dover Q208_Transcript

FINAL TRANSCRIPT

DOV - Q2 2008 Dover Corporation Earnings Conference Call
Event Date/Time: Jul. 23. 2008 / 8:00AM ET

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FINAL TRANSCRIPT
Jul. 23. 2008 / 8:00AM, DOV - Q2 2008 Dover Corporation Earnings Conference Call

CORPORATE PARTICIPANTS
Paul Goldberg
Dover Corp. - Treasurer, IR Director
Ron Hoffman
Dover Corp. - CEO
Bob Livingston
Dover Corp. - President, COO
Rob Kuhbach
Dover Corp. - VP Finance, CFO

CONFERENCE CALL PARTICIPANTS
Wendy Caplan
Wachovia Securities - Analyst
Terry Darling
Goldman Sachs - Analyst
Alex Blanton
Ingalls & Snyder - Analyst
Scott Davis
Morgan Stanley - Analyst
Steve Tusa
JPMorgan - Analyst
John Inch
Merrill Lynch - Analyst
Shannon O'Callaghan
Lehman Brothers - Analyst
Nigel Coe
Deutsche Bank - Analyst
Matt McConnell
Robert W. Baird & Co. - Analyst

PRESENTATION
Operator
Good morning and welcome to the second-quarter 2008 Dover Corporation earnings conference call. With us today are Ron
Hoffman, Chief Executive Officer of Dover Corporation; Bob Livingston, President and Chief Operational Officer of Dover
Corporation; Rob Kuhbach, Vice President of Finance and Chief Financial Officer of Dover Corporation; and Paul Goldberg,
Treasurer and Director of Investor Relations of Dover Corporation.

After the speakers' opening remarks, there will be a question-and-answer period. (Operator Instructions). As a reminder, ladies
and gentlemen, this conference is being recorded and your participation implies consent to our recording of this call. If you do
not agree with these terms, please disconnect at this time. Thank you.

I would now like to turn the call over to Mr. Paul Goldberg. Mr. Goldberg, please go ahead, sir.

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Paul Goldberg - Dover Corp. - Treasurer, IR Director
Thank you, [Brianna]. Good morning and welcome to Dover's second-quarter earnings call. With me today are Ron Hoffman,
Dover's Chief Executive Officer, Bob Livingston, Dover's President and Chief Operating Officer, and Rob Kuhbach, our VP of
Finance and CFO.

Today's call will begin with some comments from Ron and Bob on Dover's operating and financial performance. We will then
open the call up to questions.

In the interest of time, we kindly ask that you limit yourself to one question with a follow-up. Please note that our current
earnings release, investor supplement and associated presentation can be found at our Web site, www.DoverCorporation.com.

This call will be available for playback through 5 P.M. August 6, and the audio portion of this call will be archived on our Web
site for three months. The replay telephone number is 800-642-1687. When accessing the playback, you will need to supply the
following reservation code -- 54682754.

Before we get started, I'd like to remind everyone that our comments today, which are intended to supplement your understanding
of Dover, may contain certain forward-looking statements that are inherently subject to uncertainties. We caution everyone to
be guided in their analysis of Dover Corporation by referring to our Form 10-K for a list of factors that could cause our results
to differ from those anticipated in any such forward-looking statement. We also undertake no obligation to publicly update or
revise any forward-looking statements, except as required by law. We would also direct your attention to our Web site where
considerably more information can be found.

With that, I'd like to turn this call over to Ron.

Ron Hoffman - Dover Corp. - CEO
Thanks, Paul. Good morning, everyone. Thank you for joining today's conference call.

Today, we are pleased to report on Dover's strong second-quarter results. Quarterly revenues were over $2 billion for the first
time in Dover's history, an increase of 10% over the previous year. Three of our four segments set new quarterly revenue records
and all were up sequentially. Net earnings from continuing operations increased 7% to $187 million with Electronic Technologies
posting their best earnings since Q4 of 2006.

Diluted earnings per share from continuing operations were a record $0.98, up 16% over the prior year. Year-to-date revenue
was $3.9 billion, up 9%, with net earnings of $335 million, up 7%. Diluted earnings per share from continuing operations for the
year were $1.74, up 15% over the previous year.

For the quarter, Dover posted operating margins of 15.8%, up 20 basis points over the prior year and up 170 basis points
sequentially, reflecting strong leverage at Electronic Technologies and Fluid Management. These margin increases were delivered
by continuous improvements in operating efficiencies and proactive pricing actions offsetting the challenges of significant
material cost increases.

Fluid Solutions, energy, and the product identification platforms, which comprise slightly under 50% of Dover's total segment
earnings, led the quarterly improvement. Each of these growth platforms produced quarterly earnings improvement in excess
of 15% and continues to benefit from healthy end markets, cost reductions, pricing actions, and synergy initiatives. We strongly
believe that these growth platforms serve global markets that can continue to grow.

