Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND

FINANCIAL STATEMENT SCHEDULE

Page
51	Management's Report on Internal Control Over Financial Reporting
52	Report of Independent Registered Public Accounting Firm
53	Consolidated Statements of Earnings
54	Consolidated Statements of Comprehensive Earnings
55	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, 2015. 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, 2015, 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, 2015, management has excluded all companies acquired in purchase business combinations during 2015. The Company is currently assessing the control environments of these acquisitions. The following companies were acquired in purchase business combinations during 2015: JK Group, Gala Industries, Reduction Engineering Scheer, and Gemtron. These companies are wholly-owned by the Company and their revenue for the year ended December 31, 2015 represents approximately 0.5% of the Company’s consolidated total revenue for the same period and their assets represent approximately 1.4% of the Company’s consolidated assets as of December 31, 2015.

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2015 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, 2015 and 2014, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2015 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, 2015, 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.

As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it classifies deferred taxes on the balance sheet in 2015.

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 JK Group, Gala Industries, Reduction Engineering Scheer, and Gemtron from its assessment of internal control over financial reporting as of December 31, 2015 because these companies were acquired by the Company in purchase business combinations during 2015. We have also excluded these companies from our audit of internal control over financial reporting. These companies are wholly-owned by the Company and their total assets and total revenues represent 1.4% and 0.5%, respectively, of the related financial statement amounts as of and for the year ended December 31, 2015.

	/s/ PricewaterhouseCoopers LLP
	Chicago, Illinois
	February 12, 2016

DOVER CORPORATION

CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share figures)

	Years Ended December 31,
	2015				2014				2013
Revenue	$	6,956,311			$	7,752,728			$	7,155,096
Cost of goods and services	4,388,167				4,778,479				4,376,505
Gross profit	2,568,144				2,974,249				2,778,591
Selling and administrative expenses	1,647,382				1,758,765				1,616,921
Operating earnings	920,762				1,215,484				1,161,670
Interest expense, net	127,257				127,179				120,654
Other income, net	(7,105		)		(5,902		)		(4,970		)
Earnings before provision for income taxes and discontinued operations	800,610				1,094,207				1,045,986
Provision for income taxes	204,729				316,067				248,459
Earnings from continuing operations	595,881				778,140				797,527
Earnings (loss) from discontinued operations, net	273,948				(2,905		)		205,602
Net earnings	$	869,829			$	775,235			$	1,003,129
Earnings per share from continuing operations:
Basic	$	3.78			$	4.67			$	4.66
Diluted	$	3.74			$	4.61			$	4.60
Earnings (loss) per share from discontinued operations:
Basic	$	1.74			$	(0.02	)		$	1.20
Diluted	$	1.72			$	(0.02	)		$	1.18
Net earnings per share:
Basic	$	5.52			$	4.65			$	5.86
Diluted	$	5.46			$	4.59			$	5.78
Weighted average shares outstanding:
Basic	157,619				166,692				171,271
Diluted	159,172				168,842				173,547
Dividends paid per common share	$	1.64			$	1.55			$	1.45

See Notes to Consolidated Financial Statements

DOVER CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

(In thousands)

	Years Ended December 31,
	2015				2014				2013
Net earnings	$	869,829			$	775,235			$	1,003,129
Other comprehensive (loss) earnings, net of tax
Foreign currency translation adjustments:
Foreign currency translation (losses) gains during period	(117,302		)		(144,643		)		34,617
Reclassification of foreign currency translation gains to earnings	(3,092		)		(6,300		)		(29,881		)
Total foreign currency translation	(120,394		)		(150,943		)		4,736
Pension and other postretirement benefit plans:
Actuarial gains (losses) arising during period	4,492				(60,766		)		101,478
Prior service cost arising during period	4,171				(354		)		(1,246		)
Amortization of actuarial losses included in net periodic pension cost	10,280				5,792				12,542
Amortization of prior service costs included in net periodic pension cost	4,993				5,617				5,733
Total pension and other postretirement benefit plans	23,936				(49,711		)		118,507
Changes in fair value of cash flow hedges:
Unrealized net (losses) gains arising during period	(328		)		(137		)		35
Net gains reclassified into earnings	(108		)		(107		)		(84		)
Total cash flow hedges	(436		)		(244		)		(49		)
Other	1,252				939				(565		)
Other comprehensive (loss) earnings	(95,642		)		(199,959		)		122,629
Comprehensive earnings	$	774,187			$	575,276			$	1,125,758

See Notes to Consolidated Financial Statements.

DOVER CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

	December 31, 2015				December 31, 2014
Current assets:
Cash and cash equivalents	$	362,185			$	681,581
Receivables, net of allowances of $18,050 and $18,894	1,120,490				1,186,746
Inventories, net	802,895				863,737
Prepaid and other current assets	135,209				101,905
Total current assets	2,420,779				2,833,969
Property, plant and equipment, net	854,269				837,069
Goodwill	3,737,389				3,491,557
Intangible assets, net	1,413,223				1,369,520
Other assets and deferred charges	194,103				171,005
Assets of discontinued operations	—				327,171
Total assets	$	8,619,763			$	9,030,291
Current liabilities:
Notes payable and current maturities of long-term debt	$	151,122			$	777,956
Accounts payable	650,880				615,332
Accrued compensation and employee benefits	223,039				272,822
Accrued insurance	99,642				95,896
Other accrued expenses	235,971				266,277
Federal and other taxes on income	6,528				10,566
Total current liabilities	1,367,182				2,038,849
Long-term debt	2,617,342				2,253,041
Deferred income taxes	575,709				504,618
Other liabilities	414,955				482,340
Liabilities of discontinued operations	—				50,718
Stockholders' equity:
Preferred stock - $100 par value; 100,000 shares authorized; none issued	—				—
Common stock - $1 par value; 500,000,000 shares authorized; 256,112,943 and 255,892,502 shares issued at December 31, 2015 and December 31, 2014, respectively	256,113				255,893
Additional paid-in capital	928,409				900,833
Retained earnings	7,686,642				7,074,782
Accumulated other comprehensive loss	(254,573		)		(158,931		)
Common stock in treasury	(4,972,016		)		(4,371,852		)
Total stockholders' equity	3,644,575				3,700,725
Total liabilities and stockholders' equity	$	8,619,763			$	9,030,291

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, 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 acquisition	—				—				—				—				—				—
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
Net earnings	—				—				869,829				—				—				869,829
Dividends paid	—				—				(257,969		)		—				—				(257,969		)
Common stock issued for the exercise of share-based awards	210				(4,416		)		—				—				—				(4,206		)
Tax benefit from the exercise of share-based awards	—				661				—				—				—				661
Stock-based compensation expense	—				30,697				—				—				—				30,697
Common stock issued, other	10				634				—				—				—				644
Common stock acquired	—				—				—				—				(600,164		)		(600,164		)
Other comprehensive loss, net of tax	—				—				—				(95,642		)		—				(95,642		)
Balance at December 31, 2015	$	256,113			$	928,409			$	7,686,642			$	(254,573	)		$	(4,972,016	)		$	3,644,575

See Notes to Consolidated Financial Statements

DOVER CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Years Ended December 31,
	2015				2014				2013
Operating Activities of Continuing Operations
Net earnings	$	869,829			$	775,235			$	1,003,129
Adjustments to reconcile net earnings to cash from operating activities:
(Earnings) loss from discontinued operations, net	(273,948		)		2,905				(205,602		)
Depreciation and amortization	327,089				307,188				278,033
Stock-based compensation	30,697				31,628				30,480
Provision for losses on accounts receivable (net of recoveries)	5,946				4,730				5,869
Deferred income taxes	(5,916		)		(33,866		)		8,275
Employee benefit plan expense	34,253				34,627				44,311
Contributions to employee benefit plans	(21,942		)		(24,232		)		(40,258		)
Other, net	(2,258		)		(21,813		)		3,904
Cash effect of changes in assets and liabilities (excluding effects of acquisitions, dispositions and foreign exchange):
Accounts receivable	37,916				(87,207		)		(87,806		)
Inventories	63,129				(63,717		)		1,684
Prepaid expenses and other assets	(7,401		)		(18,527		)		(8,452		)
Accounts payable	42,925				60,176				38,808
Accrued compensation and employee benefits	(71,090		)		(17,731		)		(17,817		)
Accrued expenses and other liabilities	(19,765		)		40,955				(7,353		)
Accrued taxes	(60,405		)		(40,187		)		(67,593		)
Net cash provided by operating activities of continuing operations	949,059				950,164				979,612
Investing Activities of Continuing Operations
Additions to property, plant and equipment	(154,251		)		(166,033		)		(141,694		)
Acquisitions (net of cash and cash equivalents acquired)	(567,843		)		(802,254		)		(322,838		)
Proceeds from the sale of property, plant and equipment	14,604				14,373				23,801
Proceeds from the sale of businesses	689,314				191,348				76,457
Settlement of net investment hedge	(17,752		)		—				—
Other	1,350				(19,991		)		2,597
Net cash used in investing activities of continuing operations	(34,578		)		(782,557		)		(361,677		)
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	394,300				—				403,776
Proceeds from exercise of share-based awards, including tax benefits	4,024				20,337				38,922
Change in commercial paper and notes payable, net	(327,000		)		251,500				(381,000		)
Repayment of long-term debt	(300,048		)		(6,566		)		(3,246		)
Dividends to stockholders	(257,969		)		(258,487		)		(247,820		)
Purchase of common stock	(600,164		)		(601,077		)		(457,871		)
Payments for employee tax obligations upon exercise of share-based awards	(5,029		)		(21,151		)		(31,303		)
Net cash used in financing activities of continuing operations	(1,091,886		)		(255,489		)		(678,542		)
Cash Flows from Discontinued Operations
Net cash provided by operating activities of discontinued operations	(113,946		)		25,760				172,955
Net cash used in investing activities of discontinued operations	(1,984		)		(19,753		)		(107,191		)
Net cash (used in) provided by discontinued operations	(115,930		)		6,007				65,764
Effect of exchange rate changes on cash and cash equivalents	(26,061		)		(40,426		)		(1,351		)
Net (decrease) increase in cash and cash equivalents	(319,396		)		(122,301		)		3,806
Cash and cash equivalents at beginning of period	681,581				803,882				800,076
Cash and cash equivalents at end of period	$	362,185			$	681,581			$	803,882
Supplemental information - cash paid during the year for:
Income taxes	$	346,382			$	372,446			$	318,402
Interest	$	128,151			$	128,412			$	123,881

