DOVER CORP - 10-K Annual Report

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

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NO. 1-4018

DOVER CORPORATION
(Exact name of Registrant as specified in its charter)

DELAWARE 53-0257888
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

280 PARK AVENUE 10017
NEW YORK, NY (Zip Code)
(Address of principal executive offices)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(212) 922-1640

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

TITLE OF CLASS

NONE

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 ninety days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Securities and Exchange Act of
1934). Yes [X] No [ ]
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The aggregate market value of the voting and non-voting common stock held
by non-affiliates of the Registrant as of the close of business June 30, 2003
was $6,069,763,636. Registrant's closing price as reported on the New York Stock
Exchange-Composite Transactions for June 30, 2003 was $29.96 per share.

The number of outstanding shares of the Registrant's common stock as of
February 18, 2004 was 203,172,389.

DOCUMENTS INCORPORATED BY REFERENCE

PART III -- CERTAIN PORTIONS OF THE PROXY STATEMENT FOR ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON APRIL 20, 2004 (THE "2004 PROXY
STATEMENT").

SPECIAL NOTES REGARDING FORWARD LOOKING STATEMENTS

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

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PART I

ITEM 1. BUSINESS

OVERVIEW

Dover Corporation ("Dover" or the "Company"), originally incorporated in
1947 in the State of Delaware, became a publicly traded company in 1955 with
four operating divisions. It is a diversified industrial manufacturing
corporation encompassing 52 operating companies which primarily manufacture a
broad range of specialized industrial products and sophisticated manufacturing
equipment, and seek to expand their range of related services. Additional
information is contained in Items 7 and 8.

The Company's businesses are divided into four business segments.
Diversified builds packaging and printing machinery, heat transfer equipment,
food refrigeration and display cases, specialized bearings, construction and
agricultural cabs, as well as sophisticated products for use in the defense,
aerospace and automotive industries. Industries makes products for use in the
waste handling, bulk transport, automotive service, commercial food service and
packaging, welding, cash dispenser and construction industries. Resources
manufactures products primarily for the automotive, fluid handling, petroleum,
original equipment manufacturers (OEM), engineered components and chemical
equipment industries. Technologies builds sophisticated automated assembly and
testing equipment and specialized electronic components for the electronics
industry, and industrial printers for coding and marking.

BUSINESS STRATEGY

The Company operates with certain fundamental objectives. First, it seeks
to acquire and own businesses with proprietary, engineered industrial products
which make them leaders in the niche markets which they serve. Second, these
businesses should be customer focused, innovative and well managed to achieve
above average profit margins by supplying customers with value added products
and related services. Third, the Company expects that these types of businesses
will generate strong cash flow which can not only sustain such operations, but
also provide excess cash flow which the Company can then reinvest in similar
business opportunities.

The Company expects to manage its cash flow so that the mix of its external
debt levels and capital structure are optimized to support continued ready
access to the capital markets.

MANAGEMENT PHILOSOPHY

The Company practices a highly decentralized management style. The
presidents of the operating companies are given a great deal of autonomy and
have a high level of independent responsibility for their businesses and their
performance. This is in keeping with the Company's operating philosophy that
independent operations are better able to serve customers by focusing closely on
their products and reacting quickly to customer needs. The Company's executive
management role is to provide management oversight, allocate and manage capital,
assist in major acquisitions, evaluate, motivate and, as necessary, replace
operating management and provide selected other services.

ACQUISITIONS AND DIVESTITURES

The Company has a long-standing acquisition program. The Company seeks to
acquire and develop "platform" businesses, which are marked by growth,
innovation and higher than average profit margins. Each of its businesses should
be a leader in its market as measured by market share, customer service,
innovation, profitability and return on assets. The Company traditionally
focuses on acquiring new businesses which could operate independently from other
Dover companies ("stand-alones"). Over the last ten years, increased emphasis
has been placed on acquiring businesses that can be added on to existing
operations ("add-ons"). The target companies are generally manufacturers of high
value-added, engineered products sold to a broad customer base of industrial or
commercial users. One of the most critical factors in the decision to acquire a
business is the Company's judgment of the skill, energy, ethics and
compatibility of the top executives at the

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acquisition target. Dover expects that acquired companies will continue to be
operated by the management team in place at acquisition, with a high degree of
autonomy in keeping with the Company's decentralized structure. From January 1,
1999 through December 31, 2003, the Company made 66 acquisitions at a total
acquisition cost of $1,815.4 million. In 2003, the Company completed one
stand-alone and five add-on acquisitions at a total cost of $362.1 million. For
more details regarding acquisitions completed over the past two years, see Note
2 to the Consolidated Financial Statements in Item 8. These acquisitions have
had a substantial impact on the Company's sales and earnings since 1999. During
the past three years, the overall number of Company acquisitions and dollars
invested has been dropping. This largely reflects the general economic
conditions and the lack of attractive acquisition candidates. The Company's
future growth depends in large part on finding and acquiring successful
businesses, as a number of the Company's current businesses operate in
relatively mature markets where sustained internal growth objectives are
difficult to achieve.

While the Company expects to buy and hold businesses, it does periodically
reassess each business to verify that it continues to represent a good long-term
investment. There may also be situations where a Company business represents a
very attractive acquisition for another company based on specific market
conditions. Based on these criteria, the Company has divested businesses. Over
the past three years, the Company has been more proactive in evaluating its
operating companies against internal growth and profitability criteria. During
that time, the Company has discontinued 16 operations and subsequently sold 11
for an aggregate consideration of $385.9 million. For more details, see the
"Discontinued Operations" discussion below and Note 7 to the Consolidated
Financial Statements in Item 8.

BUSINESS SEGMENTS

DIVERSIFIED

Diversified's fourteen stand-alone operating companies manufacture
equipment and components for industrial, commercial and defense applications. In
2003, Diversified completed one add-on acquisition. A description of each
stand-alone operating company is provided below:

Major Units

Hill Phoenix's U.S. manufacturing facilities provide refrigeration systems,
display cases, walk-in coolers and freezers, electrical distribution products,
and engineering services for sale to the supermarket industry, as well as
commercial/industrial refrigeration, big box retail and convenience store
customers. Hill Phoenix sells equipment primarily in North America directly to
the end user with a small percentage of sales through independent distributors.

The Sargent companies design and manufacture fluid control and structural
components for the global aerospace and U.S. defense industries. They specialize
in complex fluid control assemblies with typical end-use applications such as
U.S. submarines, aircraft landing gear and engine thrust reverser systems, land
and amphibious vehicle utility actuation systems, helicopter rotary systems,
engine pneumatic ducting and cooling systems, aircraft environmental control
systems, and general airframe and engine structures. With manufacturing
facilities in the U.S. and Canada, the businesses share common customers
throughout the commercial aerospace and defense industries and sell direct to
their end users: OEMs, airlines and government agencies.

Performance Motorsports sells primarily pistons and other engine components
into motor-sport and power-sport markets that include high performance racing,
motorcycles, all-terrain vehicles, snowmobiles and watercraft. Performance
Motorsports products include forged and cast pistons, connecting rods,
crankshafts and cylinder liners along with their complementary components,
including piston rings, bearings, gaskets, and a variety of other internal valve
train and engine components, as well as suspension, braking, clutching, and
chassis components. Products are manufactured in the U.S. and Europe for sale
through distributors.

SWEP is a global leader in the design and manufacture of copper-brazed and
nickel-brazed compact heat exchangers. They also design and manufacture district
heating and district cooling substations. SWEP products are manufactured in
Sweden, Switzerland, Malaysia and the U.S. and are sold via a direct sales

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force, through wholly-owned sales companies in the U.S., Europe and Asia, and by
sales agents throughout the world for various applications in a wide variety of
industries.

Belvac is a world leader in high-speed trimming and necking equipment for
the worldwide beverage can-making industry. For that same industry, Belvac
designs and manufactures base re-profiling and reforming, shaping, bottom rim
coating, flanging and inspection equipment. In addition, Belvac designs and
produces high-speed trimming and burnishing equipment for the plastic container
industry. All of Belvac's products are manufactured in the U.S. and sold through
a direct sales force with offices in both the U.S. and Europe.

Waukesha Bearings Corporation manufactures bearings for certain rotating
machinery applications including turbo machinery, motors and generators, for use
in the industrial, utility, naval and commercial marine industries. Waukesha's
product lines include polymer, ceramic and magnetic designs for specific
customer applications, as well as hydrodynamic bearing design applications.
Waukesha's Hydratight Sweeney business makes manual and hydraulic bolt
tightening devices, and its Central Research Laboratories business makes remote
control manipulators for material handling applications in hazardous or sterile
environments. The company operates manufacturing facilities in the U.S. and the
U.K. and sales are made primarily in Europe and North America both directly and
through agents in several different countries.

Tranter PHE manufactures gasketed plate and frame heat exchangers, welded
plate heat exchangers and all-welded heat exchangers for a wide range of
applications in a variety of industries. PHE's products are manufactured in the
U.S., Sweden, India and the U.K. Sales are split approximately 60/40 between
Eurasia and the Americas. Products are sold through a network of manufacturers'
representatives in North America, through wholly-owned sales companies in Europe
and Asia, and by sales agents and manufacturers' representatives in the rest of
the world.

Mark Andy manufactures printing equipment and accessories primarily for the
specialty packaging-printing segment at locations in the U.S. and Europe. The
company specializes in the fabrication of narrow web printing presses used for
producing pressure sensitive labels for the food, cosmetic, pharmaceutical and
logistics (inventory, transportation, baggage handling) markets. Products are
sold primarily in the Americas and Europe through distributors.

Crenlo fabricates operator cabs and rollover structures for sale to OEM
manufacturers in the construction, agriculture, and commercial equipment
markets, such as Caterpillar, John Deere & Company, and Case New Holland. In
addition, Crenlo produces "build-per-print" high volume sheet metal enclosures
for the electronics, telecommunications and electrical markets. Crenlo operates
manufacturing facilities in the U.S., which is its primary market.

Other Units

Graphics Microsystems manufactures color measurement and control systems
for printing presses. Primary markets served are catalog, book, publication and
newspaper printing. Products are designed to add economic value to printing
processes by automating manual processes, providing quality control and reducing
waste. Products are sold primarily in the Americas and Europe directly to
printing firms as well as printing press manufacturers.

SWF Companies manufacture packaging automation machinery utilized in
forming, loading and sealing folding carton stock and corrugated board
packaging. SWF's products are sold primarily in the U.S. through direct
representation as well as indirect channels. Approximately 30% of the company's
machines are installed and operated outside of North America.

Tranter Radiator manufactures heat exchangers for cooling oil-filled
electrical transformers at their sole facility in South Carolina. Approximately
95% of all sales are to North America. Sales to North American OEM transformer
manufacturers are through a direct sales force, while OEM sales outside of North
America are primarily through agents. Aftermarket sales are handled both direct
and through agents.

Van Dam manufactures dry offset printing machines for the packaging
industry. The machines are manufactured in the Netherlands, where they have two
facilities. They also have sales facilities in the U.S. and

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Germany. Products are sold via a direct sales force in Europe and the Americas,
and through a network of agents around the world. 2003 sales are split
approximately 35% to North America, 35% to North and Central Europe, and 10% to
Asia, with the remainder to South America, the Middle East and Southern Europe.

L&E is a German based systems engineering company that designs, builds and
installs tailored drying systems, heat recovery systems and exhaust air cleaning
systems for paper mills, automotive OEM paint shops, and various other
industries. Sales are split nearly evenly between paper systems, automotive
systems, and exhaust gas cleaning systems, with approximately 95% of the sales
going to European customers, mostly German. Products are sold primarily through
a direct sales force, coupled with agents in strategic locales around the world.

INDUSTRIES

Industries is comprised of twelve stand-alone operating companies that
manufacture a diverse mix of equipment and components for use in the waste
handling, bulk transport, automotive service, commercial food service,
packaging, and construction equipment industries. In 2003 Industries completed
two add-on acquisitions. A description of each stand-alone operating company is
provided below:

Major Units

Heil Environmental manufactures a wide variety of refuse collection bodies
(garbage trucks) including front loaders, rear loaders, side loaders, and
recycling units. Heil Environmental sells its products to municipal customers,
national accounts, and independent waste haulers through a network of
distributors, and directly in certain geographic areas. Heil Environmental also
manufactures a line of dump truck bodies/hoists for the hauling industry and a
line of refuse container lifts for the waste industry. Products are manufactured
in the U.S., for sales primarily in North America, and in the U.K. for the
European Market.

Rotary Lift manufactures a wide range of vehicle service and storage lifts,
which are sold through equipment distributors, and directly to a wide variety of
markets including independent service and repair shops, national chains and
franchised service facilities, new car and truck dealers, national and local
governments, and government maintenance and repair locations. Rotary has
manufacturing operations located in the U.S. and Germany and sells primarily in
the Americas and Europe.

Heil Trailer International produces a complete line of tank trailers
including aluminum, stainless steel and steel trailers that carry petroleum,
chemical, edible, dry bulk and waste products. Trailers are marketed directly to
customers in the construction, trucking, railroad, oil, recovery and heavy haul
industries, as well as to various government agencies, primarily through
distributors, both domestically and internationally. Heil Trailer has
manufacturing facilities on four continents and services customers globally.

Tipper Tie develops and manufactures in the U.S. and Europe a wide variety
of packaging machinery which employs a clip as the means of flexible package
closure. These machines and clips are sold worldwide primarily for use with
meat, poultry and other food products. Tipper Tie also produces a line of woven
netting products used in many industries, including the meat and poultry,
horticulture, Christmas tree, and environmental markets. International sales
currently generate over 55% of total sales.

Marathon Equipment manufactures on-site waste management and recycling
systems, including a variety of stationary compactors, roll-off hoists and
vertical, horizontal and two ram balers. Equipment is manufactured and sold
primarily in the U.S. to distribution centers, malls, stadiums, arenas,
hotels/motels, warehouses, office complexes, apartment buildings, retail stores,
businesses, and recycling centers.

Triton manufactures a full-line of ATM's for off-premise and financial
institution markets. Triton is the largest provider of off-premise ATM's and ATM
management software in North America and has more than 95,000 installations in
over 17 countries worldwide. Currently, over 40% of units are sold to
institutions. Triton's line of off-premise ATM's can be found in convenience
stores, airports, hotels, restaurants, shopping centers, and casinos. Triton's
line of ATM's designed specifically for financial institutions incorporates
features specific to banks and credit unions.

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PDQ Manufacturing, Inc. manufactures touch free vehicle wash systems, which
are sold primarily in the U.S. and Canada to major oil companies as well as to
investors. Sales are made through an industry distribution network that installs
the equipment and provides after-sale service and support.

DI Foodservice Companies, through its Groen, Randell, and Avtec brands,
manufacture commercial foodservice cooking equipment, cook-chill production
systems, refrigeration products, custom food storage and preparation products,
kitchen ventilation, air handling systems and conveyer systems. DI Foodservice
serves the institutional and commercial foodservice markets worldwide through
its network of distributors, manufacturer's representatives, and direct sales
force. The primary market for DI Foodservice products is North America.

Other Units

Kurz-Kasch manufactures electromagnetic products and specialty plastic
components, primarily electromagnetic stators that regulate electronic fuel
injectors, electronic fuel pumps for the heavy truck and automotive industries,
phenolic brake pistons and electronic valve assemblies. Kurz-Kasch also
manufactures specialty plastic components used in aerospace, electrical,
telecommunications and other industries. All products are manufactured in the
U.S. and sold direct to OEM's.

Chief Automotive Systems manufactures vehicle collision measuring and
repair systems, including pulling equipment, computerized measuring, gas and
dust extraction systems. Chief markets its equipment worldwide in over 40
countries throughout Europe, Asia and the Americas, utilizing a direct sales,
service and training organization, as well as through distributors.

DovaTech produces industrial CO2 lasers used for cutting, welding, drilling
and cladding processes in the aerospace, automotive, heavy equipment and sheet
metal fabrication industries, YAG lasers used in a variety of micromachining,
marking, engraving, diamond processing, welding and cutting applications, and
related equipment used to control the temperature of industrial lasers, machine
tools, welding equipment, machinery coolants, plastic injection molding
equipment and medical diagnostic equipment. All products are made in the U.S.
for sale directly and through distributors in North America, Europe and Asia.

Somero Enterprises manufactures highly specialized laser guided concrete
screeding equipment used in the commercial construction industry. Products are
built in the U.S. and sold globally through a direct sales force, sales
representatives and dealers.

RESOURCES

Resources' thirteen stand-alone operating companies manufacture components
and equipment for the oil and gas production industry, petroleum retailing,
refining and transportation, general process industries, automotive industries,
recreational and off-road vehicle market, and other select commercial markets.
During 2003, Resources completed one stand-alone acquisition, Warn Industries
located in Clackamas, Oregon. A description of each stand-alone operating
company is provided below:

Major Units

Warn Industries is the market leader for high performance recreational
winches, winch mounts, four-wheel drive (4WD) hubs, and other accessories for
4WD vehicles, including both light trucks and all-terrain vehicles (ATV). In
addition, Warn provides a range of patented, technologically advanced 4WD and
all-wheel drive (AWD) powertrain systems to leading automotive OEMs around the
world, primarily North America.

The Energy Products Group (EPG) consists of five North American operating
units, Norris, Alberta Oil Tool (AOT), Quartzdyne, Norriseal, and
Ferguson-Beauregard, which primarily serve the upstream oil and gas production
industry. Norris and AOT produce forged steel sucker rods and accessories,
integral parts of artificial lift systems used primarily in on-shore oil and gas
production. Quartzdyne manufactures precision pressure transducers using
proprietary quartz-resonator sensor technology to provide continuous monitoring
of pressure, temperature, and flow in "downhole" oil and gas exploration and
production applications. Norriseal provides control valves, butterfly valves,
and control instrumentation primarily for oil and gas production
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applications and, to a lesser extent, the general industrial, refining, chemical
processing, and marine markets. Ferguson-Beauregard provides products that
improve production from natural gas wells and electronic well controllers for
remotely monitoring, controlling, and optimizing production from natural gas
fields. Sales are made both directly to customers and through various
distribution channels. EPG's market is global, but sales are predominantly in
North America, with the bulk of international sales occurring in South America.

OPW Fueling Components is the global leader in high quality vehicle fueling
solutions. OPW offers an extensive line of fuel dispensing products including
conventional, vapor recovery, and CleanEnergy (LPG, CNG and Hydrogen) nozzles,
swivels and breakaways, as well as Vaporsaver 1 -- a tank pressure management
system. OPW provides a complete line of environmental products for both
aboveground and underground storage tanks, suction system equipment, flexible
piping, and secondary containment systems. The ECO Air products line offers an
array of tire inflation and vacuum systems, while its OPW Fuel Management
Systems group specializes in unattended fuel management, integrated tank
monitoring, and Point-of-Sale systems. OPW Fueling Component's products are
marketed globally through a network of distributors and company sales offices
located throughout the world.

De-Sta-Co Industries manufactures and sells a variety of modular automation
and workholding components, including manual toggle clamps, pneumatic and
hydraulic clamps, automation power clamps, automation shuttles and lifters,
grippers, slides, end-effectors, and other "end of robot arm" devices. De-Sta-
Co serves the automotive, electronics, and general industrial markets from plant
facilities in the U.S., Germany, Thailand, France, and Brazil, and its products
are marketed globally both on a direct basis and through a network of
distributors.

Blackmer manufactures pumps and compressors for the transfer of liquid and
gas products in a wide variety of markets, including the refined fuels, LPG,
pulp & paper, wastewater, food/sanitary, military/ marine, transportation, and
chemical process industries. Pump technologies include positive displacement,
sliding vane and eccentric disc pumps in addition to centrifugal process pumps.
Compressor technologies include reciprocating, rotary vane, and screw
compressors. Blackmer sells to OEMs directly, and to other markets through a
global network of distributors, primarily in the Americas, Europe, and Asia.

OPW Fluid Transfer Group supplies engineered products, including valves,
electronic controls, loading arms, swivels, and couplings, for the transfer,
monitoring, measuring, and protection of hazardous, liquid and dry bulk
commodities in the chemical, petroleum, and transportation industries. These
products are manufactured in the U.S., India, Brazil and the Netherlands. OPW
Fluid Transfer Group's products are sold globally, both direct and through
distributors.

Wilden produces a wide range of air-operated, double-diaphragm pumps made
of a variety of metals and engineered plastics. Wilden pumps are used in a wide
variety of fluid transfer applications in general industrial, process industry,
and specialized applications. Sales are predominantly through distributors, with
over half of Wilden's sales derived from international markets.

C. Lee Cook is comprised of three units: C. Lee Cook, Compressor Components
(CCI), and Cook Manley. C. Lee Cook is a leading manufacturer of piston rings,
seal rings, and packings for reciprocating compressors used in the natural gas
production and distribution markets, and petrochemical and petroleum refining
industries. These products are sold as original equipment parts to compressor
manufacturers, as well as aftermarket replacement parts. CCI manufactures
replacement valves, rods, rings, high performance plastic bushings, and other
compressor components; and provides compressor repair services through its
service centers, primarily for the North American gas production and
distribution markets. Cook Manley designs and manufactures engineered valves for
engines and compressors and injection molded specialty plastic components for
gas compressor markets worldwide. C. Lee Cook's products are sold both direct
and through various sales channels, largely in North America.

Texas Hydraulics designs and manufactures highly engineered welded
hydraulic cylinders for work platform, aerial utility truck, material handling,
construction, and mining industry OEMs throughout North America. Through its
Hydromotion subsidiary located in Spring City, Pennsylvania, Texas Hydraulics
also provides custom hydraulic swivels and electric slip rings for its markets.
Cylinders are manufactured in Texas

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and Tennessee for sale directly to customers. As of January 1, 2002, Texas
Hydraulics was transferred to Dover Resources because of customer end-market
synergies with the Tulsa Winch Group.

The Tulsa Winch Group (TWG) includes DP Winch, Greer Company, Pullmaster
Winch, and Tulsa Winch. The group manufactures worm and planetary gear winches,
worm gear speed reducers, planetary swings, and specialized in-cab load
indication equipment for the mobile crane industry and drives, winch/bumper
packages, capstans, constant-pull traction winches and auger drives for the
military, marine, logging, drilling, farming, utility, crane, construction, and
truck equipment markets. TWG products are marketed and sold through various
sales channels, including OEMs and dealer distribution.

Other Units

RPA Process Technologies manufactures engineered liquid filtration
equipment and systems for the petroleum refining, pulp and paper,
hydrometallurgy, and other process industries on a global basis.

Hydro Systems manufactures chemical proportioning and dispensing systems
used to dilute and dispense concentrated cleaning chemicals to the food service,
health care, supermarket, institutional, school, building service contractor,
and industrial markets. Hydro Systems products are generally sold to
manufacturers of concentrated cleaning chemicals who market them with their
branded chemicals and offer a complete chemical management system to their end
user customers.

De-Sta-Co Manufacturing produces reed valves, flapper valves and related
assemblies for compressors used in the automotive, commercial and residential
air conditioning and refrigeration markets. De-Sta-Co Manufacturing also
produces highly specialized discs for the automotive ride control market.

