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

FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 20192020

or

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

Commission File Number: 1-4018
dov-20200331_g1.jpg
(Exact name of registrant as specified in its charter)
Delaware53-0257888
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
  
3005 Highland Parkway 
Downers Grove, Illinois60515
(Address of principal executive offices)(Zip Code)
(630) 541-1540
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common StockDOVNew York Stock Exchange
1.250% Notes due 2026DOV 26New York Stock Exchange
0.750% Notes due 2027DOV 27New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes þ  No  o

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12-b-2 of the Exchange Act.
Large accelerated filer þ
Accelerated filer o
Non-accelerated filer o
Smaller reporting company o
Large Accelerated FilerAccelerated FilerEmerging growth company Growth Company
Non-Accelerated FileroSmaller Reporting Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange ActAct. o

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

The number of shares outstanding of the Registrant’s common stock as of April 11, 201914, 2020 was 145,329,437.
143,947,008.



Dover Corporation
Form 10-Q
Table of Contents

Page
 
 
 
 
 
  
 






Table of ContentsContents

Item 1. Financial Statements

DOVER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)
(Unaudited)

Three Months Ended March 31,  Three Months Ended March 31,  
20192018 20202019
RevenueRevenue$1,724,757 $1,637,671 Revenue$1,655,939  $1,724,757  
Cost of goods and servicesCost of goods and services1,101,215 1,034,842 Cost of goods and services1,043,696  1,101,215  
Gross profitGross profit623,542 602,829 Gross profit612,243  623,542  
Selling, general and administrative expensesSelling, general and administrative expenses408,466 435,026 Selling, general and administrative expenses386,941  408,466  
Loss on assets held for saleLoss on assets held for sale46,946 — Loss on assets held for sale—  46,946  
Operating earningsOperating earnings168,130 167,803 Operating earnings225,302  168,130  
Interest expenseInterest expense31,808 35,640 Interest expense27,268  31,808  
Interest incomeInterest income(890)(2,058)Interest income(1,183) (890) 
Gain on sale of a businessGain on sale of a business(6,551) —  
Other income, netOther income, net(1,106)(30)Other income, net(7,732) (1,106) 
Earnings before provision for income taxesEarnings before provision for income taxes138,318 134,251 Earnings before provision for income taxes213,500  138,318  
Provision for income taxesProvision for income taxes32,613 24,841 Provision for income taxes37,221  32,613  
Earnings from continuing operations 105,705 109,410 
Earnings from discontinued operations, net — 22,025 
Net earnings Net earnings $105,705 $131,435 Net earnings  $176,279  $105,705  
Earnings per share from continuing operations:
Basic$0.73 $0.71 
Diluted$0.72 $0.70 
Earnings per share from discontinued operations:
Basic$— $0.14 
Diluted$— $0.14 
Net earnings per share:Net earnings per share:Net earnings per share:
BasicBasic$0.73 $0.85 Basic$1.22  $0.73  
DilutedDiluted$0.72 $0.84 Diluted$1.21  $0.72  
Weighted average shares outstanding:Weighted average shares outstanding:Weighted average shares outstanding:
BasicBasic145,087 154,520 Basic144,259  145,087  
DilutedDiluted146,911 157,090 Diluted145,782  146,911  
 

See Notes to Condensed Consolidated Financial Statements


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DOVER CORPORATION 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(In thousands)
(Unaudited)

Three Months Ended March 31, Three Months Ended March 31,
20192018 20202019
Net earningsNet earnings$105,705 $131,435 Net earnings$176,279  $105,705  
Other comprehensive earnings, net of tax
Other comprehensive (loss) earnings, net of taxOther comprehensive (loss) earnings, net of tax 
Foreign currency translation adjustments:Foreign currency translation adjustments:Foreign currency translation adjustments:
Foreign currency translation gains 23,700 52,308 
Foreign currency translation (losses) gainsForeign currency translation (losses) gains(93,554) 23,700  
Reclassification of foreign currency translation losses to earningsReclassification of foreign currency translation losses to earnings25,339 — Reclassification of foreign currency translation losses to earnings—  25,339  
Total foreign currency translation adjustmentsTotal foreign currency translation adjustments49,039 52,308 Total foreign currency translation adjustments(93,554) 49,039  
Pension and other post-retirement benefit plans:Pension and other post-retirement benefit plans:Pension and other post-retirement benefit plans:
Amortization of actuarial losses included in net periodic pension costAmortization of actuarial losses included in net periodic pension cost175 1,939 Amortization of actuarial losses included in net periodic pension cost1,669  175  
Amortization of prior service costs included in net periodic pension costAmortization of prior service costs included in net periodic pension cost572 743 Amortization of prior service costs included in net periodic pension cost286  572  
Total pension and other post-retirement benefit plansTotal pension and other post-retirement benefit plans747 2,682 Total pension and other post-retirement benefit plans1,955  747  
Changes in fair value of cash flow hedges:Changes in fair value of cash flow hedges:Changes in fair value of cash flow hedges:
Unrealized net gains arising during period2,594 1,362 
Net gains reclassified into earnings(230)(253)
Unrealized net (losses) gains arising during periodUnrealized net (losses) gains arising during period(5,074) 2,594  
Net losses (gains) reclassified into earningsNet losses (gains) reclassified into earnings1,121  (230) 
Total cash flow hedgesTotal cash flow hedges2,364 1,109 Total cash flow hedges(3,953) 2,364  
Other comprehensive earnings, net of tax 52,150 56,099 
Other comprehensive (loss) earnings, net of taxOther comprehensive (loss) earnings, net of tax (95,552) 52,150  
Comprehensive earningsComprehensive earnings$157,855 $187,534 Comprehensive earnings$80,727  $157,855  


See Notes to Condensed Consolidated Financial Statements

2

Table of ContentsContents

DOVER CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)