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 16 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 3 Disposed and Discontinued Operations, the Company reported certain businesses that were 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 ("Knowles") prior to the spin-off on February 28, 2014, have been separately reported as discontinued operations for all periods presented. Also see Recently Adopted Accounting Standards below.

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 historical 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 $167,516 in 2015, $152,079 in 2014, and $144,087 in 2013.

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The Company recognizes all derivatives as either assets or liabilities on the consolidated balance sheet and measures those 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 or when a significant portion of a reporting unit is to be reclassified to discontinued operations or assets held for sale. 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 2015, the Company identified nine reporting units for its annual goodwill impairment test. Step one of the impairment test compares the fair value of each reporting unit to its carrying value. The Company uses the discounted cash flow method (or income approach) to measure the fair value of its reporting units. Under this method the Company uses it own market assumptions including internal 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. These projections are based on historical performance and future estimated results. The discount rates used in these analyses vary by reporting unit and are based on a capital asset pricing model and published relevant industry rates. We use discount rates commensurate with the risks and uncertainties inherent to each reporting unit and in our internally developed forecasts. These assumptions require significant judgment and actual results may differ from assumed and estimated amounts. When the carrying value of a reporting unit is in excess of its fair value, step two of the goodwill impairment test is required. Step two determines the amount of goodwill impairment to be recognized. See Note 6 Goodwill and Other Intangible Assets for further discussion of the Company's annual goodwill impairment test and results.

As discussed in Note 3 Disposed and Discontinued Operations, in connection with the sale of certain businesses held for sale, the Company recognized total impairment losses of $53,439, net of tax, in 2013 within the results of discontinued operations. There were no impairment losses recognized for businesses held for sale as of December 31, 2014. The Company had no businesses held for sale as of December 31, 2015.

Similarly to goodwill, the Company uses a discounted cash flow method to test its other indefinite lived intangible assets for impairment, at least annually. The Company compares 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 required for the years ended December 31, 2015, 2014, or 2013.

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.

Restructuring Accruals – From time to time the Company takes actions to reduce headcount, close facilities, or otherwise exit operations. Such restructuring activities at an operation are recorded when management has committed to an exit or reorganization plan and when termination benefits are probable and can be reasonably estimated based on circumstances at the time the restructuring plan is approved by management. Exit costs include future minimum lease payments on vacated facilities and other contractual terminations. In addition, asset impairments may be recorded as a result of an approved restructuring plan. The accrual of both severance and exit costs requires the use of estimates. Though the Company believes that its estimates accurately reflect the anticipated costs, actual results may be different from the original estimated amounts.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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. The Company includes shipping costs billed to customers in revenue and the related shipping costs in cost of sales.

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 12 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 $115,037 in 2015, $118,411 in 2014, and $117,178 in 2013.

Advertising – Advertising costs are expensed when incurred and amounted to $37,527 in 2015, $38,882 in 2014, and $36,453 in 2013.

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 ($0.8 million per occurrence effective January 1, 2016), 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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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.

Recent Accounting Pronouncements

Recently Issued Accounting Standards

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers, that introduces a new five-step revenue recognition model in which an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. This standard is effective for fiscal years beginning after December 15, 2017, 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 May 2015, the FASB issued ASU 2015-07, Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent), which addresses how certain investments measured at net asset value with redemption dates in the future are categorized within the fair value hierarchy. Topic 820, Fair Value Measurement, permits a reporting entity, as a practical expedient, to measure the fair value of certain investments using the net asset value per share of the investment. Under the new guidance, the requirement to categorize investments for which fair values are measured using the net asset value per share is removed. It also limits disclosures on investments for which the entity has elected to measure the fair value using the practical expedient. This ASU is effective for the Company beginning January 1, 2016. The adoption of this standard will not have a significant impact on the Company's consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30):Simplifying the Presentation of Debt Issuance Costs. Under this guidance, debt issuance costs related to a recognized debt liability are required to be presented in the balance sheet as a direct reduction from the carrying amount of such debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by this guidance. In adopting the ASU, the Company will be required to apply a full retrospective approach to all periods presented. This guidance is effective for the Company beginning January 1, 2016 and, upon adoption, debt issuance costs of approximately $14 million included in other assets in the consolidated balance sheet as of December 31, 2015 will be reclassified and presented as a reduction to long-term debt.

In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 340): Simplifying the Measurement of Inventory. Under this guidance, entities utilizing the FIFO or average cost method should measure inventory at the lower of cost or net realizable value, whereas net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This ASU should be applied prospectively and will be effective for the Company beginning January 1, 2017 with early adoption permitted. The Company is currently evaluating the new guidance; however, it does not anticipate that the impact to its consolidated financial statements will be significant.

In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. Under this guidance the cumulative impact of purchase accounting adjustments arising during the one year measurement period from the date of acquisition will be recognized, in full, in the period identified. This guidance is effective for fiscal years beginning after December 15, 2015 and will be applied prospectively to adjustments arising after that date. The Company does not anticipate that the impact of this standard will have a significant impact on its consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Recently Adopted Accounting Standards

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. The Company adopted this guidance in the first quarter of 2015. As a result of this guidance the Company anticipates future disposals of businesses which historically would have been classified as discontinued operations will no longer qualify for presentation as discontinued operations in its consolidated financial statements.

In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes, to simplify the presentation of deferred income taxes. The amendments in this update require that deferred tax assets and liabilities be entirely classified as noncurrent within the statement of financial position. The Company early adopted this guidance as of December 31, 2015 and elected retrospective application. Upon adoption, the Company reclassified $2.8 million of current deferred tax assets from "Deferred tax assets" to "Other assets and deferred charges," $60.5 million of current deferred tax assets from “Deferred tax assets” to “Deferred income taxes” and $0.9 million of current tax liabilities from “Federal and other income taxes” to “Deferred income taxes” as of December 31, 2014.

2. Acquisitions

2015 Acquisitions

During 2015, the Company acquired four businesses in separate transactions for net cash consideration of $567,843. The businesses were acquired to complement and expand upon existing operations within the Engineered Systems, Fluids and Refrigeration & Food Equipment segments. 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.

The following table details the acquisitions made during the year ended December 31, 2015.

Date	Type	Company / Product Line Acquired	Location (Near)	Segment
January 22	Asset	Gemtron	Vincennes, Indiana	Refrigeration & Food Equipment
Manufacturer of refrigeration doors and door systems serving convenience stores, supermarkets, drugstores, buying clubs, foodservice equipment, and other retail environments.
October 22	Stock	JK Group	Novedrate, Italy	Engineered Systems
Manufacturer and provider of innovative digital inks and consumables serving the textile printing market.
October 30	Asset/Stock	Gala Industries	Eagle Rock, Virginia	Fluids
Manufacturer of underwater pellet processing systems and solutions to the plastics compounding industry.
October 30	Asset/Stock	Reduction Engineering Scheer	Kent, Ohio	Fluids
Manufacturer of plastic pelletizers and pulverizers for the polymer industry.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

	Total
Current assets, net of cash acquired	$	76,323
Property, plant and equipment	38,849
Goodwill	315,701
Intangible assets	229,829
Other non-current assets, principally deferred taxes	1,934
Current liabilities assumed	(31,814		)
Non-current liabilities assumed, principally deferred taxes	(62,979		)
Net assets acquired	$	567,843

The amounts assigned to goodwill and major intangible asset classifications by applicable segment for the 2015 acquisitions are as follows:

	Engineered Systems				Fluids				Refrigeration & Food Equipment				Total				Average Useful life (in years)
Goodwill - Tax deductible	$	—			$	45,368			$	3,832			$	49,200			n/a
Goodwill - Non deductible	238,618				27,883				—				266,501				n/a
Customer intangibles	136,495				26,866				2,500				165,861				14
Trademarks	8,263				6,000				—				14,263				15
Other intangibles and assets	24,405				25,000				300				49,705				12
	$	407,781			$	131,117			$	6,632			$	545,530

The Company has substantially completed the purchase price allocations for the 2015 acquisitions. 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 earnings of the 2015 acquisitions included in the Company’s 2015 consolidated revenue and earnings totaled $45,800 and $3,200, respectively.