TECHNOLOGIES

Technologies is comprised of thirteen stand-alone operating companies that
manufacture products in three broad groupings: Circuit Board Assembly and Test
equipment (CBAT), Specialized Electronic Components (SEC), and Marking and
Imaging systems. In 2003 Technologies completed two small add-on acquisitions. A
description of each stand-alone operating company is provided below:

Circuit Board Assembly and Test (CBAT)

Universal Instruments manufactures high-speed precision machinery used to
assemble components onto printed circuit boards. Its products include thru-hole
component assembly machines, surface mount placement equipment, and odd
component assembly cells. It also provides complete assembly lines by
integrating equipment and software required for turnkey assembly solutions.
Universal manufactures in the U.S. and in China, with sales and service
operations in more than 30 countries.

Everett Charles Technologies (ECT) makes machines, test fixtures and
related products used in testing "bare" and "loaded" electronic circuit boards
and semiconductors. Its products generally connect the device under test to the
in-circuit or functional test set. ECT also manufactures spring loaded probes
which are used in many of its products and also sold separately. Machines are
built in the U.S., Europe and China and test fixtures are made at locations
worldwide. Products are marketed directly on a worldwide basis.

DEK produces high-speed precision screen printers and related tools and
consumables to apply solder paste and epoxy glue to substrates at the start of
the printed circuit board assembly process. Advanced applications include
printing solder paste bumps onto semiconductor wafers used in the "flip chip"
process and onto "ball grid" array packages. DEK manufactures in the U.K. and
China and has sales/service offices throughout Europe, North America, and Asia
Pacific, with a network of distributors and agents providing further support in
these territories.

OK International manufactures specialized and manual industrial tools for
the professional electronics workbench, including precision manual soldering and
desoldering tools, ball grid array rework and inspection stations, fluid
dispensing systems and other hand tools. Products are made at various U.S. and
Chinese

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locations for sales to customers in the electronics, aerospace and telecom
industries, through sales organizations around the world who manage distributors
and independent representatives.

Vitronics Soltec manufactures automated soldering systems for high volume
electronic circuit board manufacturing. With factories in the U.S., the
Netherlands, and China, it makes wave soldering machines primarily applied to
thru-hole assembly, reflow soldering systems typically used for surface mount
circuits and selective soldering to automatically solder specific components or
provide solder connections in selective areas of printed circuit boards.
Vitronics Soltec has sales and service offices in Europe, North America, and
Asia, but also sells through distributors and agents.

Alphasem manufactures die attach equipment to attach semiconductor die to
their protective packages, providing interconnections to the next level of
packaging. These "packages" are vital components in all kinds of simple and
sophisticated electronic systems used in computers, automotive applications,
space, communication devices, medical systems, and aircraft. Alphasem is based
in Switzerland and has sales and service offices in Europe, Asia, and North
America.

Hover-Davis manufactures component feeders, direct die feeders, and label
feeders that are used on high-speed component placement machines as part of
automated circuit board assembly lines. Headquartered in Rochester, New York,
Hover-Davis sells certain products directly to assembly equipment manufacturers
including Universal Instruments, while other products, fitting different
assembly equipment, are being sold to end users. Sales and service is supported
by a network of independent manufacturing representatives and distributors.

Specialty Electronic Components (SEC)

Vectron International makes high frequency engineered components and
subsystems, including frequency generation and control components using quartz
crystals and surface acoustic wave (SAW) technologies, microwave synthesizers
(multiple frequency generators), and microwave and millimeter wave transceivers.
Products are made at multiple locations in the U.S. and Germany for direct sale
to the global telecom/ datacom industry, both wired and wireless, as well as to
the medical, industrial and aerospace industries.

K&L Microwave designs and manufactures a wide range of radio frequency and
microwave filters including ceramic and dielectric resonator units, duplexers
and diplexers, combiners, receiver multicouplers, directional couplers and
wireless subassemblies for cellular base stations. K&L sells to numerous
military and aerospace customers, in addition to serving the wireless industry.
K&L has manufacturing activities in the U.S. and the Dominican Republic, and
sells its products worldwide through representatives.

Novacap is a specialty manufacturer of multi-layer ceramic capacitors and
planar arrays for commercial and high voltage, high reliability applications. It
makes products in the U.S. and the U.K., at its Syfer subsidiary, and sells
through both representatives and distributors worldwide to telecom/datacom
equipment, implanted medical products, aerospace and automotive manufacturers.

Dow-Key Microwave is a specialty manufacturer of microwave
electro-mechanical switches for use in the medical, wireless, military and
high-reliability space industries. Design and manufacturing operations are in
the U.S. and sales are made worldwide through representatives.

Dielectric Laboratories is a manufacturer of single and multi-layer high
frequency capacitors for use in the telecom, military and automotive industries.
Design and manufacturing operations are in the U.S. and sales are made worldwide
through representatives.

Marking and Imaging

Imaje is a major worldwide supplier of industrial marking and coding
systems. Its primary product is a Continuous Ink Jet (CIJ) printer, which is
used for marking variable information (such as date codes or serial numbers) on
consumer products. Markpoint, acquired in 2001, added two new technologies to
Imaje's product lineup: Drop on Demand (DOD) printers and thermal printers used
for marking on secondary

9

packaging such as cartons. Imaje has also added laser and thermal transfer
printers to its broad array of marking and coding solutions. Imaje's markets are
very broad and include food, beverage, cosmetics, pharmaceutical, electronics,
automotive and other applications where variable marking is required. Products
are made in Europe, the U.S. and China, where Imaje engages in both printer
assembly and the formulation of ink. Imaje's direct sales/service network has
subsidiaries in 29 countries and sells in over 90 countries.

DISCONTINUED OPERATIONS

In August of 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets", which was effective for fiscal
years beginning after December 15, 2001. SFAS No. 144 establishes accounting and
reporting standards for the impairment and disposal of long-lived assets and
discontinued operations. The Company elected to early adopt SFAS No. 144 in
2001. The application of this statement results in the classification, and
separate financial presentation, of certain entities as discontinued operations,
which are not included in continuing operations. The earnings (loss) from
discontinued operations include charges to reduce these businesses to estimated
fair value less costs to sell. Fair value is determined by using quoted market
prices, when available, or other accepted valuation techniques. All interim and
full year reporting periods have been restated to reflect the discontinued
operations discussed below. Refer to Note 7 to the Consolidated Financial
Statements in Item No. 8 of this Form 10-K for additional information.

The Company's executive management performs periodic reviews at all of its
operating companies to assess their growth prospects under its ownership based
on many factors including end market conditions, financial viability and their
long term strategic plans. Based upon these reviews, management, from time to
time, has concluded that some businesses had limited growth prospects under its
ownership due to relevant domestic and international market conditions, ongoing
financial viability or did not align with management's long-term strategic
plans.

During 2003, the Company discontinued five businesses, three in the
Diversified segment and one business in each of the Industries and Resources
segments, all of which were classified as held for sale as of December 31, 2003.
In aggregate these businesses were not material to the Company's results. The
Company expects to dispose of these businesses by the end of 2004.

During 2002, the Company discontinued seven businesses, four in the
Technologies segment and three in the Resources segment. In 2002, two of these
businesses, one from both Technologies and Resources were sold for a net after
tax loss of $4.5 million. The five remaining businesses were classified as held
for sale as of December 31, 2002. In 2003, all five businesses were disposed of
or liquidated for a net after tax gain of $4.9 million.

During 2001, the Company discontinued four businesses in the Diversified
segment and one business in each of the Industries and Resources segments. The
DovaTech welding equipment business from Industries and the AC Compressor
business from Diversified were sold during 2001 for a net gain after tax of
$96.6 million. The four remaining businesses were classified as held for sale as
of December 31, 2001. In 2002, all four of these businesses were disposed of or
liquidated for a net after tax gain of $3.6 million.

Charges to reduce these discontinued businesses to their estimated fair
values have been recorded in earnings (losses) from discontinued operations net
of tax. For the years ended December 31, 2003, 2002 and 2001, pre-tax charges
were recorded to write-off goodwill of $17.3 million, $31.6 million and $11.6
million, and other long-lived asset impairments and other charges were recorded
of $0.2 million, $12.3 million and $7.7 million, respectively.

Also during 2003, in connection with the completion of a federal income tax
audit and commercial resolution of other issues, the Company adjusted certain
reserves established in connection with the sales of previously discontinued
operations and recorded a gain on the sales of discontinued operations net of
tax of $16.6 million, and additional tax benefits of $5.1 million related to
losses previously incurred on sales of business. These amounts were offset by
charges of $13.6 million, net of tax, to reduce discontinued businesses to their
estimated fair value, and a loss on the sale of discontinued operations net of
tax of $6.0 million related

10

to contingent liabilities from previously discontinued operations. Total losses
from discontinued operations in 2002 and 2001 primarily relate to charges to
reduce discontinued businesses to their estimated fair value.

RAW MATERIALS

Dover's operating companies use a wide variety of raw materials, primarily
metals and semi-processed or finished components, which are generally available
from a number of sources; as a result, shortages or the loss of any single
supplier have not had, and are not likely to have, a material impact on
operating profits. During 2002, steel tariffs were imposed on the importation of
certain steel products, which had a slight adverse impact on a number of Dover
operating companies which use large amounts of steel. These tariffs remained in
effect throughout most of 2003 and were repealed late in the year. Steel prices
are expected to remain relatively high during 2004 which will have an impact on
a number of Dover operating companies.

RESEARCH AND DEVELOPMENT

Dover's operating companies are encouraged to develop new products as well
as to upgrade and improve existing products to satisfy customer needs, expand
sales opportunities, maintain or extend competitive advantages, improve product
reliability and reduce production costs. During 2003, approximately $158.7
million was spent on research and development, compared with $166.2 million and
$168.2 million in 2002 and 2001, respectively.

For the Technologies companies, efforts in these areas tend to be
particularly significant because the rate of product development by their
customers is often quite high. In general, the Technologies companies that
provide electronic assembly equipment and services can anticipate that the
performance capabilities of such equipment are expected to improve significantly
over time, with a concurrent expectation of lower operating costs and increasing
efficiency. Likewise, Technologies companies developing specialty electronic
components for the datacom and telecom commercial markets anticipate a
continuing rate of product performance improvement and reduced cost, such that
product life cycles generally average less than five years with meaningful sales
price reductions over that time period.

Industries, Resources and Diversified contain many businesses that are also
involved in important product improvement initiatives. These businesses also
concentrate on working closely with customers on specific applications,
expanding product lines and market applications, and continuously improving
manufacturing processes. Only a few of these businesses experience the same rate
of change in their markets and products that is experienced generally by the
Technologies businesses.

INTELLECTUAL PROPERTY

The Company has a number of patents, trademarks, licenses and other forms
of intellectual property, which have been acquired over a number of years and,
to the extent relevant, expire at various times over a number of years. A large
portion of the Company's intellectual property consists of confidential and
proprietary information constituting trade secrets that the Company seeks to
protect in various ways including confidentiality agreements with employees and
suppliers where appropriate. While the Company's intellectual property is
important to its success, the loss or expiration of any significant portion of
these rights would not materially affect the Company or any of its segments. The
Company believes that its commitment to continuous engineering improvements, new
product development and improved manufacturing techniques, as well as strong
sales, marketing and service efforts, are significant to its general leadership
position in the niche markets that it serves.

SEASONALITY

In general, Dover's operations while not seasonal, tend to have stronger
revenues in the second and third quarters. In particular, those companies
serving the transportation, construction, waste hauling, petroleum, commercial
refrigeration and food service markets tend to be strong during the second and
third quarters. Companies serving the major equipment markets, such as power
generation, chemical and processing

11

industries, tend to have long lead times geared to seasonal commercial or
consumer demands, which tend to delay or accelerate product ordering and
delivery to coincide with those market trends.

CUSTOMERS

Dover's businesses serve thousands of customers, no one of which accounted
for more than 10% of the Company's consolidated revenues in 2003. Within each of
the four segments, no customer accounted for more than 10% of that segment's
sales in 2003.

In the Technologies segment, the rapid growth in datacom/telecom
infrastructure market development during the period 1997-2000, involving both
equipment providers and software developers such as Lucent, Motorola, Nortel,
Cisco, Siemens, Phillips, and Qualcomm, tended to concentrate the new product
development and demand with relatively few customers. At the same time, a number
of these customers "outsourced" a significant amount of their manufacturing
capability to electronic manufacturing services (EMS) companies such as Jabil,
Solectron, Celestica, and Flextronics, which firms are now the direct customers
of Technologies companies for a number of different OEM customers. Given the
significant downturn in these markets since 2000, and the shift in
manufacturing, this has tended to increase the concentration of manufacturing
with the EMS's companies, particularly with those located in China. Hence,
machine and specialty component demand is concentrated with a smaller number of
"customers". The more significant Chinese customers are Foxconn, Asustek,
Inventec, Wistron and Arima.

In the other Dover segments, customer concentrations are quite varied.
Companies supplying the automotive and commercial refrigeration industries tend
to deal with a few large customers that are significant within those industries.
This also tends to be true for companies supplying the power generation,
aerospace and chemical industries. In the other markets served, there is usually
a much lower concentration of customers, particularly where the companies
provide a substantial number of products and services, applicable to a broad
range of end use applications.

BACKLOG

Backlog generally is not a significant factor in most of Dover's
businesses, as most of Dover's products have relatively short order-to-delivery
periods. It is more relevant to those businesses in the segments which produce
larger and more sophisticated machines or have long-term government contracts,
primarily in the Diversified segment as well as the Heil companies from the
Industries segment and the CBAT and SEC companies from the Technologies segment.
Total Company backlog as of December 31, 2003 and 2002 was $822.9 million and
$649.9 million, respectively.

COMPETITION

Dover's competitive environment is complex because of the wide diversity of
products manufactured and markets served. In general, most Dover companies are
market leaders which compete with only a few companies and the key competitive
factors are customer service, product quality and innovation. In addition, since
most of Dover's manufacturing operations are in the United States, Dover usually
is a more significant competitor domestically than in foreign markets.

In the Technologies segment, Dover competes globally against a few very
large companies, primarily operating in Japan, Europe and the Far East. Its
primary competitors are Japanese producers, including Fuji Machine, Panasonic
and TDK, and European manufacturers like Philips and Siemens.

Within the other segments, competition is primarily domestic, although an
increasing number of Dover companies see more international competitors and
several serve markets which are predominantly international, particularly
Belvac, Quartzdyne, RPA Process Technologies, Tipper Tie, Tranter, and Waukesha.

INTERNATIONAL

For foreign sales, export sales and an allocation of the assets of the
Company's continuing operations, see Note 14 to the Consolidated Financial
Statements in Item No. 8 of this Form 10-K.
12

Although international operations are subject to certain risks, such as
price and exchange rate fluctuations and foreign governmental restrictions,
Dover intends to increase its expansion into foreign markets including South
America, Asia and Eastern Europe.

The countries where most of Dover's foreign subsidiaries and affiliates are
based are France, Germany, the U.K., The Netherlands, Sweden and Switzerland,
and with increased emphasis, China.

ENVIRONMENTAL MATTERS

Dover believes its operations generally are in substantial compliance with
applicable regulations. In a few instances, particular plants and businesses
have been the subject of administrative and legal proceedings with governmental
agencies or private parties relating to the discharge or potential discharge of
regulated substances. Where necessary, these matters have been addressed with
specific consent orders to achieve compliance. Dover believes that continued
compliance will not have any material impact on the Company's financial position
going forward and will not require significant capital expenditures.

EMPLOYEES

The Company had approximately 25,700 employees as of December 31, 2003.

OTHER INFORMATION

Dover makes available free of charge through the "Financial Reports" link
on its Internet website, http://www.dovercorporation.com, the Company's annual
reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form
8-K, and any amendments to the reports. Dover posts each of these reports on the
website as soon as reasonably practicable after the report is filed with the
Securities and Exchange Commission. The information on the Company's Internet
website is not incorporated into this Form 10-K.

ITEM 2. PROPERTIES

The number, type, location and size of the Company's properties as of
December 31, 2003 are shown on the following charts, by segment:

The facilities are generally well maintained and suitable for the
operations conducted.

13

ITEM 3. LEGAL PROCEEDINGS

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

The Company and certain of its subsidiaries are also parties to a number of
other legal proceedings incidental to their businesses. Management and legal
counsel periodically review the probable outcome of such proceedings, the costs
and expenses reasonably expected to be incurred, the availability and extent of
insurance coverage and established reserves. While it is not possible at this
time to predict the outcome of these legal actions, in the opinion of
management, based on these reviews, it is remote that the disposition of the
lawsuits and the other matters mentioned above will have a material adverse
effect on the Company's financial position, results of operations or cash flows.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matter was submitted to a vote of the Company's security holders in the
last quarter of 2003.

EXECUTIVE OFFICERS OF THE REGISTRANT

All officers are elected annually at the first meeting of the Board of
Directors following the annual meeting of stockholders and are subject to
removal at any time by the Board of Directors. The executive officers of Dover
as of February 26, 2004, and their positions with the Company (and, where
relevant, prior business experience) for the past five years are as follows:

15

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

The principal market in which the Company's Common Stock is traded is the
New York Stock Exchange. Information on the high and low sales prices of such
stock, and the frequency and the amount of dividends paid during the last two
years is as follows:

DOVER CORPORATION COMMON STOCK CASH DIVIDENDS AND MARKET PRICES(1)

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

(1) As reported in the Wall Street Journal

The number of holders of record of the Company's Common Stock as of
February 27, 2004, as shown by the records of the Company's transfer agent was
approximately 14,000. This figure includes participants in the Company's 401(k)
program.

On November 17, 2003 pursuant to the 1996 Non-Employee Directors' Stock
Compensation Plan, the Company issued an aggregate of 8,750 shares of its Common
Stock to its seven U.S. resident outside directors (after withholding an
aggregate of 3,752 additional shares to satisfy tax obligations), and the
Company issued an aggregate of 1,786 shares of its Common Stock to its non-U.S.
resident outside director who was not subject to U.S. withholding tax, as
compensation for serving as directors of the Company during 2003.

16

ITEM 6. SELECTED FINANCIAL DATA

Dover Corporation financial information for the years 1999 through 2003 is
set forth in the following 5-year Consolidated Table.

DOVER CORPORATION

5-YEAR CONSOLIDATED SUMMARY OF SELECTED FINANCIAL DATA

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

All results and data in this section reflect continuing operations, which
exclude discontinued operations unless otherwise noted.

(1) Includes pre-tax restructuring charges of $28.7 million and inventory
charges of $12.0 million.

(2) Includes pre-tax restructuring charges of $17.2 million and inventory
charges of $63.8 million.

(3) Includes pre-tax gain on sale of marketable securities of $13.7 million.

17

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

SUMMARY

Sales for 2003 of $4,413.3 million were up $359.7 million or 9% from 2002,
primarily driven by increases of $194.8 million at Technologies and $109.8
million at Resources. Technologies' sales were impacted by recovery in the
electronics industry. Resources' sales increased due to improved market
conditions and the acquisition of Warn Industries. Diversified's sales increased
$52.5 million, while Industries' sales were essentially flat. Sales would have
increased 4.6% to $4,238.1 million if 2002 foreign currency translation rates
were applied to 2003 results. Acquisitions completed during 2003 contributed
$67.7 million to sales and gross profit of $18.4 million. Gross profit of
$1,520.4 million in 2003 represented a 14% improvement compared to $1,330.9
million in 2002. Gross profit for 2002 included approximately $12.0 million of
inventory provisions primarily incurred by Technologies and to a lesser extent
Diversified. Gross profit margins of 34.5% for 2003 compared to 32.8% for 2002
and were positively impacted by increased volume levels and the prior year's
operational realignment and restructuring.

Selling and administrative expenses for 2003 were $1,076.7 million or 24%
of net sales, compared to $996.2 million or 25% of net sales in 2002. Selling
and administrative expenses for 2002 included approximately $28.7 million of
restructuring provisions primarily incurred by Technologies and to a lesser
extent Industries and Diversified. Operating profit of $443.8 million for 2003
increased $109.0 million compared to the prior year due primarily to the 9%
increase in revenues, benefits from the Company's restructuring programs
undertaken during 2002 and 2001 and slightly improved global economic
conditions. Operating profit margin for 2003 was 10.1% compared to 8.3% for
2002.

Net interest expense decreased 4% to $62.2 million for 2003, comparable to
$64.8 million for 2002. The primary reasons for the decrease in net interest
expense was the decrease in long-term debt during the year of approximately $26
million, higher levels of interest bearing cash equivalents, in addition to
interest income related to the Company's outstanding interest rate swaps on some
of its long-term debt.

Other net expenses for 2003 were $9.7 million and primarily related to
foreign exchange losses of $6.2 million and legal settlements at the Industries
and Resources segments. Other expenses of $6.6 million for 2002 primarily
related to foreign exchange losses of $6.0 million. The foreign exchange losses
in both 2003 and 2002 primarily relate to appreciation of the Euro against the
U.S. dollar.

Dover's effective 2003 tax rate for continuing operations was 23.3%,
compared to 2002's rate of 21.1%. The low effective tax rate for both years is
largely due to the continuing benefit from tax credit programs such as those for
R&D combined with the benefit from U.S. export programs, lower effective foreign
tax rates from the utilization of net operating loss carryforwards and the
recognition of certain capital loss benefits.

Net earnings from continuing operations for 2003 were $285.2 million or
$1.40 per diluted share compared to $207.8 million or $1.02 per diluted share
from continuing operations in 2002. For 2003, net earnings before cumulative
effect of change in accounting principle were $292.9 million or $1.44 per
diluted share, including $7.7 million or $.04 per diluted share in earnings from
discontinued operations, compared to $171.8 million or $.84 per diluted share
for 2002, which included $36.1 million or $.18 per diluted share in losses from
discontinued operations.

Discontinued operations earnings for 2003 were $7.7 million compared to
losses of $36.1 million in 2002. During 2003, in connection with the completion
of a federal income tax audit and commercial resolution of other issues, the
Company adjusted certain reserves, established in connection with the sales of
previously discontinued operations and recorded a gain on the sales of
discontinued operations net of tax of $16.6 million, and additional tax benefits
of $5.1 million related to losses previously incurred on sales of business.
These amounts were offset by charges of $13.6 million, net of tax, to reduce
discontinued businesses to their estimated fair value, and a loss on the sale of
discontinued operations net of tax of $6.0 million related to contingent
liabilities from previously discontinued operations. Total losses from
discontinued operations in 2002 and 2001 primarily relate to charges to reduce
discontinued businesses to their estimated fair value. Refer to Note 7 in the
Consolidated Financial Statements in Item 8.

18

For 2002, the impact of the adoption of the Statement of Financial
Accounting Standard No. 142, "Goodwill and Other Intangible Assets", resulted in
a net loss of $121.3 million. The adoption resulted in a goodwill impairment
charge of $345.1 million ($293.0 million, net of tax, or $1.44 diluted earnings
per share). The adoption of the standard also discontinued the amortization of
goodwill effective January 1, 2002.

