Item 8. FINANCIAL STATEMENT AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND

FINANCIAL STATEMENT SCHEDULE

Page
50	Management's Report on Internal Control Over Financial Reporting
51	Report of Independent Registered Public Accounting Firm
52	Consolidated Statements of Earnings
53	Consolidated Statements of Comprehensive Earnings
54	Consolidated Balance Sheets
55	Consolidated Statements of Stockholders' Equity
56	Consolidated Statements of Cash Flows
57	Notes to Consolidated Financial Statements
97	Financial Statement Schedule - Schedule II, Valuation and Qualifying Accounts

(All other schedules are not required and have been omitted)

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f).

The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2014. In making this assessment, the Company’s management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework (2013).

Based on its assessment under the criteria set forth in Internal Control — Integrated Framework (2013), management concluded that, as of December 31, 2014, the Company’s internal control over financial reporting was effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP.

In making its assessment of internal control over financial reporting as of December 31, 2014, management has excluded all companies acquired in purchase business combinations during 2014. The Company is currently assessing the control environments of these acquisitions. The following companies were acquired in purchase business combinations during 2014: Heidelberg CSAT GmbH, MS Printing Solutions, Timberline Manufacturing Company, WellMark Holdings, Inc., Liquip International, and Accelerated Companies, LLC. These companies are wholly-owned by the Company and their revenue for the year ended December 31, 2014 represents approximately 2.6% of the Company’s consolidated total revenue for the same period and their excluded assets represent approximately 3.0% of the Company’s consolidated assets as of December 31, 2014.

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2014 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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, 2014 and 2013, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2014 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control - Integrated Framework 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Control Over Financial Reporting, appearing under Item 8. Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included 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. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As described in Management’s Report on Internal Control Over Financial Reporting, management has excluded from its assessment of internal control over financial reporting as of December 31, 2014 those companies acquired by the Company in purchase business combinations during 2014. We have also excluded certain companies from our audit of internal control over financial reporting. Those companies are wholly-owned by the Company and their total assets and total revenues, comprised of Heidelberg CSAT GmbH, MS Printing Solutions, Timberline Manufacturing Company, Wellmark Holdings, Inc., Liquip International, and Accelerated Companies LLC, represent 3.0% and 2.6%, respectively, of the related financial statement amounts as of and for the year ended December 31, 2014.

	/s/ PricewaterhouseCoopers LLP
	Chicago, Illinois
	February 13, 2015

DOVER CORPORATION

CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share figures)

	Years Ended December 31,
	2014				2013				2012
Revenue	$	7,752,728			$	7,155,096			$	6,626,648
Cost of goods and services	4,778,479				4,376,505				4,046,659
Gross profit	2,974,249				2,778,591				2,579,989
Selling and administrative expenses	1,758,765				1,616,921				1,520,961
Operating earnings	1,215,484				1,161,670				1,059,028
Interest expense, net	127,179				120,654				121,269
Other (income) expense, net	(5,902		)		(4,970		)		6,694
Earnings before provision for income taxes and discontinued operations	1,094,207				1,045,986				931,065
Provision for income taxes	316,067				248,459				280,990
Earnings from continuing operations	778,140				797,527				650,075
(Loss) earnings from discontinued operations, net	(2,905		)		205,602				160,995
Net earnings	$	775,235			$	1,003,129			$	811,070
Earnings per share from continuing operations:
Basic	$	4.67			$	4.66			$	3.58
Diluted	$	4.61			$	4.60			$	3.53
(Loss) earnings per share from discontinued operations:
Basic	$	(0.02	)		$	1.20			$	0.89
Diluted	$	(0.02	)		$	1.18			$	0.88
Net earnings per share:
Basic	$	4.65			$	5.86			$	4.47
Diluted	$	4.59			$	5.78			$	4.41
Dividends paid per common share	$	1.55			$	1.45			$	1.33

See Notes to Consolidated Financial Statements

DOVER CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

(In thousands)

	Years Ended December 31,
	2014				2013				2012
Net earnings	$	775,235			$	1,003,129			$	811,070
Other comprehensive (loss) earnings, net of tax
Foreign currency translation adjustments:
Foreign currency translation (losses) gains during period	(144,643		)		34,617				38,880
Reclassification of foreign currency translation gains to earnings	(6,300		)		(29,881		)		—
Total foreign currency translation	(150,943		)		4,736				38,880
Pension and other postretirement benefit plans:
Actuarial (losses) gains arising during period	(60,766		)		101,478				(56,159		)
Prior service cost arising during period	(354		)		(1,246		)		(4,685		)
Amortization of actuarial losses included in net periodic pension cost	5,792				12,542				8,530
Amortization of prior service costs included in net periodic pension cost	5,617				5,733				5,304
Total pension and other postretirement benefit plans	(49,711		)		118,507				(47,010		)
Changes in fair value of cash flow hedges:
Unrealized net (losses) gains arising during period	(137		)		35				482
Net gains reclassified into earnings	(107		)		(84		)		(357		)
Total cash flow hedges	(244		)		(49		)		125
Other	939				(565		)		609
Other comprehensive (loss) earnings	(199,959		)		122,629				(7,396		)
Comprehensive earnings	$	575,276			$	1,125,758			$	803,674

See Notes to Consolidated Financial Statements.

DOVER CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

	December 31, 2014				December 31, 2013
Current assets:
Cash and cash equivalents	$	681,581			$	803,882
Receivables, net of allowances of $18,894 and $17,203	1,186,746				1,076,641
Inventories, net	863,737				715,311
Prepaid and other current assets	101,482				62,037
Deferred tax assets	63,276				60,101
Total current assets	2,896,822				2,717,972
Property, plant and equipment, net	837,069				787,849
Goodwill	3,491,557				3,108,580
Intangible assets, net	1,369,520				1,258,911
Other assets and deferred charges	168,246				202,806
Assets of discontinued operations	327,171				2,779,063
Total assets	$	9,090,385			$	10,855,181
Current liabilities:
Notes payable and current maturities of long-term debt	$	777,956			$	229,278
Accounts payable	615,332				522,713
Accrued compensation and employee benefits	272,822				267,579
Accrued insurance	95,896				92,600
Other accrued expenses	266,277				219,609
Federal and other taxes on income	11,071				10,469
Total current liabilities	2,039,354				1,342,248
Long-term debt	2,253,041				2,599,201
Deferred income taxes	564,207				491,851
Other liabilities	482,340				508,864
Liabilities of discontinued operations	50,718				535,621
Stockholders' equity:
Preferred stock - $100 par value; 100,000 shares authorized; none issued	—				—
Common stock - $1 par value; 500,000,000 shares authorized; 255,892,502 and 255,320,345 shares issued at December 31, 2014 and December 31, 2013, respectively	255,893				255,320
Additional paid-in capital	900,833				871,575
Retained earnings	7,074,782				7,954,536
Accumulated other comprehensive (loss) earnings	(158,931		)		67,723
Common stock in treasury	(4,371,852		)		(3,771,758		)
Total stockholders' equity	3,700,725				5,377,396
Total liabilities and stockholders' equity	$	9,090,385			$	10,855,181

See Notes to Consolidated Financial Statements

DOVER CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

	Common Stock $1 Par Value				Additional Paid-In Capital				Retained Earnings				Accumulated Other Comprehensive Earnings (Loss)				Common Stock in Treasury				Total Stockholders' Equity
Balance at December 31, 2011	$	250,592			$	663,289			$	6,629,116			$	(47,510	)		$	(2,564,932	)		$	4,930,555
Net earnings	—				—				811,070				—				—				811,070
Dividends paid	—				—				(240,959		)		—				—				(240,959		)
Common stock issued for acquisition	1,636				98,974				—				—				—				100,610
Common stock issued for the exercise of share-based awards	1,871				17,210				—				—				—				19,081
Tax benefit from the exercise of share-based awards	—				22,771				—				—				—				22,771
Stock-based compensation expense	—				31,251				—				—				—				31,251
Common stock issued, other	20				1,182				—				—				—				1,202
Common stock acquired	—				—				—				—				(748,955		)		(748,955		)
Other comprehensive loss, net of tax	—				—				—				(7,396		)		—				(7,396		)
Balance at December 31, 2012	$	254,119			$	834,677			$	7,199,227			$	(54,906	)		$	(3,313,887	)		$	4,919,230
Net earnings	—				—				1,003,129				—				—				1,003,129
Dividends paid	—				—				(247,820		)		—				—				(247,820		)
Common stock issued for the exercise of share-based awards	1,194				(19,888		)		—				—				—				(18,694		)
Tax benefit from the exercise of share-based awards	—				25,661				—				—				—				25,661
Stock-based compensation expense	—				30,480				—				—				—				30,480
Common stock issued, other	7				645				—				—				—				652
Common stock acquired	—				—				—				—				(457,871		)		(457,871		)
Other comprehensive earnings, net of tax	—				—				—				122,629				—				122,629
Balance at December 31, 2013	$	255,320			$	871,575			$	7,954,536			$	67,723			$	(3,771,758	)		$	5,377,396
Net earnings	—				—				775,235				—				—				775,235
Dividends paid	—				—				(258,487		)		—				—				(258,487		)
Separation of Knowles	—				—				(1,396,502		)		(26,695		)		—				(1,423,197		)
Common stock issued for the exercise of share-based awards	565				(17,136		)		—				—				—				(16,571		)
Tax benefit from the exercise of share-based awards	—				15,110				—				—				—				15,110
Stock-based compensation expense	—				31,628				—				—				—				31,628
Common stock issued, other	8				639				—				—				—				647
Common stock acquired	—				(983		)		—				—				(600,094		)		(601,077		)
Other comprehensive loss, net of tax	—				—				—				(199,959		)		—				(199,959		)
Balance at December 31, 2014	$	255,893			$	900,833			$	7,074,782			$	(158,931	)		$	(4,371,852	)		$	3,700,725

See Notes to Consolidated Financial Statements

DOVER CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Years Ended December 31,
	2014				2013				2012
Operating Activities of Continuing Operations
Net earnings	$	775,235			$	1,003,129			$	811,070
Adjustments to reconcile net earnings to cash from operating activities:
Loss (earnings) from discontinued operations, net	2,905				(205,602		)		(160,995		)
Depreciation and amortization	307,188				278,033				229,934
Stock-based compensation	31,628				30,480				30,884
Provision for losses on accounts receivable (net of recoveries)	4,730				5,869				3,810
Deferred income taxes	(33,866		)		8,275				(3,450		)
Employee benefit plan expense	34,627				44,311				42,681
Contributions to employee benefit plans	(24,232		)		(40,258		)		(47,584		)
Other, net	(21,813		)		3,904				(14,834		)
Cash effect of changes in assets and liabilities (excluding effects of acquisitions, dispositions and foreign exchange):
Accounts receivable	(87,207		)		(87,806		)		10,869
Inventories	(63,717		)		1,684				(16,295		)
Prepaid expenses and other assets	(18,527		)		(8,452		)		(1,776		)
Accounts payable	60,176				38,808				35,552
Accrued compensation and employee benefits	(17,731		)		(17,817		)		46,470
Accrued expenses and other liabilities	40,955				(7,353		)		(22,571		)
Accrued taxes	(40,187		)		(67,593		)		24,604
Net cash provided by operating activities of continuing operations	950,164				979,612				968,369
Investing Activities of Continuing Operations
Additions to property, plant and equipment	(166,033		)		(141,694		)		(146,502		)
Acquisitions (net of cash and cash equivalents acquired)	(802,254		)		(322,838		)		(1,080,433		)
Proceeds from the sale of property, plant and equipment	14,373				23,801				9,332
Proceeds from the sale of businesses	191,348				76,457				—
Other	(19,991		)		2,597				(7,727		)
Net cash used in investing activities of continuing operations	(782,557		)		(361,677		)		(1,225,330		)
Financing Activities of Continuing Operations
Cash received from Knowles Corporation, net of cash distributed	359,955				—				—
Proceeds from long-term debt, net of discount and issuance costs	—				403,776				—
Proceeds from exercise of share-based awards, including tax benefits	20,337				38,922				66,062
Change in notes payable, net	251,500				(381,000		)		607,500
Reduction of long-term debt	(6,566		)		(3,246		)		(3,582		)
Dividends to stockholders	(258,487		)		(247,820		)		(240,959		)
Purchase of common stock	(601,077		)		(457,871		)		(748,955		)
Payments for employee tax obligations upon exercise of share-based awards	(21,151		)		(31,303		)		(23,008		)
Net cash used in financing activities of continuing operations	(255,489		)		(678,542		)		(342,942		)
Cash Flows from Discontinued Operations
Net cash provided by operating activities of discontinued operations	25,760				172,955				298,544
Net cash used in investing activities of discontinued operations	(19,753		)		(107,191		)		(127,446		)
Net cash provided by discontinued operations	6,007				65,764				171,098
Effect of exchange rate changes on cash and cash equivalents	(40,426		)		(1,351		)		22,126
Net (decrease) increase in cash and cash equivalents	(122,301		)		3,806				(406,679		)
Cash and cash equivalents at beginning of period	803,882				800,076				1,206,755
Cash and cash equivalents at end of period	$	681,581			$	803,882			$	800,076
Supplemental information - cash paid during the year for:
Income taxes	$	372,446			$	318,402			$	266,517
Interest	$	128,412			$	123,881			$	125,770

See Notes to Consolidated Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and where otherwise indicated)

1. Description of Business and Summary of Significant Accounting Policies

Description of Business - Dover Corporation (the "Company") is a diversified global manufacturer delivering innovative equipment, components, and specialty systems. The Company also provides supporting engineering, testing, and other similar services, which are not significant in relation to consolidated revenue. The Company’s businesses are based primarily in the United States of America and Europe with manufacturing and other operations throughout the world. The Company operates through four business segments that are aligned with the key end markets they serve: Energy, Engineered Systems, Fluids, and Refrigeration & Food Equipment. For additional information on the Company’s segments, see Note 17 Segment Information.

Principles of Consolidation - The consolidated financial statements include the accounts of the Company and its wholly-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. As discussed in Note 4 Disposed and Discontinued Operations, the Company is reporting certain businesses that are held for sale at December 31, 2014 as discontinued operations. The assets, liabilities, results of operations, and cash flows of these businesses, as well as the results of Knowles Corporation prior to the spin-off, have been separately reported as discontinued operations for all periods presented.

Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying disclosures. These estimates may be adjusted due to changes in future economic, industry, or customer financial conditions, as well as changes in technology or demand. Estimates are used in accounting for, among other items, allowances for doubtful accounts receivable, net realizable value of inventories, restructuring reserves, warranty reserves, pension and post retirement plans, stock-based compensation, useful lives for depreciation and amortization of long-lived assets, future cash flows associated with impairment testing for goodwill, indefinite-lived intangible assets and other long-lived assets, deferred tax assets, uncertain income tax positions, and contingencies. Actual results may ultimately differ from estimates, although management does not believe such differences would materially affect the financial statements in any individual year. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the Consolidated Financial Statements in the period that they are determined.

Cash and Cash Equivalents - Cash and cash equivalents include 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.

Allowance for Doubtful Accounts – The Company maintains allowances for estimated losses as a result of customers' inability to make required payments. Management evaluates the aging of the accounts receivable balances, the financial condition of its customers, historical trends, and the time outstanding of specific balances to estimate the amount of accounts receivable that may not be collected in the future and records the appropriate provision.

Inventories – Inventories for the majority of the Company’s subsidiaries, including all international subsidiaries, are stated at the lower of cost, determined on the first-in, first-out (FIFO) basis, or market. Other domestic inventories are stated at cost, determined on the last-in, first-out (LIFO) basis, which is less than market value.

Property, Plant and Equipment - Property, plant and equipment includes the historic cost of land, buildings, machinery, and equipment, and significant improvements to existing plant and equipment or, in the case of acquisitions, a fair market value appraisal of such assets completed at the time of acquisition. Property, plant and equipment also includes the cost of purchased software. 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. The Company depreciates its assets on a straight-line basis over their estimated useful lives as follows: buildings and improvements 5 to 31.5 years; machinery and equipment 3 to 7 years; furniture and fixtures 3 to 7 years; vehicles 3 years; and software 3 to 5 years. Depreciation expense totaled $152,079 in 2014, $144,087 in 2013, and $128,341 in 2012.

Derivative Instruments - The Company uses derivative financial instruments to hedge its exposures to various risks, including interest rate and foreign currency exchange rate risk. The Company does not enter into derivative financial instruments for speculative purposes and does not have a material portfolio of derivative financial instruments. Derivative financial instruments used for hedging purposes must be designated and effective as a hedge of the identified risk exposure at inception of the contract. The Company recognizes all derivatives as either assets or liabilities on the consolidated balance sheet and measures those

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and where otherwise indicated)

instruments at fair value. For derivatives designated as hedges of the fair value of assets or liabilities, the changes in fair value of both the derivatives and of the hedged items are recorded in current earnings. For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivatives is recorded as a component of other comprehensive earnings and subsequently recognized in net earnings when the hedged items impact earnings.

Goodwill and Other Intangible Assets - Goodwill represents the excess of purchase consideration over the fair value of the net assets of businesses acquired. Goodwill and certain other intangible assets deemed to have indefinite lives (primarily trademarks) are not amortized. Instead, goodwill and indefinite-lived intangible assets are tested for impairment at least annually or more frequently if indicators of impairment exist, such as a significant sustained change in the business climate or a current expectation of an impending disposal. The Company conducts its annual impairment evaluation in the fourth quarter of each year. Recoverability of goodwill is measured at the reporting unit level and determined using a two-step process. For 2014, the Company identified 16 reporting units for its annual goodwill impairment test. Step one of the test compares the fair value of each reporting unit using a discounted cash flow method to its book value. This method uses the Company’s own market assumptions including projections of future cash flows, determinations of appropriate discount rates, and other assumptions which are considered reasonable and inherent in the discounted cash flow analysis. The projections are based on historical performance and future estimated results. These assumptions require significant judgment and actual results may differ from assumed and estimated amounts. Step two, which compares the book value of the goodwill to its implied fair value, was not necessary since there were no indicators of potential impairment from step one.

As discussed in Note 4 Disposed and Discontinued Operations, in connection with the sale of certain businesses held for sale, the Company recognized total impairment losses of $53,439 and $51,854, net of tax, in 2013 and 2012, respectively, within the results of discontinued operations. With respect to the fair value of businesses held for sale at December 31, 2014 each will be evaluated in subsequent reporting periods until the time of sale, and further adjustments to fair value are possible if business conditions should change.

Similar to goodwill, in testing its other indefinite lived intangible assets for impairment, the Company uses a discounted cash flow method to calculate and compare the fair value of the intangible asset to its book value. This method uses the Company’s own market assumptions which are considered reasonable and inherent in the discounted cash flow analysis. Any excess of carrying value over the estimated fair value is recognized as an impairment loss. No impairment of indefinite lived intangibles was indicated for the years ended December 31, 2014, 2013, or 2012.

Other intangible assets with determinable lives consist primarily of customer lists, unpatented technology, patents, and trademarks. These other intangibles are amortized over their estimated useful lives, ranging from 5 to 15 years.

Long-lived assets (including intangible assets with determinable lives) are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, such as a significant sustained change in the business climate. 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.

See Note 7 Goodwill and Other Intangible Assets for additional details on goodwill balances.

Foreign Currency - Assets and liabilities of non-U.S. subsidiaries, where the functional currency is not the U.S. dollar, have been translated at year-end exchange rates and profit and loss accounts have been translated using weighted-average yearly exchange rates. Foreign currency translation gains and losses are included as a component of Accumulated Other Comprehensive Earnings (Loss). Assets and liabilities of an entity that are denominated in currencies other than an entity’s functional currency are re-measured into the functional currency using end of period exchange rates or historical rates where applicable to certain balances. Gains and losses related to these re-measurements are recorded within the Statement of Earnings as a component of other expense (income), net.

Revenue Recognition - Revenue is recognized when all of the following conditions are satisfied: a) persuasive evidence of an arrangement exists, b) price is fixed or determinable, c) collectability is reasonably assured, and d) delivery has occurred or services have been rendered. The majority of the Company’s revenue is generated through the manufacture and sale of a broad range of specialized products and components, with revenue recognized upon transfer of title and risk of loss, which is generally upon shipment. Service revenue represents less than 5% of total revenue and is recognized as the services are performed. In limited cases, revenue arrangements with customers require delivery, installation, testing, certification, or other acceptance provisions to be satisfied before revenue is recognized.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and where otherwise indicated)

Stock-Based Compensation – The principal awards issued under the Company’s stock-based compensation plans include non-qualified stock-settled stock appreciation rights and performance share awards. The cost for such awards is measured at the grant date based on the fair value of the award. The value of the portion of the award that is expected to ultimately vest is recognized as expense on a straight-line basis, generally over the explicit service period of three years (except for retirement-eligible employees and retirees) and is included in selling and administrative expense in the Consolidated Statements of Earnings. Expense for awards granted to retirement-eligible employees is recorded over the period from the date of grant through the date the employee first becomes eligible to retire and is no longer required to provide service. See Note 13 Equity and Cash Incentive Program for additional information related to the Company’s stock-based compensation. At the time of grant, the Company estimates forfeitures, based on historical experience, in order to estimate the portion of the award that will ultimately vest.

Income Taxes - The provision for income taxes on continuing operations includes federal, state, local, and non-U.S. taxes. Tax credits, primarily for research and experimentation, non-U.S. earnings, and U.S. manufacturer's tax deduction 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 using enacted rates on the future tax consequences of temporary differences. Temporary differences include the differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases and the tax benefit of carryforwards. A valuation allowance is established for deferred tax assets for which realization is not assured. In assessing the need for a valuation allowance, management considers all available evidence, including the future reversal of existing taxable temporary differences, taxable income in carryback periods, prudent and feasible tax planning strategies, and estimated future taxable income. The valuation allowance can be affected by changes to tax regulations, interpretations and rulings, changes to enacted statutory tax rates, and changes to future taxable income estimates.

Tax benefits are recognized from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position in consideration of applicable tax statutes and related interpretations and precedents. Tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized on ultimate settlement.

The Company has not provided for any residual U.S. income taxes on unremitted earnings of non-U.S. subsidiaries as such earnings are currently intended to be indefinitely reinvested outside of the U.S. It is not practicable to estimate the amount of tax that might be payable if some or all of such earnings were to be repatriated, and the amount of foreign tax credits that would be available to reduce or eliminate the resulting U.S. income tax liability.

Research and Development Costs – Research and development costs, including qualifying engineering costs, are expensed when incurred and amounted to $118,411 in 2014, $117,178 in 2013, and $123,639 in 2012.

Advertising – Advertising costs are expensed when incurred and amounted to $38,882 in 2014, $36,453 in 2013, and $35,688 in 2012.

Risk, Retention, Insurance - The Company currently self-insures its product and commercial general liability claims up to $5.0 million per occurrence, its workers’ compensation claims up to $0.5 million per occurrence, and automobile liability claims up to $1.0 million per occurrence. Third-party insurance provides primary level coverage in excess of these amounts up to certain specified limits. In addition, the Company has excess liability insurance from third-party insurers on both an aggregate and an individual occurrence basis well in excess of the limits of the primary coverage. A worldwide program of property insurance covers the Company’s owned and leased property and any business interruptions that may occur due to an insured hazard affecting those properties, subject to reasonable deductibles and aggregate limits. The Company’s property and casualty insurance programs contain various deductibles that, based on the Company’s experience, are typical and customary for a company of its size and risk profile. The Company does not consider any of the deductibles to represent a material risk to the Company. The Company generally maintains deductibles for claims and liabilities related primarily to workers’ compensation, health and welfare claims, general commercial, product and automobile liability and property damage, and business interruption resulting from certain events. The Company accrues for claim exposures that 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 provide protection on both an individual claim and annual aggregate basis.

Reclassifications – Certain amounts in prior years have been reclassified to conform to the current year presentation.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and where otherwise indicated)

Recent Accounting Pronouncements – In June 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-12 which requires that a performance target for share-based payments that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. Under this new standard, compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the periods for which the requisite service has already been rendered. This update is effective for annual periods beginning after December 15, 2015. The Company has evaluated this guidance and determined that the adoption will not significantly impact the consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09 that introduces a new five-step revenue recognition model in which an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. This standard is effective for fiscal years beginning after December 15, 2016, including interim periods within that reporting period. The Company is currently evaluating the new guidance to determine the impact it will have on its consolidated financial statements.

In April 2014, the FASB issued ASU 2014-08, which includes amendments that change the requirements for reporting discontinued operations and require additional disclosures about discontinued operations. Under the new guidance, only disposals representing a strategic shift in operations - that is, a major effect on the organization's operations and financial results - should be presented as discontinued operations. Additionally, the ASU requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations. This update is effective for Dover in the first quarter of 2015. The Company has evaluated this guidance and determined that the adoption will not significantly impact the consolidated financial statements.

In July 2013, the FASB issued ASU 2013-11, which provides that an unrecognized tax benefit, or a portion thereof, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except to the extent that a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date to settle any additional income taxes that would result from disallowance of a tax position, or the tax law does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, then the unrecognized tax benefit should be presented as a liability. This standard was effective for Dover for fiscal years beginning after December 15, 2013. The Company adopted this guidance effective January 1, 2014. The adoption of this ASU did not significantly impact the consolidated financial statements.

In March 2013, the FASB issued ASU 2013-05, which permits an entity to release cumulative translation adjustments into net income when a reporting entity (parent) ceases to have a controlling financial interest in a subsidiary or group of assets that is a business within a foreign entity. Accordingly, the cumulative translation adjustment should be released into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided, or, if a controlling financial interest is no longer held. The revised standard was effective for Dover for fiscal years beginning after December 15, 2013. The Company adopted this guidance effective January 1, 2014. The adoption of this ASU did not significantly impact the consolidated financial statements.

In February 2013, the FASB issued ASU 2013-02 which requires additional disclosures regarding the reporting of reclassifications out of accumulated other comprehensive income. ASU 2013-02 requires an entity to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. This guidance was effective for reporting periods beginning after December 15, 2012. The Company adopted this guidance effective January 1, 2013. The Company's adoption of this standard did not have a significant impact on its consolidated financial statements.

In July 2012, the FASB issued ASU 2012-02, which allows an entity to first assess qualitative factors to determine whether it is necessary to perform a quantitative impairment test of an indefinite-lived intangible asset. Per the terms of this ASU, an entity would not be required to calculate the fair value of an indefinite-lived intangible asset unless the entity determines, based on qualitative assessment, that it is not more likely than not, the indefinite-lived intangible asset is impaired. The revised standard was effective for Dover for its annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Its adoption did not have a material impact on the Company’s consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and where otherwise indicated)

2. Spin-off of Knowles Corporation

On February 28, 2014, Dover completed the distribution of Knowles Corporation to its stockholders. The transaction was completed through the pro rata distribution of 100% of the common stock of Knowles to Dover's shareholders of record as of the close of business on February 19, 2014. Each Dover shareholder received one share of Knowles common stock for every two shares of Dover common stock held as of the record date.

The following is a summary of the assets and liabilities distributed to Knowles as part of the separation on February 28, 2014:

Assets:
Cash and cash equivalents	$	40,045
Other current assets	340,945
Non-current assets	1,678,820
Total assets	$	2,059,810
Liabilities:
Current liabilities	$	252,673
Non-current liabilities	383,940
Total liabilities	$	636,613
Net assets distributed to Knowles Corporation	$	1,423,197

Knowles incurred $100,000 of borrowings under its revolving credit facility and $300,000 of borrowings under its term loan facility to finance a cash payment of $400,000 to Dover immediately prior to the distribution. Dover received net cash of $359,955 upon separation, which reflects $40,045 of cash held by Knowles on the distribution date and retained by it in connection with its separation from Dover. Dover utilized the net proceeds from Knowles to pay down commercial paper and to repurchase shares of its common stock in the first quarter of 2014.

In connection with the spin-off of Knowles, the Company allocated $26,695 of accumulated other comprehensive earnings to Knowles, relating primarily to foreign currency translation gains, offset by unrecognized losses on pension obligations. Also, the Company was required to reallocate a portion of its goodwill from continuing operations to a reporting unit included in the Knowles distribution. The reallocation of $19,749 of goodwill was determined using a relative fair value approach. See Note 7 Goodwill and Other Intangible Assets for additional information.

The historical results of Knowles, including the results of operations, cash flows, and related assets and liabilities have been reclassified to discontinued operations for all periods presented herein. See Note 4 Disposed and Discontinued Operations. Pursuant to the separation of Knowles from Dover, and the related separation and distribution agreements, any agreed upon liabilities are not significant and will be settled in the near future.