March 31, 2019December 31, 2018 March 31, 2020December 31, 2019
Assets Assets Assets  
Current assets: Current assets:   Current assets:    
Cash and cash equivalents Cash and cash equivalents $243,014 $396,221 Cash and cash equivalents  $508,907  $397,253  
Receivables, net of allowances of $29,116 and $28,469 1,272,053 1,231,859 
Receivables, net of allowances of $33,901 and $29,381Receivables, net of allowances of $33,901 and $29,3811,222,154  1,217,190  
Inventories Inventories 828,298 748,796 Inventories  852,075  806,141  
Prepaid and other current assets Prepaid and other current assets 141,891 126,878 Prepaid and other current assets  122,864  127,846  
Assets held for sale44,210 — 
Total current assets Total current assets 2,529,466 2,503,754 Total current assets  2,706,000  2,548,430  
Property, plant and equipment, net Property, plant and equipment, net 797,682 806,497 Property, plant and equipment, net  841,813  842,318  
Goodwill Goodwill 3,777,277 3,677,328 Goodwill  3,860,817  3,783,347  
Intangible assets, net Intangible assets, net 1,149,136 1,134,256 Intangible assets, net  1,096,140  1,055,014  
Other assets and deferred charges Other assets and deferred charges 404,350 243,936 Other assets and deferred charges  439,483  440,368  
Total assetsTotal assets$8,657,911 $8,365,771 Total assets$8,944,253  $8,669,477  
Liabilities and Stockholders' EquityLiabilities and Stockholders' EquityLiabilities and Stockholders' Equity
Current liabilities: Current liabilities:   Current liabilities:    
Notes payable and current maturities of long-term debt$346,255 $220,318 
Notes payable Notes payable  $500,000  $84,700  
Accounts payable Accounts payable 952,162 969,531 Accounts payable  947,006  983,293  
Accrued compensation and employee benefits Accrued compensation and employee benefits 176,726 212,666 Accrued compensation and employee benefits  175,231  226,658  
Accrued insurance Accrued insurance 99,215 97,600 Accrued insurance  99,992  98,432  
Other accrued expenses Other accrued expenses 337,417 313,452 Other accrued expenses  355,837  339,060  
Federal and other income taxes Federal and other income taxes 14,566 13,854 Federal and other income taxes  16,295  17,748  
Liabilities held for sale 20,581 — 
Total current liabilities Total current liabilities 1,946,922 1,827,421 Total current liabilities  2,094,361  1,749,891  
Long-term debtLong-term debt2,940,967 2,943,660 Long-term debt  2,963,018  2,985,716  
Deferred income taxes Deferred income taxes 349,428 339,325 Deferred income taxes  338,586  322,036  
Noncurrent income tax payableNoncurrent income tax payable54,304 54,304 Noncurrent income tax payable52,000  52,000  
Other liabilities Other liabilities 528,837 432,395 Other liabilities  515,607  527,174  
Stockholders' equity: Stockholders' equity:   Stockholders' equity:    
Total stockholders' equity Total stockholders' equity 2,837,453 2,768,666 Total stockholders' equity  2,980,681  3,032,660  
Total liabilities and stockholders' equity Total liabilities and stockholders' equity $8,657,911 $8,365,771 Total liabilities and stockholders' equity  $8,944,253  $8,669,477  


See Notes to Condensed Consolidated Financial Statements





3

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Table of Contents

DOVER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except share data)
(Unaudited)

Common stock $1 par valueAdditional paid-in capitalTreasury stockRetained earningsAccumulated other comprehensive (loss) earningsTotal stockholders' equity Common stock $1 par valueAdditional paid-in capitalTreasury stockRetained earningsAccumulated other comprehensive lossTotal stockholders' equity
Balance at December 31, 2018 $257,822 $886,016 $(5,947,562)$7,815,486 $(243,096)$2,768,666 
Balance at December 31, 2019 Balance at December 31, 2019  $258,552  $869,719  $(6,090,842) $8,211,257  $(216,026) $3,032,660  
Adoption of ASU 2016-13Adoption of ASU 2016-13—  —  —  (2,112) —  (2,112) 
Net earnings Net earnings — — — 105,705 — 105,705 Net earnings  —  —  —  176,279  —  176,279  
Dividends paid ($0.48 per share) — — — (69,809)— (69,809)
Dividends paid ($0.49 per share)Dividends paid ($0.49 per share)—  —  —  (70,899) —  (70,899) 
Common stock issued for the exercise of share-based awardsCommon stock issued for the exercise of share-based awards392 (20,000)— — — (19,608)Common stock issued for the exercise of share-based awards  193  (10,212) —  —  —  (10,019) 
Stock-based compensation expenseStock-based compensation expense— 8,182 — — — 8,182 Stock-based compensation expense  —  3,252  —  —  —  3,252  
Other comprehensive earnings, net of tax — — — — 52,150 52,150 
Common stock acquired Common stock acquired  —  —  (52,916) —  —  (52,916) 
Other comprehensive loss, net of tax Other comprehensive loss, net of tax  —  —  —  —  (95,552) (95,552) 
Other, net Other, net — (7,833)— — — (7,833)Other, net  —  (12) —  —  —  (12) 
Balance at March 31, 2019 $258,214 $866,365 $(5,947,562)$7,851,382 $(190,946)$2,837,453 
Balance at March 31, 2020 Balance at March 31, 2020  $258,745  $862,747  $(6,143,758) $8,314,525  $(311,578) $2,980,681  