DIVERSIFIED

Diversified's earnings increased 3% in 2003 on a 5% sales increase, as
capital equipment markets remained soft. The earnings increase was achieved
mainly through operational improvements, volume and cost reduction efforts.
Record segment bookings improved 7% over the prior year. Hill Phoenix, SWEP and
Belvac accounted for a large portion of the earnings gain, which was somewhat
offset by declines at Waukesha, Performance Motorsports, Graphics Microsystems
and Crenlo.

Hill Phoenix reported its second consecutive record year, setting new highs
in sales, earnings and cash flow, again leading Diversified in each of these
three categories. Despite its overall market being down, Hill Phoenix benefited
from growth at several of its largest customers as well as securing new key
accounts. Hill Phoenix has been able to outperform its competition and gain
market share in recent years, due largely to industry leading product innovation
and strong customer service. The improvement was across all its business units,
as Display Cases, Refrigeration Systems, National Cooler and EDP all showed a
year-over-year earnings increase. A three point operating margin improvement was
achieved, largely the result of leveraging value-added pricing and productivity
gains. All growth over the last two years was internal, as there were no
acquisitions impacting results. Growth is expected to slow somewhat in 2004,
although Hill Phoenix expects to deliver another strong performance as the
capital programs of its large customers are expected to remain strong.

Sargent's earnings were slightly down compared to the prior year, as strong
military business and a successful add-on acquisition were offset by the
extended commercial aerospace downturn. Record bookings improved 32% over prior
year, led by the Marine Division being awarded a large U.S. military order for
submarine ship sets. Margins fell in 2003 largely due to an unfavorable sales
mix and the decision to invest in several development programs. The Sonic
business unit was hurt by continued airline cutbacks and a significant reduction
in production at their largest customer. Sargent Aerospace Canada, a
manufacturer of airplane components in Montreal, Canada, was acquired in April
and produced positive results throughout the year.

Performance Motorsports' earnings declined for the first time since being
acquired by Diversified in 1998, due to several production issues and a weak
powersports market. Performance Motorsports struggled throughout the year
integrating its December 2002 acquisition of Chambon, where volumes declined and
significant losses resulted. Perfect Bore absorbed high production costs and
also reported a loss, due to lingering production problems resulting from
internalizing a key manufacturing process that had previously been outsourced.
Performance Motorsport's two largest business units, Wiseco and JE Pistons, both
had steady years and reported sales and earnings slightly ahead of prior year.
After four consecutive quarters of unfavorable comparisons to the prior year,
Performance Motorsports saw order intake increase in the fourth quarter and
earnings improved over the prior year. Despite market softness in 2003,
Performance Motorsports maintained its market share and is well positioned to
improve as its markets recover.

19

SWEP exceeded prior year bookings, sales, and earnings in every quarter in
2003. Though the year started slow, order activity improved in both its heat
pump and boiler markets and was very strong in the last nine months of the year.
Production capacity was increased with both capital investments and productivity
programs to meet the growing demand. Backlog at the end of 2003 was 67% above
last year. Earnings were up 60% on a 24% increase in sales, driven by cost
reduction, favorable currency rates, and a robust market. Its new central
warehouse in Germany was fully consolidated in 2003, which drove down lead times
and reduced selling and administrative expenses. Though the price of stainless
steel dropped slightly late in the year, potential increases in metal prices may
affect near term margins.

Belvac reported its highest earnings in five years, improving 64% over
prior year. As the only independent global supplier of can forming equipment,
Belvac's recent success has been in the non-U.S. market, especially Russia and
Australia, where can manufacturing and consumer use is growing. A significant
portion of its business includes spares and retrofits that improve the
productivity of its customer's equipment. Further investment and advancement in
its plastic container equipment is beginning to complement its can forming
business, and is opening up new opportunities for growth. Belvac began the
process of establishing a warehouse, service center and related supply chains in
the Czech Republic, and the facility will be fully operational in 2004.

Waukesha had a strong finish to the year, but still recorded a 15% earnings
decline on a 6% drop in revenue. The weak power generation market continued to
negatively impact the Bearings division, and costs to close its South Carolina
facility further reduced earnings. This was the third time in two years that
Bearings down sized its capacity due to the soft market demand. On a positive
note, the Magnetics Bearing group had a record year in sales and earnings as
project development work is beginning to show a payback. After a slow start to
the year, the Hydratight Sweeney division had a solid comeback in the last three
quarters on strong Torque and Service business. The Tension business was down
for the year, though bookings in its Oil & Gas markets improved in the fourth
quarter setting a good foundation for 2004. Central Research Labs' sales and
earnings were significantly down as orders for a number of large nuclear waste
clean-up projects were delayed into 2004. CRL continues to develop the use of
their products with large OEM's in the pharmaceutical markets.

Tranter PHE set new bookings and sales records in 2003, though earnings
dropped below last year by 6%. Marine bookings came back strong especially with
shipyards in South Korea. Another solid contributor was the North America
ethanol market that is being driven by investments in alternative energy
sources. Favorable currency translations due to the weakening of the dollar and
higher Eurasian business also increased reported sales. Investments were made in
the India operations to add manufacturing and engineering capability to make
welded products for the Eurasia market. This facility attained the highest
quality approvals for its industry in 2003 -- PED (Pressure Equipment Directive)
for Europe and ASME (American Society of Mechanical Engineers) for North
America. Significant gains in productivity, reduced lead times and on time
delivery in the Swedish manufacturing operations were also achieved. Tranter is
well positioned to benefit from what seems to be a pent up demand in many of its
markets.

Mark Andy earnings declined 12% on slightly lower sales, as cost reduction
efforts did not offset weaker gross margins. An unfavorable product mix,
production start-up problems on a new label press, and higher warranty expenses
caused lower earnings in the St. Louis operations. Results improved at year-end
with fourth quarter earnings contributing over half of the year's total
earnings. The package printing equipment market further weakened in 2003 but
began to see some firming late in the year. After a short rebound in label press
orders in 2002, bookings declined 13% in 2003. Comco packaging press orders were
flat in 2003, although 2003 ended with its best quarterly bookings performance
since the acquisition in early 2001. Improvements in sales coverage, upgrades in
sales personnel, and worldwide sales organization changes were made to
strengthen its position. Both U.S. operations received ISO certification and
lean manufacturing initiatives continue to drive improvement.

Crenlo followed 2002's substantial turnaround with lower earnings despite
slightly increased volume. Earnings were down due to an unfavorable sales mix,
rising medical, natural gas and wage costs, and costs associated with projects
that will generate future revenue. The unfavorable sales mix is attributable to

20

a decline in the specialty enclosure business, which has been negatively
impacted by a large customer's restructuring following a merger. The South
Carolina facility continued to be hurt by under-leveraged fixed costs and high
overtime, resulting in the inability to reach consistent production levels. On a
positive note, cost reductions and productivity gains achieved in 2003 have
Crenlo well positioned to capitalize on higher volumes. Increased order activity
in the fourth quarter by several key customers provides cautious optimism going
into 2004, as shipment levels for the first quarter are projected to be higher.

Graphics Microsystem's (GMI) sales grew 3% over 2002, despite the third
consecutive year of a decline in the printing industry. The ColorQuick product
set a new sales record and has required a re-alignment of its business resource
and processes. GMI has decided to target large growth opportunities and has
shifted its business model from only serving small to medium size printers in
the aftermarket to a focus on large printers and the high end new press OEM
market. 2003 earnings were negatively affected by necessary investments in R&D,
price concessions, and technical service to pursue this new business.

SWF completed a year of transition, reporting breakeven results as several
key managers were replaced and plant consolidations were finalized. Facilities
in Florida and Washington were consolidated into the California operation,
resulting in overhead cost reduction and business simplification going forward.
Several large warranty issues were resolved in 2003, and new warranty claims
steadily declined throughout the year. Positive strides were made operationally,
including the introduction of laser machining capabilities, formally
establishing preferred suppliers, restructuring the sales and engineering
organizations and the introduction of integrated work groups. The internal
improvements achieved in 2003 will allow SWF to be more externally focused in
2004.

INDUSTRIES

Industries earned 12% less on essentially flat sales, reflecting plant
closing costs and margin pressure from earlier in the year. Nevertheless,
quarterly sales and earnings improved sequentially as the year progressed.
Fourth quarter results topped the previous three quarters, reflecting market
share increases and improved market conditions across the majority of companies.
The biggest contributors to earnings increases were PDQ, with strong new product
sales and Tipper Tie which benefited from strong overseas performance,
capitalizing on the opening of the Eastern European markets.

2003 was a challenging year for Heil Environmental. Earnings were down 30%
as its market declined over 20%, resulting in the lowest industry volume since
1997. Municipal markets remained weak and pricing pressures continued.
Environmental closed down a facility and consolidated their two parts
businesses. Performance increased in the second half, as both the third and
fourth quarters showed favorable comparisons to prior year, and full year
bookings and backlog were up reflecting favorable year over year comparisons.
Overseas, Heil was able to leverage a strong UK market while increasing share.

Rotary Lift's sales were enhanced by the May 2003 acquisition of Blitz, a
German lift manufacturer. However, integrating the existing Rotary Lift Italian
operations into Blitz negatively impacted earnings. North American sales fell
slightly as the industry declined and competitive pressures led to contracting
margins. For the full year, Rotary Lift's sales grew 5% and earnings were flat.
However, a number of new products were introduced in latter half of the year,
resulting in sales growth of over 8% in the second half. Backlog is up over 50%,
leading to optimism heading into 2004.

21

Industry declines impacted Heil Trailer, as the U.S. tank trailer markets
decreased for the fourth consecutive year. Reacting to the contraction, Trailer
closed two facilities during the year. Despite continued price competition,
Trailer was able to grow share in both the petroleum and dry bulk markets.
Business began to pick up later in the year, as fourth quarter revenues were 16%
above 2002 levels. Military shipments began in earnest in the fourth quarter,
and will account for an additional $20.0 million of sales in 2004, the result of
a military contract awarded to Heil in late 2003. Kalyn Siebert, a Heil Trailer
subsidiary, benefited from this strong military volume as revenues almost
doubled for the year.

Tipper Tie's European operations achieved record sales driven by strong
performance in Eastern Europe. Earnings improved 21% on a sales increase of 9%.
Alpina, a 2000 acquisition, surpassed last year's record results as they
continue to expand their product line into new geographic regions. The U.S.
business continues to be challenged amid a weak capital equipment market and
continued pricing pressure. However, the declines witnessed last year have been
stemmed and a rebound is expected in 2004.

Marathon's sales and margins declined three percentage points in 2003 which
were primarily the result of pricing pressures driven by market weakness. The
waste equipment market was down, adjusting to the overcapacity of production in
the industry, ultimately leading to price erosion. As a result, Marathon closed
a facility while reducing headcount by over 10%. Strength in their Recycling
Systems Group helped stem the tide, and will be a key growth area in 2004.

Triton, which saw significant improvement in 2002, delivered record
revenues in 2003, although earnings were relatively flat because of new product
start-up costs. Unit sales were up over 10% in a flat U.S. market, resulting in
share gains again in 2003. These gains were attributable to the success of the
9100 product line, which was introduced mid-2002 and focuses on the broadest
segment of the cash dispenser market. It now represents more than two thirds of
2003 unit sales volume. Their strong new product focus continued in 2003, as two
key products were introduced late in the year. The FT5000 is a through-the-wall
model aimed at the financial institution market, while the RL5000 is aimed
principally at the retail market. Internationally, both the UK and Canadian
markets remained strong, and market share increased in both of these key focus
regions. Triton expects to enter additional countries in 2004, as international
markets currently account for approximately 35% of unit sales.

PDQ's record fourth quarter results contributed to solid year-over-year
gains. Earnings increased 22% while sales increased 12%. An increase in major
oil and gas station business coupled with continued strong investor demand drove
the late year surge. Market share continues to increase, although competitors
are beginning to have an impact on the low-end market. A major driver in 2002
was the introduction and customer acceptance of several new products, one of
which, a higher-end Laser Wash, accounted for over 30% of sales in the fourth
quarter.

Declining tax revenues for most states, counties and municipalities led to
a slowdown in DI Foodservice's institutional foodservice equipment market,
continuing a trend which began last year. However, both Groen and Randell were
able to grow market share during the year. There has been a pickup in chain
restaurant sales, as many experienced strong same-store-sales growth in the
later half of the year. Institutional markets will continue to struggle,
although renovation and replacements have shown some growth in 2003 and are
expected to continue into 2004. Consolidation costs experienced in 2003 to bring
the Groen, Randell, and Avtec businesses under the DI Foodservice umbrella, will
positively impact margins in 2004.

Kurz-Kasch rebounded from a challenging 2002 as revenues and earnings
increased over 10% driven by the successful integration of business/product
lines acquired in late 2002. In addition, Kurz Kasch purchased Wabash Magnetics,
a manufacturer of actuators and sensors, in December of 2003. This acquisition
will allow Kurz-Kasch to expand into the medical and irrigation markets, among
others.

Dovatech's performance benefited from strength in both the Chiller and
Laser businesses. A pickup in semiconductor demand drove the Laser business
performance while strong sales into the medical market resulted in the Chiller
business growing over 18%. Strength in Chief Automotive's computerized measuring
products was more than offset by market contraction in the frame-straightening
market. Somero partially

22

offset significant market weakness with the successful introduction of the
"Copperhead", a walk-behind laser screed, which now accounts for over 60% of
unit sales.

RESOURCES

Resources' 2003 earnings increased by 10% on a sales increase of 13% due to
strong increases from the Energy Products Group, De-Sta-Co Industries and the
OPW companies, and the acquisition of Warn Industries. All twelve Resources
companies increased bookings versus 2002 and ended the year with slightly higher
backlogs overall.

Warn, which was acquired on October 1, 2003, was a significant driver of
Resources' revenue and earnings growth, even after the impact of purchase
accounting. Warn is a leader in the recreational winch business, both for all
terrain vehicles and four-wheel drive vehicles. In addition, Warn is a leading
manufacturer of all wheel drive and four-wheel drive disconnect
technology -- providing products that enhance fuel economy and improve
performance of these vehicles. The continued flow of new products and the
entrance into new markets should drive continued growth in the business.

The Energy Products Group results include Quartzdyne, which was added to
the group in 2003. Overall, the year was extremely positive with an earnings
increase of 41% on a sales increase of 15% -- great operating leverage. The core
products of Alberta Oil Tool and Norris achieved sales and margin increases,
both domestically and globally. Both of these units had record profits.
Ferguson-Beauregard and Norriseal had greatly improved earnings on relatively
small increases in sales. Quartzdyne was the exception in the group. While
continuing to achieve very respectable earnings, Quartzdyne did not benefit from
increased activity in the energy sector. However, they did not experience any
loss of market share and the company continued to invest in new products to
allow expansion of its served markets.

OPW Fueling Components had a very strong year leveraging earnings 35% on a
sales increase of 8%. OPW achieved solid business growth from its "newly
certified" products for compliance with the "Enhanced Vapor Recovery"
requirements. In addition, the business continued to rationalize capacity in
North America, while at the same time opening a new facility in China and
expanding its presence in Brazil with the opening of a larger manufacturing
facility. Significant benefits were achieved from global sourcing and expansion
of a well-disciplined Six Sigma quality initiative. The full integration of the
EMCO Electronics acquisition into the OPW Fuel Management business was completed
in 2003 and drove an earnings increase in that business unit.

De-Sta-Co Industries increased earnings 23% on a sales increase of 16%.
Continued focus on new product development, internal lean initiatives, and
improvements in channel management provided very positive results. The German
and French operations achieved significant improvement in earnings. The
increased strength in the Industrial Products Group offset weakness in the
electronics and U.S. automotive business segments.

The pump companies, Blackmer and Wilden, experienced a number of
challenges, including a legal settlement and costs incurred to restructure
product lines, in 2003 that impacted earnings, although both companies made
strides to improve their product offering and grow their business on a global
basis. Wilden's non-U.S. sales grew 20% and were enhanced by the opening of a
manufacturing facility in China, which exceeded first year plan results, and
growth in their Argentina operation as that economy began to recover.

23

Blackmer had its strongest year ever in Europe but experienced costs in the U.S.
to rationalize capacity and "right-size" its U.S. operations.

OPW Fluid Transfer Group had a year of solid improvement across all its
business units with earnings increasing 16% on a sales increase of 8%.
Improvements in working capital contributed to a higher return on investment.
Strong results from Midland and Europe were the drivers to better results. The
global footprint for this business was expanded in 2003 with the addition of a
facility in Brazil and finalization of a restructuring in Europe.

C. Lee Cook benefited from right-sizing in 2002, as well as from a number
of management led initiatives to reduce product cost, and expand its service
presence. The business achieved positive earnings leverage of 15% on a modest
sales increase of 4%. As the year 2003 ended, C. Lee Cook experienced
improvements across all of its business units -- both OEM related and service
related. This increase indicates continued investment in natural gas production
and transmission. With demand for natural gas increasing, the Company
anticipates strength in the business going forward.

Texas Hydraulics experienced a challenging year as a result of continued
price pressure and reduced schedules from construction equipment customers.
During 2003, the business made significant investments in new products and new
customer applications/prototypes. As the year of 2003 closed, orders resulting
from new products were strong. The business continues to implement lean concepts
and selective outsourcing to improve its cost structures.

Tulsa Winch was able to grow earnings 6% on a sales increase of 9%. There
was very little consistency across market segments, with difficult conditions in
the large crane and service crane markets being offset by strength in the
petroleum, military, and marine segments. Continued efforts to leverage
strengths across the group are leading to advanced new product offerings that
will be introduced in 2004.

RPA Process Technologies experienced an extremely difficult year in 2003
with declining revenues and a full year loss resulting from depressed capital
spending in the process industry coupled with significant one-time charges to
downsize its operations in France.

Hydro Systems experienced relatively flat sales in its traditional core
U.S. business but was still able to achieve a 4% earnings gain on a 5% sales
increase, primarily as a result of prior investments in new products and Europe.
The European operations more than doubled earnings as a result of some very
successful new product launches. Hydro also invested in the start-up of a new
facility in Brazil, which began operations during the fourth quarter of 2003 and
will provide full year benefits in 2004.

TECHNOLOGIES

Technologies sales increased to $1,231.2 million, a 19% increase over 2002.
As a result of both the restructuring commenced in the fourth quarter of 2002
and increased revenues, earnings increased to $84.8 million, a $115.1 million
improvement from a loss in 2002 of $30.3 million. Included in the loss for 2002
were restructuring, inventory and other charges totaling $35.2 million. The
electronics industry is clearly in a recovery mode with even the telecom sector
showing signs of increased equipment spending. As electronic manufacturing
continues to shift to Asia, almost all of the Technologies companies have
improved their Asian infrastructure in sales and marketing and, at the equipment
companies, in manufacturing.

24

In addition, all of the companies continued their efforts to expand their
product offering in the markets and applications they serve. Military, space,
avionics, medical, automotive and other industrial applications played a greater
role in 2003 than in 2002 in the Technologies businesses.

CIRCUIT BOARD ASSEMBLY AND TEST (CBAT)

Technologies' CBAT businesses reported earnings of $43.7 million for the
year versus a loss of $55.7 million in 2002. The 2002 loss included inventory,
restructuring and other charges of $25.9 million. Sales increased 22% to $731.8
million while bookings increased 24% to $760.9 million. Much of this growth came
from the back-end semiconductor businesses, ECT and Alphasem, whose sales grew
from 16% of CBAT sales in 2002 to over 22% in 2003.

Universal Instruments saw a 17% increase in sales over 2002 and recorded a
profit for the first time since 2000. Universal continues to invest in new
products which were recently exhibited at the November Productronica show in
Germany. Universal will face significant challenges in 2003 transitioning to
these new products, and bringing them to full commercialization in the second
half of 2004.

While sales at Everett Charles Technologies increased 18%, profits
increased dramatically with double-digit margins, after reporting a loss in
2002. The largest increase in sales occurred in the back-end semiconductor test
products. The test handling equipment at MultiTest and the load board and socket
products at ECT reported the largest increase in sales and bookings activity.
This trend is expected to continue into the beginning of 2004.

DEK experienced a 26% increase in sales and reported a profit for 2003. The
weakening dollar impacted DEK's gross margin as much of its manufacturing
remains in the UK, while sales are generally sold in U.S. dollar or U.S. dollar
linked currencies. The 2002 acquisition of Acumen has now been integrated and
has provided increased levels of non-machine recurring revenues.

OK International reported a slight increase in sales of 4% which generated
positive earnings compared to a loss in 2002. Earnings were slightly positive
compared to a loss in prior years. During 2003, OK completely restructured its
domestic operations by consolidating the majority of its manufacturing into a
single plant in southern California.

Vitronics Soltec reported a 39% increase in sales and also had a profit
versus a loss in 2002. Its new products in selective soldering and its "lead
free" solder knowledge leadership helped Vitronics continue to gain market share
against its competitors.

Alphasem reported a 103% increase in sales and positive earnings in 2003,
in contrast to a loss in 2002. Alphasem serves the back end semiconductor
business with die bonding equipment. Under a new President, Alphasem has
restructured the company's management team, its R&D efforts, Asian sales force
and logistics, and established a Chinese manufacturing organization. These
efforts have had a significant impact on the improved financial results of the
Company.

Hover-Davis, acquired in October of 2002, saw sales increase 14% on a year
over year basis. Though financial performance improved over 2002, Hover-Davis
reported a small loss in 2003, as markets served have still not fully recovered.

25

SPECIALTY ELECTRONIC COMPONENTS (SEC)

In Technologies' SEC companies, sales increased 3% over 2002, to $211.6
million. Earnings improved significantly to $7.3 million when compared to a loss
of $12.1 million last year. The 2002 loss included inventory, restructuring and
other charges of $9.9 million. Substantially all of this earnings growth came in
the fourth quarter as the first three quarters were basically flat on a
year-to-year comparison. During 2003, the SEC companies made considerable
efforts to expand their customer base and industries served. Telecom products
were a lesser portion of the overall businesses as military, space, avionics,
medical, automotive and other industrial applications grew as a percent of
sales. Towards the end of 2003, even telecom customers increased their spending
with indications that this trend will continue into 2004.

Vectron (formerly referred to as Quadrant), the largest of the SEC
companies, reported an increase in sales of 5% for the year, but 23% for the
fourth quarter alone. Margins improved to 10% in the fourth quarter. Earnings
for the year improved by $17.4 million from a loss in 2002. Vectron continues to
acquire new customers based on its technology, service and quality.

K&L Microwave spent most of 2003 refocusing its business on military and
industrial markets. As its base station customers consolidated their supply
chains, K&L found much of its planned Asian telecom infrastructure business had
diminished. Accordingly, K&L has exited all Asian manufacturing, leaving in
place a sales and marketing team to respond to appropriate opportunities. This
realignment of its business resulted in a loss for K&L for 2003.

The capacitor companies, Novacap and Dielectric, both reported increased
sales, 17% and 4%, respectively. Operating margins increased to 13% and 9%,
respectively. Both companies continued their efforts at developing
hi-reliability and hi-frequency applications for their customers.