3. Acquisitions

2014 Acquisitions

During 2014, the Company acquired seven businesses in separate transactions for net cash consideration of $802,254. The businesses were acquired to complement and expand upon existing operations within the Energy, Fluids and Refrigeration & Food Equipment segments and the Printing & Identification platform of the Engineered Systems segment. The goodwill identified by these acquisitions reflects the benefits expected to be derived from product line expansion and operational synergies. Upon consummation of the acquisitions, each of these businesses is now wholly-owned by Dover.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and where otherwise indicated)

The following table details the acquisitions made during the year ended December 31, 2014.

Date	Type	Company / Product Line Acquired	Location (Near)	Segment
January 1	Stock	Heidelberg CSAT GmbH	Karlsruhe, Germany	Engineered Systems
Manufacturer of digital printing systems that are installed in-packaging-line for the identification of pharmaceutical and medical products.
February 3	Stock	MS Printing Solutions	Milan, Italy	Engineered Systems
Manufacturer of innovative digital ink jet printing systems for the textile and specialty material industries.
June 11	Asset	Timberline Manufacturing Company	Beaumont, Texas	Energy
Manufacturer of chemical injection and metering solutions for oil and gas producers.
July 30	Stock	WellMark Holdings, Inc.	Oklahoma City, Oklahoma	Energy
Manufacturer of valves, instrumentation, and chemical injection pumps serving the oil and gas industry.
July 31	Asset	SweatMiser	McDonough, Georgia	Refrigeration & Food Equipment
Manufacturer of anti-sweat controllers for doors in the refrigeration industry.
August 25	Stock / Asset	Liquip International	Smithfield, Australia	Fluids
Manufacturer of fluid handling solutions, loading arms, tank truck valves and fittings, electronic measurement systems for tank trucks, fuel filtration systems, and aviation fueling components and services.
October 1	Stock	Accelerated Companies LLC	The Woodlands, Texas	Energy
Integrated provider of hydraulic and gas lift systems, electric submersible pump systems, surface pumps and modular fluid handling systems for oil and gas production.

The following presents the allocation of acquisition cost to the assets acquired and liabilities assumed, based on their estimated fair values:

	Accelerated				Other Acquisitions				Total
Current assets, net of cash acquired	$	133,475			$	74,712			$	208,187
Property, plant and equipment	51,070				6,199				57,269
Goodwill	222,808				209,330				432,138
Intangible assets	131,200				163,727				294,927
Current liabilities assumed	(43,935		)		(36,425		)		(80,360		)
Non-current liabilities assumed, principally deferred taxes	(58,896		)		(51,011		)		(109,907		)
Net assets acquired	$	435,722			$	366,532			$	802,254

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and where otherwise indicated)

The amounts assigned to goodwill and major intangible asset classifications by applicable segment for the 2014 acquisitions are as follows:

	Energy				Engineered Systems				Fluids				Refrigeration & Food Equipment				Total				Useful life (in years)
Goodwill - Tax deductible	$	10,835			$	—			$	184			$	1,022			$	12,041			na
Goodwill - Non deductible	314,604				80,581				24,912				—				420,097				na
Customer intangibles	198,200				22,843				23,273				600				244,916				12
Trademarks	19,300				6,594				2,125				—				28,019				11
Patents	—				878				—				500				1,378				8
Other intangibles and assets	5,900				10,374				4,340				—				20,614				6
	$	548,839			$	121,270			$	54,834			$	2,122			$	727,065

The Company has substantially completed the purchase price allocations for the 2014 acquisitions, including that of Accelerated Companies LLC, which was purchased in October. As additional information is obtained about these assets and liabilities within the measurement period (not to exceed one year from the date of acquisition), including finalization of asset appraisals, the Company will refine its estimates of fair value to allocate the purchase price more accurately.

The Consolidated Statements of Earnings include the results of these businesses from the dates of acquisition. The aggregate revenue and pre-tax loss of the 2014 acquisitions included in the Company’s 2014 consolidated revenue and earnings totaled $207,000 and $7,000, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and where otherwise indicated)

2013 Acquisitions

During 2013, the Company acquired ten businesses for an aggregate consideration of $322,838, net of cash acquired. A summary of the acquisitions made during 2013 is as follows:

Date	Type	Company / Product Line Acquired	Location (Near)	Segment
May 2	Stock	Ebsray Pumps	Brookvale, Australia	Fluids
Manufacturer of rotary pumps in vane, regenerative turbine, and internal gear technologies.
May 7	Stock	The Curotto-Can, Inc.	Sonoma, California	Engineered Systems
Manufacturer of automated front loaders for use in the waste collection industry.
May 21	Asset	Klaus Enterprise, Ltd.	Alberta, Canada	Energy
Manufacturer of valves and gas compressor components that specializes in replacing parts designed to optimize the efficiency and reliability of reciprocating compressors.
May 30	Asset	Source Technologies	Charlotte, North Carolina	Engineered Systems
Manufacturer of printing devices and software, specializing in thermal stationary barcode printers.
July 1	Asset	RSI Systems	Frederick, Maryland	Engineered Systems
Manufacturer of thermal ink jet applications ranging from packaging line coding and marking to high-speed product identification, authentication, and tracking systems for serialization.
September 19	Stock	SPIRIT Global Energy Solutions	Midland, Texas	Energy
Manufacturer of artificial lift tools and technology for oil and gas producers.
October 5	Stock	Fibresec Holdings Ltd.	Dorset, England	Fluids
Manufacturer of composite access covers and containment systems for retail fueling sites.
October 9	Stock	Kungsors Plast AB (KPS)	Kungsors, Sweden	Fluids
Manufacturer of high density polyethylene fusion underground piping systems for retail fueling sites.
October 16	Stock	Lianyungang Jump Equipment Co., Ltd.	Lianyungang, China	Fluids
Provider of top loading and LNG onshore loading equipment in China.
November 4	Stock	Finder Pompe S.p.A.	Merate, Italy	Fluids
Manufacturer of engineered pumps, spare parts, and related services for critical applications mostly in the upstream, midstream, and downstream oil and gas markets.

The businesses were acquired to complement and expand upon existing operations within the Energy, Engineered Systems and Fluids segments.

The following presents the allocation of acquisition cost to the assets acquired and liabilities assumed, based on their estimated fair values:

Current assets, net of cash acquired	$	98,641
Property, plant and equipment	33,403
Goodwill	141,888
Intangible assets	149,228
Other non-current assets, principally deferred taxes	2,622
Current liabilities assumed	(58,052		)
Non-current liabilities assumed, principally deferred taxes	(44,892		)
Net assets acquired	$	322,838

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and where otherwise indicated)

Pro Forma Information

The following unaudited pro forma information illustrates the effect on the Company’s revenue and earnings from continuing operations for years ended December 31, 2014 and 2013, assuming that the 2014 acquisitions had taken place at the beginning of 2013. As a result, the supplemental pro forma earnings reflect adjustments to earnings from continuing operations as reported in the Consolidated Statements of Earnings to exclude $11,558 of nonrecurring expense related to the fair value adjustments to acquisition-date inventory (after-tax) and $3,502 of acquisition-related costs (after-tax) from the year ended December 31, 2014. The supplemental pro forma earnings for the comparable 2013 period were adjusted to include these charges as if they were incurred at the beginning of 2012. The 2014 and 2013 supplemental pro forma earnings are also adjusted to reflect the comparable impact of additional depreciation and amortization expense (net of tax) resulting from the fair value measurement of tangible and intangible assets relating to 2014 and 2013 acquisitions.

	Years Ended December 31,
	2014				2013
Revenue from continuing operations:
As reported	$	7,752,728			$	7,155,096
Pro forma	7,987,639				7,602,756
Earnings from continuing operations:
As reported	$	778,140			$	797,527
Pro forma	806,321				794,823
Basic earnings per share from continuing operations:
As reported	$	4.67			$	4.66
Pro forma	4.84				4.64
Diluted earnings per share from continuing operations:
As reported	$	4.61			$	4.60
Pro forma	4.78				4.58

These pro forma results of operations have been prepared for comparative purposes only, and they do not purport to be indicative of the results of operations that actually would have resulted had the acquisitions occurred on the dates indicated or that may result in the future.

4. Disposed and Discontinued Operations

Management evaluates Dover's businesses periodically for their strategic fit within its operations. Accordingly, in 2014, the Company announced its intention to divest Datamax O'Neil and Sargent Aerospace, two businesses with the Engineered Systems segment. The assets, liabilities, and results of operations of these businesses were reclassified to discontinued operations in the fourth quarter of 2014.

Also included in discontinued operations are the assets, liabilities, and results of operations of DEK International and Everett Charles Technologies (including the Multitest business, collectively "ECT"), until their respective sale dates of July 2, 2014 and November 30, 2013. Additionally, the results of discontinued operations include Knowles Corporation until the distribution on February 28, 2014, as well as costs incurred by Dover to complete the spin-off of Knowles. These costs totaled $27,055 and $30,093 for the years ended December 31, 2014 and 2013, respectively. See also Note 2 Spin-off of Knowles Corporation.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and where otherwise indicated)

Summarized results of the Company’s discontinued operations are as follows:

	Years Ended December 31,
	2014				2013				2012
Revenue	$	568,991			$	1,970,965			$	1,918,035
Loss on sale, including impairments, net of tax	$	(3,691	)		$	(35,473	)		$	(50,818	)
Earnings from operations before taxes	13,611				209,293				241,023
(Provision) benefit for income taxes	(12,825		)		31,782				(29,210		)
Earnings from operations, net of tax	786				$	241,075			$	211,813
(Loss) earnings from discontinued operations, net of tax	$	(2,905	)		$	205,602			$	160,995

2014 - The Company completed the sale of DEK International in the third quarter of 2014. Sale proceeds totaled $170,616, which resulted in an after-tax loss on sale of $6,895. The Company also recognized a gain on sale of $3,204 in 2014 in connection with a working capital adjustment of $4,482 for ECT, which was sold in the fourth quarter of 2013.

The net earnings from operations for 2014 of $786 includes after-tax earnings of $32,289 for those businesses classified as discontinued operations. Also reflected in this amount are the aforementioned spin-off costs of $27,055 and a pension settlement charge of $4,448, net of tax, attributable to lump sum payments made to Knowles participants in Dover's qualified defined benefit pension plan.

2013 - In 2013, in connection with a change in goodwill reporting units within discontinued operations resulting from the Company's expected manner of disposing of its electronic test and assembly businesses, the Company was required to allocate goodwill to these individual reporting units based upon relative current fair values. This process resulted in a benefit of $25,520 in the discontinued operations deferred income tax provision for 2013 as a result of the elimination of certain deferred tax liabilities. The Company recorded a goodwill impairment charge of $54,532 ($44,188 after tax) at ECT in 2013 in connection with the anticipated sale of this business. This charge was a write-down of the carrying value to fair value, based on the current estimated sales price.

The Company also recognized an impairment loss of $14,001 in the fourth quarter of 2013, in connection with the impending sale of DEK. This loss included goodwill impairment of the related reporting unit of $9,251, of which none was deductible for tax purposes.

The Company completed the sale of ECT in the fourth quarter of 2013 for total proceeds of $92,694, which resulted in an after-tax loss on sale of $2,804. Included in the sale proceeds was a note receivable from the buyer of $16,250, net of $3,750 of contingencies. The Company has since collected this note receivable.

The net earnings from operations of $241,075 reflects the after-tax earnings of all business classified as discontinued operations, as well as $54,827 of discrete tax benefits principally related to the conclusion of certain federal, state and international tax audits, $18,279 of interest on tax obligations in foreign jurisdictions, and the aforementioned spin-off costs of $30,093.

2012 - The net earnings from operations of $211,813 reflects after-tax earnings from operations generated by all business classified as discontinued operations as well as various expense and accrual adjustments relating to other discontinued operations. In addition, the Company recognized a goodwill impairment charge of $63,819 ($51,854 after tax) for ECT, representing a write-down of the reporting unit's carrying value of goodwill to its fair value.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and where otherwise indicated)

Assets and liabilities of discontinued operations are summarized below:

	December 31, 2014				December 31, 2013
Assets of Discontinued Operations
Accounts receivable (1)	$	46,691			$	403,539
Inventories, net	58,401				229,465
Prepaid and other current assets	8,571				84,814
Total current assets	113,663				717,818
Property, plant and equipment, net	31,573				401,600
Goodwill and intangible assets, net	181,798				1,633,587
Other assets and deferred charges	137				26,058
Total assets	$	327,171			$	2,779,063
Liabilities of Discontinued Operations
Accounts payable (1)	$	21,199			$	278,607
Other current liabilities	17,675				153,788
Total current liabilities	38,874				432,395
Deferred income taxes	8,752				60,361
Other liabilities	3,092				42,865
Total liabilities	$	50,718			$	535,621

At December 31, 2014, the assets and liabilities of discontinued operations primarily relate to Datamax O'Neil and Sargent Aerospace, which were held for sale on that date. At December 31, 2013, the assets and liabilities of discontinued operations relate to those businesses mentioned above, as well as DEK International, which was sold on July 2, 2014 and Knowles, which was spun off on February 28, 2014.

(1)	Amounts at December 31, 2013 include estimated credits and liabilities associated with tax obligations in foreign jurisdictions resulting from value-added tax for the Multitest business within ECT. Accounts receivable includes $93,598 of credits. Accounts payable includes $76,443 of liabilities and $18,279 of interest. These balances were settled in 2014.

5. Inventories, net

	December 31, 2014				December 31, 2013
Raw materials	$	352,016			$	338,621
Work in progress	147,715				127,611
Finished goods	483,912				367,011
Subtotal	983,643				833,243
Less reserves	(119,906		)		(117,932		)
Total	$	863,737			$	715,311

At December 31, 2014 and 2013, approximately 25% and 30%, respectively, of the Company's total inventories were accounted for using the LIFO method.

6. Property, Plant and Equipment, net

	December 31, 2014				December 31, 2013
Land	$	55,076			$	56,118
Buildings and improvements	537,474				517,087
Machinery, equipment and other	1,698,638				1,596,085
Subtotal	2,291,188				2,169,290
Less accumulated depreciation	(1,454,119		)		(1,381,441		)
Total	$	837,069			$	787,849

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and where otherwise indicated)

7. Goodwill and Other Intangible Assets

Accounting Standards Codification ("ASC") 350, "Intangibles - Goodwill and Other Intangibles" provides guidance on an entity's subsequent measurement and recognition of goodwill and other intangibles, including subsequent changes to carrying amounts, impairment, and fair value adjustments. In accordance with the guidance set forth in ASC 350, and in connection with the realignment of its businesses in the first quarter of 2014, the Company reallocated goodwill among its reporting units based on their current relative fair value.