 Common stock $1 par valueAdditional paid-in capitalTreasury stockRetained earningsAccumulated other comprehensive (loss) earningsTotal stockholders' equity
Balance at December 31, 2017 $256,992 $942,485 $(5,077,039)$8,455,501 $(194,759)$4,383,180 
Adoption of ASU 2018-02— — — 12,856 (12,856)— 
Cumulative catch-up adjustment related to Adoption of Topic 606— — — 175 — 175 
Net earnings — — — 131,435 — 131,435 
Dividends paid ($0.47 per share) — — — (72,691)— (72,691)
Common stock issued for the exercise of share-based awards290 (15,229)— — — (14,939)
Stock-based compensation expense— 7,314 — — — 7,314 
Common stock acquired — — (44,977)— — (44,977)
Other comprehensive earnings, net of tax — — — — 56,099 56,099 
Other, net — 26 — — — 26 
Balance at March 31, 2018 $257,282 $934,596 $(5,122,016)$8,527,276 $(151,516)$4,445,622 
 Common stock $1 par valueAdditional paid-in capitalTreasury stockRetained earningsAccumulated other comprehensive (loss) earningsTotal stockholders' equity
Balance at December 31, 2018  $257,822  $886,016  $(5,947,562) $7,815,486  $(243,096) $2,768,666  
Net earnings  —  —  —  105,705  —  105,705  
Dividends paid ($0.48 per share)—  —  —  (69,809) —  (69,809) 
Common stock issued for the exercise of share-based awards  392  (20,000) —  —  —  (19,608) 
Stock-based compensation expense  —  8,182  —  —  —  8,182  
Other comprehensive earnings, net of tax  —  —  —  —  52,150  52,150  
Other, net  —  (7,833) —  —  —  (7,833) 
Balance at March 31, 2019  $258,214  $866,365  $(5,947,562) $7,851,382  $(190,946) $2,837,453  



See Notes to Condensed Consolidated Financial Statements



4















Table of ContentsContents


DOVER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended March 31,  Three Months Ended March 31,  
20192018 20202019
Operating Activities:Operating Activities:  Operating Activities:  
Net earningsNet earnings$105,705 $131,435 Net earnings$176,279  $105,705  
Adjustments to reconcile net earnings to cash from operating activities:Adjustments to reconcile net earnings to cash from operating activities:Adjustments to reconcile net earnings to cash from operating activities:
Earnings from discontinued operations, net— (22,025)
Loss on assets held for saleLoss on assets held for sale46,946 — Loss on assets held for sale—  46,946  
Depreciation and amortizationDepreciation and amortization67,738 68,625 Depreciation and amortization68,752  67,738  
Stock-based compensation expenseStock-based compensation expense8,182 6,745 Stock-based compensation expense3,252  8,182  
Gain on sale of a businessGain on sale of a business(6,551) —  
Other, netOther, net2,363 (5,440)Other, net(17,358) 2,363  
Cash effect of changes in assets and liabilities:Cash effect of changes in assets and liabilities:Cash effect of changes in assets and liabilities:
Accounts receivable, netAccounts receivable, net(42,252)22,781 Accounts receivable, net(25,313) (42,252) 
InventoriesInventories(73,041)(63,554)Inventories(61,936) (73,041) 
Prepaid expenses and other assetsPrepaid expenses and other assets(14,921)(14,778)Prepaid expenses and other assets(8,654) (14,921) 
Accounts payableAccounts payable(22,638)(6,690)Accounts payable(25,245) (22,638) 
Accrued compensation and employee benefitsAccrued compensation and employee benefits(55,559)(69,554)Accrued compensation and employee benefits(67,247) (55,559) 
Accrued expenses and other liabilitiesAccrued expenses and other liabilities(16,107)(36,029)Accrued expenses and other liabilities25,321  (16,107) 
Accrued and deferred taxes, netAccrued and deferred taxes, net18,108 4,019 Accrued and deferred taxes, net14,563  18,108  
Net cash provided by operating activitiesNet cash provided by operating activities24,524 15,535 Net cash provided by operating activities75,863  24,524  
Investing Activities:Investing Activities:   Investing Activities:    
Additions to property, plant and equipmentAdditions to property, plant and equipment(37,122)(44,678)Additions to property, plant and equipment(40,172) (37,122) 
Acquisitions, net of cash acquiredAcquisitions, net of cash acquired(175,083)(68,385)Acquisitions, net of cash acquired(208,421) (175,083) 
Proceeds from sale of property, plant and equipmentProceeds from sale of property, plant and equipment170 2,160 Proceeds from sale of property, plant and equipment1,232  170  
Proceeds from sale of businessesProceeds from sale of businesses2,245 2,069 Proceeds from sale of businesses16,850  2,245  
OtherOther(7,900)(13,763)Other—  (7,900) 
Net cash used in investing activitiesNet cash used in investing activities(217,690)(122,597)Net cash used in investing activities(230,511) (217,690) 
Financing Activities:Financing Activities:   Financing Activities:    
Repurchase of common stockRepurchase of common stock— (44,977)Repurchase of common stock(52,916) —  
Change in commercial paper and notes payableChange in commercial paper and notes payable125,893 195,066 Change in commercial paper and notes payable415,300  125,893  
Dividends paid to stockholdersDividends paid to stockholders(69,809)(72,691)Dividends paid to stockholders(70,899) (69,809) 
Payments to settle employee tax obligations on exercise of share-based awardsPayments to settle employee tax obligations on exercise of share-based awards(19,608)(14,943)Payments to settle employee tax obligations on exercise of share-based awards(10,019) (19,608) 
Repayment of long-term debt— (350,000)
OtherOther(409)(1,558)Other(512) (409) 
Net cash provided by (used in) financing activities36,067 (289,103)
Net cash provided by financing activitiesNet cash provided by financing activities280,954  36,067  
Cash Flows from Discontinued Operations   
Net cash provided by operating activities of discontinued operations— 19,963 
Net cash used in investing activities of discontinued operations— (13,426)
Net cash provided by discontinued operations — 6,537 
Effect of exchange rate changes on cash and cash equivalentsEffect of exchange rate changes on cash and cash equivalents3,892 2,886 Effect of exchange rate changes on cash and cash equivalents(14,652) 3,892  
Net decrease in cash and cash equivalents (153,207)(386,742)
Net increase (decrease) in cash and cash equivalentsNet increase (decrease) in cash and cash equivalents 111,654  (153,207) 
Cash and cash equivalents at beginning of periodCash and cash equivalents at beginning of period396,221 753,964 Cash and cash equivalents at beginning of period397,253  396,221  
Cash and cash equivalents at end of periodCash and cash equivalents at end of period$243,014 $367,222 Cash and cash equivalents at end of period$508,907  $243,014  