Dow-Key continued to be profitable on flat sales. Dow-Key serves primarily
the military, space and industrial markets, which have not been as volatile as
the telecom industry.

MARKING AND CODING

Imaje, the French-based industrial marking and coding Company, reported
full year sales of $287.9 million, an increase of 24%, and earnings of almost
$60 million, an increase of 21%. Imaje had historically relied on its continuous
ink-jet small character printer and related ink as its primary products. During
the past two years, Imaje, through acquisitions, has acquired "drop on demand"
large character printer and thermal printer technologies. During 2003, products
related to these new capabilities grew to 21% of equipment sales, from 17% in
2002, while at the same time, ink jet unit sales grew 17% year over year.

Imaje has a strong global presence. Sales for 2003, as compared to 2002,
were enhanced by a 20% strengthening of the Euro against the dollar. However,
margins continue to be pressured as the majority of Imaje's product costs are
incurred in Euros while significant amounts of revenues are denominated in U.S.
dollars. Consequently, Imaje is in the process of expanding its production and
delivery platform in both China and North America. These efforts should be
accomplished by mid-2004.

26

CRITICAL ACCOUNTING POLICIES

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

Revenue is recognized and earned when all of the following circumstances
are satisfied, a) persuasive evidence of an arrangement exists, b) price is
fixed or determinable, c) collectibility is reasonably assured and d) delivery
has occurred. In revenue transactions where installation is required, revenue
can be recognized when the installation obligation is not essential to the
functionality of the delivered products. Revenue transactions involving
non-essential installation obligations are those which can generally be
completed in a short period of time, at insignificant cost and the skills
required to complete these installations are not unique to the Company and in
many cases can be provided by third parties or the customers. If the
installation obligation is essential to the functionality of the delivered
product, revenues are deferred until installation is complete. In a limited
number of revenue transactions, other post shipment obligations such as training
and customer acceptance are required and, accordingly, revenues are deferred
until the customer is obligated to pay, or acceptance has been confirmed.
Service revenues are recognized and earned when services are performed and are
not significant to any period presented.

Allowances for doubtful accounts are estimated at the individual operating
companies based on estimates of losses related to customer receivable balances.
Estimates are developed by using standard quantitative measures based on
historical losses, adjusting for current economic conditions and, in some cases,
evaluating specific customer accounts for risk of loss. The establishment of
reserves requires the use of judgment and assumptions regarding the potential
for losses on receivable balances. Though Dover considers these balances
adequate and proper, changes in economic conditions in specific markets in which
the Company operates could have a material effect on reserve balances required.
In times of rapid market decline, such as affected a number of Technologies'
companies in 2001 and 2002, reserve balances needed to be adjusted in response
to these unusual circumstances.

Inventory for the majority of the Company's subsidiaries, including all
international subsidiaries and the Technologies segment, are stated at the lower
of cost, determined on the first-in, first-out (FIFO) basis, or market. Other
domestic inventory is stated at cost, determined on the last-in, first-out
(LIFO) basis, which is less than market value. Under certain market conditions,
estimates and judgments regarding the valuation of inventory are employed by the
Company to properly value inventory. Technologies companies tend to experience
higher levels of inventory value fluctuations, particularly given the relatively
high rate of product obsolescence over relatively short periods of time.

Occasionally, the Company will establish restructuring reserves at an
operation. These reserves, for both severance and exit costs, require the use of
estimates. Though Dover believes that these estimates accurately reflect the
costs of these plans, actual results may be different than the estimated
amounts.

Dover has significant tangible and intangible assets on its balance sheet
that include goodwill and other intangibles related to acquisitions. The
valuation and classification of these assets and the assignment of useful
depreciation and amortization lives involves significant judgments and the use
of estimates. The testing of these intangibles under established accounting
guidelines (including SFAS No. 142) for impairment also requires significant use
of judgment and assumptions, particularly as it relates to the identification of
Reporting Units and the determination of fair market value. Dover's assets and
reporting units are tested and reviewed for impairment on an annual basis during
the fourth quarter or when there is a significant change in circumstances. The
Company believes that its use of estimates and assumptions are reasonable and
comply
27

with generally accepted accounting principles. Changes in business conditions
could potentially require future adjustments to these valuations.

The valuation of Dover's pension and other post-retirement plans requires
the use of assumptions and estimates that are used to develop actuarial
valuations of expenses and assets/liabilities. These assumptions include
discount rates, investment returns, projected salary increases and benefits, and
mortality rates. The actuarial assumptions used in Dover's pension reporting are
reviewed annually and compared with external benchmarks to assure that they
accurately account for Dover's future pension obligations. Changes in
assumptions and future investment returns could potentially have a material
impact on Dover's pension expenses and related funding requirements. Dover's
expected long-term rate of return on plan assets is reviewed annually based on
actual returns and portfolio allocation.

Dover has significant amounts of deferred tax assets that are reviewed for
recoverability and valued accordingly. These assets are evaluated by using
estimates of future taxable income streams and the impact of tax planning
strategies. Reserves are also estimated for ongoing audits regarding federal,
state and international issues that are currently unresolved. The Company
routinely monitors the potential impact of these situations and believes that it
is properly reserved. Valuations related to tax accruals and assets can be
impacted by changes to tax codes and rulings, changes in statutory tax rates and
the Company's future taxable income levels.

Dover has significant accruals and reserves related to its risk management
program. These accruals require the use of estimates and judgment in regards to
risk exposure and ultimate liability. The Company estimates losses under these
programs using actuarial assumptions, Dover experience, and relevant industry
data. Dover considers the current level of accruals and reserves adequate
relative to current market conditions and Company experience.

Dover has established reserves for environmental and legal contingencies at
both the operating company and corporate levels. A significant amount of
judgment and use of estimates is required to quantify Dover's ultimate exposure
in these matters. The valuation of reserves for contingencies is reviewed on a
quarterly basis at the operating and corporate levels to assure that Dover is
properly reserved. Reserve balances are adjusted to account for changes in
circumstances for ongoing issues and the establishment of additional reserves
for emerging issues. While Dover believes that the current level of reserves is
adequate, changes in the future could impact these determinations.

The Company from time to time will discontinue certain operations for
various reasons. Estimates are used to adjust if necessary, the assets and
liabilities of discontinued operations to their estimated fair value less costs
to sell. These estimates include assumptions relating to the proceeds
anticipated as a result of the sale. The adjustments to fair market value of
these operations provide the basis for the gain or loss when sold. Changes in
business conditions or the inability to sell an operation could potentially
require future adjustments to these estimates.

LIQUIDITY AND CAPITAL RESOURCES

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

28

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

Cash flow provided from operating activities during 2003 was $236.5 million
higher than 2002. Increases in cash flows from operations were primarily driven
by increased net earnings of $77.4 million and tax refunds of $151.5 million.

Cash used in investing activities for 2003 rose $269.1 million from the
prior year, reflecting an increase in acquisition activity from the prior year.
The acquisition expenditures for 2003 were $362.1 million compared to $99.7
million in 2002. Acquisitions expenditures during 2003 were primarily related to
the purchase of Warn for $326.0 million. The Company expects that 2004
acquisition activity will be consistent with the 2003 level but will depend
largely upon the availability and pricing of appropriate acquisition candidates.
Capital expenditures were essentially flat at $96.4 million for both 2003 and
2002. Capital expenditures during 2003 and 2002 were funded by internal cash
flow. Capital expenditures for 2004 are expected to increase slightly over 2003
levels.

Cash used in financing activities during 2003 was down $41.8 million
compared to 2002. Dividends paid of $115.5 million was the primary use of the
cash, offset by a net increase in debt of $13.5 million. Cash used in financing
activities during 2002 primarily reflected a net $21.5 million decrease of debt
and dividend payments of $109.4 million. During 2003, Dover repaid approximately
$26.4 million of long-term debt and had $40.0 million of commercial paper
outstanding as of December 31, 2003.

In addition to measuring its cash flow generation and usage based upon the
operating, investing and financing classifications included in the Consolidated
Statement of Cash Flow, the Company also measures free cash flow. Management
believes that free cash flow is an important measure of operating performance
because it provides both management and investors a measurement of cash
generated from operations that is available to fund acquisitions and repay debt.
Dover's free cash flow for 2003 increased significantly as cash generated from
operations improved $236.5 million from 2002. The following table is a
reconciliation of free cash flow with cash flows from operating activities:

The Company's cash and cash equivalents increased 26% during 2003 to $370.4
million at December 31, 2003, compared to $293.8 million at December 31, 2002.

Working capital (calculated as accounts receivable, plus inventory, less
accounts payable) increased from December 31, 2002 by $103.8 million or 10.1% to
$1,024.2 million, primarily driven by increases in receivables of $105.7 million
to $747.6 million and increases in inventory of $65.8 million to $639.3 million,
offset by increases in payables of $67.7 million to $258.9 million. Excluding
the impact of acquisitions on working capital of $58.9 million and changes in
foreign currency of $60.7 million, working capital decreased by $15.8 million or
2% from December 31, 2002. Increases in receivables were driven by acquisitions
of

29

$33.2 million, increases due to foreign currency fluctuations of $56.2 million
and increased sales activity. Inventory balances increases were driven by
acquisitions of $38.5 million, increases due to foreign currency fluctuations of
$32.1 million and decreases due to operational efforts to reduce inventory on
hand. Increases in accounts payable were driven by acquisitions of $12.7
million, foreign currency fluctuations of $27.6 million and a concerted effort
by management to better align the payable cycle with the Company's cash receipts
cycle.

Other assets and deferred charges increased $40.6 million to $208.1 million
at December 31, 2003. Increases were primarily due to increased pre-paid pension
assets resulting from $48.5 million of contributions made during 2003.

At December 31, 2003, the Company's net property, plant, and equipment
amounted to $717.9 million compared with $676.2 million at the end of the
preceding year. The increase in net property, plant and equipment reflected
acquisitions of $64.0 million, capital expenditures of $96.4 million and
increases related to foreign currency fluctuation of $26.5 million, offset by
depreciation.

Goodwill and intangible assets increased $216.8 million and $146.9 million,
respectively. Increases were primarily driven by acquisitions which resulted in
goodwill of $184.9 million and intangible assets of $149.5 million and
fluctuations in foreign currency exchange rates of $68.9 million, offset by
amortization.

The aggregate of current and deferred income tax assets and liabilities
increased from $152.0 million at the beginning of the year to $330.8 million at
year-end. This resulted primarily from the increase in deferrals related to
intangible assets, the federal tax refund of $151.5 million and increase in
taxable income during 2003.

Current accrued expenses increased $66.0 million to $446.8 million at
December 31, 2003. Increases during 2003 related to increased accrued
compensation and employee benefits of $20.7 million, increased insurance
accruals of $19.2 million and increases in other accrued expenses of $26.2
million.

Retained earnings increased from $3,164.6 million at the beginning of 2003
to $3,342.0 million at December 31, 2003. The $177.4 million increase resulted
from 2003 net earnings of $292.9 million, reduced by cash dividends which
aggregated $115.5 million. Stockholders' equity increased from $2,394.8 million
to $2,742.7 million. The $347.9 million increase resulted mainly from the
increase in retained earnings and increased equity adjustments related to
foreign currency translation of $157.9 million.

Dover's consolidated pension benefit obligation increased by $100.9 million
in 2003. The increase was due principally to increases in actuarial losses
related to decreases in the discount rate. In addition, plan assets increased
$76.2 million due to gains on plan investments during the year and contributions
of $48.5 million. During 2003, plan amendments created an increase in the
benefit obligation of $27.0 million. Due to the decrease in the net funded
status of the plans and the amortization of unrecognized losses, it is estimated
that pension expense will increase to approximately $16.1 million in 2004. The
Company anticipates making discretionary contributions to its pension benefit
plans of $15 million to $25 million in 2004.

The Company utilizes the total debt and net debt to total capitalization
calculations to assess its overall financial leverage and believes the
calculations are useful to its stakeholders for the same reasons. The total debt
level of $1,067.6 million as of December 31, 2003 increased $13.5 million from
December 31, 2002 as a result of drawing down approximately $40.0 million of
short-term commercial paper, partially offset by repayment of $26.4 million of
long-term debt. As of December 31, 2003, net debt of $696.2 million represented
20.2% of total capital, a decrease of 3.9 percentage points from December 31,
2002. During 2003, Dover borrowed $175 million in commercial paper to fund the
acquisition of Warn, which was then paid down in the same period with tax
refunds of approximately $151.5 million.

30

The following table reconciles net debt and net debt to total
capitalization:

The Company has access to $600 million of bank credit facilities. The
arrangements include a $300 million 364-day Credit Agreement (dated October
2003, which replaced the prior 364-day credit agreement dated October 2002) and
a $300 million 3-year credit agreement (dated October 2002). The new 364-day
facility bears interest at Libor plus .23% and the 3-year facility bears
interest at LIBOR plus .21%. The key financial covenant of these facilities
requires the Company to maintain an interest coverage ratio of EBITDA to net
interest expense of not less than 3.5 to 1. The Company has been in compliance
with the covenant and the ratio was 9.4 to 1 as of December 31, 2003 and 7.8 to
1 as of December 31, 2002. These credit facilities were unused during 2003 and
2002. The Company intends to replace both the $300 million 3-year and 364-day
facilities on or before their expiration dates of October 2005 and 2004,
respectively. The Company established a Canadian Credit Facility in November of
2002. Under the terms of this Credit Agreement, the Company has a Canadian (CAD)
$30 million bank credit availability and has the option to borrow in either
Canadian Dollars or U.S. Dollars. At December 31, 2003 and 2002, the outstanding
borrowings under this facility were approximately $16 million in U.S. dollars.
The covenants and interest rates under this facility match those of the primary
$600 million Revolving Credit Facilities. The Canadian Credit Facility was
renewed for an additional year prior to its expiration date of November 25, 2003
and now expires on November 25, 2004. The Company intends to replace the
Canadian Credit Facility on or before its expiration date. The primary purpose
of these agreements is to act as an alternative for short-term financing in the
event of a disruption in the commercial paper market which the Company normally
accesses for its short-term borrowing needs.

The Company may, from time to time, enter into interest rate swap
agreements to manage its exposure to interest rate changes. Interest rate swaps
are agreements to exchange fixed and variable rate payments based on the
notional principal amounts. As of December 31, 2003, the Company has three
interest rate swap agreements terminating on June 1, 2008 with a total notional
amount of $150 million to exchange fixed rate interest for variable. All three
swaps were designated as fair value hedges of the $150 million 6.25% Notes, due
June 1, 2008, and the interest payments or receipts from these agreements,
during 2003, were recorded as adjustments to interest expense. There was no
hedge ineffectiveness as of December 31, 2003 and the aggregate fair value
interest rate swaps determined through market quotation of $1.7 million was
reported in other assets and long-term debt. Subsequent to December 31, 2003,
one interest rate swap with a notional amount of $50.0 million was terminated
with no material impact to the Company.

During 2002, Dover settled two interest rate swaps, which resulted in net
gains of $8.4 million. These gains were deferred and are being amortized over
the balance of the term of the debt, permanently reducing the effective interest
rate of the $250 million Notes, due November 15, 2005 from 6.5% to 5.3%.

Dover's long-term debt instruments with a book value of $1,003.9 million on
December 31, 2003 had a fair value of approximately $1,103.0 million. For the
year ending December 31, 2002, the Company's long-term debt instruments
approximated their fair value.

Management is not aware of any potential impairment to the Company's
liquidity, and the Company was in compliance with all its long-term debt
covenants. It is anticipated that in 2004 any funding requirements

31

above cash generated from operations will be met through the issuance of
commercial paper or, depending upon market conditions, through the issuance of
long-term debt or some combination of the two.

The Company's credit ratings are as follows for the years ended December
31:

A summary of the Company's long-term debt maturities and rental commitments
as of December 31, 2003 is as follows:

The Company believes that existing sources of liquidity are adequate to
meet anticipated funding needs at comparable risk-based interest rates for the
foreseeable future. Acquisition spending would increase company debt but
management anticipates that the debt to capital ratio will remain generally
consistent with historical levels. Operating cash flow and access to capital
markets are expected to satisfy the Company's various cash flow requirements,
including acquisition spending and pension funding as needed.

NEW ACCOUNTING STANDARDS

In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities", which is effective for exit and
disposal activities initiated after December 31, 2002. The standard replaces
EITF Issue 94-3 and requires companies to recognize costs associated with exit
or disposal activities when they are incurred, as defined in SFAS No. 146,
rather than at the date of a commitment to an exit or disposal plan. The
provisions of SFAS 146 are to be applied prospectively. The effect of the
adoption of SFAS No. 146 was immaterial to the Company's consolidated results of
operations and financial position.

In November of 2002, the FASB issued FASB Interpretation No. 45 (FIN 45),
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others, an interpretation of FASB
Statements No. 5, 57 and 107 and Rescission of FASB Interpretation No. 34." FIN
45 clarifies the requirements of FASB Statement No. 5, "Accounting for
Contingencies", relating to the guarantor's accounting for, and disclosure of,
the issuance of certain types of guarantees. The disclosure requirements of FIN
45 are effective for financial statements of interim or annual periods that end
after December 15, 2002 and have been incorporated into the footnotes. The
provisions for initial recognition and measurement are effective on a
prospective basis for guarantees that are issued or modified after December 31,
2002, irrespective of the guarantor's year-end. FIN 45 requires that upon
issuance of a guarantee, the entity must recognize a liability for the fair
value of the obligation it assumes under that guarantee. The effect of the
adoption of FIN 45 was immaterial to the Company's consolidated results of
operations and financial position. The Company has also adopted the disclosure
requirements of FIN 45.

In December of 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation-Transition and Disclosure -- an amendment of SFAS 123"
which is effective for fiscal years ending after December 15, 2002 regarding
certain disclosure requirements which have been incorporated into the footnotes.
This Statement amends FASB Statement No. 123, "Accounting for Stock-Based
Compensation", to provide alternative methods of transition for an entity that
voluntarily changes to the fair value based method of accounting for stock-based
employee compensation. It also amends the disclosure provisions of that
Statement to require prominent disclosure about the effects on reported net
income of an entity's accounting

32

policy decisions with respect to stock-based employee compensation. Finally,
this Statement amends APB Opinion No. 28, "Interim Financial Reporting", to
require disclosure about those effects in interim financial information. The
effect of the adoption of SFAS No. 148 had no impact to the Company's
consolidated results of operations or financial position.

In January 2003, FASB Interpretation No. 46 (FIN 46), "Consolidation of
Variable Interest Entities" was issued. FIN 46 provides guidance on
consolidating variable interest entities and applies immediately to variable
interests created after January 31, 2003. In December 2003, the Financial
Accounting Standards Board revised and superseded FIN 46 with the issuance of
FIN 46R in order to address certain implementation issues which will be adopted
the first reporting period ending after March 15, 2004. The interpretation
requires variable interest entities to be consolidated if the equity investment
at risk is not sufficient to permit an entity to finance its activities without
support from other parties or the equity investors lack certain specified
characteristics. The effect of the adoption of FIN 46 was immaterial to the
Company's consolidated results of operations and financial position.

In May 2003 the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity". SFAS No. 150
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. SFAS
No. 150 applies specifically to a number of financial instruments that companies
have historically presented within their financial statements either as equity
or between the liabilities section and the equity section, rather than as
liabilities. SFAS No. 150 is effective for financial instruments entered into or
modified after May 31, 2003, and otherwise is effective at the beginning of the
first interim period beginning after June 15, 2003. The effect of the adoption
of SFAS No. 150 was immaterial to the Company's consolidated results of
operations and financial position.

In December 2003, the Securities and Exchange Commission issues Staff
Accounting Bulletin No. 104 (SAB 104), Revenue Recognition. SAB 104 supersedes
SAB 101, Revenue Recognition in Financial Statements to include the guidance
from Emerging Issues Task Force EITF 00-21 "Accounting for Revenue Arrangements
with Multiple Deliverables." The adoption of SAB 104 did not have a material
effect on the Company's consolidated results of operations or financial
position.

In December 2003, the FASB published a revision to SFAS No. 132 "Employers'
Disclosure about Pensions and Other Postretirement Benefits an amendment of FASB
Statements No. 87, 88, and 106". SFAS No. 132R requires additional disclosures
to those in the original SFAS No. 132 about the assets, obligations, cash flows,
and net periodic benefit cost of defined benefit pension plans and other defined
benefit postretirement plans. The provisions of SFAS No. 132 remain in effect
until the provisions of SFAS No. 132R are adopted. SFAS No. 132R is effective
for financial statements with fiscal years ending after December 15, 2003. The
adoption of SFAS No. 132R did not have a material impact on the Company's
consolidated results of operations or financial position.

2002 COMPARED WITH 2001

SUMMARY

Dover had net earnings from continuing operations for 2002 of $207.8
million or $1.02 diluted earnings per share (DEPS) compared to $178.2 million or
$.87 DEPS from continuing operations in 2001. Earnings from continuing
operations (net of tax) included inventory, restructuring and other charges of
$25.3 million or $.12 DEPS in 2002 and $52.6 million or $.26 DEPS in 2001. For
2002, net earnings before changes in accounting principles were $171.8 million
or $.84 DEPS, including $36.1 million or $.18 DEPS in losses from discontinued
operations, compared to $248.5 million or $1.22 DEPS in 2001 which included
$70.3 million or $.34 DEPS in earnings from discontinued operations which was
primarily the result of gains from the sale of AC Compressor and DovaTech
businesses.

For 2002, the net loss was $121.3 million or $.60 DEPS compared to earnings
of $248.5 million or $1.22 DEPS in 2001. 2002 results include the impact of the
adoption of Statement of Financial Accounting Standards No. 142, Goodwill and
Other Intangible Assets (SFAS 142). The adoption resulted in a goodwill

33

impairment charge of $345.1 million ($293.0 million net of tax or $1.44 DEPS)
which was recognized as the cumulative effect of a change in accounting
principle in the first quarter of 2002. The adoption of SFAS 142 also included
the discontinuance of the amortization of goodwill, effective January 1, 2002.
Goodwill amortization, adjusted for discontinued operations, totaled $42.2
million net of tax or $.21 DEPS for 2001.

Sales for 2002 were $4,053.6 million compared to $4,223.2 million last
year, a decrease of 4%. Gross profit of $1,330.9 million for the year 2002 was
down 2% compared to the 2001 amount of $1,353.5 million. This decline was
primarily due to the impact on Dover Technologies of the market contraction in
demand for its products serving the electronics industry. At the same time, many
of the industrial businesses in the other three operating segments were
negatively impacted by the slowdown in general economic activity. However, the
gross profit margin of 33% for 2002 compared favorably to 32% in 2001. Operating
profit of $334.7 million improved 7% compared to $313.9 million in 2001. As a
percentage of sales, operating profit in 2002 was 8% compared to 7% in 2001.
Comparisons to 2001 benefited from the discontinuation of goodwill amortization
in accordance with SFAS 142.