On January 7, 2016, the Company acquired the dispenser and system businesses of Tokheim Group S.A.S. ("Tokheim") for a purchase price of approximately €411.3 million, or $448.7 million. Tokheim will be integrated within the Fluids segment, and will enable the segment to provide the most complete solutions available for retail fueling customers. The initial accounting for this business combination has not yet been completed.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

2014 Acquisitions

During 2014, the Company acquired seven businesses for an aggregate consideration of $802,254, net of cash acquired. A summary of the acquisitions made during 2014 is as follows:

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)

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, 2015 and 2014, assuming that all acquisitions had taken place at the beginning of the prior year period. 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 $2,560 of nonrecurring expense related to the fair value adjustments to acquisition-date inventory (after-tax) and $1,999 of acquisition-related costs (after-tax) from the year ended December 31, 2015. The supplemental pro forma earnings for the 2014 period were similarly adjusted for 2014 acquisition charges as if they were incurred at the beginning of 2013. The 2015 and 2014 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 2015 and 2014 acquisitions.

	Years Ended December 31,
	2015				2014
Revenue from continuing operations:
As reported	$	6,956,311			$	7,752,728
Pro forma	7,096,102				8,148,820
Earnings from continuing operations:
As reported	$	595,881			$	778,140
Pro forma	623,350				795,754
Basic earnings per share from continuing operations:
As reported	$	3.78			$	4.67
Pro forma	3.95				4.77
Diluted earnings per share from continuing operations:
As reported	$	3.74			$	4.61
Pro forma	3.92				4.71

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.

3. Disposed and Discontinued Operations

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

Disposed Businesses

During the fourth quarter of 2015, the Company completed the sale of a product line within its Refrigeration and Food Equipment segment. As discussed in Note 1 Description of Business and Summary of Significant Accounting Policies, the Company adopted ASU 2014-08 effective January 1, 2015. This ASU amended the criteria for the classification of a business or group of assets to be disposed as discontinued operations. Under this new guidance, the disposal of this product line did not represent a strategic shift in operations and, therefore, did not qualify for presentation as a discontinued operation. As such,the results of operations for this business remain within the Company's revenue and earnings from continuing operations. Upon disposal of the business the Company recognized a minimal gain of approximately $150.

Discontinued Operations

The results of operations and financial position of the following businesses have been reclassified to discontinued operations for all periods presented:

•	Datamax O'Neil and Sargent Aerospace until their disposals in 2015;

•	DEK International until its disposal in 2014;

•	Knowles Corporation until the completion of the spin-off of this business in February 2014; and

•	Everett Charles Technologies (including the Multitest business, collectively "ECT") until its disposal in 2013

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,
	2015				2014				2013
Revenue	$	72,869			$	568,991			$	1,970,965
Gain (loss) on sale, including impairments, net of tax	$	265,550			$	(3,691	)		$	(35,473	)
Earnings from operations before taxes	8,222				13,611				209,293
Benefit (provision) for income taxes	176				(12,825		)		31,782
Earnings from operations, net of tax	$	8,398			$	786			$	241,075
Earnings (loss) from discontinued operations, net of tax	$	273,948			$	(2,905	)		$	205,602

2015 - On March 2, 2015, the Company completed the sale of Datamax O'Neil for total proceeds of $185,000, which resulted in a net gain on sale of $87,781. On April 24, 2015, the Company completed the sale of Sargent Aerospace for total proceeds of $500,000, which resulted in a net gain on sale of $177,769. The Company paid approximately $110,500 of taxes relating to the net gain on sale of these businesses which is reflected in the cash flows of discontinued operations. These businesses were previously included in the results of the Engineered Systems segment and were reclassified to discontinued operations in the fourth quarter of 2014 in connection with their impending sale.

The net earnings from operations for 2015 of $8,398 include after-tax earnings of $9,209 for those businesses classified as discontinued operations. Also reflected in this amount is a pension settlement charge of $810, net of tax, attributable to lump sum payments made to Sargent Aerospace participants in Dover's qualified defined benefit pension plan.

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 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 reflect the after-tax earnings of all businesses 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 costs of $30,093 related to the spin-off of Knowles.

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
Assets of Discontinued Operations
Accounts receivable	$	46,691
Inventories, net	58,401
Prepaid and other current assets	8,571
Total current assets	113,663
Property, plant and equipment, net	31,573
Goodwill and intangible assets, net	181,798
Other assets and deferred charges	137
Total assets	$	327,171
Liabilities of Discontinued Operations
Accounts payable	$	21,199
Other current liabilities	17,675
Total current liabilities	38,874
Deferred income taxes	8,752
Other liabilities	3,092
Total liabilities	$	50,718

At December 31, 2014, the assets and liabilities of discontinued operations relate to Sargent Aerospace and Datamax O'Neil, which were sold in 2015. The Company had no assets and liabilities classified as discontinued operations as of December 31, 2015.

2014 Spin-off of Knowles Corporation

On February 28, 2014, Dover completed the distribution of Knowles 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 total net cash of $359,955 upon separation, of which $359,837 was received during the nine months ended September 30, 2014, which reflects the $400,000 cash payment net 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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

In addition to the net assets reflected above, the Company also allocated approximately $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.

4. Inventories, net

	December 31, 2015				December 31, 2014
Raw materials	$	333,551			$	352,016
Work in progress	135,624				147,715
Finished goods	443,032				483,912
Subtotal	912,207				983,643
Less reserves	(109,312		)		(119,906		)
Total	$	802,895			$	863,737

At December 31, 2015 and 2014, approximately 18% and 25%, respectively, of the Company's total inventories were accounted for using the LIFO method.

5. Property, Plant and Equipment, net

	December 31, 2015				December 31, 2014
Land	$	55,567			$	55,076
Buildings and improvements	546,809				537,474
Machinery, equipment and other	1,772,031				1,698,638
Subtotal	2,374,407				2,291,188
Less accumulated depreciation	(1,520,138		)		(1,454,119		)
Total	$	854,269			$	837,069

6. Goodwill and Other Intangible Assets

Goodwill

The changes in the carrying value of goodwill by segment for the years ended December 31, 2015 and 2014 are as follows:

	Energy				Engineered Systems				Fluids				Refrigeration & Food Equipment				Total
Goodwill	$	727,972			$	1,221,210			$	664,128			$	565,831			$	3,179,141
Accumulated impairment loss	—				(10,591		)		(59,970		)		—				(70,561		)
Balance at January 1, 2014	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
Acquisitions	—				238,618				73,251				3,832				315,701
Purchase price adjustments	8,604				—				—				—				8,604
Disposition of business	—				(19,128		)	(1)	—				(3,749		)	(2)	(22,877		)
Foreign currency translation and other	(10,159		)		(15,804		)		(27,169		)		(2,464		)		(55,596		)
Balance at December 31, 2015	$	1,047,180			$	1,473,864			$	655,745			$	560,600			$	3,737,389

(1)	Amount reflects additional goodwill allocated to Sargent Aerospace upon its disposition, based on the fair value of the business relative to the remaining entities in its reporting unit.

(2)	Amount reflects goodwill disposed of in connection with the divestiture of a product line within the Refrigeration and Food Equipment segment.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

During 2015, the Company recognized additions of $315,701 to goodwill as a result of recent acquisitions as outlined in Note 2 Acquisitions. Due to the inherent difficulty of estimating the initial purchase price allocation of recent acquisitions and the time needed to finalize the balance sheets of acquired companies, the Company will continue to refine its estimates of fair value to more accurately allocate purchase price; however, any such revisions are not expected to be significant. During 2015, the Company recorded adjustments totaling $8,604 as a result of the finalization of purchase price allocation to assets acquired and liabilities assumed related to acquisitions completed in 2014.

During the fourth quarter of 2015, the Company sold a product line within the Refrigeration and Food Equipment segment. In conjunction with this disposal, the company allocated goodwill upon disposal of $3,749, determined using the relative fair value approach.

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 the relative fair value approach.

In addition, during 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.

During the year ended December 31, 2014, the Company recorded adjustments totaling $10,955 to goodwill related primarily to finalization of the purchase price allocation to assets acquired and liabilities assumed for the 2013 acquisitions.

Annual impairment testing

The Company performed its annual goodwill impairment test during the fourth quarter of 2015 using a discounted cash flow analysis as discussed in Note 1 Description of Business and Summary of Significant Accounting Policies. The Company performed step one of the annual goodwill impairment test for each of its nine reporting units, concluding that the fair values of all of its reporting units were in excess of their carrying values. As such, step two of the impairment test was not required. As previously noted, the fair values of each of the Company’s reporting units was determined using a discounted cash flow analysis which includes management’s current assumptions as to future cash flows and long-term growth rates. The discount rates used in these analyses varied by reporting unit and were based on a capital asset pricing model and published relevant industry rates. We used discount rates commensurate with the risks and uncertainties inherent to each reporting unit and in our internally developed forecasts. Discount rates used in our 2015 reporting unit valuations ranged from 9.5% to 11.0%.