Due to the separation of Knowles in the first quarter of 2014, the Company was required to allocate a portion of its goodwill from continuing operations to a reporting unit included in the distribution of Knowles. Accordingly, the assets distributed on February 28, 2014 included an additional $19,749 of allocated goodwill, determined using a relative fair value approach.

During the fourth quarter of 2014, the Company announced its intent to sell two businesses within the Engineered Systems segment. As a result, the Company allocated goodwill totaling $152,663 to these companies from their respective reporting units using a relative fair value approach.

The adjustments made to goodwill due to the distribution of Knowles, the reclassification of businesses held for sale, and the restatement of segment results due to the realignment of Dover's businesses has been applied to all periods presented on the Consolidated Balance Sheet for goodwill and assets of discontinued operations.

The changes in the carrying value of goodwill by segment for the years ended December 31, 2014 and 2013 are as follows:

	Energy				Engineered Systems				Fluids				Refrigeration & Food Equipment				Total
Goodwill	$	716,210			$	1,202,906			$	560,131			$	588,624			$	3,067,871
Accumulated impairment loss	—				(10,591		)		(59,970		)		—				(70,561		)
Balance at January 1, 2013	716,210				1,192,315				500,161				588,624				2,997,310
Acquisitions	19,810				19,968				102,110				—				141,888
Purchase price adjustments	(2,278		)		(521		)		(2,417		)		(22,922		)		(28,138		)
Foreign currency translation	(5,770		)		(1,143		)		4,304				129				(2,480		)
Balance at December 31, 2013	727,972				1,210,619				604,158				565,831				3,108,580
Acquisitions	325,438				80,581				25,097				1,022				432,138
Purchase price adjustments	(395		)		—				11,350				—				10,955
Foreign currency translation	(4,280		)		(21,022		)		(30,942		)		(3,872		)		(60,116		)
Balance at December 31, 2014	$	1,048,735			$	1,270,178			$	609,663			$	562,981			$	3,491,557

During the year ended December 31, 2014, the Company recorded adjustments totaling $10,955 to goodwill relating primarily to finalization of the purchase price allocation to assets acquired and liabilities assumed for the 2013 acquisitions. The Company will continue to refine its estimates of fair value to allocate the purchase price more accurately; however, any such revisions are not expected to be significant.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and where otherwise indicated)

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

	December 31, 2014								December 31, 2013
	Gross Carrying Amount				Accumulated Amortization				Gross Carrying Amount				Accumulated Amortization
Amortized intangible assets:
Trademarks	$	138,650			$	34,097			$	110,573			$	24,418
Patents	150,404				108,484				153,850				102,756
Customer Intangibles	1,429,906				484,449				1,211,744				379,124
Unpatented Technologies	92,480				45,812				80,483				35,891
Drawings & Manuals	36,377				13,087				41,800				10,462
Distributor Relationships	64,614				34,377				64,614				31,144
Other	24,214				12,737				22,365				12,599
Total	$	1,936,645			$	733,043			$	1,685,429			$	596,394
Unamortized intangible assets:
Trademarks	165,918								169,876
Total intangible assets, net	$	1,369,520							$	1,258,911

Total amortization expense for the years ended December 31, 2014, 2013, and 2012 was $155,109, $133,946, and $101,593, respectively. Amortization expense for the next five years, based on current intangible balances, is estimated to be as follows:

2015	$	140,046
2016	139,880
2017	136,746
2018	125,827
2019	110,262

8. Accrued Expenses and Other Liabilities

The following table details the major components of other accrued expenses:

	December 31, 2014				December 31, 2013
Warranty	$	46,704			$	39,824
Unearned/deferred revenue	20,678				22,839
Taxes other than income	28,452				34,229
Accrued interest	31,318				31,738
Accrued volume discounts	16,352				16,909
Accrued commissions (non-employee)	12,799				11,151
Restructuring and exit	22,021				4,986
Legal and environmental	7,868				4,967
Other (none of which are individually significant) (1)	80,085				52,966
	$	266,277			$	219,609

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and where otherwise indicated)

The following table details the major components of other liabilities (non-current):

	December 31, 2014				December 31, 2013
Deferred compensation (2)	$	323,105			$	321,736
Unrecognized tax benefits	94,875				97,920
Unearned/deferred revenue	8,599				7,751
Legal and environmental	31,841				35,145
Warranty	2,684				3,100
Restructuring and exit	—				356
Other (none of which are individually significant) (1)	21,236				42,856
	$	482,340			$	508,864

(1)	The liability relating to the Company's cumulative loss of $15,567 on the Swiss franc cross-currency swap was reclassified from other liabilities to other accrued expenses at December 31, 2014 in anticipation of the settlement of this net investment hedge when it expires on October 15, 2015. See Note 11 Financial Instruments.

(2)	Deferred compensation includes $229,128 and $232,669 at December 31, 2014 and 2013, respectively, for liabilities related to defined benefit and other postretirement benefit plans. See Note 15 Employee Benefit Plans.

Warranty

Estimated warranty program claims are provided for at the time of sale. Amounts provided for are based on historical costs and adjusted for new claims. The changes in the carrying amount of product warranties through December 31, 2014 and 2013 are as follows:

	2014				2013
Beginning Balance, January 1	$	42,924			$	39,554
Provision for warranties	60,833				52,943
Settlements made	(56,746		)		(49,101		)
Other adjustments, including acquisitions and currency translation	2,377				(472		)
Ending balance, December 31	$	49,388			$	42,924

9. Restructuring Activities

From time to time, the Company will initiate various restructuring programs and incur severance and other restructuring costs. The following table details restructuring charges incurred by segment for the periods presented:

	Years Ended December 31,
	2014				2013				2012
Energy (1)	$	7,549			$	(811	)		$	584
Engineered Systems	6,624				3,628				8,320
Fluids	3,784				850				2,215
Refrigeration & Food Equipment	24,897				5,451				2,761
Corporate	1,954				—				—
Total	$	44,808			$	9,118			$	13,880
These amounts are classified in the Consolidated Statements of Earnings as follows:
Cost of goods and services	$	19,690			$	5,320			$	3,613
Selling and administrative expenses	25,118				3,798				10,267
Total	$	44,808			$	9,118			$	13,880

(1)	In 2013, restructuring charges incurred within the Energy segment included a net gain on the sale of buildings in connection with facility consolidations.

The restructuring charges of $44,808 incurred in 2014 relate to restructuring programs initiated during 2014 and 2013. These programs are designed to better align the Company's operations with current market conditions through targeted facility

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and where otherwise indicated)

consolidations, headcount reductions and other measures to further optimize operations. The Company expects to incur restructuring charges of approximately $17.0 million to $20.0 million in the first quarter of 2015, with the majority of these charges in the Energy segment. We expect to fund the remainder of the 2014 programs currently underway, as well those commenced in 2015, over the next 12 to 18 months. In light of the economic uncertainty in certain of our end markets and our continued focus on improving our operating efficiency, it is possible that additional programs may be implemented throughout the remainder of 2015.

The $44,808 of restructuring charges incurred during 2014 included the programs as described below.

•	The Energy segment incurred restructuring charges of $7,549, related principally to a facility consolidation in its businesses serving the compression markets and reduction in workforce.

•	The Engineered Systems segment recorded $6,624 of restructuring charges relating to facility consolidations within both the Printing & Identification and Industrials platforms, as well as actions taken to optimize costs related to engineering, sales, and administrative functions within the Printing & Identification platform.

•	The Fluids segment recorded $3,784 of restructuring charges principally related to reduction in workforce for those businesses serving the Pumps markets.

•	The Refrigeration & Food Equipment segment recorded restructuring charges of $24,897, primarily related to headcount reductions and exit plans at targeted facilities, including approximately $17.5 million related to the closure of a European-based facility within Refrigeration.

•	Corporate recorded restructuring charges of $1,954, primarily severance expense, resulting from the Company's decision to realign its businesses into a new segment structure in the first quarter of 2014 following the spin-off of Knowles.

Restructuring expenses incurred in 2013 and 2012 also included targeted facility consolidations at certain businesses.

The following table details the Company’s severance and other restructuring accrual activity:

	Severance				Exit				Total
Balance at December 31, 2011	$	1,654			3,110				$	4,764
Restructuring charges	10,583				3,297				13,880
Payments	(9,554		)		(3,916		)		(13,470		)
Other, including foreign currency	4				74				78
Balance at December 31, 2012	2,687				2,565				5,252
Restructuring charges	7,103				2,015				9,118
Payments	(7,001		)		(2,451		)		(9,452		)
Other, including foreign currency	87				337				424
Balance at December 31, 2013	2,876				2,466				5,342
Restructuring charges	23,532				21,276				44,808
Payments	(10,092		)		(5,750		)		(15,842		)
Other, including foreign currency	(958		)		(11,329		)	(1)	(12,287		)
Balance at December 31, 2014	$	15,358			$	6,663			$	22,021

(1)	Other activity in exit reserves primarily represents the non-cash write-off of inventory and fixed assets in connection with certain facility closures.

The accrual balances at December 31, 2014 primarily reflects restructuring plans initiated during the year, as well as ongoing lease commitment obligations for facilities closed in earlier periods.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and where otherwise indicated)

10. Borrowings and Lines of Credit

Borrowings consist of the following:

	December 31, 2014				December 31, 2013
Short-term:
Current portion of long-term debt	$	299,956			$	2,778
Commercial paper	478,000				226,500
	$	777,956			$	229,278

	December 31, 2014				December 31, 2013
Long-term:
4.875% 10-year notes due October 15, 2015	$	299,836			$	299,638
5.45% 10-year notes due March 15, 2018	348,928				348,598
2.125% 7-year notes due December 1, 2020 (euro-denominated)	363,970				411,500
4.30% 10-year notes due March 1, 2021	449,839				449,813
6.65% 30-year debentures due June 1, 2028	199,517				199,483
5.375% 30-year debentures due October 15, 2035	296,685				296,526
6.60% 30-year notes due March 15, 2038	247,948				247,859
5.375% 30-year notes due March 1, 2041	345,830				345,671
Other	444				2,891
Total long-term debt	2,552,997				2,601,979
Less current portion	(299,956		)		(2,778		)
	$	2,253,041			$	2,599,201

On December 4, 2013, the Company issued €300.0 million of 2.125% euro-denominated notes due 2020. The proceeds of $403,776 from the sale of the notes, net of discounts and issuance costs, were used to repay commercial paper.

On October 15, 2015, the outstanding 4.875% notes with a face value of $300.0 million will mature. These notes have been classified as current maturities of long-term debt as of December 31, 2014. Depending on capital requirements for 2015, the Company may finance the repayment of these notes through either the issuance of additional commercial paper or new debt instruments.

The long-term note borrowings presented above are net of unamortized discounts of $8,213 and $9,196 at December 31, 2014 and 2013, respectively. The debentures presented above include unamortized discounts of $3,798 and $3,991 at December 31, 2014 and 2013, respectively. The discounts are being amortized to interest expense using the effective interest rate method over the life of the issuances. The notes and debentures are redeemable at the option of Dover in whole or in part at any time at a redemption price that includes a make-whole premium, with accrued interest to the redemption date.

The Company maintains a $1.0 billion unsecured revolving credit facility with a syndicate of banks (the "Credit Agreement") which expires on November 10, 2016. At the Company's election, loans under the Credit Agreement will bear interest at a Eurodollar or Sterling rate based on LIBOR, plus an applicable margin ranging from 0.565% to 1.225% (subject to adjustment based on the credit rating accorded the Company's senior unsecured debt by S&P and Moody's), or at a base rate pursuant to a formula defined in the Credit Agreement. In addition, the Credit Agreement requires the Company to pay a facility fee and imposes various restrictions on the Company such as, among other things, the requirement for the Company to maintain an interest coverage ratio of EBITDA to consolidated net interest expense of not less than 3.0 to 1. The Company was in compliance with this covenant and its other long-term debt covenants at December 31, 2014 and had a coverage ratio of 12.7 to 1. The Company primarily uses this facility as liquidity back-up for its commercial paper program and has not drawn down any loans under the $1.0 billion facility and does not anticipate doing so. The Company generally uses commercial paper borrowings for general corporate purposes, funding of acquisitions, and the repurchases of its common stock.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and where otherwise indicated)

Interest expense and interest income for the years ended December 31, 2014, 2013 and 2012 were as follows:

	Years Ended December 31,
	2014				2013				2012
Interest expense	$	131,689			$	124,535			$	125,992
Interest income	(4,510		)		(3,881		)		(4,723		)
Interest expense, net	$	127,179			$	120,654			$	121,269

The weighted average interest rate for short-term commercial paper borrowings was 0.1% for 2014 and 0.1% for 2013.

Scheduled maturities of long-term debt for the years ending December 31 are as follows:

2015	$	299,956
2016	114
2017	117
2018	348,958
2019	—
2020 and thereafter	1,903,852
	$	2,552,997

As of December 31, 2014, the Company had approximately $135,452 outstanding in letters of credit and guarantees with financial institutions, which expire at various dates in 2015 through 2020. These letters of credit are primarily maintained as security for insurance, warranty and other performance obligations.

11. Financial Instruments

Derivatives

The Company is exposed to market risk for changes in foreign currency exchange rates due to the global nature of its operations. In order to manage this risk the Company has hedged portions of its forecasted sales and purchases, which occur within the next twelve months and are denominated in non-functional currencies, with currency forward or collar contracts designated as cash flow hedges. At December 31, 2014 and December 31, 2013, the Company had contracts with U.S. dollar equivalent notional amounts of $47,047 and $33,216, respectively, to exchange foreign currencies, principally the U.S. dollar, euro, Chinese yuan. The Company believes it is probable that all forecasted cash flow transactions will occur.

In addition, the Company had outstanding contracts at December 31, 2014 and December 31, 2013 with a total notional amount of $52,392 and $104,688, respectively, that are not designated as hedging instruments. These instruments are used to reduce the Company's exposure for operating receivables and payables that are denominated in non-functional currencies. Gains and losses on the fair value of these instruments is reflected in other expense (income) on the Consolidated Statements of Earnings.