Segment earnings of $359.0 million improved 1% from $354.9 million in 2001.
Diversified's earnings of $127.5 million improved 44% compared to 2001 on a 10%
sales increase to $1,115.8 million. In the Industries segment earnings increased
3% to $137.6 million on a 2% sales decline to $1,034.7 million. Resources'
earnings declined 2% to $124.4 million on an 8% sales decrease to $872.9
million. In the Technologies segment a loss for 2002 of $30.3 million compared
to 2001 earnings of $5.6 million, and reflected a 13% sales decline to $1,036.5
million. For 2002, Diversified had margins of 11%, up two points and Industries
produced margins of 13%, which remained unchanged from 2001. Resources' margins
improved one percentage point to 14%. Technologies' negative margins of 3%
compared to break-even margins in 2001.

Dover's tax rate for continuing operations was 21.1% for 2002 and 29.5% in
2001. The lower effective tax rate in 2002 was attributable to three factors.
First, the Company continued to benefit from tax credit programs such as those
for Research and Development and foreign taxes. Second, the Company also
continued to benefit from tax incentive programs relating to export sales.
Third, the Company implemented a reorganization of various entities which
permitted the Company to identify and recognize tax benefits related to adverse
market conditions and the Company's adoption of SFAS No. 142.

Interest expense of $69.9 million for the year ended 2002 was down 23%
compared to 2001 primarily due to lower levels of commercial paper borrowings
throughout 2002. Interest income declined in 2002 compared to 2001, which
included $5.0 million related to a U.S. Federal tax settlement.

All other net income or expense declined $20.8 million for 2002 compared to
the prior year total, which included an insurance recovery of $6.4 million in
the Diversified segment. Foreign exchange losses of $6.0 million for 2002
compared to gains of $1.7 million in 2001. 2002 losses were due to unfavorable
exchange rate movements primarily involving the Euro.

DIVERSIFIED

Diversified's earnings increased 44% in 2002 to $127.5 million on a 10%
sales increase to $1,115.8 million. Implementation of lean initiatives,
operational improvements, and cost reduction efforts helped the earnings
increase, as well the absence of $18.1 million in restructuring, inventory, and
other charges taken in 2001. The impact of goodwill amortization on earnings for
the full year 2001 was $14.4 million. Segment profit margins improved to 11%
from 9%. A significant turnaround at Crenlo, strong earnings growth at Hill
Phoenix, and PMI gains accounted for a large portion of the earnings
improvement, which were somewhat offset by declines at SWF, L&E, Tranter, Mark
Andy, Waukesha, and Sargent.

Hill Phoenix's financial performance improved significantly in 2002,
setting new records in sales, earnings, and cash flow, leading Diversified in
each of these three categories. This was accomplished through ongoing market
share gain in recent years and benefiting from their largest customer's
continuing expansion programs. Market share improved to 18% in 2002 from 14% in
2001. This growth was the result of being well positioned with the fastest
growing customers as well as securing new key accounts. Aggressive cost
reduction

34

initiatives at the Refrigeration Division were a major contributor to the
company's margin improvement in 2002.

Sargent's 2002 earnings were down consistent with an increase in sales
volume. The weakened commercial aircraft market negatively impacted the
company's core business, offset somewhat by the Marine Division's record
earnings year fueled by an active military market. Margins fell in 2002 due
largely to a shift in product mix and lower volume. The Sonic business was
depressed by airline losses and a 28% reduction in production at their largest
customer.

Performance Motorsports (PMI) achieved their sixth consecutive record year
in sales and earnings. This accomplishment was made in spite of a weak fourth
quarter, as their usual pickup in advance of the 2002 racing season did not
occur. Also, the last few years of mild winters in the Midwest hurt their
seasonal sales of pistons to the snowmobile market. Investments were made in the
U.K. in both a European sales office and a new Technology Center to promote and
market their products in this key region of the racing world. Successful
integration of past acquisitions has positioned Performance Motorsports well in
the market, increasing product offerings and strengthening their distribution
channels. In late December 2002, PMI acquired Chambon S.A. of St. Etienne,
France, a manufacturer of premium crankshafts for the Formula 1 market. The
addition of Chambon gives Performance Motorsports the ability to offer a
complete rotating assembly to the engine market.

Tranter ended 2002 with a weak fourth quarter that left earnings and
margins below 2001, despite a record sales and bookings year. Tranter is highly
dependent on industrial capital spending, which remained weak in 2002. After
years of stable margins, 2002 and 2001 have seen significant margin erosion. A
soft U.S. and European economy reduced total orders in the marketplace, and led
to stronger price competition for the orders that were available. Tranter's
three business units, SWEP, Tranter Radiator, and Tranter PHE, were reported as
independent operating companies of Diversified in 2002.

Belvac ended 2002 on a positive trend resulting in their highest annual
bookings in five years. As the only independent global supplier of can forming
equipment, Belvac's recent success has been in the international market,
especially Russia and Eastern Europe, where can manufacturing and consumer
demand is growing. A significant part of their business includes spares and
retrofits that improve the productivity of their customers' equipment. Belvac is
well known for their proprietary technology, which provides them with a strong
position in the market. Further investment and advancement in their plastic
container equipment is beginning to complement their can forming business, and
is opening up new opportunities for growth.

Waukesha Bearings' earnings decline of 10% was caused by the collapse of
the power generation market for large bearing products. Backlog at year-end 2002
was significantly down due to low bookings and cancelled orders throughout the
year from key customers. Waukesha's two other divisions, Hydratight Sweeney and
Central Research Labs, both had modest sales and earnings increases as their
markets, oil/gas and nuclear waste cleanup, remained fairly stable throughout
2002. In response to the bearing market decline, the Bearings division shutdown
one small facility in the U.K. and consolidated their large bearing production
into one plant in the U.S., resulting in a 25% headcount reduction.

Mark Andy's printing equipment market continued to be weak for most of 2002
and operational earnings decreased. Sales were higher than 2001 due mainly to
having a full year's impact of the March 2001 acquisition of Comco. Improved
integration of the Comco product line was a focus in 2002, as a new sales
organization was introduced and was successful in gaining orders late in the
year. The printing market improved slightly in late 2002, allowing bookings and
backlog for label presses in the U.S. to improve in the fourth quarter. After
three years of declining sales and earnings, new management and improved
processes/products at Van Dam in the Netherlands resulted in increased earnings
in 2002. The Graphics Microsystems (GMI) division secured preferred partner
status with a large press supplier in 2002, as well having their products
selected as the standard platform for the future by two of the world's largest
printing companies. The Mark Andy structure changed in 2002 as Graphics
Microsystems was reported as a separate Diversified operating company.

35

Crenlo achieved a significant earnings improvement in 2002, turning sizable
2001 losses into a modest profit. The focus at Crenlo in 2002 was a return to
profitability through lean manufacturing initiatives, resulting in reduced
headcount and improvements in productivity and first pass yield. Cost reduction
efforts in the material acquisition area, including value-engineering efforts,
resulted in savings of over $2 million. Additionally, the inventory reserves
taken in 2001 were not repeated in 2002. These cost saving programs fueled the
significant earnings improvement with little additional sales volume.

SWF had a disappointing 2002 as restructuring costs related to plant
consolidations and product rationalization were incurred, in addition to high
warranty expense to correct a number of large equipment projects. The weak
packaging machinery market continued throughout 2002, and sales for SWF
decreased when compared to 2001. Improved project selection and pricing
strategies were implemented to focus on their core business where acceptable
profit margins could be attained.

L&E reported a small loss for 2002 on a 12% decline in sales. The largest
volume decrease was in the Automotive division where a poor European economy and
intense competitive pricing caused negative results. Their focus is on cost
control, reduced headcount, and expanded outsourcing of project work to lower
cost countries. A new entity was created in China in 2002 to develop
opportunities for both outsourcing and new business in this growing market.

INDUSTRIES

Industries sales declined 2% to $1,034.7 million, as market weakness seen
in 2001 continued in 2002. Heil Environmental, Heil Trailer, Chief and PDQ
experienced the largest sales declines. Earnings of $137.5 million were 3% above
2001 levels, were impacted by restructuring charges of $3.7 million related to
plant closings and the exiting of certain product lines. Segment margins
improved slightly to 13%. The impact of goodwill amortization on earnings for
the full year in 2001 was $14.6 million.

Heil Environmental's performance declined in 2002 as a soft market,
reductions in municipal budgets for refuse collection vehicles, and new engine
emission regulations combined to curtail sales. A majority of municipalities
redirected funds initially targeted for refuse collection equipment to support
security and emergency response infrastructure. In addition, many private,
municipal and large retail haulers postponed chassis purchases due to concerns
regarding the performance of new engines mandated by the new emission
regulations. Countering these negative trends, Environmental introduced a number
of new products to address customer needs and downsized their workforce given
the lower volumes. A management change was also initiated as a new President was
named who had previously been in charge of Rotary Lift.

Rotary Lift, one of Industries largest sales and earnings contributors,
again delivered improved sales and earnings. Helped by zero percent financing
driving car sales, Rotary capitalized on its ability to provide innovative
solutions and nationwide service, and grew its car program business over 20%.
Faced with a stagnant market and increasing competition from low-cost Asian
competitors, Rotary was once again able to grow market share. Rotary's focus on
cost reduction allowed it to hold margins in a tough pricing environment.
Additionally, its focus on providing productivity based solutions, as evidenced
by their Inbay(TM) product, has insulated them to some degree from the pricing
pressures seen at the commodity end of the business.

Heil Trailer's 2002 sales and earnings declined for the third consecutive
year. The domestic bulk trailer industry remained slow for the entire year
impacted by the slowest petroleum trailer market in the past 7 years. In
addition, military sales were negatively impacted by delays in government
testing. Trailer once again managed to increase share in both the petroleum and
dry bulk trailer markets in the face of intense competitive pressures, driven by
over capacity and a slow market. A strong focus on global markets resulted in
Trailer's international businesses contributing almost one quarter of their
profits in 2002.

Tipper Tie rebounded somewhat from a weak 2001, driven by a strong
performance by their overseas subsidiary. Technopack, along with Alpina, a
recent European acquisition, enjoyed a record year with sales of equipment,
clips and loops all at record levels. This performance improvement was primarily
driven by Eastern European demand. Tipper U.S. had a more difficult year as
sales of equipment and clips slipped. Late in 2002, Tipper decided to eliminate
a small product line, which negatively impacted profits in 2002.

36

Marathon entered 2002 facing a depressed waste management market which
continued to slide throughout 2002 and was down 33% over the last two years.
However, Marathon was able to grow market share and increase both sales and
earnings while maintaining margins at above historical levels. Leveraging its
broad product line enabled them to add new customers and gain additional
business, even with an industry that saw an increase in internet auctions and
severe pricing pressure. This was made possible through Marathon's strong
engineering focus, which they have parlayed to develop customer-friendly
products to meet the individual needs of waste haulage and chain store accounts.

Triton improved significantly versus a weak 2001. Although the U.S. market
was relatively flat, Triton's share improved behind the successful introduction
of their "9100" product, a product focused on the broadest segment of the cash
dispenser market. This product contributed more than 50% of unit sales since its
mid-year introduction. New products introduced into the other segments of the
market also contributed. Triton's results internationally were also positive,
lead by strong results in the U.K. Overall margins rebounded to 2000 levels
behind increased sales and a reduced cost structure.

With the vehicle wash equipment market softening significantly, PDQ saw
both investors and corporate oil companies reduce their purchases in 2002. Oil
company consolidation took its toll on sales, while the investor market was hurt
by a difficulty in obtaining financing. As a result, for the first time since
they were purchased by Dover in 1998, PDQ had a down year. Sales and earnings
saw declines versus a record 2002, although they were flat compared to 2001.
However, PDQ was still able to grow share. In addition, new products along with
the implementation of "lean manufacturing" initiatives allowed PDQ to hold
margins as well.

The DI Foodservice Companies, which include Groen, Randell and Avtec,
finished 2002 with flat sales and earnings. Declining tax receipts in most
states and municipalities led to a slowdown in Groen's institutional foodservice
equipment market while Randell's markets were impacted by cutbacks in new
foodservice chain start-ups. The newly identified DI Foodservice team is
assessing various consolidation and synergy prospects. A change in the way they
go to market put in place toward the latter part of 2002.

Kurz-Kasch, which was acquired in 2001, and whose primary products include
electromagnetic stators and specialty plastics, saw margins decline (versus
record levels in 2001) on relatively flat sales. Increased quality and
engineering specifications imposed by customers, along with a weak market,
contributed to the margin deterioration.

Chief had a disappointing year in 2002 as both sales and earnings were down
significantly. Softness in the economy coupled with changing insurance industry
trends negatively impacted buying decisions. A combination of more cars being
"totaled" and customers foregoing repairs to avoid higher insurance premiums has
hurt the industry. Recognizing this market shift, Chief underwent a number of
strategic changes to better serve its markets going forward. These include
consolidating domestic channels of distribution, adding an inside sales support
function, streamlining product offerings, and revising current approaches to
installation, training, and service. Costs associated with these initiatives had
a major impact on 2002 performance.

Somero's performance suffered from the third year of double-digit market
declines with non-residential building down 17% and industrial construction off
45%. As a result, sales of their primary product, large laser screeds, were down
significantly. They successfully introduced the "CopperHead" in 2002, a new
product that primarily serves the upper deck and smaller floor concrete
screeding markets.

Dovatech, which consists of laser and chiller businesses, experienced
difficult market conditions leading to double-digit sales declines.

RESOURCES

Resources 2002 sales declined 8% primarily driven by declines in the oil
and gas production markets served by the Energy Products Group and C. Lee Cook.
Capital spending weakened in most markets and distributors reduced inventories.
Earnings decreased 2% to $124.4 million. Full year results for 2001 included
$7.1 million of inventory, restructuring and other charges. No comparable
charges were recorded in 2002. Positive operating leverage (increased margins on
flat to down sales) at most companies resulted from cost
37

reduction in operating expense and implementation of lean manufacturing
programs. The impact of goodwill amortization on earnings for the full year in
2001 was $10.3 million. Operating margins were 14%, up from 13% in 2001.

The market for the Energy Products Group was weak during 2002. Sales were
down approximately 19% and earnings were off over 30%. Commodity prices remained
high but drilling activity was down significantly as capital spending by oil
companies was reduced. The core products of Norris and Alberta Oil Tool (AOT)
saw a decline in international sucker rod sales but AOT drive rod sales remained
strong. Continued penetration in the sucker rod guide and premium coupling
markets should enhance future results as oilfield activity levels increase.
Ferguson Beauregard's plunger lift and automation products were off from the
prior year. Norriseal's 2002 sales and earnings were also below 2001 with an
unfavorable product mix. Quartzdyne had record sales in 2002, as they gained new
customers and increased their applications into the measurement while drilling
market. Investments were made to vertically integrate their manufacturing
processes.

OPW Fueling Components maintained sales in 2002 equal to prior year,
primarily as a result of two product line acquisitions made early in the year.
Overall, earnings were below 2001 levels even though overhead structures were
reduced. Sales and earnings increases were achieved in every market outside the
U.S. with extremely strong growth in Latin America and Asia Pacific. These
increases were not enough to offset the declines caused by reduction in new
service station construction in the U.S. markets. Industry consolidation at
manufacturers, customers, and distributors accelerated in 2002. The
consolidations at major oil companies and financial failure at several major
convenience store chains provided an opportunity for customers to buy stations
at reduced prices versus building new stations. Brevetti-Nettuno, an Italian
manufacturer of LPG nozzles, was acquired to broaden product offerings for
alternative fuels. The acquisition of the Emco Electronics product line by Petro
Vend has moved OPW into a much stronger market position in electronic tank
gauging. These units were fully integrated in 2002 and now position Petro Vend
to be a much stronger global player in this expanding market.

De-Sta-Co Industries leveraged 9% earnings growth on flat sales due to full
year results of on-going cost reduction initiatives. The automation products
demand grew in support of new vehicle model introductions in the automotive
market. Industrial market clamps sales were slowly improving as customers
implemented new tooling programs to reduce set-up costs. Electronic market sales
remained severely depressed. De-Sta-Co Industries expanded their Asian
operations and have cost effective facilities operating on all major continents.

The industrial pump companies (Blackmer and Wilden) recorded a 3% sales
increase and a 19% earnings increase driven by a favorable product mix,
innovative new products and operational improvements resulting from lean
manufacturing initiatives. Blackmer gains were driven by increased sales at
government accounts, System One sales, and improved performance in Europe.
Blackmer continues to implement lean manufacturing initiatives and consolidated
its Oklahoma City compressor operations into its System One facility in
Massachusetts. Wilden Pump benefited from improved sales of its new food line
and plastic bolted series pumps. Wilden domestic sales were flat but
international sales to the Far East were up significantly. During 2002, Wilden
began to establish a wholly owned foreign entity in China to strengthen their
presence in that region.

OPW Fluid Transfer Group improved earnings on reduced sales in 2002 as cost
reduction initiatives implemented in 2001 produced positive results and improved
margins. The depressed bulk cargo tank and railcar markets hampered U.S. growth
but European sales set a new record. Although chemical processing markets were
down, renewed emphasis was placed on new products to existing customers.

C. Lee Cook sales and earnings were off significantly as demand from gas
compressor OEM's and aftermarket requirements slowed. Service work on existing
field products maintained levels similar with 2001. A new service center for the
West Coast was opened and manufacturing expansions were completed that will
support future growth. The Manley valve business had operating results equal to
2001 on slightly reduced sales volume. The longer-term outlook for Cook products
continued to be very favorable as gas production and processing activity
increased.

38

The Tulsa Winch Group was challenged in 2002 by significant declines in
construction equipment markets, aerial lift markets, and a slow petroleum
market. Strong cost reduction efforts maintained solid operating margins and
positioned the company to benefit as market conditions improved. The military
winch business remained strong and was driven by long-term contracts. The crane
overload protection products are targeting new applications in the higher
volume, smaller capacity mobile crane market.

RPA Process Technologies (RPA) experienced significant delays in capital
spending from its customer base in 2002. Sales and earnings were both off
significantly with its European unit only contributing with major project
shipments in the fourth quarter. RPA implemented significant process
improvements during the year.

Hydro Systems posted record earnings on slightly reduced sales led by
improved earnings at Nova Controls and continued expansion in European markets.
The industrial cleaning market served by Hydro was slightly depressed in 2002
due to slower hotel and restaurant business.

De-Sta-Co Manufacturing had flat sales and earnings with continued pricing
pressure from their automotive customer base. Sales slowed during the fourth
quarter in their automotive market as well as in their Hydro Cam tool and die
business. De-Sta-Co Manufacturing continued to work on new product initiatives
to broaden its exposure to new markets.

Duncan Industries had flat sales and earnings increases, and positioned
itself for an upturn by reducing costs internally and through improvement in
quality and cost reduction initiatives with outside suppliers.

Wittemann was sold in the first quarter of 2002 at a very modest loss.

TECHNOLOGIES

Technologies sales decreased 13% from 2001 levels to $1,036.5 million. As a
result, Technologies reported a loss of $30.3 million as compared to earnings of
$5.6 million for 2001. The impact of goodwill amortization on earnings for the
full year 2001 was $12.1 million. Included in the losses for 2002 and 2001 were
$35.2 million and $43.3 million of charges, respectively, for restructuring,
inventory reserves and other charges. The strengthening of, and the increased
focus on, the medical, automotive and military markets were not enough to offset
the continued major softness in the computer and industrial electronics market
segments. Although, it appeared that a recovery was beginning to take place in
the spring of 2002, it became clear that this was not sustainable for the
remainder of 2002. Accordingly, the companies serving the communications,
computer and industrial electronics industries began to resize their companies
for profitability at the sales levels they were experiencing during the second
half of the year. By the end of the first quarter 2002, the Circuit Board
Assembly and Test (CBAT) businesses and the Specialty Electronics Components
(SEC) businesses reduced their workforces by 15% and 13%, respectively, from the
beginning of 2002. In addition, where warranted, the companies reduced their
capacity needs to adapt to the current market opportunities.

The most significant change at substantially all of the CBAT and SEC
companies was the geographic shift in their markets. The year marked the
continued shift to Asia (with an emphasis on China) for Electronic Manufacturing
Services (EMS) companies, and China was the strongest of the telecommunications
equipment markets. By the end of 2002, substantially all of the CBAT companies
were manufacturing in China either at their own facility or through
subcontractors. Where the strengths of the markets warrant, the SEC companies
will have Asian based sales offices and in certain cases manufacturing
facilities. While the American markets reflected stronger automotive, medical
and military opportunities, the Asian, and in particular China, markets offered
the best opportunity for telecommunication equipment and electronic assembly
growth in the near term.

CBAT

Technologies CBAT businesses recorded a loss of $55.7 million in the year
2002 which included inventory, restructuring and other charges of $25.9 million
compared to a loss of $52.8 million in 2001 which

39

included inventory, restructuring and other charges of $33.3 million. Sales for
2002 were $598.6 million, a decrease of 7% from full year 2001 results.

Universal Instruments experienced a decline in sales of 15% from 2001, and
recorded a slightly smaller loss than in 2001. In the third quarter of 2002,
Universal undertook an aggressive reorganization, including significant
reductions in staff, redefining its sales channels by current market
opportunities, tailoring specific products for high volume automotive
manufacturing, and opening a 100,000 square foot plant in China (which commenced
operation in February 2002). During 2002, the actions Universal took resulted in
its ability to maintain and actually increase its market share. Universal
continued to invest in significant product development to address future circuit
board and component placement needs.

Everett Charles Technologies' sales increased slightly as its acquisition
of MultiTest was held for all of 2002 versus only seven months of 2001. The
North American test market remained very weak while customer new product
introductions (NPI) were also slow. ECT's probe and fixture business depend to a
large degree on customer NPI. ECT's two German bare board test equipment
companies maintained their sales levels and increased their profitability. The
back-end semiconductor test market showed some strengthening in the second half
of 2002, up significantly from the second half of 2001.

DEK, though seeing a similar decrease in sales of 14% over 2001, still
maintained a market leadership position. It acquired Acumen, a manufacturer of
stencils in North America and Asia, giving DEK a global presence in an
increasingly important segment of the process consumables and tooling business.
DEK has expanded its capabilities to serve the semiconductor industry and is
manufacturing some of its product line in China.

OK International saw a smaller decline in sales for 2002 compared to 2001
and reported a loss. OK depends to a large part on the overall electronics
manufacturing industry and its results reflected the softness in that market.

Vitronics Soltec was able to maintain its sales at the 2001 level with the
release of a Selective Soldering product line, improving their competitive
position.

Alphasem reported a strong gain in sales of 16% despite the overall decline
in the semiconductor industry. Alphasem manufactures die-bonding equipment for
the back end of the semiconductor industry. Despite its improved sales efforts,
Alphasem still reflected a loss in 2002 which was 9% better than the loss in
2001 as Alphasem tried to meet the demands of new product innovation.

Dover Technologies acquired Hover-Davis in the fourth quarter of 2002.
Hover-Davis is the largest independent manufacturer of component feeding, direct
die feeding and label printing devices for the circuit board assembly market. It
sells its products directly to both OEM (including Universal Instruments) and
end users of placement equipment. Since it was acquired in the fourth quarter,
it did not have a significant impact on reported sales or earnings.