Although all nine reporting units passed the step 1 impairment test, the Company noted a decrease in the fair value in excess of carrying value for two of its reporting units within the Energy segment, which together have an aggregate goodwill balance of $957.0 million. These businesses and their estimated cash flows have been impacted by declining oil prices and the resulting economic pressures within the oil and gas industry. In spite of these declines these two reporting units had fair values in excess of their carrying values of 26% and 19%.

While the Company believes the assumptions used in the 2015 impairment analysis are reasonable and representative of expected results, if market conditions worsen or persist for an extended period of time, an impairment of goodwill or assets may occur. The Company will continue to monitor the long-term outlook and forecasts, including estimated future cash flows, for these businesses and the impact on the carrying value of goodwill and assets in 2016.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Intangible Assets

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

	December 31, 2015								December 31, 2014
	Gross Carrying Amount				Accumulated Amortization				Gross Carrying Amount				Accumulated Amortization
Amortized intangible assets:
Trademarks	$	150,926			$	45,536			$	138,650			$	34,097
Patents	150,570				112,399				150,404				108,484
Customer Intangibles	1,567,048				595,635				1,429,906				484,449
Unpatented Technologies	137,919				56,495				92,480				45,812
Drawings & Manuals	34,232				15,760				36,377				13,087
Distributor Relationships	64,614				37,610				64,614				34,377
Other	23,923				18,168				24,214				12,737
Total	$	2,129,232			$	881,603			$	1,936,645			$	733,043
Unamortized intangible assets:
Trademarks	165,594								165,918
Total intangible assets, net	$	1,413,223							$	1,369,520

Total amortization expense for the years ended December 31, 2015, 2014, and 2013 was $159,573, $155,109, and $133,946, respectively. Amortization expense for the next five years, based on current intangible balances, is estimated to be as follows:

2016	$	165,903
2017	162,338
2018	161,416
2019	160,058
2020	154,519

7. Other Accrued Expenses and Other Liabilities

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

	December 31, 2015				December 31, 2014
Warranty	$	41,502			$	46,704
Unearned/deferred revenue	28,072				20,678
Taxes other than income	25,180				28,452
Accrued interest	30,262				31,318
Accrued volume discounts	16,402				16,352
Accrued commissions (non-employee)	10,949				12,799
Restructuring and exit costs	13,991				22,021
Cross-currency swap	—				15,567
Other (none of which are individually significant)	69,613				72,386
	$	235,971			$	266,277

The Company's Swiss franc cross-currency net investment hedge was settled on October 13, 2015. See Note 10 Financial Instruments for additional information.

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, 2015				December 31, 2014
Deferred compensation	$	74,665			$	93,977
Defined benefit and other postretirement benefit plans	195,095				229,128
Unrecognized tax benefits	79,992				94,875
Unearned/deferred revenue	12,437				8,599
Legal and environmental	30,032				31,841
Warranty	2,964				2,684
Other (none of which are individually significant)	19,770				21,236
	$	414,955			$	482,340

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, 2015 and 2014 are as follows:

	2015				2014
Beginning Balance, January 1	$	49,388			$	42,924
Provision for warranties	51,392				60,833
Settlements made	(55,715		)		(56,746		)
Other adjustments, including acquisitions and currency translation	(599		)		2,377
Ending balance, December 31	$	44,466			$	49,388

8. Restructuring Activities

The Company initiated various restructuring programs and incurred severance and other restructuring costs by segment as follows:

	Years Ended December 31,
	2015				2014				2013
Energy (1)	$	30,763			$	7,549			$	(811	)
Engineered Systems	13,302				6,624				3,628
Fluids	4,879				3,784				850
Refrigeration & Food Equipment	5,848				24,897				5,451
Corporate	412				1,954				—
Total	$	55,204			$	44,808			$	9,118
These amounts are classified in the Consolidated Statements of Earnings as follows:
Cost of goods and services	$	21,194			$	19,690			$	5,320
Selling and administrative expenses	34,010				25,118				3,798
Total	$	55,204			$	44,808			$	9,118

(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 $55,204 incurred in 2015 relate to restructuring programs designed to better align the Company's operations with current market conditions through targeted facility consolidations, headcount reductions and other measures to further optimize operations. We expect to fund the remainder of the 2015 programs currently underway over the next 12 to 18 months. Additional programs may be implemented during 2016 with related restructuring charges.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The $55,204 of restructuring charges incurred during 2015 included the following programs:

•	The Energy segment incurred restructuring charges of $30,763 related to various programs across the segment focused on workforce reductions and field service consolidations. These programs were initiated to better align cost base with the significantly lower demand environment.

•	The Engineered Systems segment recorded $13,302 of restructuring charges relating to headcount reductions across various businesses primarily related to optimization of administrative functions within Printing & Identification and U.S. manufacturing consolidation within Industrials.

•	The Fluids segment recorded $4,879 of restructuring charges principally related to reduction in workforce for those businesses serving the Pumps markets. Additional restructuring was completed in the pumps businesses for facility consolidation.

•	The Refrigeration & Food Equipment segment recorded restructuring charges of $5,848, primarily related to asset impairment due to exit plans at targeted facilities and headcount reductions.

Restructuring expenses incurred in 2014 and 2013 also included targeted facility consolidations at certain businesses and actions taken to optimize the Company's cost structure.

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

	Severance				Exit				Total
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
Restructuring charges	32,148				23,056				55,204
Payments	(38,003		)		(12,322		)		(50,325		)
Other, including foreign currency	1,533				(14,442		)	(1)	(12,909		)
Balance at December 31, 2015	$	11,036			$	2,955			$	13,991

(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, 2015 primarily reflects restructuring plans initiated during the year, as well as ongoing lease commitment obligations for facilities closed in prior periods.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

9. Borrowings and Lines of Credit

Borrowings consist of the following:

	December 31, 2015				December 31, 2014
Short-term:
Current portion of long-term debt	$	122			$	299,956
Commercial paper	151,000				478,000
	$	151,122			$	777,956

	December 31, 2015				December 31, 2014
Long-term:
4.875% 10-year notes due October 15, 2015	$	—			$	299,836
5.45% 10-year notes due March 15, 2018	349,258				348,928
2.125% 7-year notes due December 1, 2020 (euro-denominated)	328,592				363,970
4.30% 10-year notes due March 1, 2021	449,865				449,839
3.150% 10-year notes due November 15, 2025	396,951				—
6.65% 30-year debentures due June 1, 2028	199,552				199,517
5.375% 30-year debentures due October 15, 2035	296,844				296,685
6.60% 30-year notes due March 15, 2038	248,036				247,948
5.375% 30-year notes due March 1, 2041	345,989				345,830
Other	2,377				444
Total long-term debt	2,617,464				2,552,997
Less current portion	(122		)		(299,956		)
	$	2,617,342			$	2,253,041

The Company repaid its October 15, 2015, $300.0 million, 4.875% notes upon maturity through the use of commercial paper borrowings. On November 15, 2015, the Company issued $400.0 million, 3.150% notes due 2025 realizing proceeds of $394,300, net of discounts and issuance costs. The Company used the proceeds of this issuance to repay its incremental commercial paper.

The long-term borrowings presented above are net of unamortized discounts of $13,951 and $12,011 at December 31, 2015 and 2014, 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.

On November 10, 2015, the Company entered into a $1.0 billion five-year unsecured revolving credit facility with a syndicate of banks (the "Credit Agreement") that replaced a facility with similar terms that was set to expire in November 2016. This current facility expires on November 10, 2020. At the Company's election, loans under the Credit Agreement will bear interest at a Canadian Dollar, Eurodollar, Swedish Kronor, or Sterling rate based on CDOR, EURIBOR, LIBOR or STIBOR, plus an applicable margin ranging from 0.580% to 1.000% (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, 2015 and had a coverage ratio of 13.3 to 1. The Company primarily uses this facility as liquidity back-up for its commercial paper program and has not drawn down any loans under the facility and does not anticipate doing so. The Company generally uses commercial paper borrowings for general corporate purposes, funding of acquisitions, and the repurchases of its common stock.

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, 2015, 2014 and 2013 were as follows:

	Years Ended December 31,
	2015				2014				2013
Interest expense	$	131,676			$	131,689			$	124,535
Interest income	(4,419		)		(4,510		)		(3,881		)
Interest expense, net	$	127,257			$	127,179			$	120,654

The weighted average interest rate for short-term commercial paper borrowings was 0.2%, 0.1%, and 0.1% for 2015, 2014, and 2013, respectively.

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

2016	$	122
2017	122
2018	349,290
2019	—
2020	328,592
2021 and thereafter	1,939,338
	$	2,617,464

As of December 31, 2015, the Company had approximately $116,210 outstanding in letters of credit and guarantees with financial institutions, which expire at various dates in 2016 through 2020. These letters of credit are primarily maintained as security for insurance, warranty and other performance obligations. In general, we would only be liable for the amount of these guarantees in the event of default in the performance of our obligations, the probability of which we believe is remote.