Our energy platform, which is a significant differentiator for Dover relative to other industrial peers, posted strong organic
growth for the quarter. The continued demand for energy, whether oil, natural gas or power-generation equipment, is driven


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by high commodity costs and strong global demand. Product identification continues to grow globally, fueled by the increased
demand in logistics, traceability, and consumer safety applications.

Bookings were $2 billion, up 6% over the prior year, led by strong growth at the Electronic Technologies segment as well as the
energy, Fluid Solutions and product identification platforms. Backlog was $1.6 billion, essentially flat with last year but up 8%
from 2007 year-end.

Dover's 10% quarterly revenue growth consisted of 5.4% organic growth, a 270 basis point improvement over the first quarter.
Acquisitions accounted for 1.3%, and the impact of foreign exchange was 3.5%. Organic growth for the full year is still anticipated
to be roughly 4% to 5%.

Free cash flow for the quarter was $192 million, 9.6% of revenue, driven by increased earnings and continued improvements
in working capital. Year-to-date, we have generated $301 million of free cash flow, up 29%, and remain on target for another
full year where our free cash flow will exceed 10% of revenue.

From a strategic capital allocation perspective, Dover continues to be highly disciplined at evaluating potential acquisitions as
we focus on synergistic add-ons within our targeted platforms and segments. We invested $77 million for two add-on acquisitions
early in the second quarter. As previously identified in our first-quarter earnings call, Neptune Pump joined our Pump Solutions
group, and [Brady Bit] was added to the Energy Products Group. These acquisitions will be slightly accretive this year.

We anticipate 2008 acquisition spending to be similar to 2007.

We repurchased $198 million of Dover stock during the quarter and anticipate finishing our $500 million share repurchase
program during the third quarter. When completed, Dover will have repurchased $1 billion of shares and reduced our share
count by roughly 10% over a 12-month period. Year-to-date, our repurchased activities resulted in a $0.12 EPS improvement,
excluding the interest expense.

During the second quarter, we made two changes with regard to discontinued operations. We have moved Triton from engineered
systems to discontinued operations in anticipation of the completion of its sale in the near future. This discontinuance of Triton
and the subsequent write-down of its carrying value resulted in $51 million loss during the quarter.

We also moved Crenlo from discontinued operations back to continuing operations in the material handling platform within
Industrial Products. After four quarters in discontinued and after selling off the underperforming portion of this company, we
have not received an offer reflecting the true value for the Crenlo [cabin] closure business. Recognizing the limited opportunity
to sell this property in today's climate, we will continue to operate Crenlo and seek potential operating synergies within our
material handling platform. The net effect of these two changes to our quarterly continuing operations results was a net positive
of $0.01 diluted EPS and $0.02 year-to-date.

Effective July 1, Bob Livingston was promoted to President and Chief Operating Officer of Dover. Bob, who was President and
CEO of the Engineered Systems segment, has been with Dover for nearly 25 years. I'm extremely pleased that he has accepted
the challenge of this new position and look forward to working with him through this transition.

With that, I'd like to turn the call over to Bob so he can update you on our segment performance. Bob?

Bob Livingston - Dover Corp. - President, COO
Thanks, Ron. Thanks for that warm introduction. I'm very excited about my new role and I look forward to building on the
improved performance of Dover that will deliver increased shareholder returns. I'm pleased to report on the successful quarterly
results posted by our companies.


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At the Industrial Products segment, which accounts for 32% of Dover's revenue, sales were $649 million, up 6% over last year,
with looking of $631 million for a book-to-bill of 0.97. Earnings of $88 million were essentially flat from the second quarter of
'07, which benefited from a $5 million, one-time property sale gain. Excluding this one-time gain, earnings would have been
up 5% with margins of 13.5%, essentially flat with last year.

The Materials Handling platform recorded increased sales and earnings of 2% and 4% respectively. Quarterly bookings were
$313 million for a 1.02 book-to-bill. Improved industrial market sales at Warren and Texas Hydraulics, along with the acquisitions
of IMC by DE-STA-CO and Lantec by Tulsa Winch offset lower construction and market sales at Paladin and Crenlo. Improved
platform margins resulted from internal cost-improvement initiatives and price increases that offset significant increases in
steel, energy and transportation costs.

Restructuring and consolidation efforts continue to be implemented to ensure the material handling businesses are run efficiently
based on current and anticipated market conditions.

Military, industrial and energy-related markets should continue to perform well, but we do not anticipate improvement in the
automotive or construction businesses during the second half.

The mobile equipment platform increased sales by 9% while earnings decreased 3%. Adjusting for the one-time gain on the
property sale previously mentioned, platform earnings would have been up 7%.

Quarterly bookings were $318 million, led by increases in refuse and aerospace but offset by declining sales in the automotive
sector and North American tank trailer demand. Backlogs remain strong at $549 million.

Heil bar metal continued to grow market share while margins were challenged by rising steel and freight costs. At Heil Trailer,
strong military and [sand] trailers offset weakness in petroleum and dry-bulk trailers. Sargent's improved performance reflected
positive strength in its commercial aircraft market, while Rotary Lift delivered record sales and earnings.