Since the beginning of 2001, all of the CBAT companies have reduced their
operating costs significantly and are finding less expensive sources for their
materials or manufacturing locations. Their product development is on track for
addressing their customers' needs.

SEC

In Technologies' SEC companies, sales for 2002 were $205.6 million compared
to $341.6 million in 2001, a decrease of 40%. SEC reported a loss of $12.1
million in 2002 which included inventory, restructuring and other charges of
$9.9 million compared to earnings of $45.6 million in 2001 which included
restructuring and other charges of $10.2 million.

The SEC companies produce highly specialized, often custom designed,
high-end components used in a wide variety of electronic devices. During 2002,
all of the SEC companies began to shift their focus from predominantly serving
the wired and wireless telecommunications industry, to high-reliability medical,
space, avionics and military applications. Though there was a greater mix of
industries served at the end of 2002, the largest customer base still remained
in the telecommunications market. Much of the excess industry inventory
40

built up during 2000 and early 2001 was depleted in 2002. However, the telecom
and datacom service providers remained very cautious in their capital equipment
spending as their business models were changing and new Federal
telecommunications regulations were being developed. Although it is starting to
become apparent that the imbedded communications infrastructure systems and
equipment are showing the stresses of increased capacity and lack of investment
over the past 24 months, it will be necessary for the anticipated Federal
regulations to evolve and a rationalization of the business model of these
telecom service providers to occur before growth in capital spending will
resume. The timing of this impact is unknown.

Vectron's (formerly referred to as Quadrant) sales decreased significantly
resulting in an operating loss for 2002. Vectron, under a new President, began a
major restructuring early in the year to consolidate facilities, reorganize the
company structure to better address the changes in its customer base and product
needs, and to right size its workforce. It also has focused on the Asian market
and in growing its high reliability space and military positions.

K&L Microwave saw a significant decrease in sales but was able to maintain
a slight profit. It was hard hit by the telecommunication downturn as it serves
the base station deployment customers. K&L has opened a facility in Nanjing,
China to provide telecommunication infrastructure products to the growing
Chinese and Asian markets. Dow-Key Microwave improved its earnings on relatively
flat sales. Dow-Key had a strong military and space program that continued to
see funding for product deployment.

The capacitor companies, Novacap and Dielectric, saw continued decreases in
their sales, as they both serve the telecommunications industries. However,
their specialty products have avionics, military and medical applications which
were showing growth. Novacap and Dielectric reported small losses mostly
attributable to write-off of excess equipment.

MARKING AND CODING

Imaje, the French-based industrial ink-jet printer and ink manufacturer,
had full year 2002 earnings of $49.8 million which were down 7% from 2001 but
still generated the highest earnings of any Dover company. Sales were up 11% to
$232.2 million from 2001. Imaje continued with the integration of its mid-2001
acquisition of Markpoint, with sales increasing 11%. A new thermal printer line
was rolled out to the Imaje marketing channels. In 2002, Imaje had strong global
presence selling direct in the majority of its markets while using distributors
to expand its reach to over 90 countries. As a result of a tight industrial
market place in Europe and the Americas, and the increasing mix of Markpoint
products, which utilizes somewhat less consumables in their marking, margins
decreased from 26% to 21%. In 2002, Imaje opened its new ink plant and research
and development center at its headquarters in Valence, France.

RESTRUCTURING AND INVENTORY CHARGES

During 2002 and 2001, the Company's segments and operating companies
initiated a variety of restructuring programs. These restructuring programs
focused on reducing the overall cost structure primarily through reductions in
headcount and through the disposition or closure of certain non-strategic or
redundant product lines and manufacturing facilities. Restructuring charges are
comprised of employee separation and facility exit costs. Restructuring charges
for continuing operations were recorded as selling and administrative expenses.
The employee separation programs for continuing operations announced have
involved approximately 3,700 employees, all of whom have been terminated as of
December 31, 2003. The Company has completed the vast majority of restructuring
programs undertaken in 2002 by the end of 2003 and the majority of the 2001
restructuring programs were completed by December 31, 2002. The remaining exit
reserves relate to future lease payments for facilities that were closed. These
costs will be paid over the remaining term of each lease.

In 2002, the Company initiated restructuring programs at selected operating
companies with ongoing efforts to reduce costs in the continually challenging
business environments in which the Company operates. The total restructuring
charges related to these programs in 2002 were $28.7 million. The restructuring
charges included both employee separation costs of $11.9 million and costs
associated with exit activities of $16.8 million. The restructuring in
Technologies took place in the CBAT and SEC groups, in response to the
41

significant declines in the end-markets served by these operations. CBAT
recorded $6.6 million for employee separation and $11.2 million for exit
activities. The majority of the severance and exit costs were incurred at
Universal, Everett Charles and DEK. The facility exit costs are comprised of
lease terminations and idle equipment impairments. SEC recorded $2.5 million for
employee separation and $3.6 million for facility exit activities, a majority of
which costs were incurred at Quadrant and Novacap. Industries recorded
restructuring charges of $3.7 million, of which $2.1 million was incurred to
exit an under-performing product line at Tipper Tie. The remaining $1.6 million
was for employee separation and other exit costs. Diversified recorded $1.1
million of restructuring charges to rationalize its SWF business of which $0.8
million was for severance. Due to significant declines in the demand for certain
products, special inventory reserves of $12.0 million were established in 2002,
primarily in the Technologies segment and to a lesser degree in the Diversified
segment.

During 2001, the Company initiated various restructuring programs in
response to the downturn in the end markets served within its Technologies
segment and to reduce the overall cost structure in the Diversified, Industries
and Resources segments. The total restructuring charges related to these
programs in 2001 was $17.2 million. The restructuring charges included both
employee separation costs of $11.7 million and $5.5 million for exit costs. The
Technologies segment recorded restructuring charges in CBAT primarily for costs
associated with employee separation of $5.1 million. In addition, as a result of
the downturn in the end markets served, CBAT recorded charges of $1.4 million
for exit costs. SEC also announced restructuring programs, primarily related to
the closure of two European operations that were facing difficult market
conditions, for $1.0 million. In addition, SEC recorded charges of $0.9 million
for employee separation costs. Imaje also recorded employee separation costs of
$1.0 million for certain management employees due to a change in strategic
focus. The Diversified segment recorded restructuring charges for employee
separation costs of $3.1 million and facility exit costs of $2.4 million related
to the closure of two North American facilities that were experiencing declining
volume, pricing pressure and excess capacity concerns. The Industries segment
recorded charges of $2.0 million to restructure its Rotary Lift European
operations and the Resources segment recorded $0.3 million to restructure its
De-Sta-Co operating company. Due to significant declines in the demand for
certain products, special inventory reserves of $63.8 million were established
in 2001, primarily in the Technologies segment and to a lesser degree in the
Diversified and Resources segments.

NON-GAAP DISCLOSURES

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

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATES

The Company's exposure to market risk for changes in interest rates relates
primarily to the fair value of long-term fixed interest rate debt, commercial
paper borrowings and investments in cash equivalents. Generally, the fair market
value of fixed-interest rate debt will increase as interest rates fall and
decrease as interest rates rise. A 65 basis point increase or decrease in
interest rates (10% of the Company's weighted average long-term debt interest
rate) would have an immaterial effect on the fair value of the Company's long-
term debt. Commercial paper borrowings are at variable interest rates, and have
maturities of three months or

42

less. An 11 basis point increase or decrease in the interest rates (10% of the
Company's weighted average commercial paper interest rate) on commercial paper
borrowings would have an immaterial impact on the Company's pre-tax earnings.
All highly liquid investments, including highly liquid debt instruments
purchased with an original maturity of three months or less, are considered cash
equivalents. The Company places its investments in cash equivalents with high
credit quality issuers and limits the amount of exposure to any one issuer. A 10
basis point decrease or increase in interest rates (10% of the Company's
weighted average interest rate) would have an immaterial impact on the Company's
pre-tax earnings. During 2003, the Company entered into three interest rate
swaps as discussed in Note 9 to the Consolidated Financial Statements in Item 8.
The Company does not enter into derivative financial or derivative commodity
instruments for trading or speculative purposes.

FOREIGN EXCHANGE

The Company conducts business in various foreign currencies, primarily in
Canada, Europe, China and other Asian countries. Therefore, changes in the value
of the currencies of these countries affect the Company's financial position and
cash flows when translated into U.S. Dollars. The Company has generally accepted
the exposure to exchange rate movements relative to its investment in foreign
operations. As of December 31, 2003 the Company had not established a formal
foreign-currency hedging program but may, from time to time, for a specific
exposure, enter into fair value hedges. The Company has mitigated and will
continue to mitigate a portion of its currency exposure through operation of
decentralized foreign operating companies in which the majority of all costs are
local-currency based. A 20% or less change in the value of all foreign
currencies would not have a material effect on the Company's financial position
and cash flows.

43

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULE

(ALL OTHER SCHEDULES ARE NOT REQUIRED AND HAVE BEEN OMITTED)

44

REPORT OF MANAGEMENT

The accompanying consolidated financial statements of Dover Corporation and
other financial information included in its Annual Report on Form 10-K for 2003
are the responsibility of the Company's management and have been prepared in
conformity with accounting principles generally accepted in the United States of
America and, in the judgment of management, present fairly and consistently the
Company's financial position and results of operations and cash flows. These
statements, by necessity, include amounts that are based on management's
estimates and judgments and give due consideration to materiality.

The accounting systems, financial reporting, disclosure and internal
accounting controls of the Company are designed by and are the responsibility of
the Company's management. This internal control framework is designed to provide
reasonable assurance that, in all material respects, transactions are properly
authorized and recorded, the financial records reliably and accurately support
the Company's consolidated financial statements and assets are safeguarded
against loss from unauthorized use or disposition. An effective internal control
system, no matter how well designed, has inherent limitations, including the
possibility of the circumvention or overriding of controls and, therefore, can
provide only reasonable assurance with respect to financial statement
preparation and such safeguarding of assets. Qualified personnel throughout the
organization maintain and monitor these internal accounting controls on an
ongoing basis.

The Company's financial management systematically reviews the adequacy and
effectiveness of the controls and reports thereon. In particular, the Company
has assessed its internal control system at the end of the period covered by the
accompanying consolidated financial statements. Based on this assessment,
management believes the internal accounting controls in use at that time are
likely to provide reasonable assurance that the Company's assets are
safeguarded, that transactions are executed in accordance with management's
authorizations, and that the financial records are reliable for the purpose of
preparing financial statements.

PricewaterhouseCoopers LLP, independent auditors, are retained by the Audit
Committee to audit Dover Corporation's consolidated financial statements. Their
accompanying report states that it is based on audits conducted in accordance
with auditing standards generally accepted in the United States of America,
which include consideration of the Company's internal controls to establish a
basis for determining the nature, timing and extent of audit tests to be
applied.

The Audit Committee of the Board of Directors, composed solely of
independent directors, meets periodically with management and the Company's
independent auditors to review matters relating to the quality of financial
reporting and internal accounting control and the nature, extent and results of
their audits. The Company's independent auditors have free access to the Audit
Committee.

/s/ THOMAS L. REECE
--------------------------------------
Thomas L. Reece
Chairman and Chief Executive Officer
February 27, 2004

/s/ RONALD L. HOFFMAN
--------------------------------------
Ronald L. Hoffman
President and Chief Operating Officer
February 27, 2004

/s/ ROBERT G. KUHBACH
--------------------------------------
Robert G. Kuhbach
Vice President, Finance, Chief
Financial Officer
and Treasurer
February 27, 2004

45

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Shareholders of Dover Corporation:

In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the financial
position of Dover Corporation and its subsidiaries at December 31, 2003 and
2002, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 2003 in conformity with accounting
principles generally accepted in the United States of America. In addition, in
our opinion, the financial statement schedules listed in the accompanying index
present fairly, in all material respects, the information set forth therein when
read in conjunction with the related consolidated financial statements. These
financial statements and financial statement schedules are the responsibility of
the Company's management; our responsibility is to express an opinion on these
financial statements and financial statement schedules based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 6 to the consolidated financial statements, in 2002
the Company ceased recording amortization of goodwill as of the beginning of the
year and recorded a goodwill impairment charge of $293.0 million, net of tax.

/s/ PRICEWATERHOUSECOOPERS LLP
--------------------------------------
PricewaterhouseCoopers LLP
New York, New York
February 11, 2004

46

DOVER CORPORATION

CONSOLIDATED STATEMENTS OF EARNINGS (LOSSES)

See Notes to Consolidated Financial Statements.
47

DOVER CORPORATION

CONSOLIDATED STATEMENTS OF EARNINGS (LOSSES) -- (CONTINUED)

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

See Notes to Consolidated Financial Statements.
48

DOVER CORPORATION

CONSOLIDATED BALANCE SHEETS

See Notes to Consolidated Financial Statements.
49

DOVER CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE EARNINGS
(LOSSES)

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

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

Common Stock, $1 par value per share. 500,000,000 shares authorized; issued
238,304,232 in 2003, and 237,680,338 shares in 2002.

Treasury Stock; 35,391,575 shares in 2003, and 35,277,845 shares in 2002.

Dividends paid per share were $.57 and $.54 and $.52 for 2003, 2002 and 2001,
respectively.

Unrealized holding gains (losses), net of taxes of $214, $(207) and $(1,539) in
2003, 2002 and 2001, respectively.
See Notes to Consolidated Financial Statements.
50

DOVER CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

See Notes to Consolidated Financial Statements.

51

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company is a multinational, diversified manufacturing corporation
comprised of 52 stand-alone operating companies which manufacture a broad range
of specialized industrial products and sophisticated manufacturing equipment.
The Company also provides some engineering and testing services, which are not
significant in relation to consolidated revenues. The Company's operating
companies are based primarily in the United States of America and Europe. The
Company's businesses are divided into four reportable segments. Diversified
builds packaging and printing machinery, heat transfer equipment, food
refrigeration and display cases, specialized bearings, construction and
agricultural cabs, as well as sophisticated products for use in the defense,
aerospace and automotive industries. Industries makes products for use in the
waste handling, bulk transport, automotive service, commercial food service and
packaging, welding, cash dispenser and construction industries. Resources
manufactures products primarily for the automotive, fluid handling, petroleum,
original equipment manufactures (OEM) engineered components and chemical
equipment industries. Technologies builds sophisticated automated assembly and
testing equipment and specialized electronic components for the electronics
industry, and industrial printers for coding and marking. The accounting
policies that affect the more significant elements of the Company's financial
statements and that apply to the Company's segment information are described
briefly below:

CONSOLIDATION

The consolidated financial statements include the accounts of the Company
and its majority-owned subsidiaries. Intercompany accounts and transactions have
been eliminated in consolidation. The results of operations of purchased
businesses are included from the dates of acquisitions. Several businesses
qualified for discontinued operations treatment in 2003, 2002 and 2001. The
assets, liabilities, results of operations and cash flows of all discontinued
operations have been segregated and reported as discontinued operations for all
periods presented.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates. Significant estimates include allowances for doubtful accounts
receivable, net realizable value of inventories, restructuring charges,
determining pension and post retirement assumptions, useful lives associated
with amortization and depreciation, warranty reserves, income taxes and tax
valuation reserves, environmental reserves, legal reserves, insurance reserves
and the valuations of discontinued assets and liabilities.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents includes cash on hand, demand deposits and short
term investments which are highly liquid in nature and have original maturities
at the time of purchase of three months or less. Cash equivalents were $324.4
million and $236.2 million at December 31, 2003 and 2002, respectively.

INVENTORIES

Inventory for the majority of the Company's subsidiaries, including all
international subsidiaries and the Technologies segment, are stated at the lower
of cost, determined on the first-in, first-out (FIFO) basis, or market. Other
domestic inventory is stated at cost, determined on the last-in, first-out
(LIFO) basis, which is less than market value.

52

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION

Property, plant and equipment includes the cost of land, buildings,
equipment and significant improvements to existing plant and equipment.
Expenditures for maintenance, repairs and minor renewals are expensed as
incurred. When property or equipment is sold or otherwise disposed of, the
related cost and accumulated depreciation is removed from the respective
accounts and the gain or loss realized on disposition is reflected in earnings.
Plant and equipment was generally depreciated through December 31, 2003 based
upon accelerated methods, utilizing estimated useful property lives. Building
lives range from 5 to 50 years; machinery and equipment lives range from 2 to 20
years. Depreciation expense was $133.1 million in 2003, $139.1 million in 2002,
and $138.2 million in 2001. The Company has made the determination to change to
the straight-line method of depreciation for assets acquired on or after January
1, 2004. Management's decision to change was based on the fact that
straight-line depreciation has become a better method of matching revenue and
expenses over the estimated useful life of capitalized assets given their
characteristics and usage patterns. The Company has determined that the design
and durability of these assets increasingly does not diminish to any significant
degree over time and it is therefore preferable to recognize the related cost
uniformly over their estimated useful lives. The anticipated effect of the
change for the twelve months ended December 31, 2004 will be to increase net
income by approximately $4.0 million or $0.02 per diluted share. The anticipated
effect on any quarterly three-month period ended March 31, June 30, September 30
and December 31 is not projected to be material.

GOODWILL AND OTHER INTANGIBLE ASSETS

As of January 1, 2002, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets".
In accordance with the guidelines of this accounting principle, goodwill and
indefinite-lived intangible assets are no longer amortized and are assessed for
impairment on at least an annual basis. Refer to Note 6 for disclosure on the
impact of the adoption. The Company has elected to test annually for goodwill
impairment in the fourth quarter of the fiscal year. Goodwill of a reporting
unit will also be tested for impairment between annual tests if a triggering
event occurs, as defined by SFAS No. 142, that could potentially reduce the fair
value of the reporting unit below its carrying value. Prior to 2002, the Company
amortized goodwill over a period of principally 40 years.

LONG-LIVED ASSETS

In accordance with SFAS No. 144, Accounting for the Impairment or Disposal
of Long-Lived Assets, long-lived assets are reviewed for impairment annually and
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. If an indicator of impairment exists for any
grouping of assets, an estimate of undiscounted future cash flows is produced
and compared to its carrying value. If an asset is determined to be impaired,
the loss is measured by the excess of the carrying amount of the asset over its
fair value as determined by an estimate of discounted future cash flows.

COMPREHENSIVE EARNINGS (LOSSES)

Comprehensive earnings (losses) includes net earnings (losses), foreign
currency translation and both realized and unrealized holding gains (losses) on
marketable securities.

FOREIGN CURRENCY

Assets and liabilities of foreign subsidiaries, where the local currency is
the functional currency, have been translated at year-end exchange rates and
profit and loss accounts have been translated using weighted average yearly
exchange rates. Adjustments resulting from translation have been recorded in the
equity section of the balance sheet as cumulative translation adjustments.
Assets and liabilities of an entity that are denominated in currencies other
than an entity's functional currency are remeasured into the functional
53

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

currency using end of period exchange rates. Gains and losses related to these
remeasurements are recorded within the Statement of Earnings (Losses) as a
component of Other (income) expense, net. Other comprehensive earnings (losses)
were increased by $157.9 million and $111.4 in 2003 and 2002, respectively, and
decreased by $37.5 million in 2001, as a result of the foreign currency
translation adjustments.

REVENUE RECOGNITION

Revenue on sales of product is recognized and earned when all of the
following circumstances are satisfied, a) persuasive evidence of an arrangement
exists, b) price is fixed or determinable, c) collectibility is reasonably
assured and d) delivery has occurred. In revenue transactions where installation
is required, revenue can be recognized when the installation obligation is not
essential to the functionality of the delivered products. Revenue transactions
involving non-essential installation obligations are those which can generally
be completed in a short period of time, at insignificant cost and the skills
required to complete these installations are not unique to the Company and in
many cases can be provided by third parties or the customers. If the
installation obligation is essential to the functionality of the delivered
product, revenues are deferred until installation is complete. In a limited
number of revenue transactions, other post shipment obligations such as training
and customer acceptance are required and, accordingly, revenues are deferred
until the customer is obligated to pay, or acceptance has been confirmed.
Service revenues are recognized and earned when services are performed and are
not significant to any period presented.

STOCK-BASED COMPENSATION

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

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

54

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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

INCOME TAXES

The provision for income taxes on continuing operations includes federal,
state, local and foreign taxes. Tax credits, primarily for research and
experimentation and foreign earnings and export programs are recognized as a
reduction of the provision for income taxes on continuing operations in the year
in which they are available for tax purposes. Deferred taxes are provided on
temporary differences between assets and liabilities for financial reporting and
tax purposes as measured by enacted tax rates expected to apply when temporary
differences are settled or realized. Future tax benefits are recognized to the
extent that realization of those benefits is considered to be more likely than
not. A valuation allowance is established for deferred tax assets for which
realization is not assured. The Company has not provided for any residual U.S.
income taxes on unremitted earnings of foreign subsidiaries as such earnings are
intended to be indefinitely reinvested.

RESEARCH AND DEVELOPMENT COSTS

Research and development expenditures, including qualifying engineering
costs, are expensed when incurred and amounted to $158.7 million in 2003, $166.2
million in 2002 and $168.6 million in 2001.

RISK RETENTION, INSURANCE

The Company generally retains the primary, first loss, risk for losses,
claims and liabilities related primarily to workers' compensation, health and
welfare claims, business interruption resulting from certain events and
commercial general, product and automobile liability. The Company accrues for
claim exposures which are probable of occurrence and can be reasonably
estimated. As part of the Company's risk management program, insurance is
maintained to transfer risk beyond the level of self-retention and provides stop
loss protection on both an individual claim and annual aggregate basis. The
Company self insures its product and general liability claims up to $2.0 million
per occurrence and its workers' compensation up to $0.3 million per occurrence
and automobile liability claims up to $1.0 million per occurrence. As of January
1, 2004, the Company increased its self-insurance level for its products and
general liability claims, up to $3.0 million per occurrence. A third party
insurance provider insures claims per occurrence in excess of these amounts up
to predetermined limits of $5.0 million for product and general liability, and
state imposed statutory limits for workers' compensation and $2.0 million for
automobile liability. In addition, the Company has aggregate deductible stop
loss insurance from third party insurers on both an aggregate and an individual
occurrence well in excess of the limits discussed above. A worldwide program of
property insurance covers the Company's owned property and any business
interruptions which may occur due to a hazard risk affecting those properties
subject to reasonable deductibles and aggregate limits.

ACCOUNTING FOR DERIVATIVE FINANCIAL INSTRUMENTS

Effective January 1, 2001, the Company adopted SFAS Statement No. 133
"Accounting for Derivative Instruments and Hedging Activities" and its related
amendment SFAS Statement No. 138, "Accounting for
55

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Certain Derivative Instruments and Certain Hedging Activities". These statements
establish accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. The statements require recognition of all derivatives as
either assets or liabilities on the balance sheet and the measurement of those
instruments at fair value. If the derivative is designated as a fair value hedge
and is effective, the changes in the fair value of the derivative and of the
hedged item attributable to the hedged risk are recognized in earnings in the
same period. If the derivative is designated as a cash flow hedge, the effective
portions of changes in the fair value of the derivative are recorded in other
comprehensive income and are recognized in the income statement when the hedged
item affects earnings. Ineffective portions of changes in the fair value of cash
flow hedges are recognized in earnings. The Company does not enter into
derivative financial instruments for speculative purposes and does not have a
material portfolio of derivative financial instruments.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amount of cash and cash equivalents, trade receivables,
accounts payable, notes-payable and accrued expenses approximates fair value due
to the short maturity of these instruments.