10. 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, 2015 and December 31, 2014, the Company had contracts with U.S. dollar equivalent notional amounts of $37,735 and $47,047, respectively, to exchange foreign currencies, principally the U.S. dollar, Euro, and 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, 2015 and December 31, 2014 with a total notional amount of $51,369 and $52,392, 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 are reflected in income on the Consolidated Statements of Earnings.

Previously, we entered into a floating-to-floating cross currency swap agreement with a total notional amount of $50,000 in exchange for CHF 65,100, which matured on October 15, 2015. This transaction hedged a portion of our net investment in non-U.S. operations. The agreement qualified as a net investment hedge and changes in the fair value were reported within the cumulative translation adjustment section of other comprehensive earnings, with any hedge ineffectiveness recognized in current earnings. The fair value of this hedge reflected cumulative losses of $15,567 at December 31, 2014, reflecting the strengthening of the Swiss franc relative to the U.S. dollar over the term of this arrangement. At maturity on October 15, 2015, the Company settled the outstanding liability on this swap agreement for a total of $17,752.

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, 2015 and December 31, 2014 and the balance sheet lines in which they are recorded:

	Fair Value Asset (Liability)
	December 31, 2015				December 31, 2014				Balance Sheet Caption
Foreign currency forward / collar contracts	$	170			$	973			Prepaid and other current assets
Foreign currency forward / collar contracts	(452		)		(810		)		Other accrued expenses
Net investment hedge - cross currency swap	—				(15,567		)		Accrued expenses

The amount of gains or losses from hedging activity recorded in earnings is not significant and the amount of unrealized gains and losses from cash flow hedges 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 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:

	2015				2014				2013
Gain (loss) on euro-denominated debt	$	35,458			$	47,630			$	(6,099	)
Gain (loss) on Swiss franc cross-currency swap	(2,185		)		8,149				(1,035		)
Total gain (loss) on net investment hedges before tax	33,273				55,779				(7,134		)
Tax (expense) benefit	(11,646		)		(19,523		)		2,494
Net gain (loss) on net investment hedges, net of tax	$	21,627			$	36,256			$	(4,640	)

Fair Value Measurements

Accounting Standards Codification ("ASC") 820, "Fair Value Measurements and Disclosures," establishes a hierarchy for 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 as follows:

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 Company's assets and liabilities measured at fair value on a recurring basis as of December 31, 2015 and December 31, 2014 are as follows:

	December 31, 2015				December 31, 2014
	Level 2				Level 2
Assets:
Foreign currency cash flow hedges	$	170			$	973
Liabilities:
Foreign currency cash flow hedges	452				810
Swiss franc cross-currency swap	—				15,567

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 fair value 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, 2015 and December 31, 2014 was $2,880,734 and $3,002,701, respectively, compared to the carrying value of $2,617,464 and $2,552,997, respectively. The estimated fair value of long-term debt is based on quoted market prices for similar instruments and is, therefore, classified as Level 2 within the fair value hierarchy. The carrying values of cash and cash equivalents, trade receivables, accounts payable, and notes payable are reasonable estimates of their fair values as of December 31, 2015 and December 31, 2014 due to the short-term nature of these instruments.

11. 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,
	2015				2014				2013
Domestic	$	530,268			$	789,689			$	714,723
Foreign	270,342				304,518				331,263
	$	800,610			$	1,094,207			$	1,045,986

Income tax expense (benefit) relating to continuing operations for the years ended December 31, 2015, 2014, and 2013 is comprised of the following:

	Years Ended December 31,
	2015				2014				2013
Current:
U.S. Federal	$	115,130			$	231,939			$	114,218
State and local	11,706				8,434				17,468
Foreign	79,982				97,037				89,702
Total current	206,818				337,410				221,388
Deferred:
U.S. Federal	$	19,238			$	7,386			$	35,315
State and local	(3,433		)		11,250				(4,556		)
Foreign	(17,894		)		(39,979		)		(3,688		)
Total deferred	(2,089		)		(21,343		)		27,071
Total expense	$	204,729			$	316,067			$	248,459

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,
	2015			2014			2013
U.S. Federal income tax rate	35.0	%		35.0	%		35.0	%
State and local taxes, net of Federal income tax benefit	1.6			1.3			1.2
Foreign operations tax effect	(4.3	)		(3.7	)		(3.3	)
Research & experimentation tax credits (1)	(0.4	)		(0.3	)		(0.7	)
Domestic manufacturing deduction	(3.0	)		(3.0	)		(2.2	)
Foreign tax credits	(2.4	)		0.4			0.3
Branch losses	(0.2	)		(0.7	)		(0.2	)
Release of valuation allowance	—			(0.6	)		—
Resolution of tax contingencies	(1.8	)		(0.5	)		(7.2	)
Other, principally non-tax deductible items	1.1			1.0			0.9
Effective rate from continuing operations	25.6	%		28.9	%		23.8	%

(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, 2015				December 31, 2014
Deferred Tax Assets:
Accrued compensation, principally postretirement and other employee benefits	$	133,000			$	151,640
Accrued expenses, principally for state income taxes, interest, and warranty	42,213				45,262
Net operating loss and other carryforwards	210,396				190,298
Inventories, principally due to reserves for financial reporting purposes and capitalization for tax purposes	12,329				13,285
Accounts receivable, principally due to allowance for doubtful accounts	4,937				4,323
Accrued insurance	4,365				5,529
Long-term liabilities, principally warranty, environmental, and exit costs	4,509				4,096
Other assets	(36,576		)		(26,793		)
Total gross deferred tax assets	375,173				387,640
Valuation allowance	(171,365		)		(141,252		)
Total deferred tax assets	$	203,808			$	246,388
Deferred Tax Liabilities:
Intangible assets, principally due to different tax and financial reporting bases and amortization lives	$	(699,876	)		$	(676,647	)
Plant and equipment, principally due to differences in depreciation	(56,872		)		(55,012		)
Accounts receivable	(8,236		)		(6,481		)
Total gross deferred tax liabilities	(764,984		)		(738,140		)
Net deferred tax liability	$	(561,176	)		$	(491,752	)
Classified as follows in the consolidated balance sheets:
Non-current deferred tax asset	14,533				12,866
Non-current deferred tax liability	(575,709		)		(504,618		)
	$	(561,176	)		$	(491,752	)

As of December 31, 2015, the Company has loss carryforwards for U.S. Federal purposes totaling approximately $28.1 million attributed to the 2011 Anthony acquisition, and loss carryforwards for non-U.S. purposes totaling $625.8 million primarily resulting from restructuring undertaken to effect the Knowles spin-off. As of December 31, 2014, the Company had non-U.S loss carryforwards of $519.4 million. The federal loss carryforwards are available for use against the Company's consolidated

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

federal taxable income and begin to expire in 2024. The entire balance of the non-U.S. losses as of December 31, 2015 is available to be carried forward, with $22.6 million of these losses beginning to expire during the years 2016 through 2035. The remaining $603.2 million of such losses can be carried forward indefinitely.

The Company has $104.8 million and $109.2 million of state tax loss carryforwards as of December 31, 2015 and 2014, respectively, that are available for use by the Company between 2016 and 2035.

As of December 31, 2015 and 2014, the Company has research and development credit carryforwards for U.S. Federal purposes of $0.8 million attributable to the 2011 Anthony acquisition. 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 $1.1 billion at December 31, 2015, 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 $18 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 2012. All significant state, local, and international matters have been concluded for years through 2008. 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, 2013	$	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 (1)	(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				10,722				77,089
Additions based on tax positions related to the current year	17,131				—				17,131
Additions for tax positions of prior years	2,900				—				2,900
Reductions for tax positions of prior years (1)	(17,135		)		—				(17,135		)
Settlements	(1,153		)		—				(1,153		)
Lapse of statutes	(12,744		)		—				(12,744		)
Unrecognized tax benefits at December 31, 2015	$	55,366		(2)	$	10,722		(3)	$	66,088

(1)	The settlement of certain income tax examinations of the 2009 and 2010 tax years (in the year ended December 31, 2013) and 2011 and 2012 (in the year ended December 31, 2015) resulted in a significant decrease in unrecognized tax benefits.

(2)

If recognized, the net amount of potential tax benefits that would impact the Company’s effective tax rate is $50.3 million. During the years ended December 31, 2015, 2014, and 2013, the Company recorded income of $4.3 million, $1.3 million and $5.5 million, respectively, as a component of provision for income taxes related to the reversal of previously accrued interest and penalties on unrecognized tax benefits. The Company had accrued interest and penalties of $13.9 million at December 31, 2015 and $15.5 million at December 31, 2014, which are not included in the above table.

(3)	The Company had recorded $10.7 million of unrecognized tax benefits related to operations previously classified as Discontinued Operations. Upon disposal of the Discontinued Operations, these unrecognized tax benefits were transferred to Continuing Operations. If recognized, the potential tax benefits will be recorded in Discontinued Operations.