See Notes to Condensed Consolidated Financial Statements

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Table of Contents
DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated) (Unaudited)
1. Basis of Presentation

The accompanying unaudited interim Condensed Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for interim periods and do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America ("GAAP") for complete financial statements. These unaudited interim Condensed Consolidated Financial Statements should therefore be read in conjunction with the Consolidated Financial Statements and Notes for Dover Corporation ("Dover" or the "Company") for the year ended December 31, 2018,2019, included in the Company's Annual Report on Form 10-K filed with the SEC on February 15, 2019.14, 2020. The year end Condensed Consolidated Balance Sheet was derived from audited financial statements. Certain amounts in the prior periods have been reclassified to conform to the current year presentation.  

On May 9, 2018, the Company completed a pro-rata distribution of the common stock of Apergy Corporation ("Apergy") to the Company's shareholders of record as of the close of business on April 30, 2018. Apergy holds entities conducting upstream energy businesses previously included in the Energy segment. As discussed in Note 5 - Discontinued and Disposed Operations, the Apergy businesses met the criteria to be reported as discontinued operations because the spin-off is a strategic shift in business that has a major effect on the Company's operations and financial results. Therefore, the Company is reporting the historical results of Apergy, including the results of operations, cash flows, and related assets and liabilities, as discontinued operations for all periods presented herein. Subsequent to the spin-off of Apergy, effective the second quarter of 2018, the Company no longer has the Energy segment and is aligned into three reportable segments. See Note 18 —Segment Information for additional information regarding the updated segments, including segment results for the three months ended March 31, 2019 and 2018. Unless otherwise noted, the accompanying Notes to the Consolidated Financial Statements have all been revised to reflect the effect of the separation of Apergy and all prior year balances have been revised accordingly to reflect continuing operations only.

The accompanying unaudited interim Condensed Consolidated Financial Statements have been prepared in accordance with U.S. GAAP, which requires management to make estimates and assumptions that affect amounts reported in the Condensed Consolidated Financial Statements and accompanying disclosures. Although these estimates are based on management’s best knowledge of current events and actions that the Company may undertake in the future, actual results may differ from those estimates. The Condensed Consolidated Financial Statements reflect all adjustments of a normal, recurring nature that are, in the opinion of management, necessary for a fair statement of results for these interim periods. The results of operations of any interim period are not necessarily indicative of the results of operations for the full year.

2. Spin-off of Apergy CorporationRevenue

On May 9, 2018, Dover completed the distribution of Apergy to its shareholders. The transaction was completed through the pro rata distribution of 100%A majority of the common stock of Apergy to Dover's shareholders of record asCompany’s revenue is short cycle in nature with shipments within one year from order. A small portion of the closeCompany’s revenue derives from contracts extending over one year. The Company's payment terms generally range between 30 to 90 days and vary by the location of business on April 30, 2018. Each Dover shareholder received one sharebusinesses, the type of Apergy common stock for every two shares of Dover common stock held as of the record date.

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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated) (Unaudited)
The following is a summary of the assets and liabilities transferredproducts manufactured to Apergy as part of the separation on May 9, 2018:
Assets:
Cash and cash equivalents$10,357 
Current assets462,620 
Non-current assets1,438,760 
$1,911,737 
Liabilities:
Current liabilities$185,354 
Non-current liabilities119,568 
$304,922 
Net assets distributed to Apergy Corporation$1,606,815 
Less: Cash received from Apergy Corporation700,000 
Net distribution to Apergy Corporation$906,815 

In connection with the spin-off from the company, Apergy issued andbe sold $300.0 million in aggregate principal amount of its 6.375% senior notes due May 2026 in a private offering exempt from the registration requirements of the Securities Act of 1933, as amended, and incurred $415.0 million in borrowings under its new senior secured term loan facility to fund a one-time cash payment of $700.0 million to Dover. Dover received net cash of $689.6 million upon separation, which reflects $10.4 million of cash held by Apergy on the distribution date and retained by it in connection with its separation from Dover. Dover utilized the proceeds from Apergy as the primary source of funding for $1 billion of share repurchases started in December 2017 and completed in December 2018.
Included within the net assets distributed to Apergy is approximately $33 million of accumulated other comprehensive earnings attributable to Apergy, relating primarily to foreign currency translation gains, offset by unrecognized losses on pension obligations.
The historical results of Apergy, including the results of operations, cash flows, and related assets and liabilities have been reclassified to discontinued operations for all periods presented herein. See Note 5 — Held for Sale, Disposed and Discontinued Operations. Pursuant to the separation of Apergy from Dover, and the related separation and distribution agreements, any liabilities due from Dover to Apergy are not significant.