NEW ACCOUNTING STANDARDS

In July 2002, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 146, "Accounting for Costs Associated with Exit or Disposal Activities",
which is effective for exit and disposal activities initiated after December 31,
2002. The standard replaces EITF Issue 94-3 and requires companies to recognize
costs associated with exit or disposal activities when they are incurred, as
defined in SFAS No. 146, rather than at the date of a commitment to an exit or
disposal plan. The provisions of SFAS 146 are to be applied prospectively. The
effect of the adoption of SFAS No. 146 was immaterial to the Company's
consolidated results of operations and financial position.

In November of 2002, the FASB issued FASB Interpretation No. 45 (FIN 45),
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others, an interpretation of FASB
Statements No. 5, 57 and 107 and Rescission of FASB Interpretation No. 34." FIN
45 clarifies the requirements of FASB Statement No. 5., "Accounting for
Contingencies", relating to the guarantor's accounting for, and disclosure of,
the issuance of certain types of guarantees. The disclosure requirements of FIN
45 are effective for financial statements of interim or annual periods that end
after December 15, 2002 and have been incorporated into the footnotes. The
provisions for initial recognition and measurement are effective on a
prospective basis for guarantees that are issued or modified after December 31,
2002, irrespective of the guarantor's year-end. FIN 45 requires that upon
issuance of a guarantee, the entity must recognize a liability for the fair
value of the obligation it assumes under that guarantee. The effect of the
adoption of FIN 45 was immaterial to the Company's consolidated results of
operations and financial position. The Company has also adopted the disclosure
requirements of FIN 45.

In December of 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation -- Transition and Disclosure -- an amendment of SFAS
123" which is effective for fiscal years ending after December 15, 2002
regarding certain disclosure requirements which have been incorporated into the
footnotes. This Statement amends FASB Statement No. 123, "Accounting for
Stock-Based Compensation", to provide alternative methods of transition for an
entity that voluntarily changes to the fair value based method of accounting for
stock-based employee compensation. It also amends the disclosure provisions of
that Statement to require prominent disclosure about the effects on reported net
income of an entity's accounting policy decisions with respect to stock-based
employee compensation. Finally, this Statement amends APB Opinion No. 28,
"Interim Financial Reporting", to require disclosure about those effects in
interim financial information. The effect of the adoption of SFAS No. 148 had no
impact to the Company's consolidated results of operations or financial
position.

56

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In January 2003, FASB Interpretation No. 46 (FIN 46), "Consolidation of
Variable Interest Entities" was issued. FIN 46 provides guidance on
consolidating variable interest entities and applies immediately to variable
interests created after January 31, 2003. In December 2003, the Financial
Accounting Standards Board revised and superseded FIN 46 with the issuance of
FIN 46R in order to address certain implementation issues which will be adopted
the first reporting period ending after March 15, 2004. The interpretation
requires variable interest entities to be consolidated if the equity investment
at risk is not sufficient to permit an entity to finance its activities without
support from other parties or the equity investors lack certain specified
characteristics. The effect of the adoption of FIN 46 was immaterial to the
Company's consolidated results of operations and financial position.

In May 2003 the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity". SFAS No. 150
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. SFAS
No. 150 applies specifically to a number of financial instruments that companies
have historically presented within their financial statements either as equity
or between the liabilities section and the equity section, rather than as
liabilities. SFAS No. 150 is effective for financial instruments entered into or
modified after May 31, 2003, and otherwise is effective at the beginning of the
first interim period beginning after June 15, 2003. The effect of the adoption
of SFAS No. 150 was immaterial to the Company's consolidated results of
operations and financial position.

In December 2003, the Securities and Exchange Commission issues Staff
Accounting Bulletin No. 104 (SAB 104), Revenue Recognition. SAB 104 supersedes
SAB 101, Revenue Recognition in Financial Statements to include the guidance
from Emerging Issues Task Force EITF 00-21 "Accounting for Revenue Arrangements
with Multiple Deliverables." The adoption of SAB 104 did not have a material
effect on the Company's consolidated results of operations or financial
position.

In December 2003, the FASB published a revision to SFAS No. 132 "Employers'
Disclosure about Pensions and Other Postretirement Benefits an amendment of FASB
Statements No. 87, 88, and 106". SFAS No. 132R requires additional disclosures
to those in the original SFAS No. 132 about the assets, obligations, cash flows,
and net periodic benefit cost of defined benefit pension plans and other defined
benefit postretirement plans. The provisions of SFAS No. 132 remain in effect
until the provisions of SFAS No. 132R are adopted. SFAS No. 132R is effective
for financial statements with fiscal years ending after December 15, 2003. The
adoption of SFAS No. 132R did not have a material impact on the Company's
consolidated results of operations or financial position.

RECLASSIFICATIONS

Certain amounts in prior years have been reclassified to conform to the
current year's presentation.

57

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. ACQUISITIONS

All of the acquisitions listed below for the years ending 2003 and 2002
have been accounted for by the purchase method of accounting. Accordingly, the
accounts of the acquired companies, after adjustment to reflect fair market
values assigned to assets and liabilities, have been included in the
consolidated financial statements from their respective dates of acquisitions.
Unless otherwise noted, all acquisitions are wholly owned.

2003 ACQUISITIONS

The aggregate cost of the 2003 acquisitions was approximately $367.5
million of which $184.9 million represents goodwill.

2002 ACQUISITIONS

The aggregate cost of the 2002 acquisitions was approximately $100.8
million of which $43.1 million represents goodwill.

58

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following unaudited pro forma information presents the results of
operations of the Company as if the 2003 and 2002 acquisitions had taken place
on January 1, 2002.

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

On October 1, 2003, Dover acquired Warn Industries, Inc. for approximately
$326.0 million in cash. Warn, located in Portland, Oregon, is the industry
leader in the design, manufacture and marketing of high-performance vehicular
winches. Warn, with annual sales in excess of $150 million, is a stand alone
operating company within the Resources segment. The acquisition was originally
financed with existing cash on hand and commercial paper borrowings. During the
fourth quarter, all the commercial paper borrowings associated with the
acquisition were repaid. The results of Warn's operations have been included in
the consolidated financial statements since the date of acquisition. The
purchase price allocation has been prepared on a preliminary basis, and changes
are not expected to be material. The Company has obtained a third-party
valuation for certain tangible and intangible assets.

59

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table is a summary of the estimated fair values of the assets
acquired and liabilities assumed as of the date of acquisition:

Approximately $91.5 million of the goodwill is expected to be deductible
for tax purposes.

3. INVENTORIES

At December 31, 2003, domestic inventories determined by the LIFO inventory
method amounted to $131.4 million and $122.4 million at December 31, 2002.

4. PROPERTY, PLANT AND EQUIPMENT

60

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. OTHER ACCRUED EXPENSES

6. GOODWILL AND OTHER INTANGIBLE ASSETS

As of January 1, 2002, the Company adopted SFAS No. 142, "Goodwill and
Other Intangible Assets". In accordance with the guidelines of this accounting
principle, goodwill and indefinite-lived intangible assets are no longer
amortized but will be assessed for impairment on at least an annual basis.
During 2001, the Company amortized goodwill over a period of principally 40
years. As an initial step in the implementation process, the Company identified
41 Reporting Units that would be tested for impairment. In the Industries,
Diversified, and Resources market segments the "stand-alone" operating companies
were identified as "Reporting Units". These entities qualify as Reporting Units
in that they are one level below an operating segment, discrete financial
information exists for each entity and the segment executive management group
directly reviews these units. Due to the lack of similarities in either
products, production processes or markets served, management could not identify
any situations where the components in these three operating segments could
currently be aggregated into a single Reporting Unit. In the Technologies
segment, three Reporting Units were identified, Marking (consisting of one
stand-alone operating company), Circuit Board Assembly and Test or "CBAT" and
Specialty Electronic Components or "SEC".

As required under the transitional accounting provisions of SFAS No. 142,
the Company completed both steps required to identify and measure goodwill
impairment at each of the Reporting Units as of January 1, 2002. The first step
involved identifying all Reporting Units with carrying values (including
goodwill) in excess of fair value, which was estimated using the present value
of future cash flows. The identified Reporting Units from the first step were
then measured for impairment by comparing the implied fair value of the
Reporting Unit goodwill, determined in the same manner as in a business
combination, with the carrying amount of the goodwill. As a result of these
procedures, goodwill was reduced by $345.1 million and a net after tax charge of
$293.0 million was recognized as a cumulative effect of a change in accounting
principle in the first quarter of 2002. Five stand-alone operating companies or
Reporting Units accounted for over 90% of the total impairment -- Triton and
Somero from the Industries segment, Crenlo and Mark Andy from the Diversified
segment, and Wilden from the Resources segment. Various factors impacted the
identification and amounts of impairment recognized at the reporting units.
These included the current market conditions in terms of size and new product
opportunities, current and/or future operating margins and future growth
potential relative to expectations when acquired. Of the total goodwill
reduction, $148.0 million was from the Diversified segment, $127.5 million was
from the Industries Segment and $69.6 million was from the Resources segment.
Additionally, the Company completed its reassessment of recognized intangible
assets, including trademarks, and adjusted the remaining amortization lives of
certain intangibles based on relevant factors.

61

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company has elected to annually test for goodwill impairment in the
fourth quarter of its fiscal year, or when there is a significant change in
circumstance. The Company, subsequent to the adoption of SFAS No. 142 has tested
the identified reporting units in the fourth quarter of 2003 and 2002,
respectively, and has determined that there has been no additional goodwill
impairment.

Provided below is a reconciliation of previously reported financial
statement information to pro forma amounts that reflect the elimination of
goodwill and indefinite-lived intangible amortization for the comparable period
prior to adoption:

The changes in the carrying value of goodwill by market segment through the
year ended December 31, 2003 are as follows:

62

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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

The total intangible amortization expense for the twelve months ended
December 31, 2003, 2002 and 2001 was $18.2 million, $17.8 million, and $18.6
million, respectively. The estimated amortization expense, based on current
intangible balances, for the next five fiscal years beginning January 1, 2004 is
as follows:

7. DISCONTINUED OPERATIONS

In August of 2001, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets",
which was effective for fiscal years beginning after December 15, 2001. SFAS No.
144 establishes accounting and reporting standards for the impairment and
disposal of long-lived assets and discontinued operations. The Company elected
to early adopt SFAS No. 144 in 2001. The application of this statement results
in the classification, and separate financial presentation, of certain entities
as discontinued operations, which are not included in continuing operations. The
earnings (loss) from discontinued operations include charges to reduce these
businesses to estimated fair value less costs to sell. Fair value is determined
by using quoted market prices, when available, or other accepted valuation
techniques. All interim and full year reporting periods have been restated to
reflect the discontinued operations discussed below.

The Company's executive management performs periodic reviews at all of its
operating companies to assess their growth prospects under its ownership based
on many factors including end market conditions, financial viability and their
long term strategic plans. Based upon these reviews, management, from time to
time, has concluded that some businesses had limited growth prospects under its
ownership due to relevant

63

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

domestic and international market conditions, ongoing financial viability or did
not align with management's long-term strategic plans.

During 2003, the Company discontinued five businesses, three in the
Diversified segment and one business in each of the Industries and Resources
segments, all of which were identified as held for sale as of December 31, 2003.
In aggregate these businesses were not material to the Company's results. The
Company expects to dispose of these businesses by the end of 2004.

During 2002, the Company discontinued seven businesses, four in the
Technologies segment and three in the Resources segment. In 2002, two of these
businesses, one from both Technologies and Resources were sold for a net after
tax loss of $4.5 million. The five remaining businesses were classified as held
for sale as of December 31, 2002. In 2003, all five businesses were disposed of
or liquidated for a net after tax gain of $4.9 million.

During 2001, the Company discontinued four businesses in the Diversified
segment and one business in both the Industries and Resources segments. The
DovaTech welding equipment business from Industries and the AC Compressor
business from Diversified were sold during 2001 for a net gain after tax of
$96.6 million. The four remaining businesses were classified as held for sale as
of December 31, 2001. In 2002, all four of these businesses were disposed of or
liquidated for a net after tax gain of $3.6 million. Earnings (losses) from
discontinued operations include the following results for the years ended
December 31:

Charges to reduce these discontinued businesses to their estimated fair
values have been recorded in losses from discontinued operations net of tax. For
the years ended December 31, 2003, 2002 and 2001, pre-tax charges were recorded
to write-off goodwill of $17.3 million, $31.6 million and $11.6 million and
other long-lived asset impairments and other charges of $0.2 million, $12.3
million and $7.7 million, respectively.

Also during 2003, in connection with the completion of a federal income tax
audit and commercial resolution of other issues, the Company adjusted certain
reserves established in connection with the sales of previously discontinued
operations and recorded a gain on the sales of discontinued operations net of
tax of $16.6 million, and additional tax benefits of $5.1 million related to
losses previously incurred on sales of business. These amounts were offset by
charges of $13.6 million, net of tax, to reduce discontinued businesses to their
estimated fair value, and a loss on the sale of discontinued operations net of
tax of $6.0 million related to contingent liabilities from, previously
discontinued operations. Total losses from discontinued operations in 2002 and
2001 primarily relate to charges to reduce discontinued businesses to their
estimated fair value.

64

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The major classes of discontinued assets and liabilities included in the
Consolidated Balance Sheets are as follows:

8. RESTRUCTURING AND INVENTORY CHARGES

During 2002 and 2001, the Company's segments and operating companies
initiated a variety of restructuring programs. These restructuring programs
focused on reducing the overall cost structure primarily through reductions in
headcount and through the disposition or closure of certain non-strategic or
redundant product lines and manufacturing facilities. Restructuring charges are
comprised of employee separation and facility exit costs. Restructuring charges
for continuing operations were recorded as selling and administrative expenses.
The employee separation programs for continuing operations announced have
involved approximately 3,700 employees, all of whom have been terminated as of
December 31, 2003. The Company has completed the vast majority of restructuring
programs undertaken in 2002 by the end of 2003 and the majority of the 2001
restructuring programs were completed by December 31, 2002. The remaining exit
reserves relate to future lease obligations for facilities that were closed.
These costs will be paid over the remaining term of each lease.

2002 RESTRUCTURING

In 2002, the Company initiated restructuring programs at selected operating
companies with ongoing efforts to reduce costs in the continually challenging
business environments in which the Company operates. The total restructuring
charges related to these programs in 2002 were $28.7 million. The restructuring
charges included both employee separation costs of $11.9 million and costs
associated with exit activities of $16.8 million.

The restructuring in Technologies took place in the CBAT and SEC groups, in
response to the significant declines in the end-markets served by these
operations. CBAT recorded $6.6 million for employee separation and $11.2 million
for exit activities. The majority of the severance and exit costs were incurred
at Universal, Everett Charles and DEK. The facility exit costs are comprised of
lease terminations and idle equipment impairments. SEC recorded $2.5 million for
employee separation and $3.6 million for facility exit activities, a majority of
which costs were incurred at Quadrant and Novacap.

Industries recorded restructuring charges of $3.7 million, of which $2.1
million was incurred to exit an under-performing product line at Tipper Tie. The
remaining $1.6 million was for employee separation and other exit costs.
Diversified recorded $1.1 million of restructuring charges to rationalize its
SWF business of which $0.8 million was for severance.

65

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2001 RESTRUCTURING

During 2001, the Company initiated various restructuring programs in
response to the downturn in the end markets served within its Technologies
segment and to reduce the overall cost structure in the Diversified, Industries
and Resources segments. The total restructuring charges related to these
programs in 2001 was $17.2 million. The restructuring charges included both
employee separation costs of $11.7 million and $5.5 million for exit costs.

The Technologies segment recorded restructuring charges in CBAT primarily
for costs associated with employee separation of $5.1 million. In addition, CBAT
recorded charges of $1.4 million for exit costs. SEC also announced
restructuring programs, primarily related to the closure of two European
operations for $1.0 million. In addition, SEC recorded charges of $0.9 million
for employee separation costs. Imaje also recorded employee separation costs of
$1.0 million for certain management employees.

The Diversified segment recorded restructuring charges for employee
separation costs of $3.1 million and facility exit costs of $2.4 million related
to the closure of two North American facilities that were experiencing declining
volume, pricing pressure and excess capacity concerns. The Industries segment
recorded charges of $2.0 million to restructure its Rotary Lift European
operations and the Resources segment recorded $0.3 million to restructure its
De-Sta-Co operating company.

The Company recorded pre-tax restructuring charges by business segment for
the years ended December 31, as follows:

A reconciliation of restructuring provisions is as follows:

66

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Due to significant declines in the demand for certain products, special
inventory reserves were established in 2002 and 2001. The following table
details the utilization of these reserves by segment through December 31, 2003:

The inventory sold through December 31, 2003 and 2002 has generated pretax
profits of approximately $0.05 million and $1.2 million, respectively.

9. LINES OF CREDIT AND DEBT

The Company has access to $600 million of bank facilities. The arrangements
include a $300 million 364-day Credit Agreement (dated October 2003, which
replaced the prior 364-day credit agreement dated October 2002) and a $300
million 3-year credit agreement (dated October 2002). The new 364-day facility
bears interest at Libor plus .23% and the 3-year facility bears interest at
LIBOR plus .21%. The key financial covenant of these facilities requires the
Company to maintain an interest coverage ratio of EBITDA to net interest expense
of not less than 3.5 to 1. The Company has been in compliance with the covenant
and the ratio was 9.4 to 1 as of December 31, 2003 and 7.8 to 1 as of December
31, 2002. These credit facilities were unused during 2003 and 2002. The Company
intends to replace both the $300 million 3-year and 364-day facilities on or
before their expiration dates of October 2005 and 2004, respectively. The
Company established a Canadian Credit Facility in November of 2002. Under the
terms of this Credit Agreement, the Company has a Canadian (CAD) $30 million
bank credit availability and has the option to borrow in either Canadian Dollars
or U.S. Dollars. At December 31, 2003 and 2002, the outstanding borrowings under
this facility were approximately $16 million in U.S. dollars. The covenants and
interest rates under this facility match those of the primary $600 million
Revolving Credit Facilities. The Canadian Credit Facility was renewed for an
additional year prior to its expiration date of November 25, 2003 and now
expires on November 25, 2004. The Company intends to replace the Canadian Credit
Facility on or before its expiration date. The primary purpose of these
agreements is to act as an alternative for short-term financing in the event of
a disruption in the commercial paper market which the Company normally accesses
for its short-term borrowing needs.

Notes payable shown on the consolidated balance sheets for 2003 principally
represented commercial paper issued in the U.S. with 2002 primarily representing
short-term borrowings at a foreign subsidiary. The weighted average interest for
short-term borrowings for the years 2003 and 2002 was 1.1% and 1.8%,
respectively.

Dover's long-term debt instruments with a book value of $1,003.9 million on
December 31, 2003 had a fair value of approximately $1,103.0 million. For the
year ending December 31, 2002, the Company's long-term debt instruments
approximated their fair value.

67

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

A summary of the Company's long-term debt is as follows for years ended
December 31:

Annual repayments of long-term debt are scheduled as follows:

The Company may, from time to time, enter into interest rate swap
agreements to manage its exposure to interest rate changes. Interest rate swaps
are agreements to exchange fixed and variable rate payments based on the
notional principal amounts. As of December 31, 2003, the Company has three
interest rate swap agreements terminating on June 1, 2008 with a total notional
amount of $150 million to exchange fixed rate interest for variable. All three
swaps were designated as fair value hedges of the $150 million 6.25% Notes, due
June 1, 2008, and the interest payments or receipts from these agreements,
during 2003, were recorded as adjustments to interest expense. There was no
hedge ineffectiveness as of December 31, 2003 and the aggregate fair value
interest rate swaps determined through market quotation of $1.7 million was
reported in other assets and long-term debt. Subsequent to December 31, 2003,
one interest rate swap with a notional amount of $50.0 million was terminated
with no material impact to the Company.

During 2002, Dover settled two interest rate swaps, which resulted in net
gains of $8.4 million. These gains were deferred and are being amortized over
the balance of the term of the debt, permanently reducing the effective interest
rate of the $250 million Notes, due November 15, 2005 from 6.5% to 5.3%.

10. STOCK OPTION AND PERFORMANCE INCENTIVE PROGRAM

On April 24, 1984, the stockholders approved an incentive stock option plan
and cash performance program under which a maximum aggregate of 19 million
shares was reserved for grants to key personnel until January 30, 1994. This
plan expired on January 30, 1995, but certain previous grants for approximately
82,780 shares remain outstanding at December 31, 2003. The period during which
these options are

68

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

exercisable is fixed by the Company's Compensation Committee at the time of
grant, but is not to exceed ten years.

On April 25, 1995, the stockholders approved an incentive stock option plan
and a cash performance program to replace the expired 1984 plan and program.
Under the 1995 plan a maximum aggregate of 20 million shares was reserved for
grants to key personnel until January 30, 2005. The option price may not be less
than the fair market value of the stock at the time the options are granted. The
period during which these options are exercisable is fixed by the Company's
Compensation Committee at the time of grant, but is not to exceed ten years.

Transactions in stock options (all of which are non-qualified and cliff
vest three years after grant) under this plan are summarized as follows:

69

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company also has a restricted stock program, under which common stock
of the Company may be granted at no cost to certain officers and key employees.
In general, restrictions limit the sale or transfer of these shares during a two
or three year period, and restrictions lapse proportionately over the two or
three year period. Restricted shares granted in 2003, 2002 and 2001 were 6,000,
zero and 71,969, respectively.

In addition, the Company has a stock compensation plan under which
non-employee directors are granted shares of Dover's common stock each year as
their primary compensation for serving as directors. During 2003, the Company
issued an aggregate of 8,750 shares of its Common Stock to its seven U.S.
resident outside directors (after withholding an aggregate of 3,752 additional
shares to satisfy tax obligations), and the Company issued an aggregate of 1,786
shares of its Common Stock to its non-U.S. resident outside director who was not
subject to U.S. withholding tax, as compensation for serving as directors of the
Company during 2003. During 2002, the Company issued an aggregate of 9,800
shares of its Common Stock to its seven U.S. resident outside directors (after
withholding an aggregate of 4,200 additional shares to satisfy tax obligations),
and the Company issued an aggregate of 2,000 shares of its Common Stock to its
non-U.S. resident outside director who was not subject to U.S. withholding tax,
as compensation for serving as directors of the Company during 2002.