The Company also has an outstanding floating-to-floating cross currency swap agreement for a total notional amount of $50,000 in exchange for CHF 65,100, which expires on October 15, 2015. This transaction hedges a portion of the Company’s net investment in CHF-denominated operations. The agreement qualifies as a net investment hedge and the effective portion of the change in fair value is reported within the cumulative translation adjustment section of other comprehensive income. The fair values at December 31, 2014 and December 31, 2013 reflected cumulative losses of $15,567 and $23,716, respectively, due to the strengthening of the Swiss franc relative to the U.S. dollar over the term of the arrangement.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and where otherwise indicated)

The following table sets forth the fair values of derivative instruments held by the Company as of December 31, 2014 and December 31, 2013 and the balance sheet lines in which they are recorded:

	Fair Value Asset (Liability)
	December 31, 2014				December 31, 2013				Balance Sheet Caption
Foreign currency forward / collar contracts	$	973			$	879			Prepaid and other current assets
Foreign currency forward / collar contracts	(810		)		(168		)		Other accrued expenses
Net investment hedge - cross currency swap	(15,567		)		(23,716		)		Accrued expenses / Other liabilities (1)

(1)	The liability relating to the cumulative loss on the Swiss franc cross currency swap is reflected in accrued expenses on the Consolidated Balance Sheet at December 31, 2014 as this swap matures on October 15, 2015. It was reflected in other liabilities as of December 31, 2013.

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

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

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

Amounts recognized in other comprehensive earnings (loss) for the gains (losses) on its net investment hedges were as follows:

	2014				2013				2012
Gain (loss) on euro-denominated debt	$	47,630			$	(6,099	)		$	—
Gain (loss) on Swiss franc cross-currency swap	8,149				(1,035		)		(1,025		)
Total gain (loss) on net investment hedges before tax	55,779				(7,134		)		(1,025		)
Tax (expense) benefit	(19,523		)		2,494				359
Net gain (loss) on net investment hedges, net of tax	$	36,256			$	(4,640	)		$	(666	)

Fair Value Measurements

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

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

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

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and where otherwise indicated)

The following table presents the Company’s assets and liabilities measured at fair value on a recurring basis as of December 31, 2014 and December 31, 2013:

	December 31, 2014												December 31, 2013
	Level 1				Level 2				Level 3				Level 1				Level 2				Level 3
Assets:
Foreign currency cash flow hedges	$	—			$	973			$	—			$	—			$	879			$	—
Liabilities:
Foreign currency cash flow hedges	—				810				—				—				168				—
Swiss franc cross-currency swap	—				15,567				—				—				23,716				—

The derivative contracts are measured at fair value using models based on observable market inputs such as foreign currency exchange rates and interest rates; therefore, they are classified within Level 2 of the valuation hierarchy.

In addition to fair value disclosure requirements related to financial instruments carried at fair value, accounting standards require disclosures regarding the fair value of all of the Company’s financial instruments. The estimated fair value of long-term debt at December 31, 2014 and December 31, 2013 was $3,002,701 and $2,872,454, respectively, compared to the carrying value of $2,552,997 and $2,601,979, respectively. The estimated fair value of long-term debt is based on quoted market prices for similar instruments and is, therefore, classified as Level 2 within the valuation hierarchy. The carrying values of cash and cash equivalents, trade receivables, accounts payable, and notes payable are reasonable estimates of their fair values as of December 31, 2014 and December 31, 2013 due to the short-term nature of these instruments.

12. Income Taxes

Income taxes have been based on the following components of “Earnings before provision for income taxes and discontinued operations” in the Consolidated Statements of Earnings:

	Years Ended December 31,
	2014				2013				2012
Domestic	$	789,689			$	714,723			$	640,896
Foreign	304,518				331,263				290,169
	$	1,094,207			$	1,045,986			$	931,065

Income tax expense (benefit) relating to continuing operations for the years ended December 31, 2014, 2013, and 2012 is comprised of the following:

	Years Ended December 31,
	2014				2013				2012
Current:
U.S. Federal	$	231,939			$	114,218			$	196,622
State and local	8,434				17,468				(1,590		)
Foreign	97,037				89,702				84,723
Total current	337,410				221,388				279,755
Deferred:
U.S. Federal	$	7,386			$	35,315			$	20,149
State and local	11,250				(4,556		)		(2,262		)
Foreign	(39,979		)		(3,688		)		(16,652		)
Total deferred	(21,343		)		27,071				1,235
Total expense	$	316,067			$	248,459			$	280,990

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and where otherwise indicated)

Differences between the effective income tax rate and the U.S. federal income statutory rate are as follows:

	Years Ended December 31,
	2014			2013			2012
U.S. Federal income tax rate	35.0	%		35.0	%		35.0	%
State and local taxes, net of Federal income tax benefit	1.3			1.2			1.3
Foreign operations tax effect	(3.7	)		(3.3	)		(3.2	)
R&E tax credits (1)	(0.3	)		(0.7	)		—
Domestic manufacturing deduction	(3.0	)		(2.2	)		(2.2	)
Foreign tax credits	0.4			0.3			0.3
Branch losses	(0.7	)		(0.2	)		—
Release of valuation allowance	(0.6	)		—			—
Resolution of tax contingencies	(0.5	)		(7.2	)		(1.8	)
Other, principally non-tax deductible items	1.0			0.9			0.8
Effective rate from continuing operations	28.9	%		23.8	%		30.2	%

(1)	On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law, and this legislation retroactively extended the R&E tax credit for two years, from January 1, 2012 through December 31, 2013. Income tax expense for 2013 includes $4.8 million for the entire benefit of the R&E tax credit attributable to 2012.

The tax effects of temporary differences that give rise to future deferred tax assets and liabilities are as follows:

	December 31, 2014				December 31, 2013
Deferred Tax Assets:
Accrued compensation, principally postretirement and other employee benefits	$	151,640			$	130,326
Accrued expenses, principally for state income taxes, interest, and warranty	45,262				43,700
Net operating loss and other carryforwards	190,298				70,821
Inventories, principally due to reserves for financial reporting purposes and capitalization for tax purposes	13,285				14,068
Accounts receivable, principally due to allowance for doubtful accounts	4,323				4,507
Accrued insurance	5,529				4,353
Long-term liabilities, principally warranty, environmental, and exit costs	4,096				3,777
Other assets	(8,838		)		(11,957		)
Total gross deferred tax assets	405,595				259,595
Valuation allowance	(141,252		)		(14,063		)
Total deferred tax assets	$	264,343			$	245,532
Deferred Tax Liabilities:
Intangible assets, principally due to different tax and financial reporting bases and amortization lives	$	(694,602	)		$	(604,464	)
Plant and equipment, principally due to differences in depreciation	(55,012		)		(61,455		)
Accounts receivable	(6,481		)		(6,674		)
Total gross deferred tax liabilities	(756,095		)		(672,593		)
Net deferred tax liability	$	(491,752	)		$	(427,061	)
Classified as follows in the consolidated balance sheets:
Current deferred tax asset	$	63,276			$	60,101
Non-current deferred tax asset	10,107				5,642
Current deferred tax liability	(928		)		(953		)
Non-current deferred tax liability	(564,207		)		(491,851		)
	$	(491,752	)		$	(427,061	)

As of December 31, 2014, the Company has loss carryforwards for U.S. Federal purposes totaling approximately $71.5 million attributed to the 2011 Anthony acquisition, and loss carryforwards for non-U.S. purposes totaling $519.4 million primarily

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and where otherwise indicated)

resulting from restructuring undertaken to effect the Knowles spin-off. As of December 31, 2013, the Company had non-U.S loss carryforwards of $39.9 million. The federal loss carryforwards are available for use against the Company's consolidated federal taxable income and begin to expire in 2024. The entire balance of the non-U.S. losses as of December 31, 2014 is available to be carried forward, with $20.3 million of these losses beginning to expire during the years 2015 through 2034. The remaining $499.1 million of such losses can be carried forward indefinitely.

The Company has $109.2 million and $145.8 million of state tax loss carryforwards as of December 31, 2014 and 2013, respectively, that are available for use by the Company between 2015 and 2034.

As of December 31, 2014 and 2013, the Company has research and development credit carryforwards for U.S. Federal purposes of $0.8 million attributable to the 2011 Anthony acquisition and no alternative minimum tax credits. The research and development credits begin to expire in 2025.

The Company maintains valuation allowances by jurisdiction against the deferred tax assets related to certain of these carryforwards as utilization of these tax benefits is not assured for certain jurisdictions.

The Company has not provided for U.S. federal income taxes or tax benefits on the undistributed earnings of its international subsidiaries, totaling approximately $1.3 billion at December 31, 2014, because such earnings are reinvested and it is currently intended that they will continue to be reinvested indefinitely. It is not practicable to estimate the amount of tax that might be payable if some or all of such earnings were to be repatriated, and the amount of foreign tax credits that would be available to reduce or eliminate the resulting U.S. income tax liability.

Unrecognized Tax Benefits

The Company files U.S., state, local, and foreign tax returns. The Company is routinely audited by the tax authorities in these jurisdictions, and a number of audits are currently underway. It is reasonably possible during the next twelve months that uncertain tax positions may be settled, which could result in a decrease in the gross amount of unrecognized tax benefits. This decrease may result in an income tax benefit. Due to the potential for resolution of federal, state, and foreign examinations, and the expiration of various statutes of limitation, the Company's gross unrecognized tax benefits balance may change within the next twelve months by a range of zero to $27 million. Some portion of any such change may be reported as discontinued operations. The Company is no longer subject to examinations of its federal income tax returns for years through 2010. All significant state, local, and international matters have been concluded for years through 2007. The Company believes adequate provision has been made for all income tax uncertainties.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and where otherwise indicated)

The following table is a reconciliation of the beginning and ending balances of the Company’s unrecognized tax benefits:

	Continuing				Discontinued				Total
Unrecognized tax benefits at January 1, 2012	$	134,773			$	54,268			$	189,041
Additions based on tax positions related to the current year	10,188				26				10,214
Additions for tax positions of prior years	4,128				3,470				7,598
Reductions for tax positions of prior years	(14,257		)		(25		)		(14,282		)
Settlements	(418		)		(85		)		(503		)
Lapse of statutes	(12,550		)		(3,429		)		(15,979		)
Unrecognized tax benefits at December 31, 2012	121,864				54,225				176,089
Additions based on tax positions related to the current year	9,056				1				9,057
Additions for tax positions of prior years	7,584				3,315				10,899
Reductions for tax positions of prior years (A)	(62,610		)		(40,240		)		(102,850		)
Settlements	(2,823		)		(2,523		)		(5,346		)
Lapse of statutes	(7,845		)		(1,564		)		(9,409		)
Unrecognized tax benefits at December 31, 2013	65,226				13,214				78,440
Additions based on tax positions related to the current year	11,751				14				11,765
Additions for tax positions of prior years	1,065				499				1,564
Reductions for tax positions of prior years	(5,782		)		(265		)		(6,047		)
Settlements	(843		)		(155		)		(998		)
Lapse of statutes	(5,050		)		(2,585		)		(7,635		)
Unrecognized tax benefits at December 31, 2014	$	66,367		(B)	$	10,722			$	77,089

(A)	The settlement of certain income tax examinations of the 2009 and 2010 tax years resulted in a significant decrease in gross unrecognized tax benefits.

(B)

If recognized, the net amount of potential tax benefits that would impact the Company’s effective tax rate is $48.8 million. During the years ended December 31, 2014, 2013, and 2012, the Company recorded potential interest and penalty expense (income) of $(1.3) million, $(5.5) million and $0.1 million, respectively, related to its unrecognized tax benefits as a component of provision for income taxes. The Company had accrued interest and penalties of $15.5 million at December 31, 2014 and $17.1 million at December 31, 2013, which are not included in the above table.

13. Equity and Cash Incentive Program

The Company's share-based awards are typically granted annually at its regularly scheduled first quarter Compensation Committee meeting. Beginning in 2013, these awards were made pursuant to the terms of the Company's 2012 Equity and Cash Incentive Plan (the "2012 Plan"), which was approved by shareholders on May 3, 2012. This plan replaced the 2005 Equity and Cash Incentive Plan (the "2005 Plan"), which would have otherwise terminated according to its terms on January 31, 2015 and the 1996 Non-Employee Directors Stock Compensation Plan (the "Directors Plan"), which would have otherwise terminated according to its terms on December 31, 2012. Upon approval of the 2012 Plan, no additional awards may be granted under the 2005 Plan. Officers and other key employees, as well as non-employee directors, are eligible to participate in the 2012 Plan, which has a ten year term and will terminate on May 3, 2022. The 2012 Plan provides for stock options and SARs grants, restricted stock awards, restricted stock unit awards, performance share awards, cash performance awards, directors' shares, and deferred stock units. Under the 2012 Plan, a total of 17,000,000 shares of common stock are reserved for issuance, subject to adjustments resulting from stock dividends, stock splits, recapitalizations, reorganizations, and other similar changes.

The exercise price per share for stock options and SARs is equal to the closing price of the Company’s stock on the New York Stock Exchange on the date of grant. New common shares are issued when options or SARs are exercised. The period during which options and SARs are exercisable is fixed by the Company’s Compensation Committee at the time of grant. Generally, the stock options or SARs vest after three years of service and expire at the end of ten years.

In addition, in connection with the separation of Knowles on February 28, 2014, the Company modified the outstanding equity awards for its employees. The awards were modified such that all individuals received an equivalent fair value both before and after the separation of Knowles. This modification resulted in the issuance of an additional 933,845 SARs, 20,523 stock options, 11,480 performance shares and 5,389 restricted stock units. The exercise price of these outstanding awards, where applicable, was

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and where otherwise indicated)

adjusted to preserve the value of the awards immediately prior to the separation. As no incremental fair value was awarded as a result of the issuance of these additional shares, the modification did not result in additional compensation expense.