12. 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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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 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,
	2015				2014				2013
Pre-tax compensation expense	$	30,697			$	31,628			$	30,480
Tax benefit	(10,877		)		(11,201		)		(10,745		)
Total stock-based compensation expense, net of tax	$	19,820			$	20,427			$	19,735

SARs and Stock Options

In 2015, 2014, and 2013, the Company issued SARs covering 1,144,529, 1,043,734, and 1,613,884 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:

	2015				2014				2013
Risk-free interest rate	1.51		%		1.70		%		1.39		%
Dividend yield	2.24		%		1.98		%		2.06		%
Expected life (years)	5.1				5.3				7.1
Volatility	27.19		%		30.81		%		33.78		%
Grant price	$	73.28			$	82.51			$	63.33
Fair value at date of grant	$	14.55			$	19.84		(1)	$	18.17		(1)

(1)	Updated to reflect the modification of grants issued prior to 2014 and 2013 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.

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, 2015 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 1/1/2015	7,640,742			$	54.69					52,907			$	33.50
Granted	1,144,529			73.28						—			—
Forfeited / expired	(299,349	)		70.91						(9,081	)		33.49
Exercised	(675,329	)		48.61						(43,826	)		33.50
Outstanding at 12/31/2015	7,810,593			57.32				5.9		—			—				na
Exercisable at 12/31/2015	4,482,264			$	46.67			4.4		—			$	—			na

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The following table summarizes information about outstanding SARs at December 31, 2015:

		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		1,969,791			$	33.94			3.5		$	53,922			1,969,791			$	33.94			3.5		$	53,922
$40.54 - $58.69		2,502,838			$	56.59			5.1		$	11,810			2,502,838			$	56.59			5.1		$	11,810
$63.33 - $82.51		3,337,964			$	71.67			8.0		$	—			9,635			$	70.57			7.5		$	—
		7,810,593									$	65,732			4,482,264									$	65,732

Unrecognized compensation expense related to SARs not yet exercisable was $13,178 at December 31, 2015. This cost is expected to be recognized over a weighted average period of 1.6 years.

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

	2015				2014				2013
SARs
Fair value of SARs that became exercisable	$	25,380			$	26,796			$	23,605
Aggregate intrinsic value of SARs exercised	$	14,560			$	51,813			$	83,944
Stock Options
Cash received by Dover for exercise of stock options	$	1,468			$	5,227			$	14,830
Aggregate intrinsic value of options exercised	$	1,649			$	8,614			$	19,937

The Company recognized net tax benefits of $661, $15,110, and $25,661 during 2015, 2014, and 2013, 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 2015, 2014, and 2013, the Company issued performance shares covering 61,611, 58,206, and 47,032 shares, respectively. The performance share awards granted in 2014 and 2015 are considered performance condition awards as attainment is based on Dover's performance relative to established internal metrics. The fair value of these awards was determined using Dover's closing stock price on the date of grant. The expected attainment of the internal metrics for these awards is analyzed each reporting period, and the related expense is adjusted 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 fair value and average attainment used in determining compensation cost of the performance shares issued in 2014 and 2015 is as follows for the year ended December 31, 2015:

	Performance shares
	2015				2014
Fair value per share at date of grant	$	73.28			$	82.51
Average attainment rate reflected in expense	11.98		%		34.33		%

The performance share awards granted in 2013 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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

(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.

A summary of activity for performance share awards for the year ended December 31, 2015 is as follows:

	Number of Shares			Weighted-Average Grant-Date Fair Value
Unvested at January 1, 2015	101,723			$	77.33
Granted	61,611			73.28
Forfeited	(4,690	)		75.49
Vested (1)	(42,584	)		70.92
Unvested at December 31, 2015	116,060			$	77.61

(1)

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 2015, as shown above, will result in 73.0% of payout of Dover common shares as a result of the three-year performance from 2013 - 2015 relative to its peer group.

Unrecognized compensation expense related to unvested performance shares as of December 31, 2015 was $924, which will be recognized over a weighted average period of 1.4 years.

Restricted Stock Awards

The Company also has restricted stock authorized for grant (as part of the 2005 and 2012 Plans). Under these Plans 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 145,545 and 131,719 of restricted stock awards in 2015 and 2014, respectively. No restricted stock awards were issued in 2013.

A summary of activity for restricted stock awards for the year ended December 31, 2015 is as follows:

	Number of Shares			Weighted-Average Grant-Date Fair Value
Unvested at January 1, 2015	166,000			$	76.00
Granted	145,545			73.28
Forfeited	(17,597	)		77.67
Vested	(39,376	)		82.15
Unvested at December 31, 2015	254,572			$	75.07

Unrecognized compensation expense relating to unvested restricted stock as of December 31, 2015 was $7,722, which will be recognized over a weighted average period of 1.3 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,
	2015			2014			2013
Aggregate shares granted	21,205			17,331			14,271
Shares deferred	(11,196	)		(8,904	)		(6,929	)
Shares withheld to satisfy tax obligations	—			(210	)		(354	)
Net shares issued	10,009			8,217			6,988

13. 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 $84,801, $87,149, and $76,541 for the years ended December 31, 2015, 2014, and 2013, 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, 2015 are as follows:

	Operating				Capital
2016	$	62,892			$	2,830
2017	53,364				1,222
2018	43,888				436
2019	29,438				240
2020	21,386				182
2021 and thereafter	50,410				243
	$	261,378			$	5,153

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, 2015 and 2014, the Company has reserves totaling $30,595 and $32,890, 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, 2015 and 2014, 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.

14. 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 $32,281, $34,263, and $25,645 for the years ended December 31, 2015, 2014, and 2013, 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 separation of Knowles in 2014, the Company offered one-time lump sum payments 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 $10,279 in 2014.

The Company also maintains post retirement benefit plans which cover approximately 1,163 participants, approximately 1,141 of whom are eligible for medical benefits. These plans are 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, 2015 and 2014.

	Qualified Defined Benefits																Non-Qualified Supplemental Benefits								Post-Retirement Benefits
	U.S. Plan								Non-U.S. Plans
	2015				2014				2015				2014				2015				2014				2015				2014
Change in benefit obligation:
Benefit obligation at beginning of year	$	575,576			$	519,552			$	265,023			$	299,284			$	137,999			$	133,056			$	13,943			$	14,136
Benefits earned during the year	15,661				13,801				6,613				6,027				3,739				3,320				163				249
Interest cost	23,163				25,204				5,885				8,222				5,063				6,148				512				627
Plan participants' contributions	—				—				1,555				1,732				—				—				417				476
Benefits paid	(51,126		)		(17,957		)		(8,399		)		(5,452		)		(12,845		)		(13,939		)		(1,148		)		(1,222		)
Actuarial (gain) loss	(33,199		)		84,314				(5,018		)		40,962				(8,645		)		11,088				(785		)		(556		)
Business dispositions	—				—				(106		)		(60,164		)		—				(3,137		)		—				—
Amendments	—				—				(5,063		)		—				—				1,463				(1,049		)		—
Settlements and curtailments	(2,942		)		(49,338		)		(2,753		)		(390		)		—				—				(1,168		)		—
Currency translation and other	534				—				(11,751		)		(25,198		)		—				—				—				233
Benefit obligation at end of year	527,667				575,576				245,986				265,023				125,311				137,999				10,885				13,943
Change in plan assets:
Fair value of plan assets at beginning of year	601,376				595,143				163,510				203,681				—				—				—				—
Actual return on plan assets	2,567				73,528				2,369				14,868				—				—				—				—
Company contributions	—				—				8,366				9,547				12,845				13,939				731				746
Plan participants' contributions	—				—				1,555				1,732				—				—				417				476
Benefits paid	(51,126		)		(17,957		)		(8,399		)		(5,452		)		(12,845		)		(13,939		)		(1,148		)		(1,222		)
Business dispositions	—				—				—				(46,334		)		—				—				—				—
Settlements and curtailments	—				(49,338		)		(2,753		)		(390		)		—				—				—				—
Currency translation	—				—				(5,212		)		(14,142		)		—				—				—				—
Fair value of plan assets at end of year	552,817				601,376				159,436				163,510				—				—				—				—
Funded status	$	25,150			$	25,800			$	(86,550	)		$	(101,513	)		$	(125,311	)		$	(137,999	)		$	(10,885	)		$	(13,943	)
Amounts recognized in the balance sheets consist of:
Assets and Liabilities:
Other assets and deferred charges	$	25,150			$	25,800			$	2,064			$	152			$	—			$	—			$	—			$	—
Accrued compensation and employee benefits	—				—				(1,433		)		(1,575		)		(27,361		)		(21,978		)		(921		)		(926		)
Other liabilities (deferred compensation)	—				—				(87,181		)		(100,090		)		(97,950		)		(116,021		)		(9,964		)		(13,017		)
Total Assets and Liabilities	$	25,150			$	25,800			$	(86,550	)		$	(101,513	)		$	(125,311	)		$	(137,999	)		$	(10,885	)		$	(13,943	)
Accumulated Other Comprehensive Loss (Earnings):
Net actuarial losses (gains)	$	110,163			$	119,919			$	59,953			$	61,813			$	(9,678	)		$	(746	)		$	(1,347	)		$	192
Prior service cost (credit)	2,215				3,388				(4,095		)		1,058				24,454				31,381				(999		)		(615		)
Net asset at transition, other	—				—				(52		)		(48		)		—				—				—				—
Deferred taxes	(39,333		)		(43,158		)		(13,569		)		(15,312		)		(5,173		)		(10,725		)		762				90
Total Accumulated Other Comprehensive Loss (Earnings), net of tax	73,045				80,149				42,237				47,511				9,603				19,910				(1,584		)		(333		)
Net amount recognized at December 31,	$	98,195			$	105,949			$	(44,313	)		$	(54,002	)		$	(115,708	)		$	(118,089	)		$	(12,469	)		$	(14,276	)
Accumulated benefit obligations	$	498,899			$	537,393			$	232,924			$	246,814			$	114,817			$	123,229