11. TAXES ON INCOME

Total income taxes for the years ended December 31, 2003, 2002 and 2001
were allocated as follows:

Income tax expense (benefit) is made up of the following components:

70

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Income taxes have been based on the following components of earnings before
taxes on continuing income:

The reasons for the difference between the effective rate and the U.S.
Federal income statutory rate of 35% are as follows:

71

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31
of each year are as follows:

The Company has loss carryovers from continuing operations for federal and
foreign purposes as of December 31, 2003 of $24.0 million and $289.4 million,
respectively, and for 2002 federal and foreign loss carryovers of $298.2 and
$177.0 million, respectively. The Company expects to utilize all of the $24.0
million federal losses in the 2000 and 2001 carryback period. The federal loss
of $298.2 million from 2002 was carried back to 1999. The entire balance of the
foreign losses is available to be carried forward, with $62.9 million of these
beginning to expire during the years 2004 through 2010. The remaining $226.5
million of such losses can be carried forward indefinitely. The Company
maintains a valuation allowance to reduce the deferred tax assets related to
these carry forwards, as utilization of these losses is not assured.

The Company does not provide for U.S. federal income taxes or tax benefits
on the undistributed earnings or losses of its international subsidiaries
because such earnings are reinvested and, in the opinion of management, will
continue to be reinvested indefinitely. At December 31, 2003 and 2002, the
Company had not provided federal income taxes on earnings of approximately
$223.2 million and $160.0 million,

72

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

respectively, from its international subsidiaries. Should these earnings be
distributed in the form of dividends or otherwise, the Company would be subject
to both U.S. income taxes and withholding taxes in various international
jurisdictions. These taxes will be partially offset by U.S. foreign tax credits.
Determination of the related amount of unrecognized deferred U.S. income taxes
is not practicable because of the complexities associated with this hypothetical
calculation.

Dover is continuously undergoing examination of its federal income tax
returns by the Internal Revenue Service (the "IRS"). The Company and the IRS
have settled tax years through 1995. The Company expects to resolve open years
(1996-1999) in the near future, all within the amounts paid and/or reserved for
these liabilities. The IRS is currently examining the Company's 2000, 2001 and
2002 federal income tax returns. Additionally, the Company is routinely involved
in state and local income tax audits, and on occasion, foreign jurisdiction tax
audits.

12. COMMITMENTS AND CONTINGENT LIABILITIES

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

The Company and certain of its subsidiaries are also parties to a number of
other legal proceedings incidental to their businesses. Management and legal
counsel periodically review the probable outcome of such proceedings, the costs
and expenses reasonably expected to be incurred, the availability and extent of
insurance coverage and established reserves. While it is not possible at this
time to predict the outcome of these legal actions, in the opinion of
management, based on these reviews, it is remote that the disposition of the
lawsuits and the other matters mentioned above will have a material adverse
effect on financial position, results of operations or cash flows of the
Company.

The Company leases certain facilities and equipment under operating leases,
many of which contain renewal options. Total rental expense, net of
insignificant sublease rental income, on all operating leases was $44.7 million,
$43.5 million and $39.8 million, for 2003, 2002, and 2001, respectively.
Contingent rentals under the operating leases were not significant.

Minimum future rental commitments under operating leases having
non-cancelable lease terms in excess of one year aggregate $151.3 million as of
December 31, 2003 and are payable as follows:

73

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Warranty program claims are provided for at the time of sale. Amounts
provided for are based on historical costs and adjusted for new claims. A
reconciliation of the warranty provision is as follows:

13. EMPLOYEE BENEFIT PLANS

The Company has defined benefit and defined contribution pension plans (the
"Plans") covering substantially all employees of the Company and its domestic
and international subsidiaries. The Plans' benefits are generally based on years
of service and employee compensation. The Company's funding policy is consistent
with the funding requirements of ERISA and applicable foreign law. Dover uses a
measurement date of September 30th for its pension and other postretirement
benefit plans.

The Company is responsible for overseeing the management of the investments
of the defined benefit Plans' assets and otherwise ensuring that the Plans'
investment programs are in compliance with ERISA, other relevant legislation,
and related Plans' documents. Where relevant, the Company has retained several
professional investment managers to manage the Plans' assets and implement the
investment process. The investment managers, in implementing their investment
processes, have the authority and responsibility to select appropriate
investments in the asset classes specified by the terms of their applicable
prospectus or investment manager agreements with the Plans.

The primary financial objective of the Plans is to secure participant
retirement benefits. Accordingly, the key objective in the Plans' financial
management is to promote stability and, to the extent appropriate, growth in
funded status. Related and supporting financial objectives are established in
conjunction with a review of current and projected Plan financial requirements.

The assets of the Plans are invested to achieve an appropriate return for
the Plans consistent with a prudent level of risk. The asset return objective is
to achieve, as a minimum over time, the passively managed return earned by
market index funds, weighted in the proportions outlined by the asset class
exposures identified in the Plans' strategic allocation.

The Expected Return on Asset Assumption used for pension expense was
developed through analysis of historical market returns, current market
conditions, and the past experience of plan asset investments. Estimates of
future market returns by asset category are lower than actual long-term
historical returns in order to generate a conservative forecast. Overall, it is
projected that the investment of Plan assets achieve an 8.50% net return over
time, from the asset allocation strategy.

The Company also provides, through nonqualified plans, supplemental pension
benefits in excess of qualified plan limits imposed by Federal tax law. These
plans cover officers and certain key employees and serve to restore the combined
pension amount to original benefit levels to what they would be absent such
limits. These plans are funded from the general assets of the Company.

Dover has reflected the merger of the Warn plan into the Dover Corporation
Pension Plan, effective October 1, 2003. Dover chose to recognize this plan
merger using purchase accounting, whereby the unfunded Pension Benefit
Obligation ("PBO") as of the merger date was recognized as an accrued cost of
$13.7 million. Subsequent to the valuation date of the defined benefit plan,
Dover made an additional funding of $2.7 million

74

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

related to Warn in the fourth quarter of 2003, which is not reflected in the
funded status of the plan as of the measurement date of September 30, 2003.

During 2003, two plan amendments created an increase in the benefit
obligations of the Company's non-qualified supplemental pension benefit plan. A
change in early retirement factors under the supplemental benefit plan allows
for employees who are 62 and have 10 years of service with the Company to retire
with unreduced benefits between 62 and 65. The second amendment provides partial
prior service credit to executives who are hired at or after age 40 and are
eligible to participate in this plan.

The following table sets forth the components of the Company's net periodic
benefit (expense) for 2003, 2002 and 2001.

The assumptions used in determining the net periodic (expense) benefit
above were as follows:

75

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The funded status and resulting prepaid pension cost of U.S. defined
benefit plans (international defined benefit plans are not considered material)
for 2003 and 2002 were as follows:

The assumptions used in determining the above were as follows:

76

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The actual and target weighted-average asset allocation for benefit plans
were:

Target asset allocations were established in the first quarter of 2003, and
were achieved by December 31, 2003.

Information about the expected 2004 employer discretionary contributions is
as follows:

Pension cost for all defined contribution and defined benefit plans was
$21.2 million for 2003, $21.5 million for 2002, and $26.5 million for 2001.

For post retirement benefit measurement purposes, a 10% annual rate of
increase in the per capita cost of covered benefits (i.e., health care cost
trend rates) was assumed for 2003; the rates were assumed to decrease gradually
to 6% by the year 2008 and remain at that level thereafter. The health care cost
trend rate assumption has a significant effect on the amount reported. For
example, increasing (decreasing) the assumed health care cost trend rates by one
percentage point in each year would increase (decrease) the accumulated
postretirement benefit obligation as of December 31, 2003 by $1.7 million ($1.4
million) and the net postretirement benefit cost for 2003 by approximately $0.2
million ($0.1 million).

The post retirement benefit plans only cover approximately 650 participants
and are closed to new participants.

14. INFORMATION ABOUT THE COMPANY'S OPERATIONS IN DIFFERENT SEGMENTS AND
GEOGRAPHIC AREAS

Selected information by geographic regions is presented below:

77

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Revenues are attributed to regions based on the location of the Company's
customer, which in some instances is an intermediary and not necessarily the end
user. Long-lived assets are comprised of net property, plant and equipment;
intangible assets and goodwill, net of amortization; and other assets and
deferred charges.

The Company's operating companies are based primarily in the United States
of America and Europe. The Company's businesses are divided into four reportable
segments. Dover's businesses serve thousands of customers, none of which
accounted for more than 10% of consolidated revenues. Accordingly, it is
impracticable to provide revenues from external customers for each product and
service sold by segment. Selected financial information by market segment as
follows:

SALES, OPERATING PROFIT AND OTHER DATA BY MARKET SEGMENT

78

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

15. QUARTERLY DATA (UNAUDITED)

All quarterly and full year periods have been restated to reflect certain
operations that were discontinued. The quarterly data presented above will not
agree to previously issued quarterly statements made as a result of this
restatement.

(1) Represents results from continuing operations.

(2) 2002 net earnings include goodwill impairment of $293.0 million net of tax
recorded in the first quarter of 2002 as a result of the adoption of SFAS
No. 142 effective January 1, 2002.

79

DOVER CORPORATION

SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 2003, 2002, 2001

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Not Applicable

ITEM 9A. 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, Chief Operating
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-15e. Based upon that evaluation, the Chief Executive
Officer and Chief Financial Officer concluded that the Company's disclosure
controls and procedures were effective. During the fourth quarter of 2003, there
were no changes in the Company's internal control over financial reporting that
have materially affected, or are reasonably likely to materially affect, the
Company's internal control over financial reporting.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information with respect to the directors of the Company required to be
included pursuant to this Item 10 is included under the caption "1. Election of
Directors" in the 2004 Proxy Statement relating to the 2004 Annual Meeting of
Stockholders filed with the Securities and Exchange Commission pursuant to Rule
14a-6 under the Securities Exchange Act of 1934, as amended, and is incorporated
in this Item 10 by reference. The information with respect to the executive
officers of the Company required to be included pursuant to this Item 10 is
included under the caption "Executive Officers of the Registrant" in Part I of
this Annual Report on Form 10-K and is incorporated in this Item 10 by
reference.

80

The information with respect to Section 16(a) reporting compliance required
to be included in this Item 10 is included under the caption "Section 16(a)
Beneficial Ownership Reporting Compliance" in the 2004 Proxy Statement and is
incorporated in this Item 10 by reference.

The Company has adopted a code of ethics that applies to its chief
executive officer and senior financial officers. A copy of this code of ethics
can be found as Exhibit 14 to this Form 10-K and on the Company's website at
www.dovercorporation.com. In the event of any amendment to, or waiver from, the
code of ethics, the Company will publicly disclose the amendment or waiver by
posting the information on its website.

ITEM 11. EXECUTIVE COMPENSATION

The information with respect to executive compensation required to be
included pursuant to this Item 11 is included under the caption "Executive
Compensation" in the 2004 Proxy Statement and is incorporated in this Item 11 by
reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information regarding security ownership of certain beneficial owners
and management that is required to be included pursuant to this Item 12 is
included under the caption "Security Ownership of Certain Beneficial Owners and
Management" in the 2004 Proxy Statement and is incorporated in this Item 12 by
reference.

EQUITY COMPENSATION PLANS

The Equity Compensation Plan Table below presents information regarding the
Company's equity compensation plans at December 31, 2003:

The Company has three compensation plans under which equity securities of
the Company have been authorized for issuance and have been issued to employees
and to non-employee directors:

The 1984 Incentive Stock Option Plan and 1984 Cash Performance Program

The purpose of the 1984 Stock Option Plan and 1984 Cash Performance Program
(the "1984 PLAN") was to give key employees of the Company the opportunity to
receive options to purchase the Company's common stock and to participate in the
cash performance program. The 1984 Plan expired in January 1995 and was replaced
by the 1995 Incentive Stock Option Plan and Cash Performance Program. However,
as of December 31, 2003, there were outstanding options for 81,548 shares under
the 1984 Plan.

The 1995 Incentive Stock Option Plan and 1995 Cash Performance Program

The Company's 1995 Incentive Stock Option Plan and 1995 Cash Performance
Program (the "PERFORMANCE PLAN"), adopted in 1995 (replacing the 1984 Plan which
expired in January 1995), provides for stock options, restricted stock awards
and cash performance awards. The 1995 Plan will expire in January 2005.

81

The 1995 Plan is intended to promote the long-term success of Dover by
providing salaried officers and other key employees of Dover and its
subsidiaries with a long-range inducement to remain with Dover and to encourage
them to increase their efforts to make Dover successful. Options granted under
the 1995 Plan are designated as either non-qualified stock options or incentive
stock options within the meaning of Section 422 of the Internal Revenue Code.

The exercise price of options is the fair market value on the date of grant
as determined in good faith by the Compensation Committee. The Compensation
Committee determines the term of each option but in no event may an option be
exercised more than 10 years following the grant date. No more than 600,000
shares may be granted to a single participant in any one year. Options granted
under this plan may not be sold, transferred, hypothecated, pledged or otherwise
disposed of by any of the holders except by will or by the laws of descent and
distribution except that a holder may transfer any non-qualified option granted
under this plan to members of the holder's immediate family, or to one or more
trusts for the benefit of such family members provided that the holder does not
receive any consideration for the transfer.

The information above summarizes the material aspects of the 1995 Plan. The
rights and obligations of participants are determined by the provisions of the
plan document itself.

The 1996 Non-Employee Directors' Stock Compensation Plan

The Dover Corporation 1996 Non-Employee Directors' Stock Compensation Plan
(the "DIRECTORS' PLAN"), provides the primary compensation to non-employee
directors of the Company for their service as directors. Through the end of
2002, non-employee directors were granted 2,000 shares of the Company's common
stock per year (adjusted for stock splits). If any director served for less than
a full calendar year, the number of shares granted to that director for the year
was adjusted pro rata, based on the number of calendar quarters for such year
for which he or she served as a director. The Directors' Plan was amended
effective January 1, 2003 as approved by the stockholders, and as amended
provides for different levels of stock grants in 2003 and beyond. Beginning in
2003, non-employee Directors are entitled to receive annual compensation in an
amount set from time to time by the Board (currently $90,000 per year), which
the Board intends to have paid 25% in cash and 75% in common stock under the
Directors' Plan, subject to the limitations set forth therein on the maximum
number of shares that may be granted to any Director in any year. Under the new
compensation arrangements, for 2003, non-employee Directors received $22,500 in
cash and $67,500 worth of Common Stock, or 1,786 shares, based on the fair
market value of Common Stock on November 15, 2003. The number of Shares to be
granted to any Director for any calendar year for less than all of which he or
she had served as a Director will be prorated as deemed appropriate by the
Compensation Committee. The shares granted under the Directors' Plan may be
treasury shares or newly issued shares but in either case they will be listed on
the New York Stock Exchange.

The information above summarizes the material aspects of the Directors'
Plan. The rights and obligations of participants are determined by the
provisions of the plan document itself.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information with respect to any reportable transaction, business
relationship or indebtedness between the Company and the beneficial owners of
more than 5% of the Common Stock, the directors or nominees for director of the
Company, the executive officers of the Company or the members of the immediate
families of such individuals that is required to be included pursuant to this
Item 13 is included under the caption "1. Election of Directors -- Directors'
Compensation" in the 2004 Proxy Statement and is incorporated in this Item 13 by
reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information set forth under the caption "Relationship with Independent
Accountants" in the 2004 Proxy Statement is incorporated in this Item 14 by
reference.

82

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)(1) Financial Statements

Financial Statements covered by the Report of Independent Auditors:

(A) Consolidated Statements of Earnings (Losses) for the years ended
December 31, 2003, 2002 and 2001.

(B) Consolidated Balance Sheets as of December 31, 2003 and 2002.

(C) Consolidated Statements of Stockholders' Equity and Comprehensive
Earnings (Losses), for the years ended December 31, 2003, 2002 and 2001.

(D) Consolidated Statements of Cash Flows for the years ended December
31, 2003, 2002 and 2001.

(E) Notes to consolidated financial statements.

(2) Financial Statement Schedule

The following financial statement schedule is included in Item No. 8 of
this report on Form 10-K:

Schedule II -- Valuation and Qualifying Accounts

All other schedules are not required and have been omitted.

(3) Not covered by the Report of Independent Auditors:

Quarterly financial data (unaudited)

(4) See (c) below.

(b) Current Reports on Form 8-K:

The Company filed with the Securities and Exchange Commission a report
on Form 8-K, dated October 16, 2003, under Item 12, furnishing the press
release dated October 16, 2003 informing shareholders of third quarter 2003
results.

(c) Exhibits:

(3)(i) Restated Certificate of Incorporation, filed as Exhibit 3.1
to the Company's Quarterly Report on Form 10-Q for the
Period Ended June 30, 1998 (SEC File No. 001-04018), is
incorporated by reference.
(3)(ii) Certificate of Correction to the Restated Certificate of
Incorporation dated as of January 24, 2003, filed as Exhibit
3(i) to the Company's Current Report on Form 8-K filed
February 28, 2003 (SEC File No. 001-04018), is incorporated
by reference.
(3)(iii) By-Laws of the Company.
(4.1) Amended and Restated Rights Agreement, dated as of November
15, 1996, between Dover Corporation and Harris Trust Company
of New York, filed as Exhibit 1 to Form 8-A/A dated November
15, 1996 (SEC File No. 001-04018), is incorporated by
reference.
(4.2) Indenture, dated as of June 8, 1998 between Dover
Corporation and The First National Bank Chicago, as Trustee,
filed as Exhibit 4.1 to the Company's Current Report on Form
8-K filed June 12, 1998 (SEC File No. 001-04018), is
incorporated by reference.
(4.3) Form of 6.25% Note due June 1, 2008 ($150,000,000 aggregate
principal amount), filed as Exhibit 4.3 to the Company's
Current Report on Form 8-K filed June 12, 1998 (SEC File No.
001-04018), is incorporated by reference.

84

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

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

* Executive compensation plan or arrangement.

(d) Not applicable.

85

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned thereunto duly authorized.

DOVER CORPORATION

By: /s/ THOMAS L. REECE
------------------------------------
Thomas L. Reece
Chairman and Chief Executive Officer

Date: February 27, 2004

Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the dates indicated.

86

EXHIBIT INDEX

(3)(i) Restated Certificate of Incorporation, filed as Exhibit 3.1
to the Company's Quarterly Report on Form 10-Q for the
Period Ended June 30, 1998 (SEC File No. 001-04018), is
incorporated by reference.
(3)(ii) Certificate of Correction to the Restated Certificate of
Incorporation dated as of January 24, 2003, filed as Exhibit
3(i) to the Company's Current Report on Form 8-K filed
February 28, 2003 (SEC File No. 001-04018), is incorporated
by reference.
(3)(iii) By-Laws of the Company.
(4.1) Amended and Restated Rights Agreement, dated as of November
15, 1996, between Dover Corporation and Harris Trust Company
of New York, filed as Exhibit 1 to Form 8-A/A dated November
15, 1996 (SEC File No. 001-04018), is incorporated by
reference.
(4.2) Indenture, dated as of June 8, 1998 between Dover
Corporation and The First National Bank Chicago, as Trustee,
filed as Exhibit 4.1 to the Company's Current Report on Form
8-K filed June 12, 1998 (SEC File No. 001-04018), is
incorporated by reference.
(4.3) Form of 6.25% Note due June 1, 2008 ($150,000,000 aggregate
principal amount), filed as Exhibit 4.3 to the Company's
Current Report on Form 8-K filed June 12, 1998 (SEC File No.
001-04018), is incorporated by reference.
(4.4) Form of 6.65% Note due June 1, 2028 ($200,000,000 aggregate
principal amount), filed as Exhibit 4.4 to the Company's
Current Report on Form 8-K filed June 12, 1998 (SEC File No.
001-04018), is incorporated by reference.
(4.5) Form of Indenture, dated as of November 14, 1995 between the
Company and The First National Bank of Chicago, as Trustee,
relating to the 6.45% Notes due November 15, 2005 (including
the form of the note), filed as Exhibit 4 to the Company's
Registration Statement on Form S-3 (SEC File No. 33-63713),
is incorporated by reference.
(4.6) Form of 6.50% Notes due February 15, 2011 ($400,000,000
aggregate principal amount), filed as Exhibit 4.3 to the
Company's current report on Form 8-K filed February 12, 2001
(SEC File No. 001-04018), is incorporated by reference.
(4.7) Indenture, dated as of February 8, 2001 between the Company
and BankOne Trust Company, N.A., as trustee, filed as
Exhibit 4.1 to the Company's current report on Form 8-K
filed February 12, 2001 (SEC File No. 001-04018), is
incorporated by reference.
(4.8) Officers' certificate, dated February 12, 2001, pursuant to
Section 301 of the Indenture, dated as of February 8, 2001
between the Company and BankOne Trust Company N.A., as
trustee, filed as Exhibit 4.2 to the Company's current
report on Form 8-K filed February 12, 2001 (SEC File No.
001-04018), is incorporated by reference.
The Company agrees to furnish to the Securities and Exchange
Commission upon request, a copy of any instrument with
respect to long-term debt under which the total amount of
securities authorized does not exceed 10 percent of the
total consolidated assets of the Company.
(10.1) 1984 Incentive Stock Option and 1984 Cash Performance
Program, filed as Exhibit 10(a) to Annual Report on Form
10-K for year ended December 31, 1984 (SEC File No.
001-04018), is incorporated by reference.*
(10.2) Employee Savings and Investment Plan, filed as Exhibit 99 to
Registration Statement on Form S-8 (SEC File No. 33-01419),
is incorporated by reference.*
(10.3) Amended and Restated 1996 Non-Employee Directors' Stock
Compensation Plan, included as Exhibit A to the Proxy
Statement, dated March 17, 2003 (SEC File No. 001-04018), is
incorporated by reference.*
(10.4) Executive Officer Annual Incentive Plan, included as Exhibit
A to the Proxy Statement, dated March 17, 2003 (SEC File No.
001-04018), is incorporated by reference.*
(10.5) Form of Executive Severance Agreement, filed as Exhibit 10.6
to Annual Report on Form 10-K for year ended December 31,
1998 (SEC File No. 001-04018), is incorporated by
reference.*
(10.6) 1995 Incentive Stock Option and 1995 Cash Performance
Program, filed as Exhibit 10.7 to Annual Report on Form 10-K
for year ended December 31, 2000 (SEC File No. 001-04018),
is incorporated by reference.*

(10.7) Dover Corporation Deferred Compensation Plan, as amended as
of December 31, 2001, filed as Exhibit 10 to the Company's
Current Report on Form 8-K filed February 28, 2002 (SEC File
No. 001-04018), is incorporated by reference.*
(14) Dover Corporation Code of Ethics for Chief Executive Officer
and Senior Financial Officers.
(18) Letter of Preferability regarding a change in accounting
principle.
(21) Subsidiaries of Dover.
(23.1) Consent of Independent Auditors.
(24) Power of Attorney.
(31.1) Certification pursuant to Rule 13a-14(a) of the Securities
and Exchange Act of 1934, as amended, signed and dated by
Robert G. Kuhbach.
(31.2) Certification pursuant to Rule 13a-14(a) of the Securities
and Exchange Act of 1934, as amended, signed and dated by
Thomas L. Reece.
(32) Certification pursuant to 18 U.S.C. Section 1350, as
adopted, pursuant to section 906 of the Sarbanes-Oxley Act
of 2002, signed and dated by Robert G. Kuhbach and Thomas L.
Reece.

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

* Executive compensation plan or arrangement.