Results were sluggish at PDQ, Chief and Performance Motorsports, reflecting slower discretionary spending in North America.

At the Engineered Systems segment, which accounts for 27% of Dover's revenue, sales were $539 million, up 6% over last year,
with bookings of $530 million for a 0.98 book-to-bill. Earnings of $80 million were up 3% with a 14.9% margin, down 40 basis
points over the prior-year period.

Our product identification platform again posted impressive performance. Significant leverage was displayed as revenue
increased 11% and earnings grew 15%. Our direct coating business, which essentially Markem Imaje, continues to produce very
positive operating results, reflecting strong global market conditions, a robust product portfolio, and an accelerating integration
program. Recurring revenue remains above 50%.

The engineered product platform posted sales up 2% year-over-year, while earnings were down 7% over the period. Sales gains
were posted at all companies except Belvac.

Hill Phoenix had a strong quarter as it continues to gain new customers and increase sales with new products at existing
customers. The decline of new store construction at Wal-Mart will continue to impact our business in the second half of the
year. Hill Phoenix's specialty case business continues to grow, fueled by increased prepared food offerings at supermarkets. Hill
Phoenix's continued focus on price management is offsetting a significant material price increases and is stabilizing margins.

SWEP posted sales gains in North America and Japan and opened a new facility in China during the second quarter.

Our Fluid Management segment, which accounts for 22% of Dover's revenue, continued its trend of double-digit growth.
Revenue was $447 million, up 23% over last year with strong bookings of $470 million or a 1.05 book-to-bill. Organic growth


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for this segment was an impressive 16.5% for the second quarter. Second-quarter earnings of $98 million were up 34% over
the prior-year period with 30% operating leverage. Operating margins were 21.9%, up 170 basis points over last year. Both the
energy and Fluid Solutions platforms continue to benefit from very strong global demand.

Our energy platform continues to perform in an exceptionally high level across all companies, led by the specialty diamond
drill insert businesses. Second-quarter revenue and earnings for the platform both increased 25%.

Globally, high energy prices, increased drilling activity, strong oil and gas consumption, and new power-generation projects
continue to provide a very positive climate and outlook for these companies. Double-digit sales and earnings gains over the
prior year were posted on all energy companies. Synergy integration programs are being pursued within the gas equipment
and artificial lift businesses to optimize future results. Waukesha Bearings reported its first significant order in Russia for magnetic
bearings for gas compression equipment.

The Fluid Solutions platform continued to benefit from its global customer base. The platform posted very strong quarterly
revenue and earnings gains of 20% and 35%, respectively. Similar to our energy platform, every company within Fluid Solutions
experienced double-digit gains in sales and earnings driven by strong global demand for pumps, dispensing systems and
quick-disconnect couplings.

We have also seen significant internal improvements from the formation and subsequent ongoing integration of our Pump
Solutions group. These improvements are coming in the form of capacity utilization, global sourcing, and cross-selling
opportunities. With backlog up 28% and a strong book-to-bill of 1.03, we expect Fluid Solutions' strong performance to continue.

The Electronic Technology segment, which accounts for 19% of Dover's revenue, had its strongest quarter since late 2006.
Revenue was $380 million, up 12% over last year, with bookings of $385 million for a 1.01 book-to-bill. Earnings of $51 million
were up 13%, while margins improved 10 basis points to 13.4%.

The quarter's strong performance was led by Knowles, Everett Charles, and the Ceramic Products Group. Knowles experienced
strong customer demand for their hearing aid components in Quarter 2 and continues to develop new products for that steadily
growing end market. Knowles also experienced some important customer wins in its men's business, offsetting the softness at
Motorola and Sony Ericsson. Knowles MEMS microphones are now being used by every tier 1 handset manufacturer in the
world. They have also been successful in penetrating other growing markets like notebook computers, digital cameras, gaming
consoles and GPS terminals. Everett Charles saw increased demand in the second quarter across all its businesses with the
exception of the Semiconductor Test Group.

Now that I've run through the segments, I'd like to briefly discuss our progress in synergy capture and materials pricing. First,
synergy -- as you know, we've made a commitment to deliver $40 million to $60 million in earnings improvements over the
next two years, supported by our four segment realignment and synergy opportunities. We are well on our way to achieving
that target and then some.

Business combinations and integrations, such as the formation of the Pump Solutions group, the combination of Alberta Oil
Pool and Norris, and the Markem Imaje integration are highly visible examples of these initiatives across Dover. These business
consolidations are near and dear to my heart, as I've been closely involved with the Markem Imaje integration and also the
Vectron/CFC merger of a few years ago. I've personally seen the earnings power realized by capturing that integration value.
We are making this happen all around Dover.

Markem's margins have improved about 9 percentage points since we acquired the business about 18 months ago. I am
committed to pushing this synergy agenda forward without compromising the creativity and the entrepreneurship that is so
fundamental to Dover. In the second quarter, our synergistic activities, including business integration and procurement initiatives,
resulted in $0.03 EPS benefit, net of cost.