Stock-based compensation costs are reported within selling and administrative expenses. The following table summarizes the Company’s compensation expense relating to all stock-based incentive plans:

	Years Ended December 31,
	2014				2013				2012
Pre-tax compensation expense	$	31,628			$	30,480			$	30,884
Tax benefit	(11,201		)		(10,745		)		(10,904		)
Total stock-based compensation expense, net of tax	$	20,427			$	19,735			$	19,980

SARs and Stock Options

In 2014, 2013, and 2012, the Company issued SARs covering 1,043,734, 1,613,884, and 1,719,943 shares, respectively. Since 2006, the Company has only issued SARs and does not anticipate issuing stock options in the future. The fair value of each SAR grant was estimated on the date of grant using a Black-Scholes option-pricing model with the following assumptions:

	2014				2013				2012
Risk-free interest rate	1.70		%		1.39		%		1.05		%
Dividend yield	1.98		%		2.06		%		2.03		%
Expected life (years)	5.3				7.1				5.7
Volatility	30.81		%		33.78		%		36.41		%
Grant price	$	82.51			$	63.33			$	57.62
Fair value at date of grant (1)	$	19.84			$	18.17			$	16.31

(1)	Updated to reflect the modification of grants issued prior to 2014 in connection with the separation of Knowles.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and where otherwise indicated)

A summary of activity relating to SARs and stock options granted under the 2012 Plan and the predecessor plans for the year ended December 31, 2014 is as follows:

	SARs									Stock Options
	Number of Shares			Weighted Average Exercise Price				Weighted Average Remaining Contractual Term (Years)		Number of Shares			Weighted Average Exercise Price				Weighted Average Remaining Contractual Term (Years)
Outstanding at 1/1/2014	7,520,760			$	56.67					209,827			$	38.39
Surrendered upon spin-off (1)	(359,151	)		62.55						(4,555	)		38.00
Modification upon spin-off (2)	933,845			—						20,523			—
Granted	1,043,734			82.51						—			—
Forfeit / expired	(281,822	)		65.65						(7,605	)		41.79
Exercised	(1,216,624	)		43.97						(165,283	)		35.04
Outstanding at 12/31/2014	7,640,742			54.69				6.3		52,907			33.50				0.1
Exercisable at 12/31/2014	3,631,702			$	42.43			4.6		52,907			$	33.50			0.1

(1)	In connection with the spin-off on February 28, 2014, Knowles employees surrendered their outstanding Dover equity awards, which were then converted to Knowles equity awards.

(2)	Subsequent to the separation of Knowles, the Company modified its outstanding equity awards to employees such that all individuals received an equivalent fair value both before and after the separation, which resulted in a lower exercise price for all outstanding equity awards at the time of modification.

All option awards outstanding at December 31, 2014 are vested and exercisable. These awards have an exercise price in the range of $33.49 to $34.73 and an aggregate intrinsic value of $2,022 at December 31, 2014. The following table summarizes information about outstanding SARs at December 31, 2014:

		SARs Outstanding													SARs Exercisable
Range of Exercise Prices		Number of Shares			Weighted Average Exercise Price				Weighted Average Remaining Life in Years		Aggregate Intrinsic Value				Number of Shares			Weighted Average Exercise Price				Weighted Average Remaining Life in Years		Aggregate Intrinsic Value
$25.96 - $37.79		2,130,558			$	34.01			4.5		$	80,342			2,130,558			$	34.01			4.5		$	80,342
$40.54 - $58.69		3,039,611			$	55.97			5.7		$	47,863			1,491,509			$	54.26			4.9		$	26,035
$63.33 - $82.51		2,470,573			$	70.95			8.5		$	12,490			9,635			$	70.57			8.5		$	50
		7,640,742									$	140,695			3,631,702									$	106,427

Unrecognized compensation expense related to SARs not yet exercisable was $22,807 at December 31, 2014. This cost is expected to be recognized over a weighted average period of 1.5 years.

Other information regarding the exercise of SARs and stock options is listed below:

	2014				2013				2012
SARs
Fair value of SARs that became exercisable	$	26,796			$	23,605			$	16,484
Aggregate intrinsic value of SARs exercised	$	51,813			$	83,944			$	61,531
Stock Options
Cash received by Dover for exercise of stock options	$	5,227			$	14,830			$	38,029
Aggregate intrinsic value of options exercised	$	8,614			$	19,937			$	29,866

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and where otherwise indicated)

The Company recognized tax benefits of $15,110, $25,661, and $22,771 during 2014, 2013, and 2012, respectively, for the exercise of SARs and stock options. These benefits have been recorded as an increase to additional paid-in capital and are reflected as financing cash inflows in the Consolidated Statements of Cash Flows.

Performance Share Awards

Performance share awards granted are expensed over the three-year requisite performance and service period. Awards shall become vested if (1) the Company achieves certain specified stock performance targets compared to a defined group of peer companies and (2) the employee remains continuously employed by the company during the performance period. Partial vesting may occur after separation from service in the case of certain terminations not for cause and for retirements.

In 2014, 2013, and 2012, the Company issued performance shares covering 58,206, 47,032, and 50,416 shares, respectively. The performance share awards granted in 2014 are considered performance condition awards as attainment is based on Dover's performance relative to established internal metrics. The fair value of the 2014 awards was determined using Dover's closing stock price on the date of grant of $82.51. For the year end December 31, 2014, we have assumed an average attainment rate of the internal metrics of 82.6%. The expected attainment of the internal metrics for these awards is analyzed each reporting period, and the related expense is adjusted up or down based on expected attainment, if that attainment differs from previous estimates. The cumulative effect on current and prior periods of a change in attainment is recognized in compensation cost in the period of change.

The performance share awards granted in 2013 and 2012 are market condition awards as attainment is based on Dover's three-year performance relative to its peer group for the relevant performance period. These awards were valued on the date of grant using a Monte Carlo simulation model (a binomial lattice-based valuation model) with the following assumptions, and are generally recognized ratably over the vesting period:

	2013				2012
Risk-free interest rate	0.40		%		0.37		%
Dividend yield	2.06		%		2.03		%
Expected life (years)	2.9				2.9
Volatility	30.36		%		34.10		%
Fair value of performance award (1)	$	70.92			$	63.43

(1)	Updated to reflect the modification of grants issued prior to 2014 in connection with the separation of Knowles.

Expected volatilities are based on historical volatilities of each of the defined peer companies. The interest rate is based on the U.S. Treasury yield curve in effect at the time of grant.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and where otherwise indicated)

A summary of activity for performance share awards for the year ended December 31, 2014 is as follows:

	Number of Shares			Weighted-Average Grant-Date Fair Value
Unvested at January 1, 2014	92,545			$	76.05
Surrendered upon spin-off (1)	(7,177	)		76.67
Modification upon spin-off (2)	11,480			—
Granted	58,206			82.51
Forfeit	(2,381	)		80.21
Vested (3)	(50,950	)		63.43
Unvested at December 31, 2014	101,723			$	77.33

(1)	In connection with the spin-off on February 28, 2014, Knowles employees surrendered their outstanding Dover equity awards, which were then converted to Knowles equity awards.

(2)	Subsequent to the separation of Knowles, the Company modified its outstanding equity awards to employees such that all individuals received an equivalent fair value both before and after the separation.

(3)

Under the terms of the performance share award, the actual number of shares awarded can range from zero to 200% of the original target grant, depending on Dover's three-year performance relative to the peer group for the relevant performance period. The awards that vested in 2014, as shown above, will result in zero issuances of Dover common shares as a result of the three-year performance from 2012 - 2014 relative to its peer group.

Unrecognized compensation expense related to unvested performance shares as of December 31, 2014 was $3,487, which will be recognized over a weighted average period of 1.5 years.

Restricted Stock Awards

The Company also has restricted stock authorized for grant (as part of the 2005 and 2012 Plans), 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. The Company granted 131,719 of restricted stock awards in 2014. No restricted stock awards were issued in 2013 or 2012.

A summary of activity for restricted stock awards for the year ended December 31, 2014 is as follows:

	Number of Shares			Weighted-Average Grant-Date Fair Value
Unvested at January 1, 2014	40,000			$	66.59
Modification upon spin-off (1)	5,389			—
Granted	131,719			82.51
Forfeit	(10,623	)		82.51
Vested	(485	)		82.51
Unvested at December 31, 2014	166,000			$	76.00

(1)	Subsequent to the separation of Knowles, the Company modified its outstanding equity awards to employees such that all individuals received an equivalent fair value both before and after the separation.

Unrecognized compensation expense relating to unvested restricted stock as of December 31, 2014 was $7,255, which will be recognized over a weighted average period of 1.4 years.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and where otherwise indicated)

Directors' Shares

The Company issued the following shares to its non-employee directors under the 2012 Plan as partial compensation for serving as directors of the Company:

	Years ended December 31,
	2014			2013			2012
Aggregate shares granted	17,331			14,271			20,344
Shares deferred	(8,904	)		(6,929	)		—
Shares withheld to satisfy tax obligations	(210	)		(354	)		(544	)
Net shares issued	8,217			6,988			19,800

14. Commitments and Contingent Liabilities

Lease Commitments

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, for all operating leases was $87,149, $76,541, and $66,118 for the years ended December 31, 2014, 2013, and 2012, respectively. Contingent rentals under the operating leases were not significant.

The aggregate future minimum lease payments for operating and capital leases as of December 31, 2014 are as follows:

	Operating				Capital
2015	$	63,979			$	3,801
2016	51,193				2,015
2017	42,647				731
2018	33,297				196
2019	24,283				112
2020 and thereafter	57,536				347
	$	272,935			$	7,202

Guarantees

The Company has provided typical indemnities in connection with sales of certain businesses and assets, including representations and warranties and related indemnities for environmental, health and safety, tax, and employment matters. The Company does not have any material liabilities recorded for these indemnifications and is not aware of any claims or other information that would give rise to material payments under such indemnities.

Litigation

A few of the Company’s subsidiaries are involved in legal proceedings relating to the cleanup of waste disposal sites identified under federal and state statutes 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 current and former plant sites, in cooperation with regulatory agencies, and appropriate reserves have been established. At December 31, 2014 and 2013, the Company has reserves totaling $32,890 and $34,031, respectively, for environmental and other matters, including private party claims for exposure to hazardous substances, that are probable and estimable.

The Company and certain of its subsidiaries are also parties to a number of other legal proceedings incidental to their businesses. These proceedings primarily involve claims by private parties alleging injury arising out of use of the Company’s products, exposure to hazardous substances, patent infringement, employment matters, and commercial disputes. Management and legal counsel, at least quarterly, review the probable outcome of such proceedings, the costs and expenses reasonably expected to be incurred and currently accrued to-date, and the availability and extent of insurance coverage. The Company has reserves for

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and where otherwise indicated)

legal matters that are probable and estimable and not otherwise covered by insurance, and at December 31, 2014 and 2013, these reserves are not significant. While it is not possible at this time to predict the outcome of these legal actions, in the opinion of management, based on the aforementioned reviews, the Company is not currently involved in any legal proceedings which, individually or in the aggregate, could have a material affect on its financial position, results of operations, or cash flows.

15. Employee Benefit Plans

The Company offers defined contribution retirement plans which cover the majority of its U.S. employees, as well as employees in certain other countries. The Company’s expense relating to defined contribution plans was $34,263, $25,645, and $25,805 for the years ended December 31, 2014, 2013, and 2012, respectively.

The Company sponsors qualified defined benefit pension plans covering certain employees of the Company and its subsidiaries. The plans’ benefits are generally based on years of service and employee compensation. The Company also provides to certain management employees, through non-qualified plans, supplemental retirement benefits in excess of qualified plan limits imposed by federal tax law.

In July 2013, the Company announced that, after December 31, 2013, the U.S. qualified and non-qualified defined benefit plans will be closed to new employees. All pension-eligible employees as of December 31, 2013 will continue to earn a pension benefit through December 31, 2023 as long as they remain employed by an operating company participating in the plan. The Company also announced that effective, January 1, 2024, the plan would be frozen to any future benefit accruals.

In connection with the recent separation of Knowles, the Company offered one-time lump sum payments in 2014 to Knowles employees that participated in Dover's qualified defined benefit pension plan. In 2014, the Company made total lump sum payments to participants in this plan of $49,338. Based on the total of the lump sum payments made to both Knowles and other participants in the plan during the year, the Company recorded a settlement charge of approximately $10,279 in 2014.

The Company also maintains post retirement benefit plans which cover approximately 1,165 participants, approximately 1,143 of whom are eligible for medical benefits. These plans are effectively closed to new entrants. The supplemental and post retirement benefit plans are supported by the general assets of the Company.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and where otherwise indicated)

Obligations and Funded Status

The following tables summarize the balance sheet impact, including the benefit obligations, assets, and funded status associated with the Company's significant defined benefit and other postretirement plans at December 31, 2014 and 2013.