3. Revenue

Effective January 1, 2018, the Company adopted Accounting Standard Codification ("ASC") Topic 606, Revenue from Contracts with Customers("Topic 606” or “ASC 606”), using the modified retrospective method applied to those contracts which were not completed asvolume of January 1, 2018.
Under Topic 606, a contract with a customer is an agreement which both parties have approved, that creates enforceable rights and obligations, has commercial substance and where payment terms are identified and collectability is probable. Once the Company has entered a contract, it is evaluated to identify performance obligations. For each performance obligation, revenue is recognized as control of promised goods or services transfers to the customer in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. The amount of revenue recognized takes into account variable consideration, such as discounts and volume rebates.products sold, among other factors.
Over 95% of the Company’s performance obligations are recognized at a point in time that relate to the manufacture and sale of a broad range of products and components. Revenue is recognized when control transfers to the customer upon shipment or completion of installation, testing, certification, or other substantive acceptance provisions required under the contract. Less than 5% of the Company’s revenue is recognized over time and generally relates to the sale of services or engineered to order equipment or services that have no alternative use and in which the contract specifies the Company has a right to payment for its costs, plus a reasonable margin.


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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated) (Unaudited)
Revenue from contracts with customers is disaggregated by end markets, segments and geographic location, as it best depicts the nature and amount of the Company’s revenue.
The following table presents See Note 17 — Segment Information for revenue disaggregated by end marketsegment and segment:
Three Months Ended March 31,  
 20192018
Printing & Identification$282,086 $282,522 
Industrials405,105 389,104 
Total Engineered Systems segment687,191 671,626 
Fueling & Transport373,050 319,304 
Pumps177,439 162,309 
Process Solutions152,735 146,485 
Total Fluids segment703,224 628,098 
Refrigeration277,598 278,655 
Food Equipment57,045 59,580 
Total Refrigeration & Food Equipment segment334,643 338,235 
Intra-segment eliminations(301)(288)
Total Consolidated Revenue$1,724,757 $1,637,671 

The following table presents revenue disaggregated by geography based on the location of the Company's customer:
Three Months Ended March 31,  
 20192018
United States$919,892 $853,002 
Europe402,645 387,178 
Asia196,350 194,603 
Other Americas138,118 133,144 
Other67,752 69,744 
Total$1,724,757 $1,637,671 

geographic locations.
At March 31, 2019,2020, we estimated that $83.0$156.0 million in revenue is expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period. We expect to recognize approximately 65%81% of our unsatisfied (or partially unsatisfied) performance obligations as revenue through 2020,2021, with the remaining balance to be recognized in 20212022 and thereafter.

The following table provides information about contract assets and contract liabilities from contracts with customers:
March 31, 2019December 31, 2018At Adoption March 31, 2020December 31, 2019January 1, 2019
Contract assetsContract assets$11,443 $9,330 $11,932 Contract assets$13,841  $14,894  $9,330  
Contract liabilities - currentContract liabilities - current39,733 36,461 48,268 Contract liabilities - current61,508  44,001  36,461  
Contract liabilities - non-currentContract liabilities - non-current9,731 9,382 9,916 Contract liabilities - non-current10,363  9,121  9,382  

The revenue recognized during the three months ended March 31, 20192020 and 20182019 that was included in the contract liabilities at the beginning of the period amounted to $15,414$21,133 and $13,781,$15,414, respectively.



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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated) (Unaudited)
3. Acquisitions

2020 Acquisitions

During the three months ended March 31, 2020, the Company acquired two businesses in separate transactions for total consideration of $208,421, net of cash acquired. These businesses were acquired to complement and expand upon existing operations within the Imaging & Identification and Engineered Products segments. The goodwill recorded as a result of these acquisitions represents the economic benefits expected to be derived from product line expansions and operational synergies. Goodwill in the amount of $33,125 is deductible for U.S. income tax purposes and goodwill in the amount of $92,256 is non-deductible for U.S. income tax purposes for these acquisitions.

On January 24, 2020, the Company acquired 100% of the voting stock of Sys-Tech Solutions, Inc. ("Systech"), a leading provider of product traceability, regulatory compliance and brand-protection software and solutions to pharmaceutical and consumer products manufacturers, for $162,942, net of cash acquired. The Systech acquisition strengthens the portfolio of solutions offered by the Imaging & Identification segment. In connection with this acquisition, the Company recorded goodwill of $92,256 and intangible assets of $76,100, primarily related to customer intangibles.

On February 18, 2020, the Company acquired 100% of the voting stock of So. Cal. Soft-Pak, Incorporated ("Soft-Pak") Software Solutions, a leading specialized provider of integrated back office, route management and customer relationship management software solutions to the waste and recycling fleet industry for $45,479, net of cash acquired. The Soft-Pak acquisition strengthens the digital offerings within the Engineered Products segment. In connection with this acquisition, the Company recorded goodwill of $33,125 and intangible assets of $12,800, primarily related to customer intangibles.

The following presents the preliminary allocation of purchase price to the assets acquired and liabilities assumed, based on their estimated fair values at acquisition date:
Total 
Current assets, net of cash acquired$19,816 
Property, plant and equipment1,580 
Goodwill125,381 
Intangible assets88,900 
Current liabilities(15,073)
Other liabilities(12,183)
Net assets acquired$208,421 

The amounts assigned to goodwill and major intangible asset classifications were as follows:
Amount allocatedUseful life (in years)
Goodwill - tax deductible$33,125  na
Goodwill - non deductible92,256  na
Customer intangibles74,100  12
Trademarks5,100  15
Other intangibles9,700  6 - 9
$214,281  

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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated) (Unaudited)
4. Acquisitions

2019 Acquisitions

On January 25, 2019, the Company acquired the assets of Belanger,, Inc. ("Belanger"), a leading full-line car wash equipment manufacturer for $175,083, net of cash acquired. The Belanger acquisition strengthens Dover's position in the vehicle wash business within the Fueling & Transport end market of the FluidsSolutions segment.The following presents the preliminary allocation of acquisition cost to the assets acquired and liabilities assumed, based on their estimated fair values:
Belanger 
Current assets, net of cash acquired$9,392 
Property, plant and equipment597 
Goodwill97,817 
Intangible assets77,000 
Other assets and deferred charges20 
Current liabilities(9,743)
Net assets acquired$175,083 

The amounts assigned to goodwill and major intangible asset classifications are as follows:
Amount allocatedUseful life (in years)
Goodwill - Tax deductible97,817 na
Customer intangibles54,500 9
Patents16,000 9
Trademarks6,500 15
$174,817 

The goodwill recorded as a result of this acquisition reflects the benefits expected to be derived from product line expansions and operational synergies.