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As far as material prices go, we, along with every other industrial manufacturer, experience significant price increases across a
wide range of materials. Metals in general and steel in particular posed the greatest impact to Dover. In total, metals account
for about $1.5 billion of spend for Dover on an annual basis. So far, we've done a superb job of raising prices where appropriate
and hedging our costs where possible. We are hopeful that raw materials prices stabilize through the back half of this year, but
remain cautious in our outlook. It is unreasonable to expect that we will recover 100% of our cost increases, but we will remain
diligent in our efforts.

In the second quarter, the EPS impact of higher input cost was negligible, due to the previously discussed initiatives.

In total, this was a very successful quarter of growth and positive leverage for Dover. I look forward to building on these results
in future quarters.

With that, Ron, I would turn the call back to you.

Thanks, Bob. Before we close, I'd like to clarify my own situation and fill you in on our succession process. As I came to New York
five years ago, I began a process to re-energize Dover's value creation. During that time, we have completely revamped our
portfolio of operating companies to focus on market sectors that have higher growth prospects, better earnings potential, and
more global engagement. This process culminated in the four segment reorganization of Dover last year that provides the
opportunity to capitalize on potential synergies which will maximize Dover's future results.

We also believe that this new structure clarifies the true focus of Dover for our shareholders. In 2005, we implemented the
Performance Counts program that has focused Dover Companies on attaining world-class operating standards. Dover has
significantly improved on each of our five metrics, and there are great opportunities to build on this process.

Personally, I've had a tremendously rewarding career over the past 38 years and have been very fortunate to have experienced
the unique challenges and pleasure of owning a company and managing the transformation of a great Fortune 500 company
like Dover. I've discussed with the Board my intent to retire when a new CEO is selected. I'm proud of the changes I've brought
to Dover but believe that a new leader should have the opportunity to put his stamp on the future processes and techniques
that will continue to create synergistic improvements and increase value for our shareholders.

I will not fully retire until a new CEO is named. We have a great internal candidate, and the Board is appropriately exploring
external candidates as well. Through this deliberate process, I am confident we will find the right executive to lead Dover to
new heights.

Looking forward, I am very proud of the many record results posted during the second quarter despite a challenging economic
environment. Our business leaders continue to focus on internal process improvements, synergy capture, pricing opportunities,
and managing the significant wave of material price increases. Those same dynamics will be present next quarter as well.

Overall, our bookings have held up well, and we are positive about the continued growth opportunities in the energy, product
identification and Fluid Solutions platforms. Our electronic technologies businesses posted their best quarterly results since
2006, driven primarily by gains in Asia. We are very happy with this progress but continue to be cautious of their markets.

We anticipate continued material price increases, but we are encouraged that our leaders are implementing price increases to
offset the majority of these costs. I am confident our business leaders will do the right things with this new product development,
best cross-country sourcing. We are passing on price increases to assure the continued success of Dover.


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This continued focus on performance improvements to maximize the results of our global business environments, along with
our strong cash generation, are very encouraging. Accordingly, I remain confident that Dover will deliver on our earlier guidance
of 12%-plus annual EPS growth. However, be assured we stand ready to quickly implement contingency plans and appropriately
adjust our businesses should the environment materially change from our expectations.

With that, I will turn the call back to Paul Goldberg for questions.

Thanks, Ron and Bob. At this time, I'd like to ask Brianna to queue the questions. I'd like to remind you again please if you can
limit your question to one with a follow-up, that way we will be able get everybody involved. Brianna?

QUESTIONS AND ANSWERS
Operator
Thank you. (Operator Instructions). Wendy Caplan, Wachovia.

Wendy Caplan - Wachovia Securities - Analyst
Good morning. Could we talk a little bit about the book-to-bill in the segment? It looks like Fluid Management and Electronic
Technologies are still above one, but the other two segments look a little weaker, notably engineered systems, which I'm
guessing is from the engineered products slumpiness, but if you could kind expand on those two segment book-to-bills, please.

Wendy, if I might, just to kind of put this in reference, again our orders were up year-over-year by about 6%. The trend of those
orders were very similar to last year in terms of kind of where they hit. But the segments you talked about were the weaker of
the four. However, that's not totally untraditional. Some of that's a reaction to some of the changes that Wal-Mart is bringing
into the marketplace, as well as at Belvac, which is certainly seeing a different [pan-necking] opportunity this year versus past
years, and that's just more of a market change of opportunities. Those are project-related businesses.

Wendy, this is Bob. At engineered products platform, our book-to-bill for the second quarter was 0.97. As Ron mentioned, the
real significant decrease year-over-year was at Belvac, and that's just we are in a down cycle right now and sort of a multiyear
project phase that some of their customers go through.

A little bit of negative comparison at Hill Phoenix year-over-year -- that again mostly due to the decline of new store construction
at Wal-Mart. The rest of the businesses in that group held up fairly well.

Operator
Terry Darling, Goldman Sachs.