	Qualified Defined Benefits																Non-Qualified Supplemental Benefits								Post-Retirement Benefits
	U.S. Plan								Non-U.S. Plans
	2014				2013				2014				2013				2014				2013				2014				2013
Change in benefit obligation:
Benefit obligation at beginning of year	$	519,552			$	603,905			$	299,284			$	284,798			$	133,056			$	180,408			$	14,136			$	14,571
Benefits earned during the year	13,801				17,123				6,027				6,043				3,320				5,634				249				234
Interest cost	25,204				24,801				8,222				9,081				6,148				6,741				627				523
Plan participants' contributions	—				—				1,732				1,583				—				—				476				448
Benefits paid	(17,957		)		(35,266		)		(5,452		)		(11,237		)		(13,939		)		(20,686		)		(1,222		)		(1,163		)
Actuarial (gain) loss	84,314				(76,605		)		40,962				6,501				11,088				(34,831		)		(556		)		(618		)
Business dispositions	—				—				(60,164		)		—				(3,137		)		—				—				—
Amendments	—				1,913				—				—				1,463				3,004				—				65
Settlements and curtailments	(49,338		)		(16,818		)		(390		)		(3,036		)		—				(7,228		)		—				—
Currency translation and other	—				499				(25,198		)		5,551				—				14				233				76
Benefit obligation at end of year	575,576				519,552				265,023				299,284				137,999				133,056				13,943				14,136
Change in plan assets:
Fair value of plan assets at beginning of year	595,143				554,648				203,681				181,416				—				—				—				—
Actual return on plan assets	73,528				66,761				14,868				17,356				—				—				—				—
Company contributions	—				9,000				9,547				11,359				13,939				20,686				746				715
Plan participants' contributions	—				—				1,732				1,583				—				—				476				448
Benefits paid	(17,957		)		(35,266		)		(5,452		)		(11,237		)		(13,939		)		(20,686		)		(1,222		)		(1,163		)
Business dispositions	—				—				(46,334		)		—				—				—				—				—
Settlements and curtailments	(49,338		)		—				(390		)		—				—				—				—				—
Currency translation	—				—				(14,142		)		3,204				—				—				—				—
Fair value of plan assets at end of year	601,376				595,143				163,510				203,681				—				—				—				—
Funded status	$	25,800			$	75,591			$	(101,513	)		$	(95,603	)		$	(137,999	)		$	(133,056	)		$	(13,943	)		$	(14,136	)
Amounts recognized in the balance sheets consist of:
Assets and Liabilities:
Other assets and deferred charges	$	25,800			$	75,591			$	152			$	2,976			$	—			$	—			$	—			$	—
Accrued compensation and employee benefits	—				—				(1,575		)		(1,970		)		(21,978		)		(10,161		)		(926		)		(971		)
Other liabilities (deferred compensation)	—				—				(100,090		)		(96,609		)		(116,021		)		(122,895		)		(13,017		)		(13,165		)
Total Assets and Liabilities	$	25,800			$	75,591			$	(101,513	)		$	(95,603	)		$	(137,999	)		$	(133,056	)		$	(13,943	)		$	(14,136	)
Accumulated Other Comprehensive Loss (Earnings):
Net actuarial losses (gains)	$	119,919			$	86,108			$	61,813			$	38,596			$	(746	)		$	(12,520	)		$	192			$	799
Prior service cost (credit)	3,388				4,471				1,058				1,146				31,381				38,646				(615		)		(1,024		)
Net asset at transition, other	—				—				(48		)		(48		)		—				—				—				—
Deferred taxes	(43,158		)		(31,703		)		(15,312		)		(9,965		)		(10,725		)		(9,145		)		90				20
Total Accumulated Other Comprehensive Loss (Earnings), net of tax	80,149				58,876				47,511				29,729				19,910				16,981				(333		)		(205		)
Net amount recognized at December 31,	$	105,949			$	134,467			$	(54,002	)		$	(65,874	)		$	(118,089	)		$	(116,075	)		$	(14,276	)		$	(14,341	)
Accumulated benefit obligations	$	537,393			$	482,181			$	246,814			$	280,763			$	123,229			$	93,153

The Company’s net unfunded status at December 31, 2014 and 2013 includes net liabilities of $101,513 and $95,603, respectively, relating to the Company’s significant international plans, some in locations where it is not economically advantageous to pre-fund the plans due to local regulations. The majority of the international obligations relate to defined pension plans operated by the Company’s businesses in Germany, the United Kingdom, and Switzerland.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and where otherwise indicated)

The accumulated benefit obligation for all defined benefit pension plans was $907,436 and $856,097 at December 31, 2014 and 2013, respectively. Pension plans with accumulated benefit obligations in excess of plan assets consist of the following at December 31, 2014 and 2013:

	2014				2013
Projected benefit obligation (PBO)	$	372,931			$	369,289
Accumulated benefit obligation (ABO)	342,158				336,095
Fair value of plan assets	133,930				137,654

Net Periodic Benefit Cost

Components of the net periodic benefit cost were as follows:

Defined Benefit Plans

	Qualified Defined Benefits																								Non-Qualified Supplemental Benefits
	U.S. Plan												Non-U.S. Plans (1)
	2014				2013				2012				2014				2013				2012				2014				2013				2012
Service cost	$	13,801			$	17,123			$	14,406			$	6,027			$	6,043			$	5,712			$	3,320			$	5,634			$	5,304
Interest cost	25,204				24,801				25,136				8,222				9,081				10,044				6,148				6,741				7,916
Expected return on plan assets	(41,594		)		(40,194		)		(38,978		)		(8,498		)		(9,608		)		(8,765		)		—				—				—
Amortization of:
Prior service cost	1,083				1,026				1,048				107				114				117				7,775				8,110				7,425
Recognized actuarial loss (gain)	8,289				17,654				13,515				903				1,492				579				(428		)		(16		)		138
Transition obligation	—				—				—				4				(14		)		(47		)		—				—				—
Settlement & curtailment (gain) loss (2)	10,279				187				—				(45		)		697				1,449				—				(4,411		)		—
Other	—				501				—				6				5				—				—				13				—
Total net periodic benefit cost	$	17,062			$	21,098			$	15,127			$	6,726			$	7,810			$	9,089			$	16,815			$	16,071			$	20,783

(1)	Net periodic benefit cost for non-U.S. plans includes $55, $1,220, and $1,231 of expense for the years ended December 31, 2014, 2013, and 2012, respectively, relating to plans sponsored by Knowles that were distributed as part of the separation on February 28, 2014.

(2)

$6,675 of the 2014 settlement loss on the U.S. Plan is attributable to Knowles participants in the Dover Defined Benefit Plan and has therefore, been reflected in the results of discontinued operations. The remaining $3,604 of this settlement loss has been reflected in the results of continuing operations. The curtailment gain of $4,411 was recognized in continuing operations in 2013 in connection with the freeze of the non-qualified supplemental benefit plan.

Post-Retirement Benefits

	2014				2013				2012
Service cost	$	249			$	234			$	248
Interest cost	627				523				593
Amortization of:
Prior service credit	(409		)		(416		)		(416		)
Recognized actuarial loss (gain)	54				134				(19		)
Settlement & curtailment gain	—				—				(1,493		)
Other	233				77				—
Total net periodic benefit cost	$	754			$	552			$	(1,087	)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and where otherwise indicated)

Amounts expected to be amortized from Accumulated Other Comprehensive Earnings (Loss) into net periodic benefit cost during 2015 are as follows:

	Qualified Defined Benefits								Non-Qualified Supplemental Benefits				Post-Retirement Benefits
	U.S. Plan				Non-U.S. Plans
Amortization of:
Prior service cost (credit)	$	976			$	95			$	6,927			$	(372	)
Recognized actuarial loss (gain)	12,846				2,784				286				(30		)
Transition obligation	—				5				—				—
Total	$	13,822			$	2,884			$	7,213			$	(402	)

Assumptions

The Company determines actuarial assumptions on an annual basis.

The weighted-average assumptions used in determining the benefit obligations were as follows:

	Qualified Defined Benefits												Non-Qualified Supplemental Benefits						Post-Retirement Benefits
	U.S. Plan						Non-U.S. Plans
	2014			2013			2014			2013			2014			2013			2014			2013
Discount rate	4.05	%		4.90	%		2.31	%		3.53	%		3.96	%		4.77	%		3.75	%		4.45	%
Average wage increase	4.00	%		4.00	%		2.50	%		2.86	%		4.50	%		4.50	%		na			na
Ultimate medical trend rate	na			na			na			na			na			na			5.00	%		5.00	%

The weighted average assumptions used in determining the net periodic cost were as follows:

	Qualified Defined Benefits																		Non- Qualified Supplemental Benefits									Post-Retirement Benefits
	U.S. Plan									Non-U.S. Plans
	2014			2013			2012			2014			2013			2012			2014			2013			2012			2014			2013			2012
Discount rate	4.90	%		4.05	%		4.85	%		3.53	%		3.31	%		4.62	%		4.77	%		4.02	%		4.77	%		4.45	%		3.65	%		3.65	%
Average wage increase	4.00	%		4.00	%		4.00	%		2.86	%		2.74	%		3.14	%		4.50	%		4.50	%		4.50	%		na			na			na
Expected return on plan assets	7.75	%		7.75	%		7.75	%		5.35	%		5.32	%		5.90	%		na			na			na			na			na			na

The Company’s discount rate assumption is determined by developing a yield curve based on high quality corporate bonds with maturities matching the plans’ expected benefit payment streams. The plans’ expected cash flows are then discounted by the resulting year-by-year spot rates.

For post-retirement benefit measurement purposes, an 8.0% annual rate of increase in the per capita cost of covered benefits (i.e., health care cost trend rates) was assumed for 2015. The rate was assumed to decrease gradually to 5.0% by the year 2027 and remain at that level thereafter. The health care cost trend rate assumption can have an effect on the amounts reported. For example, increasing (decreasing) the assumed health care cost trend rates by one percentage point in each year would increase (decrease) the accumulated post-retirement benefit obligation as of December 31, 2014 by $234 and $(224), respectively, and would have a negligible impact on the net post-retirement benefit cost for 2014.

Plan Assets

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 the funded status. Related and supporting financial objectives are established in conjunction with a review of current and projected plan financial requirements.

As it relates to the funded defined benefit pension plans, the Company’s funding policy is consistent with the funding requirements of the Employment Retirement Income Security Act ("ERISA") and applicable international laws. The Company is responsible for overseeing the management of the investments of the plans’ assets and otherwise ensuring that the plans’ investment programs

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and where otherwise indicated)

are in compliance with ERISA, other relevant legislation, and related plan documents. Where relevant, the Company has retained 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 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 assets assumption used for pension expense is developed through analysis of historical market returns, statistical analysis, current market conditions, and the past experience of plan asset investments. Overall, it is projected that the investment of plan assets within Dover’s U.S. defined benefit plan will achieve a 7.75% net return over time from the asset allocation strategy.

The Company’s actual and target weighted-average asset allocation for our U.S. Corporate Pension Plan was as follows:

	2014			2013			Current Target
Equity securities	55	%		64	%		58	%
Fixed income	36	%		29	%		35	%
Real estate and other	9	%		7	%		7	%
Total	100	%		100	%		100	%

While the non-U.S. investment policies are different for each country, the long-term objectives are generally the same as for the U.S. pension assets. The Company's non-U.S. plans were expected to achieve rates of return on invested assets of 5.35% in 2014, 5.32% in 2013, and 5.90% in 2012.

The fair values of both U.S. and non-U.S. pension plan assets by asset category within the ASC 820 hierarchy (as defined in Note 11 Financial Instruments) are as follows at December 31, 2014 and 2013:

	U.S. Plan
	December 31, 2014																December 31, 2013
	Level 1				Level 2				Level 3				Total Fair Value				Level 1				Level 2				Level 3				Total Fair Value
Asset category:
Common stocks:
U.S. companies	$	164,006			$	—			$	—			$	164,006			$	180,038			$	—			$	—			$	180,038
Non-U.S. companies	3,874				—				—				3,874				5,526				—				—				5,526
Fixed income investments:
Corporate bonds	—				63,878				—				63,878				—				53,924				—				53,924
Private placements	—				6,865				—				6,865				—				3,374				—				3,374
Government securities	48,370				98,998				—				147,368				25,035				87,107				—				112,142
Common stock funds:
Mutual funds	44,610				—				—				44,610				59,387				—				—				59,387
Collective trusts	—				119,312				—				119,312				—				138,236				—				138,236
Real estate funds	—				37,145				—				37,145				—				33,749				—				33,749
Cash and equivalents	14,318				—				—				14,318				8,767				—				—				8,767
	$	275,178			$	326,198			$	—			$	601,376			$	278,753			$	316,390			$	—			$	595,143

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and where otherwise indicated)

	Non-U.S. Plans
	December 31, 2014																December 31, 2013
	Level 1				Level 2				Level 3				Total Fair Value				Level 1				Level 2				Level 3				Total Fair Value
Asset category:
Common stocks	$	40,960			$	—			$	—			$	40,960			$	35,010			$	—			$	—			$	35,010
Fixed income investments	—				59,791				—				59,791				—				75,574				—				75,574
Common stock funds	—				43,821				—				43,821				—				66,285				—				66,285
Real estate funds	—				—				9,976				9,976				—				—				14,937				14,937
Cash and equivalents	1,531				—				—				1,531				6,785				—				—				6,785
Other	—				7,431				—				7,431				—				5,090				—				5,090
	$	42,491			$	111,043			$	9,976			$	163,510			$	41,795			$	146,949			$	14,937			$	203,681

Common stocks represent investments in domestic and foreign equities which are publicly traded on active exchanges and are valued based on quoted market prices.

Fixed income investments include U.S. treasury bonds and notes, which are valued based on quoted market prices, as well as investments in other government and municipal securities and corporate bonds, which are valued based on yields currently available on comparable securities of issuers with similar credit ratings.

Common stock funds consist of mutual funds and collective trusts. Mutual funds are valued by obtaining quoted prices from nationally recognized securities exchanges. Collective trusts are valued using Net Asset Value (the "NAV") as of the last business day of the year. The NAV is based on the underlying value of the assets owned by the fund minus its liabilities, and then divided by the number of shares outstanding. The value of the underlying assets is based on quoted prices in active markets.

The real estate funds are valued on an annual basis using third-party appraisals, with adjustments estimated on a quarterly basis using discounted cash flow models which consider such inputs as revenue and expense growth rates, terminal capitalization rates, and discount rates. The Company believes this is an appropriate methodology to obtain the fair value of these assets.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The fair value measurement of plan assets using significant unobservable inputs (Level 3) changed during 2013 and 2014 due to the following:

	Real estate funds				Other				Total
Balance at December 31, 2012	$	10,116			$	1,456			$	11,572
Actual return on plan assets:
Relating to assets still held at December 31, 2013	2,958				—				2,958
Purchases	1,863				—				1,863
Sales	—				(1,456		)		(1,456		)
Balance at December 31, 2013	14,937				—				14,937
Actual return on plan assets:
Relating to assets still held at December 31, 2014	(4,527		)		—				(4,527		)
Business dispositions	(362		)		—				(362		)
Sales	(72		)		—				(72		)
Balance at December 31, 2014	$	9,976			$	—			$	9,976

There were no significant transfers between Level 1 and Level 2 investments during 2014 or 2013.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and where otherwise indicated)

Future Estimates

Benefit Payments

Estimated future benefit payments to retirees, which reflect expected future service, are as follows:

	Qualified Defined Benefits								Non-Qualified Supplemental Benefits				Post-Retirement Benefits
	U.S. Plan				Non-U.S. Plans
2015	$	35,312			$	6,295			$	22,412			$	926
2016	36,702				6,841				7,968				940
2017	38,784				6,889				3,986				951
2018	40,120				7,196				5,206				959
2019	40,892				7,139				11,282				946
2020 - 2024	221,358				42,775				55,417				4,647

Contributions

In 2015, the Company expects to contribute approximately $6.5 million to its non-U.S. plans and none to its U.S. plans. Additionally, in 2015, the Company expects to fund benefit payments of approximately $22.4 million to plan participants of its unfunded, non-qualified, supplemental benefit plans.

Multiemployer Pension Plans

The Company, through its subsidiaries, participates in a few multiemployer pension plans covering approximately 100 employees working under U.S. collective bargaining agreements. None of these plans are considered individually significant to the Company. Contributions to multiemployer plans totaled less than $2.0 million in each of the last three years.