2018 Acquisitions

During the three months ended March 31, 2018, the Company acquired two businesses in separate transactions for total consideration of $68,385, net of cash acquired. These businesses were acquired to complement and expand upon existing operations within the Fluids and Refrigeration & Food Equipment segments. The goodwill recorded as a result of these acquisitions reflects the benefits expected to be derived from product line expansions and operational synergies. The goodwill is non-deductible for U.S. federal income tax purposes for these acquisitions.

On January 2, 2018, the Company acquired 100% of the voting stock of Ettlinger Group ("Ettlinger"), within the Fluids segment for $53,046, net of cash acquired. In connection with this acquisition, the Company recorded goodwill of $36,505$97,817 and intangible assets of $20,084,$77,000, primarily related to customer intangibles. The intangible assets are being amortized over 89 to 15 years.

On January 12, 2018, the Company acquired 100% of the voting stock of Rosario Handel B.V. ("Rosario"), within the Refrigeration & Food Equipment segment for total consideration of $15,339, net of cash acquired. In connection with this acquisition, the Company recorded goodwill of $10,402 and a customer intangible asset of $4,149. The customer intangible asset is being amortized over 10 years.

Pro Forma Information

The following unaudited pro forma information illustrates the impact of 20192020 and 20182019 acquisitions on the Company’s revenue and earnings from operations for the three months ended March 31, 20192020 and 2018,2019, respectively.
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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated) (Unaudited)
The unaudited pro forma information assumes that the 20192020 and 20182019 acquisitions had taken place at the beginning of the prior year, 20182019 and 2017,2018, respectively. Unaudited pro forma earnings are adjusted to reflect the comparable impact of additional depreciation and amortization expense, net of tax, resulting from the fair value measurement of intangible and tangible assets relating to the year of acquisition.

The unaudited pro forma effects for the three months ended March 31, 20192020 and 20182019 were as follows:
Three Months Ended March 31,  Three Months Ended March 31,  
2019 2018  20202019
Revenue: Revenue: Revenue:  
As reported As reported $1,724,757 $1,637,671 As reported  $1,655,939  $1,724,757  
Pro forma Pro forma 1,728,525 1,651,530 Pro forma  1,661,825  1,746,533  
Earnings from continuing operations:
Net earnings: Net earnings:  
As reported As reported $105,705 $109,410 As reported  $176,279  $105,705  
Pro forma Pro forma 107,204 111,953 Pro forma  180,433  106,188  
Basic earnings per share from continuing operations:
As reported $0.73 $0.71 
Pro forma 0.74 0.72 
Diluted earnings per share from continuing operations:
As reported $0.72 $0.70 
Pro forma 0.73 0.71 

5. Held for Sale,4. 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.

Assets2020

On March 6, 2020, the Company completed the sale of the Chino, California branch of The AMS Group ("AMS Chino"), a wholly owned subsidiary of the Company. Upon disposal of AMS Chino, the Company recognized total consideration of $16,850, which resulted in a pre-tax gain on sale of $6,551 included within the Condensed Consolidated Statements of Earnings and Liabilities Heldwithin the Refrigeration & Food Equipment Segment for Salethe three months ended March 31, 2020.

2019

On March 29, 2019, the Company entered into a definitive agreement to sell Finder Pompe S.r.l ("Finder"), a wholly owned subsidiary, to Gruppo Aturia S.p.A (“Aturia”) for a total consideration of approximately$23,629 net of estimated selling costs.. As of March 31, 2019, Finder met the criteria to be classified as held for sale. The Company classified Finder's assets and liabilities separately on the consolidated balance sheet as of March 31, 2019.

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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated) (Unaudited)
The following table presents the assets and liabilities associated with the Finder business classified as held for sale as of March 31, 2019.

March 31, 2019
Assets Held for Sale 
Accounts receivable, net $12,698 
Inventories 3,693 
Prepaid and other current assets 1,050 
Total current assets17,441 
Property, plant and equipment, net13,596 
Goodwill and intangible assets, net34,524 
Other assets and deferred charges256 
Impairment on assets held for sale(21,607)
Total assets$44,210 
Liabilities Held for Sale 
Accounts payable $7,859 
Other current liabilities 5,088 
Total current liabilities 12,947 
Deferred income taxes 7,011 
Other liabilities 623 
Total liabilities$20,581 

Based on the total consideration from the sale, net of selling costs, the Company recorded a loss on the assets held for sale of $46,946, in the Condensed Consolidated Statements of Earnings during the three months ended March 31, 2019. The loss was comprised of an impairment on assets held for sale of $21,607 and $25,339 of foreign currency translation losses reclassified out of accumulated other comprehensive losses.