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Terry Darling - Goldman Sachs - Analyst
I'm wondering if you could comment a little bit on what you see changing on three items for the second half of the year. I think
you addressed it sort of implicitly a bit, first on organic growth, 5.5% or so, this quarter very strong. It looks like, on a book-to-bill
we ought to see that pull back a bit. Then I wondered if you would also talk about this raw material price continuing in the
second half. You are being cautious on it. Is that just based on the macro factors, or do you have some visibility on that continuing
to get tougher for you?

Kind of addressing each of those three questions, certainly from an organic growth standpoint, we've identified or we forecast
4% to 5% organic growth through the remainder of the year. There's not a lot of acquisitions that we did in the end of '07 that
will fuel acquisition growth, so we still feel pretty good about that number.

I would also say that, referring back to our book-to-bill, I think we kind of covered it fairly well in our last comments but there
wasn't anything significant in the markets yet that really causes us to see a significant change in business level. We were up
year-over-year. We continue to feel very strong about the oil market and we continue to believe their product ID is going to
hold up well.

Electronics certainly had a nice comeback in the quarter. We would like to think that we will see some of that hold up, but that's
always a bit of a variable market. But we still feel pretty good about the economy right now, Terry. It's been a pretty strong year
so far.

[Rafting] to raw material prices, I think we've done a number of things to prepare our companies to be, let's see, more proactive
as it relates to the raw material pricing and how we handle that. We did a lot of moves of our companies to Mexico, to other
Eastern Block companies, to increase our presence in Asia over the last couple of years. There were costs associated with that.
I think we are getting the benefit of that now. I think our companies have internal initiatives on synergies that are making them
more efficient, and then I think we are doing a much better job of analyzing the real value we bring to our customers and
appropriately pricing for that. I think those things in total have caused us to offset the majority of our raw material price increases
year-to-date.

Then just a quick modeling question modeling -- can you talk about the sequential increase in net interest expense and the
year-over-year decline in free cash flow, and what you are expecting on interest expense and free cash flow in the back half of
the year?

Rob Kuhbach - Dover Corp. - VP Finance, CFO
Yes. From the interest-expense side, it was really just driven by probably a more accelerated share repurchase than we originally
laid out, so that drove our net debt up about $0.5 billion. The difference in the interest expense is the delta of that.

What was the second half of your question?

Rob, just to clarify, debt up to $500 million, you only repurchased $198 million in the quarter, and working capital as a percentage
of sales was actually down year-over-year, so what am I missing there?


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Well, if you look at it, when we started the share repurchase program, if you go back exactly a year, we hadn't done any real
significant share repurchase. We really started in earnest in August of last year. So that's a pretty hefty amount of share repurchase
in a relatively short time.

From a free cash flow perspective, we had very strong free cash flow in the first quarter. The second quarter was relatively strong.
So on a comparable basis, we are up 29% year-to-date over last year.

Okay, I will follow-up. Thanks.

Operator
Alex Blanton, Ingalls & Snyder.

Alex Blanton - Ingalls & Snyder - Analyst
I wonder if you could give us a flavor for the trends, geographically, what your potential exposure is to Europe, which is weakening
in many countries, and how much benefit you might be getting from strength in Asia and Latin America?

Alex, that's always very company-specific and market-specific, but I think we have a slide in our deck that shows our growth
rate year-to-date. The majority of our growth has come in Asia. That's been electronically a growth rate driven, plus the other
companies that we have that have a strong Asian presence, such as Knowles and others.

Europe for us was actually up from a growth rate standpoint this year over last. Again, we have some businesses performing
while there. Imaje, our product ID company, certainly is located in Europe. SWEP has had a very good run in its heat exchanger
business in Europe, and we continue to see great opportunities for them to build. They opened a new plant in China during the
quarter, so that will be increasing their international presence.

So across the board, pretty good global engagement here. I know a lot of people are talking about Europe pulling back. Our
rate of growth in Europe has kind of held in there fairly well. In fact, DE-STA-CO, which serves the automotive market in general,
is down certainly in the US, but projects with Audi and VW or Volkswagen in Europe have continued to keep that business quite
active.

Okay. The second question is on the corporate SG&A. It was up about 74 basis points year-over-year, and that hurt -- well, there
may have been good reason for that but had it not been up, it would have added $0.06 or $0.07 to the earnings per share. So
could you give us the reason for that? Is it a product mix change, or is it additional spending of some kind or what?


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Alex, this is Rob Kuhbach. We've had somewhat higher professional fees and we had to make some adjustments in our contingency
reserves. We don't expect that to continue. The second quarter was somewhat higher than we expected and I would say we've
adjusted our overall annual corporate spend rate. If you look in the Outlook page on the slide, we moved that up slightly from
probably a total of $5 million from where it was at the end of the first quarter. I would say the lion's share of that is from consulting
fees that we've been engaged in, and part of that relates to our integration process planning and the overall business improvement
process. Some of that we've absorbed at the corporate level rather than run it through the individual operating company. So I
would say it's largely professional fees.

Yes, what was that number you just referred to?

If you look in our slide, we have an outlook on corporate expenses, and we've raised the estimated full-year number by roughly
$5 million.