The Company’s net unfunded status at December 31, 2015 and 2014 includes net liabilities of $86,550 and $101,513, 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 $846,640 and $907,436 at December 31, 2015 and 2014, respectively. Pension plans with accumulated benefit obligations in excess of plan assets consist of the following at December 31, 2015 and 2014:

	2015				2014
Projected benefit obligation (PBO)	$	333,994			$	372,931
Accumulated benefit obligation (ABO)	311,300				342,158
Fair value of plan assets	120,069				133,930

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)
	2015				2014				2013				2015				2014				2013				2015				2014				2013
Service cost	$	15,661			$	13,801			$	17,123			$	6,613			$	6,027			$	6,043			$	3,739			$	3,320			$	5,634
Interest cost	23,163				25,204				24,801				5,885				8,222				9,081				5,063				6,148				6,741
Expected return on plan assets	(41,571		)		(41,594		)		(40,194		)		(7,990		)		(8,498		)		(9,608		)		—				—				—
Amortization of:
Prior service cost	897				1,083				1,026				89				107				114				6,927				7,775				8,110
Recognized actuarial loss (gain)	12,620				8,289				17,654				2,647				903				1,492				286				(428		)		(16		)
Transition obligation	—				—				—				4				4				(14		)		—				—				—
Settlement & curtailment loss (gain) (2)	810				10,279				187				(184		)		(45		)		697				—				—				(4,411		)
Other	—				—				501				—				6				5				—				—				13
Total net periodic benefit cost	$	11,580			$	17,062			$	21,098			$	7,064			$	6,726			$	7,810			$	16,015			$	16,815			$	16,071

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

(2)

One-time charges of $810 reflected in U.S. Plan pension expense for 2015 represents curtailments, special termination benefits, and settlements for certain businesses sold during the year; therefore, this amount has been reflected in the results of discontinued operations. $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

	2015				2014				2013
Service cost	$	163			$	249			$	234
Interest cost	512				627				523
Amortization of:
Prior service credit	(372		)		(409		)		(416		)
Recognized actuarial (gain) loss	(30		)		54				134
Other (3)	(679		)		233				77
Total net periodic (benefit) cost	$	(406	)		$	754			$	552

(3)	One-time benefit of $679 relates to the shutdown of certain plant locations, as well as changes to future benefits for certain retirees.

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 2016 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)	$	733			$	(400	)		$	6,266			$	(143	)
Recognized actuarial loss (gain)	6,437				2,673				(560		)		(236		)
Transition obligation	—				4				—				—
Total	$	7,170			$	2,277			$	5,706			$	(379	)

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
	2015			2014			2015			2014			2015			2014			2015			2014
Discount rate	4.40	%		4.05	%		2.32	%		2.31	%		3.90	%		3.96	%		4.00	%		3.75	%
Average wage increase	4.00	%		4.00	%		2.25	%		2.50	%		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
	2015			2014			2013			2015			2014			2013			2015			2014			2013			2015			2014			2013
Discount rate	4.05	%		4.90	%		4.05	%		2.31	%		3.53	%		3.31	%		3.96	%		4.77	%		4.02	%		3.75	%		4.45	%		3.65	%
Average wage increase	4.00	%		4.00	%		4.00	%		2.50	%		2.86	%		2.74	%		4.50	%		4.50	%		4.50	%		na			na			na
Expected return on plan assets	7.75	%		7.75	%		7.75	%		4.85	%		5.35	%		5.32	%		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 2016. 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, 2015 by $192 and $(175), respectively, and would have a negligible impact on the net post-retirement benefit cost for 2015.

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:

	2015			2014			Current Target
Equity securities	57	%		55	%		58	%
Fixed income	33	%		36	%		35	%
Real estate and other	10	%		9	%		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 4.85% in 2015, 5.35% in 2014, and 5.32% in 2013.

The fair values of both U.S. and non-U.S. pension plan assets by asset category within the fair value hierarchy (as defined in Note 10 Financial Instruments) are as follows at December 31, 2015 and 2014:

	U.S. Plan
	December 31, 2015												December 31, 2014
	Level 1				Level 2				Total Fair Value				Level 1				Level 2				Total Fair Value
Asset category:
Common stocks:
U.S. companies	$	150,821			$	—			$	150,821			$	164,006			$	—			$	164,006
Non-U.S. companies	6,975				—				6,975				3,874				—				3,874
Fixed income investments:
Corporate bonds	—				55,509				55,509				—				63,878				63,878
Private placements	—				4,455				4,455				—				6,865				6,865
Government securities	47,426				74,953				122,379				48,370				98,998				147,368
Common stock funds:
Mutual funds	39,159				—				39,159				44,610				—				44,610
Collective trusts	—				118,299				118,299				—				119,312				119,312
Real estate funds	—				42,391				42,391				—				37,145				37,145
Cash and equivalents	12,829				—				12,829				14,318				—				14,318
	$	257,210			$	295,607			$	552,817			$	275,178			$	326,198			$	601,376

The Company had no level 3 U.S. Plan assets at December 31, 2015 and 2014.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

	Non-U.S. Plans
	December 31, 2015																December 31, 2014
	Level 1				Level 2				Level 3				Total Fair Value				Level 1				Level 2				Level 3				Total Fair Value
Asset category:
Common stocks	$	23,113			$	—			$	—			$	23,113			$	40,960			$	—			$	—			$	40,960
Fixed income investments	—				48,523				—				48,523				—				59,791				—				59,791
Common stock funds	—				45,058				—				45,058				—				43,821				—				43,821
Collective funds	—				23,978				—				23,978				—				—				—				—
Real estate funds	—				—				8,904				8,904				—				—				9,976				9,976
Cash and equivalents	829				—				—				829				1,531				—				—				1,531
Other	—				9,031				—				9,031				—				7,431				—				7,431
	$	23,942			$	126,590			$	8,904			$	159,436			$	42,491			$	111,043			$	9,976			$	163,510

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 2014 and 2015 due to the following:

	Real estate funds
Balance at December 31, 2013	$	14,937
Actual return on plan assets:
Relating to assets still held at December 31, 2014	(4,527		)
Business dispositions	(362		)
Sales	(72		)
Balance at December 31, 2014	9,976
Actual return on plan assets:
Relating to assets still held at December 31, 2015	116
Purchases	5,629
Sales	(6,817		)
Balance at December 31, 2015	$	8,904

There were no significant transfers between Level 1 and Level 2 investments during 2015 or 2014.

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
2016	$	33,053			$	6,392			$	27,949			$	939
2017	34,776				6,546				12,358				915
2018	37,162				6,836				11,656				891
2019	37,574				6,959				13,596				852
2020	40,574				7,176				11,728				829
2021 - 2025	206,540				42,376				66,083				3,708

Contributions

In 2016, the Company expects to contribute approximately $6.3 million to its non-U.S. plans and currently does not expect to contribute to its U.S. plans. In 2016, the Company expects to fund benefit payments of approximately $27.9 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.

15. Other Comprehensive Earnings

The amounts recognized in other comprehensive earnings were as follows:

Year Ended December 31, 2015	Pre-tax				Tax				Net of tax
Foreign currency translation adjustments	$	(108,748	)		$	(11,646	)		$	(120,394	)
Pension and other postretirement benefit plans	35,727				(11,791		)		23,936
Changes in fair value of cash flow hedges	(671		)		235				(436		)
Other	1,423				(171		)		1,252
Total other comprehensive loss	$	(72,269	)		$	(23,373	)		$	(95,642	)

Year Ended December 31, 2014	Pre-tax				Tax				Net of tax
Foreign currency translation adjustments	$	(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	)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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 (loss) earnings	$	183,617			$	(60,988	)		$	122,629

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

	December 31, 2015				December 31, 2014
Cumulative foreign currency translation adjustments	$	(135,278	)		$	(14,884	)
Pension and other postretirement benefit plans	(123,301		)		(147,237		)
Changes in fair value of cash flow hedges	4,006				3,190
	$	(254,573	)		$	(158,931	)

Total comprehensive earnings were as follows:

	Years Ended December 31,
	2015				2014				2013
Net earnings	$	869,829			$	775,235			$	1,003,129
Other comprehensive (loss) earnings	(95,642		)		(199,959		)		122,629
Comprehensive earnings	$	774,187			$	575,276			$	1,125,758

Amounts reclassified from accumulated other comprehensive earnings (loss) to earnings (loss) during the year ended December 31, 2015, 2014 and 2013 were as follows:

	Years Ended December 31,
	2015				2014				2013
Pension & postretirement benefit plans:
Amortization of actuarial losses	$	15,527			$	8,822			$	19,250
Amortization of prior service costs	7,541				8,556				8,834
Total before tax	23,068				17,378				28,084
Tax expense	(7,768		)		(5,969		)		(9,809		)
Net of tax	$	15,300			$	11,409			$	18,275
Cash flow hedges:
Net gains reclassified into earnings	$	(166	)		$	(164	)		$	(130	)
Tax benefit	58				57				46
Net of tax	$	(108	)		$	(107	)		$	(84	)