On April 2, 2019, Dover completed the sale of Finder to Aturia, which generated total cash proceeds of $24,218. The Finder business iswas included in the results of the FluidsPumps & Process Solutions segment. The sale does not represent a strategic shift that will have a major effect on operations and financial results and, therefore,therefore, did not qualify for presentation as a discontinued operation. The sale closed on April 2, 2019. See Note 22 — Subsequent Events for further details on the subsequent completed sale

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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated) (Unaudited)
5. Inventories
 March 31, 2020December 31, 2019
Raw materials$486,866  $467,912  
Work in progress172,173  162,670  
Finished goods300,725  280,051  
Subtotal959,764  910,633  
Less reserves(107,689) (104,492) 
Total$852,075  $806,141  

The Company had no assets or liabilities classified as held for sale as of December 31, 2018.
6. Property, Plant and Equipment, net
 March 31, 2020December 31, 2019
Land  $54,580  $56,583  
Buildings and improvements  522,155  527,192  
Machinery, equipment and other  1,662,535  1,648,354  
Property, plant and equipment, gross2,239,270  2,232,129  
Accumulated depreciation  (1,397,457) (1,389,811) 
Property, plant and equipment, net$841,813  $842,318  

Disposed Operations

There were no dispositions duringFor the three months ended March 31, 2020 and 2019, depreciation expense was $34,555 and 2018.$32,188, respectively.
7. Credit Losses

Discontinued OperationsEffective January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments prospectively. This ASU replaces the incurred loss impairment model with an expected credit loss impairment model for financial instruments, including trade receivables. The amendment requires entities to consider forward-looking information to estimate expected credit losses, resulting in earlier recognition of losses for receivables that are current or not yet due, which were not considered under the previous accounting guidance. Upon adoption, the Company recorded a noncash cumulative effect adjustment to retained earnings of $2.1 million, net of $0.6 million of income taxes, on the opening consolidated balance sheet as of January 1, 2020.

There were no discontinued operations asThe Company is exposed to credit losses primarily through sales of products and services. The Company’s expected loss allowance methodology for accounts receivable is developed using historical collection experience, current and future economic and market conditions and a review of the three months ending March 31, 2019.current status of customers' trade accounts receivables. Due to the short-term nature of such receivables, the estimate of amount of accounts receivable that may not be collected is based on aging of the accounts receivable balances and the financial condition of customers. Additionally, specific allowance amounts are established to record the appropriate provision for customers that have a higher probability of default. The Company’s monitoring activities include timely account reconciliation, dispute resolution, payment confirmation, consideration of customers' financial condition and macroeconomic conditions. Balances are written off when determined to be uncollectible. The Company considered the current and expected future economic and market conditions surrounding the novel coronavirus ("COVID-19") pandemic and determined that the estimate of credit losses was not significantly impacted.

In 2018,Estimates are used to determine the Apergy businesses, as discussed in Note 2, met the criteria to be reported as discontinued operations because the spin-off was a strategic shift in businessallowance. It is based on assessment of anticipated payment and all other historical, current and future information that has a major effect on the Company's operations and financial results. Therefore, the results of discontinued operations for the three months ended March 31, 2018 include the historical results of Apergy prior to its distribution on May 9, 2018. The three months ended March 31, 2018 included costs incurred by Dover to complete the spin-off of Apergy amounting to $11,746, reflected in selling, general and administrative expenses in discontinued operations. See Note 2 — Spin-off of Apergy Corporation for further information.is reasonably available.

The following table provides a roll-forward of the allowance for credit losses that is deducted from the amortized cost basis of accounts receivable to present the net amount expected to be collected.
2020
Beginning Balance, January 1,$29,381 
Adoption of ASU 2016-13, cumulative-effect adjustment to retained earnings2,706 
Provision for expected credit losses3,703 
Amounts written off charged against the allowance(811)
Other, including dispositions and foreign currency translation(1,078)
Ending Balance, March 31,$33,901 


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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated) (Unaudited)
Summarized results
8. Goodwill and Other Intangible Assets
The changes in the carrying value of the Company's discontinued operations aregoodwill by reportable operating segments were as follows:
 Engineered ProductsFueling SolutionsImaging & IdentificationPumps & Process SolutionsRefrigeration & Food EquipmentTotal
Balance at December 31, 2019$636,571  $873,381  $977,069  $750,627  $545,699  $3,783,347  
Acquisitions33,125  —  92,256  —  —  125,381  
Disposition of business—  —  —  —  (2,841) (2,841) 
Foreign currency translation(4,446) (26,008) (8,514) (5,790) (312) (45,070) 
Balance at March 31, 2020$665,250  $847,373  $1,060,811  $744,837  $542,546  $3,860,817  

Three Months Ended March 31, 2018 
Revenue$284,041 
Cost of goods and services177,928 
Gross profit106,113 
Selling, general and administrative expenses79,123 
Operating earnings26,990 
Other expense, net 484 
Earnings from discontinued operations before taxes 26,506 
Provision for income taxes 4,481 
Earnings from discontinued operations, net of tax $22,025 

On May 9, 2018, all assets and liabilities of Apergy were spun-off. Therefore, as of March 31, 2019 and December 31, 2018 there were no assets and liabilities classified as discontinued operations.

6. Inventories
 March 31, 2019December 31, 2018
Raw materials$474,204 $439,616 
Work in progress177,544 154,878 
Finished goods288,986 265,722 
Subtotal940,734 860,216 
Less reserves(112,436)(111,420)
Total$828,298 $748,796 

7. Property, Plant and Equipment, net
 March 31, 2019December 31, 2018
Land $49,834 $53,623 
Buildings and improvements 518,238 529,982 
Machinery, equipment and other 1,589,863 1,555,345 
Property, plant and equipment, gross2,157,935 2,138,950 
Accumulated depreciation (1,360,253)(1,332,453)
Property, plant and equipment, net$797,682 $806,497 

Depreciation expense totaled $32,188 and $32,164 forDuring the three months ended March 31, 2019 and 2018, respectively.
8. Leases
The2020, the Company adopted ASC Topic 842 - Leasesrecorded additions of $125,381 to goodwill as a result of January 1, 2019, using the transition method per ASU No. 2018-11 issued on July 2018 wherein entities were allowed to initially apply the new leases standard at adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Accordingly, all periods prior to January 1, 2019 were presented in accordanceacquisitions with the previous ASC Topic 840, Leases,Engineered Products and no retrospective adjustments were made toImaging & Identification segments discussed in Note 3 — Acquisitions. During the comparative periods presented. Adoptionthree months ended March 31, 2020, the Company disposed of ASC 842 resulted$2,841 of the Refrigeration & Food Equipment segment goodwill as a result of the sale of a business as discussed in an increase to total assets and liabilities due to the recording of operating lease right-of-use assets ("ROU") and operating lease liabilities of approximately $163 million, as of January 1, 2019. Finance leases were not impacted by the adoption of ASC 842, as finance lease liabilities and the corresponding ROU assets were already recorded in the balance sheet under the previous guidance, ASC 840. The adoption did not materially impact the Company’s Consolidated Statements of Earnings or Cash Flows.Note 4 — Disposed Operations.