But that's already been taken is what you're saying?

What I'm saying is the lion's share of it we think has been absorbed in the second quarter (inaudible) delta.

Operator
Scott Davis, Morgan Stanley.

Scott Davis - Morgan Stanley - Analyst
Maybe a tough question to answer, but given that you are 95% FIFO accounting, Rob, do you have a feel for either, A, how much
that kind of helped you on a price/cost base this quarter, or, B, maybe how far behind the price cost curve? I mean, I know that
buys you a little bit of time to raise prices from an accounting perspective, but how much pressure does that put on you for 3Q
to really get prices in?

I would say the impact on Dover -- first of all, not a lot of our companies are actually on FIFO. A lot of them are on LIFO so we
don't have the same -- the other way around; I'm sorry. So we don't have as much of an impact as companies that are entirely
on that system, but I would say that our ability to manage through that exercise is very high. We don't expect that to have much
of an impact for the quarter or the rest of the year.


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Okay, good. When you talk about electronics really had a very nice, positive surprise this quarter and that begs a question when
you look at the book-to-bill. Was there any kind of pull-forward of business ahead of announced price increases that you are
aware of?

I would say, in general, that we didn't see any significant -- I mean, obviously pricing has been going on all year and will continue
to go on. I don't think there's any significant (technical difficulty) it's immeasurable if there's been any impact at all.

Okay. The last question, on Paladin, can you give us an indication of the rate of change? Is it still negative? Have we stabilized
at all at lower levels, or are we still going down?

Well, certainly the demolition and recycling market at Paladin has continued to hold strong. That's been really the highlight of
that marketplace. The utility business within Paladin has really performed well. Heavy construction, light construction certainly
has been down. We don't anticipate any significant change or improvement in that through the course of the year.

I would also point out, though, Scott, even with those challenges, we've been doing significant things behind the scenes to
improve our cost base in that business. We've also been seeking greater synergies among our companies. We've closed some
plants to streamline the business, and that business was a double-digit margin business in the second quarter.

Okay. Ron, congrats, a little early congrats on your retirement and thank you for your time. The last field trip was very good.
Thank you.

Operator
Steve Tusa, JPMorgan.

Steve Tusa - JPMorgan - Analyst
Congratulations, Ron. You've done a lot over the last couple of years and we appreciate everything you've done and I second
that on the trip a couple of months ago.

Just on the outlook, when I look at your normal seasonality from the second to the third quarter, you usually have somewhat
of a bump up there, maybe 5% to 6% growth quarter-over-quarter. Is there anything you are seeing out there in the near term
that would throw you off the normal seasonality?


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I think your comment on seasonality is directionally somewhat right, Steve. It's very historical. I would think the peaks and valleys
of that may be somewhat muted and it will be a little flatter as we look at where we are at compared to the remainder of the
year, not a lot of seasonal impact from probably from the second to third quarter.

Is there anything out there -- is that raw materials related? Is it just the change in the portfolio? Is there something going in oil
and gas that slows down, that drives that?

No, there's nothing about seasonality about oil and gas. You know, typically, the thing that would come to play there is if you
have a real rainy season that takes people out of the market or allows them not to get into certain fields, but I would say we
don't anticipate any seasonality issues.

We do get into some construction issues that might impact new store constructions or things that would impact, like what with
Hill Phoenix or it might impact our PDQ building some of their (inaudible) or even stations that OPW might serve, but not a lot
of that, Steve. It's going to be highly intensive quarter-to-quarter. It's really -- there's nothing out there that I would put my
finger on at the moment in any of our sectors that we look at and fret about really to seasonality for the remainder of the year.

Okay. Then one more question just on the 12%-plus growth guidance -- that's on the new continuing ops number, correct? So,
as Crenlo comes back into the fold, that adds a few pennies?

Well, I think what we've done, Steve, is if you recall, last quarter, as we did the guidance, we said 12%-plus on the number that
we had at that time. I think there was a 4% -- or excuse me, a 2% change year-to-date. Certainly, that should be added to the
number -- $0.02, I'm sorry.

(multiple speakers)

Yes, just to clarify it a little bit, Steve, the guidance that we are still holding to our guidance, which was off the $3.22 of last year
and it is appropriate to add in $0.04 for this year for the Triton Crenlo discontinuation/re-continuation, for a lack of a better
word. Is that clear?

That's clear. Thanks a lot.


FINAL TRANSCRIPT

Steve, one other clarification -- you should anticipate that the third and fourth quarters will be more balanced as opposed to
what you talked about historically on the seasonality.

Okay, so maybe not as strong in the third but not as weak of a drop-off in the fourth?

Exactly.

Operator
John Inch, Merrill Lynch.

John Inch - Merrill Lynch - Analyst
Thank you. Good morning. Ron, I echo those sentiments.

So, just as a clarification, so the $0.04 of contribution from the impact of Crenlo and Triton, so Triton I think was just kind of
breaking even, so the $0.04, is that really the way to look at it? $0.01 of contribution from Crenlo per quarter, is that the way to
think about it?