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)

16. Segment Information

The Company's businesses are aligned around its key end markets to better focus on growth strategies and provide increased opportunities to leverage Dover's scale and capitalize on productivity initiatives. Operating segments are defined as the components of an enterprise with separate financial information available which is regularly evaluated by the entity's chief operating decision maker, or decision-making group, in making resource allocation decisions. Based on this guidance, the Company has four operating segments which are also its reportable segments as follows:

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

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

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

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

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,
	2015				2014				2013
Revenue:
Energy	$	1,483,680			$	2,017,239			$	1,853,853
Engineered Systems	2,342,913				2,385,965				2,177,970
Fluids	1,399,273				1,430,566				1,236,838
Refrigeration & Food Equipment	1,731,430				1,921,189				1,887,840
Intra-segment eliminations	(985		)		(2,231		)		(1,405		)
Total consolidated revenue	$	6,956,311			$	7,752,728			$	7,155,096
Earnings from continuing operations:
Segment earnings:
Energy	$	173,190			$	461,815			$	459,649
Engineered Systems	376,961				386,998				347,497
Fluids	262,117				251,639				224,523
Refrigeration & Food Equipment	221,299				238,734				267,307
Total segments	1,033,567				1,339,186				1,298,976
Corporate expense / other (1)	105,700				117,800				132,336
Net interest expense	127,257				127,179				120,654
Earnings before provision for income taxes and discontinued operations	800,610				1,094,207				1,045,986
Provision for taxes	204,729				316,067				248,459
Earnings from continuing operations	$	595,881			$	778,140			$	797,527
Operating margins:
Energy	11.7		%		22.9		%		24.8		%
Engineered Systems	16.1		%		16.2		%		16.0		%
Fluids	18.7		%		17.6		%		18.2		%
Refrigeration & Food Equipment	12.8		%		12.4		%		14.2		%
Total Segments	14.9		%		17.3		%		18.2		%
Earnings from continuing operations	8.6		%		10.0		%		11.1		%
Depreciation and amortization:
Energy	$	141,779			$	111,956			$	99,075
Engineered Systems	59,914				61,946				59,058
Fluids	56,078				60,903				48,812
Refrigeration & Food Equipment	66,074				68,701				67,228
Corporate	3,244				3,682				3,860
Consolidated total	$	327,089			$	307,188			$	278,033
Capital expenditures:
Energy	$	33,692			$	66,998			$	60,756
Engineered Systems	37,109				29,749				29,145
Fluids	45,605				34,319				21,868
Refrigeration & Food Equipment	33,511				33,510				27,173
Corporate	4,334				1,457				2,752
Consolidated total	$	154,251			$	166,033			$	141,694

(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:	2015				2014
Energy	$	2,369,600			$	2,640,731
Engineered Systems	2,741,594				2,346,148
Fluids	1,529,333				1,421,717
Refrigeration & Food Equipment	1,482,315				1,478,433
Corporate (2)	496,921				816,091
Total assets - continuing operations	8,619,763				8,703,120
Assets from discontinued operations	—				327,171
Consolidated total	$	8,619,763			$	9,030,291

(2)	Corporate assets are principally cash and cash equivalents. Also included in corporate assets is an asset of $25,150 and $25,800 in 2015 and 2014, respectively, that represents the overfunded plan status of the U.S. defined benefit plan. Refer to Note 14 Employee Benefit Plans for additional information.

	Revenue												Long-Lived Assets
	Years Ended December 31,												At December 31,
	2015				2014				2013				2015				2014
United States	$	4,270,061			$	4,617,813			$	4,202,434			$	622,892			$	599,688
Europe	1,059,413				1,251,625				1,112,279				150,950				136,599
Other Americas	637,533				794,966				803,741				32,137				39,971
Asia	626,761				686,511				607,873				38,826				42,775
Other	362,543				401,813				428,769				9,464				18,036
Consolidated total	$	6,956,311			$	7,752,728			$	7,155,096			$	854,269			$	837,069

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)

17. 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,
	2015				2014				2013
Earnings from continuing operations	$	595,881			$	778,140			$	797,527
Earnings (loss) from discontinued operations, net	273,948				(2,905		)		205,602
Net earnings	$	869,829			$	775,235			$	1,003,129
Basic earnings per common share:
Earnings from continuing operations	$	3.78			$	4.67			$	4.66
Earnings (loss) from discontinued operations, net	$	1.74			$	(0.02	)		$	1.20
Net earnings	$	5.52			$	4.65			$	5.86
Weighted average shares outstanding	157,619,000				166,692,000				171,271,000
Diluted earnings per common share:
Earnings from continuing operations	$	3.74			$	4.61			$	4.60
Earnings (loss) from discontinued operations, net	$	1.72			$	(0.02	)		$	1.18
Net earnings	$	5.46			$	4.59			$	5.78
Weighted average shares outstanding	159,172,000				168,842,000				173,547,000

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

	Years Ended December 31,
	2015			2014			2013
Weighted average shares outstanding - Basic	157,619,000			166,692,000			171,271,000
Dilutive effect of assumed exercise of employee stock options and SARs and vesting of performance shares and restricted shares	1,553,000			2,150,000			2,276,000
Weighted average shares outstanding - Diluted	159,172,000			168,842,000			173,547,000

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 years ended December 31, 2015 and 2014 the weighted average number of anti-dilutive potential common shares excluded from the calculation above totaled 25,313 and 38,789, respectively. There were no anti-dilutive potential common shares excluded from the above calculation for the year ended December 31, 2013.

18. 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, 2015 and 2014, 256,112,943 and 255,892,502 shares of common stock were issued, and the Company had 101,109,186 and 92,880,644 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,
	2015				2014				2013
Shares repurchased in the open market	8,228,542				7,467,228				6,005,880
Shares repurchased from holders of employee stock options	—				—				5,951
Total shares repurchased	8,228,542				7,467,228				6,011,831
Average price paid per share	$	72.94			$	80.50			$	76.16

In January 2015, the Board of Directors approved a new standing share repurchase authorization, whereby the Company may repurchase up to 15,000,000 shares of its common stock over the following three years. This plan replaced all previously authorized repurchase programs. During the year ended December 31, 2015, the Company purchased 8,228,542 shares of its common stock under this authorization at a total cost of $600,164, or $72.94 per share. As of December 31, 2015, the number of shares still available for repurchase under the January 2015 share repurchase authorization was 6,771,458.

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 at a total cost of $308,512, or $79.71 per share.

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. The Company repurchased 6,005,880 shares under this program during 2013 for a total cost of $457,408. In addition, in 2013 the Company repurchased 5,951 shares from employees for a total cost of $463. 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.

Treasury shares increased to 101,109,186 at December 31, 2015 from a balance of 92,880,644 at December 31, 2014.

19. 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
2015
First	$	1,715,501			$	627,159		$	117,190			$	0.72			$	0.72			$	209,510			$	1.30			$	1.28
Second	1,758,628				654,568			155,634				0.98				0.97				332,396				2.10				2.07
Third	1,787,582				672,608			186,483				1.20				1.19				186,098				1.20				1.19
Fourth	1,694,600				613,809			136,574				0.88				0.87				141,825				0.92				0.91
	$	6,956,311			$	2,568,144		$	595,881			$	3.78			$	3.74			$	869,829			$	5.52			$	5.46
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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

20. Subsequent Events

Acquisitions

On January 7, 2016 we acquired the dispenser and system businesses of Tokheim Group S.A.S. ("Tokheim") for a purchase price of approximately €411.3 million, or $448.7 million. Of the total purchase price, €290.0 million, or approximately $316.4 million, was funded through incremental borrowings of commercial paper with the remainder funded through available cash on hand. Tokheim will be integrated within the Fluids segment, and will enable the segment to provide the most complete solutions available for retail fueling customers.

SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS

Years Ended December 31, 2015, 2014 and 2013

(In thousands)

Allowance for Doubtful Accounts		Balance at Beginning of Year				Charged to Cost and Expense (A)			Accounts Written Off			Other			Balance at End of Year
Year Ended December 31, 2015
Allowance for Doubtful Accounts		$	18,894			5,946			(5,665	)		(1,125	)		$	18,050
Year Ended December 31, 2014
Allowance for Doubtful Accounts		$	17,203			4,730			(3,524	)		485			$	18,894
Year Ended December 31, 2013
Allowance for Doubtful Accounts		$	17,005			5,869			(5,427	)		(244	)		$	17,203
(A) Net of recoveries on previously reserved or written-off balances.
Deferred Tax Valuation Allowance		Balance at Beginning of Year				Additions			Reductions			Other			Balance at End of Year
Year Ended December 31, 2015
Deferred Tax Valuation Allowance		$	141,252			30,113			—			—			$	171,365
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
LIFO Reserve		Balance at Beginning of Year				Charged to Cost and Expense			Reductions			Other			Balance at End of Year
Year Ended December 31, 2015
LIFO Reserve		$	50,769			221			(15,155	)		—			$	35,835
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