16. Other Comprehensive Earnings

The amounts recognized in other comprehensive earnings were as follows:

Year Ended December 31, 2014	Pre-tax				Tax				Net of tax
Foreign currency translation adjustments (1)	$	(131,420	)		$	(19,523	)		$	(150,943	)
Pension and other postretirement benefit plans	(70,705		)		20,994				(49,711		)
Changes in fair value of cash flow hedges	(375		)		131				(244		)
Other	1,067				(128		)		939
Total other comprehensive (loss) earnings	$	(201,433	)		$	1,474			$	(199,959	)

(1)	Tax expense in current year relates to gain for net investment hedges, as these were favorably impacted by the decline in foreign currency rates. See Note 11 Financial Instruments for additional information.

Year Ended December 31, 2013	Pre-tax				Tax				Net of tax
Foreign currency translation adjustments	$	2,242			$	2,494			$	4,736
Pension and other postretirement benefit plans	182,092				(63,585		)		118,507
Changes in fair value of cash flow hedges	(75		)		26				(49		)
Other	(642		)		77				(565		)
Total other comprehensive earnings (loss)	$	183,617			$	(60,988	)		$	122,629

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and where otherwise indicated)

Year Ended December 31, 2012	Pre-tax				Tax				Net of tax
Foreign currency translation adjustments	$	38,521			$	359			$	38,880
Pension and other postretirement benefit plans	(70,642		)		23,632				(47,010		)
Changes in fair value of cash flow hedges	195				(70		)		125
Other	692				(83		)		609
Total other comprehensive (loss) earnings	$	(31,234	)		$	23,838			$	(7,396	)

The components of accumulated other comprehensive earnings (loss) are as follows:

	December 31, 2014				December 31, 2013
Cumulative foreign currency translation adjustments	$	(14,884	)		$	170,609
Pension and other postretirement benefit plans (1)	(147,237		)		(105,381		)
Changes in fair value of cash flow hedges	3,190				2,495
	$	(158,931	)		$	67,723

(1)	Includes accumulated other comprehensive losses of $7,855, net of tax, at December 31, 2013 attributable to defined pension plans that were spun off with the distribution of Knowles on February 28, 2014.

Total comprehensive earnings were as follows:

	Years Ended December 31,
	2014				2013				2012
Net earnings	$	775,235			$	1,003,129			$	811,070
Other comprehensive (loss) earnings	(199,959		)		122,629				(7,396		)
Comprehensive earnings	$	575,276			$	1,125,758			$	803,674

Amounts reclassified from accumulated other comprehensive earnings (loss) to earnings (loss) during the year ended December 31, 2014, 2013 and 2012 were as follows:

	Years Ended December 31,
	2014				2013				2012
Pension & postretirement benefit plans:
Amortization of actuarial losses	$	8,822			$	19,250			$	12,673
Amortization of prior service costs	8,556				8,834				8,174
Total before tax	17,378				28,084				20,847
Tax expense	(5,969		)		(9,809		)		(7,013		)
Net of tax	$	11,409			$	18,275			$	13,834
Cash flow hedges:
Net gains reclassified into earnings	$	(164	)		$	(130	)		$	(549	)
Tax benefit	57				46				192
Net of tax	$	(107	)		$	(84	)		$	(357	)

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

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and where otherwise indicated)

17. Segment Information

In the first quarter of 2014, Dover announced the realignment of its businesses into a new segment structure, consisting of four segments and organized around its key end markets to better focus on growth strategies. The new structure is designed also to provide increased opportunities to leverage Dover's scale and capitalize on productivity initiatives. Dover's four segments are as follows:

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

•	Our Engineered Systems segment is comprised of two platforms, Printing & Identification and Industrials, and is focused on the design, manufacture and service of critical equipment and components serving the printing & identification, vehicle service, environmental solutions and industrial end markets.

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

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and where otherwise indicated)

Segment financial information and a reconciliation of segment results to consolidated results follows:

	Years Ended December 31,
	2014				2013				2012
Revenue:
Energy	$	2,017,239			$	1,853,853			$	1,788,295
Engineered Systems	2,385,965				2,177,970				2,143,687
Fluids	1,430,566				1,236,838				1,087,526
Refrigeration & Food Equipment	1,921,189				1,887,840				1,607,602
Intra-segment eliminations	(2,231		)		(1,405		)		(462		)
Total consolidated revenue	$	7,752,728			$	7,155,096			$	6,626,648
Earnings from continuing operations:
Segment earnings:
Energy	$	461,815			$	459,649			$	466,801
Engineered Systems	386,998				347,497				319,704
Fluids	251,639				224,523				182,544
Refrigeration & Food Equipment	238,734				267,307				223,397
Total segments	1,339,186				1,298,976				1,192,446
Corporate expense / other (1)	117,800				132,336				140,112
Net interest expense	127,179				120,654				121,269
Earnings before provision for income taxes and discontinued operations	1,094,207				1,045,986				931,065
Provision for taxes	316,067				248,459				280,990
Earnings from continuing operations	$	778,140			$	797,527			$	650,075
Operating margins:
Energy	22.9		%		24.8		%		26.1		%
Engineered Systems	16.2		%		16.0		%		14.9		%
Fluids	17.6		%		18.2		%		16.8		%
Refrigeration & Food Equipment	12.4		%		14.2		%		13.9		%
Total Segments	17.3		%		18.2		%		18.0		%
Earnings from continuing operations	10.0		%		11.1		%		9.8		%
Depreciation and amortization:
Energy	$	111,956			$	99,075			$	87,921
Engineered Systems	61,946				59,058				60,670
Fluids	60,903				48,812				41,381
Refrigeration & Food Equipment	68,701				67,228				37,295
Corporate	3,682				3,860				2,667
Consolidated total	$	307,188			$	278,033			$	229,934
Capital expenditures:
Energy	$	66,998			$	60,756			$	65,520
Engineered Systems	29,749				29,145				25,314
Fluids	34,319				21,868				22,655
Refrigeration & Food Equipment	33,510				27,173				30,863
Corporate	1,457				2,752				2,150
Consolidated total	$	166,033			$	141,694			$	146,502

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and where otherwise indicated)

Selected financial information by market segment (continued):

Total assets at December 31:	2014				2013
Energy	$	2,645,567			$	1,901,200
Engineered Systems	2,348,684				2,224,519
Fluids	1,414,387				1,390,777
Refrigeration & Food Equipment	1,494,121				1,540,295
Corporate (2)	860,455				1,019,327
Total assets - continuing operations	8,763,214				8,076,118
Assets from discontinued operations	327,171				2,779,063
Consolidated total	$	9,090,385			$	10,855,181

(2)

Corporate assets are principally cash and cash equivalents. Also included in corporate assets is an asset of $25,800 and $75,591 in 2014 and 2013, respectively, that represents the overfunded plan status of the U.S. defined benefit plan. Additionally, included in corporate assets in 2013 is a $16,250 note receivable related to proceeds from the sale of ECT. Refer to Note 4 Disposed and Discontinued Operations and Note 15 Employee Benefit Plans, respectively, for additional information.

	Revenue												Long-Lived Assets
	Years Ended December 31,												At December 31,
	2014				2013				2012				2014				2013
United States	$	4,617,813			$	4,202,434			$	3,977,925			$	599,688			$	528,001
Europe	1,251,625				1,112,279				1,082,210				136,599				153,564
Other Americas	794,966				803,741				744,192				39,971				47,374
Asia	686,511				607,873				574,140				42,775				43,516
Other	401,813				428,769				248,181				18,036				15,394
Consolidated total	$	7,752,728			$	7,155,096			$	6,626,648			$	837,069			$	787,849

Revenue is 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. The Company’s businesses are based primarily in the United States of America, Europe, and Asia. The Company’s businesses serve thousands of customers, none of which accounted for more than 10% of consolidated revenue.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and where otherwise indicated)

18. Earnings per Share

The following table sets forth a reconciliation of the information used in computing basic and diluted earnings per share:

	Years Ended December 31,
	2014				2013				2012
Earnings from continuing operations	$	778,140			$	797,527			$	650,075
(Loss) earnings from discontinued operations, net	(2,905		)		205,602				160,995
Net earnings	$	775,235			$	1,003,129			$	811,070
Basic earnings per common share:
Earnings from continuing operations	$	4.67			$	4.66			$	3.58
(Loss) earnings from discontinued operations, net	$	(0.02	)		$	1.20			$	0.89
Net earnings	$	4.65			$	5.86			$	4.47
Weighted average shares outstanding	166,692,000				171,271,000				181,551,000
Diluted earnings per common share:
Earnings from continuing operations	$	4.61			$	4.60			$	3.53
(Loss) earnings from discontinued operations, net	$	(0.02	)		$	1.18			$	0.88
Net earnings	$	4.59			$	5.78			$	4.41
Weighted average shares outstanding	168,842,000				173,547,000				183,993,000

The following table is a reconciliation of the share amounts used in computing earnings per share:

	Years Ended December 31,
	2014			2013			2012
Weighted average shares outstanding - Basic	166,692,000			171,271,000			181,551,000
Dilutive effect of assumed exercise of employee stock options and SARs and vesting of performance shares and restricted shares	2,150,000			2,276,000			2,442,000
Weighted average shares outstanding - Diluted	168,842,000			173,547,000			183,993,000

Diluted per share amounts are computed using the weighted-average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options and SARs, and vesting of performance shares and restricted shares, as determined using the treasury stock method. For the year ended December 31, 2014 the weighted average number of anti-dilutive potential common shares excluded from the calculation above totaled 38,789. There were no anti-dilutive potential common shares excluded from the above calculation for the years ended December 31, 2013 and 2012.

19. Stockholders' Equity

The Company has the authority to issue up to 100,000 shares of $100 par preferred stock and up to 500,000,000 shares of $1.00 par common stock. None of the preferred stock has been issued. As of December 31, 2014 and 2013, 255,892,502 and 255,320,345 shares of common stock were issued, and the Company had 92,880,644 and 85,413,416 treasury shares, held at cost, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and where otherwise indicated)

Share Repurchases

Share repurchases were as follows:

	Years Ended December 31,
	2014				2013				2012
Shares repurchased in the open market	7,467,228				6,005,880				12,314,795
Shares repurchased from holders of employee stock options	—				5,951				86,303
Total shares repurchased	7,467,228				6,011,831				12,401,098
Average price paid per share	$	80.50			$	76.16			$	60.38

In May 2012, the Board of Directors renewed its standing authorization of the Company's share repurchase program, on terms consistent with its prior five-year authorization which expired at that time. This renewal authorized the repurchase of up to 10,000,000 shares of the Company's common stock during the five-year period ending May 2017. The Company repurchased 3,870,248 shares under this authorization during 2014 for an average share price of $79.71. As of December 31, 2014, the approximate number of shares still available for repurchase under the May 2012 share repurchase authorization was 38,041. This authorization was canceled and replaced in January 2015 with a new standing share repurchase authorization approved by the Board of Directors, whereby the Company may repurchase up to 15,000,000 shares of its common stock over the following three years.

In November 2012, the Board of Directors approved a $1.0 billion share repurchase program authorizing repurchases of the Company's common shares over the following 12 to 18 months. In 2014, the Company completed this share repurchase program through an accelerated share repurchase transaction, whereby Dover paid $292,565 on March 10, 2014 to receive a variable number of shares on incremental dates through March 31, 2014. The Company repurchased 3,596,980 shares under this transaction for an average share price of $81.06.

20. Quarterly Data (Unaudited)

									Continuing Operations												Net Earnings
Quarter	Revenue				Gross Profit				Earnings				Per Share - Basic				Per Share - Diluted				Net Earnings				Per Share - Basic				Per Share - Diluted
2014
First	$	1,802,570			$	707,859			$	170,041			$	1.00			$	0.99			$	160,138			$	0.94			$	0.93
Second	1,962,636				768,100				210,581				1.26				1.25				213,959				1.29				1.27
Third	2,009,575				774,422				225,683				1.36				1.34				231,844				1.40				1.38
Fourth	1,977,947				723,868				171,835				1.04				1.03				169,294				1.03				1.02
	$	7,752,728			$	2,974,249			$	778,140			4.67				4.61				$	775,235			4.65				4.59
2013
First	$	1,681,540			$	653,847			$	160,267			$	0.92			$	0.91			$	210,003			$	1.21			$	1.20
Second	1,836,981				720,994				247,988				1.45				1.43				330,049				1.93				1.91
Third	1,850,653				724,041				217,045				1.27				1.26				269,114				1.58				1.56
Fourth	1,785,922				679,709				172,227				1.01				1.00				193,963				1.14				1.13
	$	7,155,096			$	2,778,591			$	797,527			4.66				4.60				$	1,003,129			5.86				5.78

SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS

Years Ended December 31, 2014, 2013 and 2012

(In thousands)

Allowance for Doubtful Accounts		Balance at Beginning of Year				Acquired by Purchase or Merger			Charged to Cost and Expense (A)			Accounts Written Off			Other			Balance at End of Year
Year Ended December 31, 2014
Allowance for Doubtful Accounts		$	17,203			1,201			4,730			(3,524	)		(716	)		$	18,894
Year Ended December 31, 2013
Allowance for Doubtful Accounts		$	17,005			—			5,869			(5,427	)		(244	)		$	17,203
Year Ended December 31, 2012
Allowance for Doubtful Accounts		$	18,757			56			3,810			(5,138	)		(480	)		$	17,005
(A) Net of recoveries on previously reserved or written-off balances.
Deferred Tax Valuation Allowance		Balance at Beginning of Year				Acquired by Purchase or Merger			Additions			Reductions			Other			Balance at End of Year
Year Ended December 31, 2014
Deferred Tax Valuation Allowance		$	14,063			—			133,431			(6,242	)		—			$	141,252
Year Ended December 31, 2013
Deferred Tax Valuation Allowance		$	17,275			—			—			(3,212	)		—			$	14,063
Year Ended December 31, 2012
Deferred Tax Valuation Allowance		$	20,396			—			—			(3,121	)		—			$	17,275
LIFO Reserve		Balance at Beginning of Year				Acquired by Purchase or Merger			Charged to Cost and Expense			Reductions			Other			Balance at End of Year
Year Ended December 31, 2014
LIFO Reserve		$	50,705			—			4,166			(4,102	)		—			$	50,769
Year Ended December 31, 2013
LIFO Reserve		$	53,374			—			—			(2,669	)		—			$	50,705
Year Ended December 31, 2012
LIFO Reserve		$	53,327			—			47			—			—			$	53,374