I think, last year, when we look at last year, you know, Triton had a significant loss and so in effect, Crenlo for this year we are
counting as $0.01 a quarter. If you looked at it as a Crenlo stand-alone, it would be more like $0.02 a quarter.

I see, okay. Then Bob, you mentioned that you guys had pretty much broken even on the [raw] side with respect to pricing but
(multiple speakers) --.

Could I just go back to Rob's point? I just want to qualify. It's true, Triton was losing money at the beginning of last year, but as
we exited last year, Triton was in fact making money. So just swapping out Crenlo and Triton, it's just an incremental $0.01 per
quarter, going forward.

But Paul, if you look at 2008, Triton wasn't really losing money, right? It was -- you get (multiple speakers)


FINAL TRANSCRIPT

No, no, they weren't.

Right, okay, so the incremental low comes from more from the Crenlo side versus Triton?

That's exactly the case; that's right.

Okay, so then when I go back to Bob's point about how kind of [rosin] pricing pretty much broke even in the quarter, yet if you
look at the engineered systems and the industrial products businesses, they didn't have as good leverage. Kind of some of the
implication is maybe some of that was the impact of [ROS] but you're saying that's not the case. Is that the way to look at it?

This is Bob. A lot of moving parts in both of those segments, but even if we were able to do 100% pass-through of material cost
into pricing, or offset it with hedging, the impact of that is you get -- it doesn't benefit you with respect to leverage. That's just
the way the math works.

The difference between the two segments -- and I will speak specifically to Engineered Systems -- is that, even though we had
some significant price increases coming through during the first half of this year, especially in steel, that we were able to pass
through some of those charges with the coverage on existing customer contracts. But in a couple of instances, we also had
pretty favorable hedging positions that were in position through June, through July, sometimes through August. So it's been
a mixture of activity, some of it pricing, some of it hedging, some of it resourcing, some product.

John, I might also add that Crenlo is now part of industrial products, was added back into that group. Its margins are a little
below the group in general, so it would have not been [very additive] to their ability to leverage in the quarter.

I mean I guess the question is do you expect leverage to improve in these two businesses going forward, or should we just -- I
mean is this an economy issue? Is it just you have to get into business by business, or how should we think about that?

Well, I think the businesses really, you know, they performed at 13.5% margins in the quarter. I think there's some potential
upside there that they should be able to find over time, whether it be pricing, or whether it be internal initiatives and the synergy
programs they're working on.


FINAL TRANSCRIPT

In some cases, you have cost upfront in order to capture those gains. There was some plant closings that happened in the group
that we will see benefit from going forward.

Thanks very much.

Operator
Shannon O'Callaghan, Lehman Brothers.

Shannon O'Callaghan - Lehman Brothers - Analyst
A question on the margins -- I'm just trying to understand a little bit the reduction to the margin guidance. I mean, we started
the year looking kind of 50 to 100 basis points improvement. Now, we are looking for 25 to 50. It sounds like you've been doing
a good job on price costs; it sounds like the synergies are ahead of plan. So how would you characterize what's changed to get
you a little less optimistic in terms of the margin improvement this year?

I don't think we've really kind of changed our overall position on margin. I think we are a little further up the curve at the end
of the second quarter than we thought we might have been at this point, which is a nice positive issue to have. I think we are
just trying to kind of keep the guidance in-line with where we think we will really finish up at, but certainly no lack of confidence
on our part on the improvements going on in our companies.

Bob, do you want to be additive to that?

Well, I guess the other comment would be I think we are being a bit cautious, just given the economic challenges we know we
are facing in the second half.

So it's mainly around the economics. I mean, you mentioned the hedges. You said it was negligible price costs this quarter. I
mean, are you assuming it gets worse 3Q, 4Q or any other dynamics?

To be honest, probably more concerned about Quarter 3 than we are Quarter 4.

Okay. Could you just give a little more of the color I guess on what's going on in product ID? I mean, the organic growth for the
whole segment was sort of flattish. You called out Belvac. It's not that big a business, but it sounds like it's pretty challenged
right now. How is product ID doing, organically?


FINAL TRANSCRIPT

Organic growth for product ID in the second quarter was 4%. Most of that, most of the organic growth -- well, most of the
growth. I'm not sure I could split it regionally on organic growth, but most of the growth that we experienced in the second
quarter was led by Europe, Latin America and Asia. North America was a bit flat. But organic growth for the quarter was 4%.

Okay, and just one more, just on Crenlo, you mentioned I think getting out of some of the underperforming parts of it before
you brought it back in. Is Crenlo operating any better now than it was when you put it into disc. op.?

Yes it is, and Crenlo is going to be a low double-digit margin business, or at least that's about where it's at. I think that we
continue to believe, though, that we put it back in our material handling group, that there might be some synergies that might
share with our Paladin business and those are going to be explored and hopefully we can find some additional benefits there.

Okay, but so it's being brought in -- I mean if you are pursuing those, this is going to be part of the portfolio, not something
that might go back out the door again?

I think we are going to manage Crenlo to the best of our ability to make it the best company possible in Dover. We will reevaluate
our position in construction equipment going forward, but I think, in today's market, there's just not an appetite for that business
currently.

Okay, great. Thanks a lot.

Operator
Nigel Coe, Deutsche Bank.

Nigel Coe - Deutsche Bank - Analyst
I just want to clarify the 12% question. So 12%, is that off $3.22 or $3.26?

It's off the $3.22, Nigel.


FINAL TRANSCRIPT

Okay.

And then you would add in the $0.01 incremental each quarter of this year for $0.04 in total, for the discontinuance Triton Crenlo
thing.

Okay, okay. Then the $0.03 net impact from (inaudible) in Q2, you mentioned that it was I think $0.02 of investments to achieve
that. I mean, how does that evolve? How does that $0.03 net evolve over the balance of the year?

I would say that we anticipate continued progress. When we talked about the original $40 million to $60 million over two years,
that mathematically comes out to somewhere around $0.13 to $0.20, so we've picked up $0.01 in the first quarter, $0.03 in the
second. I would say you're likely to see something on the same order of magnitude in the third quarter and the fourth quarter.
You know, Markem Imaje will continue to be one of the principle drivers of that process, but there's a lot of activity in the same
arena going on in other places like in the Pump Solutions group. So I think we feel confident that we are going to be well on
track to achieving that kind of progress over two years.

I think we have high confidence. I think we continue to see a little bit more challenging material process than we anticipated,
as we made our statement early on, but we are still not backing off of it.

Okay. Then on Triton, I mean it's been struggling for about a couple of years now. I'm sure you're all aware of that but why this
quarter? Why did you pull the trigger this quarter?

Well, I think we have a viable buyer currently in place that allows us to move the process forward, and we are taking advantage
of that opportunity. This just happens to be the time that it was all in place.

Okay, fair enough. Then just one more question if I may? National gas prices have obviously spiked; that's generally good for
gas drilling in the US, which is obviously good news to you. Are you seeing an increase in activity in that field?

Quite candidly, as we see these spike-ups, whether they be natural gas or whether they be oil prices, I think the oil patch is so
active and utilization is so high right now that you don't see significant peaks from that. I think the patch is very active. It just


FINAL TRANSCRIPT

allows people to have confidence in continuing the projects they have out there, which means that the rigs will be active for a
longer period of time, but I don't think we see a huge change in number just based on the price of oil and gas. I think, quite
candidly, I think, as we head into the winter, depending on what happens in the winter time frame, we might see natural gas
continue to hold well. That will continue to keep drilling activity high.

I think Canada will probably improve its drilling in the second half of the year, maybe from what it was in the first half. We are
optimistic about that because we have quite a footprint of businesses in Canada.

Okay, thanks a lot.

We are somewhat overweighted on the natural gas side. If you look at our energy group as a general rule, we benefit more from
gas drilling than oil drilling.

Okay, thanks a lot.

Operator
[Matt McConnell], Robert W. Baird.

Matt McConnell - Robert W. Baird & Co. - Analyst
The $1.5 billion that you spent on metals, can you give us a sense of how much of that is protected through long-term agreements,
or how much of your spend in the second quarter was at current prices or what had been protected before?

I think we want to clarify for you, Matt, that the $1.5 billion was an annual spend.

Matt McConnell - Robert W. Baird & Co. - Analyst
Right, yes. So, of the portion that was in the quarter, how much of that would have been protected through longer-term supply
agreements?

A number of our companies have long-term hedging agreements to try to minimize their price increases. I will say those have
been much more difficult to enforce as we progress through the course of the year, but again, we are very comfortable in the
second quarter that we did recover the majority of the price increases, whether they be through pricing or through internal
improvement initiatives. So there was a significant impact in the second quarter. I think that will become a steeper challenge
as we move throughout the remainder of the year.


FINAL TRANSCRIPT

I would just say, Matt, that we don't have that number in exact detail, but I would say more recovery was through price increases
than hedging, from my knowledge (multiple speakers).

(multiple speakers) for sure.

Operator
Thank you. At this time, I would like to turn the floor over to Ron Hoffman for any closing remarks.

I think our second quarter was a clean quarter in terms of there wasn't a lot of ins and outs of various cost issues. I'm glad to see
that we are moving forward to getting the Triton business sold. I know that's been a bit of a question for many analysts for a
period of time now.

I do think the synergy initiatives that are going on inside of Dover are really catching some nice adherence and I think I'm
encouraged. Bob commented on his prepared remarks that we believe we are ahead of pace and also identifying maybe more
opportunities than we initially had thought of. So we look forward to reporting more on that as we move forward and we look
forward to chatting with you again in the third quarter and having good results to talk about at that time.

Thanks. This concludes our conference call. Of course, we thank you for your continued interest in Dover and look forward to
speaking with you again next quarter. If there are any follow-up questions, please give me a call.

Operator
Thank you. That does conclude today's second-quarter 2008 Dover Corporation earnings conference call. You may now disconnect
your lines at this time, and have a wonderful day.

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