Dover performs its annual goodwill impairment testing in the fourth quarter of each year. During the 2019 impairment testing, all fifteen reporting units had fair values substantially in excess of their carrying values. In addition to the annual impairment test, the Company is required to regularly assess whether a triggering event has occurred which would require interim impairment testing. The Company considered the current and expected future economic and market conditions surrounding the COVID-19 pandemic and its impact on each of the reporting units. Further, the Company assessed the current market capitalization, forecasts and the amount of headroom in the 2019 impairment test. The Company determined that a triggering event has not occurred which would require an interim impairment test to be performed. Refer to "Segment Results of Operations" for further details on the COVID-19 impact to the Company's operations.

The Company’s definite-lived and indefinite-lived intangible assets by major asset class were as follows:
12
March 31, 2020December 31, 2019
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying Amount
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying Amount
Amortized intangible assets:
Customer intangibles$1,467,966  $731,391  $736,575  $1,410,636  $714,566  $696,070  
Trademarks220,805  89,123  131,682  218,064  85,791  132,273  
Patents158,612  134,360  24,252  159,376  133,677  25,699  
Unpatented technologies162,763  100,858  61,905  154,505  99,276  55,229  
Distributor relationships80,237  44,889  35,348  82,779  44,202  38,577  
Drawings & manuals26,619  22,228  4,391  27,500  22,403  5,097  
Other22,908  17,482  5,426  22,355  16,939  5,416  
Total2,139,910  1,140,331  999,579  2,075,215  1,116,854  958,361  
Unamortized intangible assets:
Trademarks96,561  —  96,561  96,653  —  96,653  
Total intangible assets, net$2,236,471  $1,140,331  $1,096,140  $2,171,868  $1,116,854  $1,055,014  

For the three months ended March 31, 2020 and 2019, amortization expense was $34,197 and $35,550, respectively, including acquisition-related intangible amortization of $33,817 and $35,155, respectively.


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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated) (Unaudited)
The Company has operating and finance leases for corporate offices, manufacturing plants, research and development facilities, shared services facilities, vehicle fleets and certain office and manufacturing equipment. Leases with an initial term of 12 months or less are not recorded in the balance sheet. The Company has elected the practical expedient to account for each separate lease component of a contract and its associated non-lease components as a single lease component, thus causing all fixed payments to be capitalized. The Company also elected the package of practical expedients permitted within the new standard, which among other things, allows the Company to carry forward historical lease classification. Variable lease payment amounts that cannot be determined at the commencement of the lease such as increases in lease payments based on changes in index rates or usage, are not included in the ROU assets or liabilities. These are expensed as incurred and recorded as variable lease expense. 9. Restructuring Activities

The Company determines if an arrangement is a lease at inception of a contract. Operating lease ROU assets are included in other assets and deferredCompany's restructuring charges and operating lease liabilities are included in other accrued expenses and other liabilities in the Consolidated Balance Sheet. Finance lease ROU assets are included in property and equipment, and the related lease liabilities are included in other accrued expenses and other liabilities in the Consolidated Balance Sheet.by segment were as follows:
 Three Months Ended March 31,  
 20202019
Engineered Products$358  $79  
Fueling Solutions1,475  738  
Imaging & Identification256  291  
Pumps & Process Solutions3,846  381  
Refrigeration & Food Equipment560  1,412  
Corporate846  35  
Total$7,341  $2,936  
These amounts are classified in the Condensed Consolidated Statements of Earnings as follows:
Cost of goods and services$1,542  $1,179  
Selling, general and administrative expenses5,799  1,757  
Total$7,341  $2,936  

ROU assets represent the Company's right to use an underlying assetThe restructuring expenses of $7,341 incurred during the lease termthree months ended March 31, 2020, were a result of restructuring programs initiated in 2019. Restructuring expense was comprised primarily of broad-based selling, general and lease liabilities representadministrative expense reduction and broad-based operational efficiency initiatives focusing on footprint consolidation, operational optimization and IT centralization designed to increase operating margin, enhance operations and position the Company's obligationCompany for sustained growth and investment. The Company expects to make lease payments arising fromincur additional charges of approximately $6 million during the lease. ROU assets and liabilities are recognized at commencement date based onremainder of 2020. COVID-19 has not resulted in significant restructuring costs. Additional programs, beyond the net present value of fixed lease payments over the lease term. The Company's lease term include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. ROU assets also include any advance lease payments made and exclude lease incentives. As mostscope of the Company's operating leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Finance lease agreements generally include an interest rate that is used to determine the present value of future lease payments. Operating fixed lease expense and finance lease depreciation expense are recognized on a straight-line basis over the lease term.announced programs, may be implemented during 2020 with related restructuring charges.

The $7,341 of restructuring charges incurred during the first quarter of 2020 primarily included the following items:
The Engineered Products segment recorded $358 of restructuring charges principally related to headcount reductions.
13
The Fueling Solutions segment recorded $1,475 of restructuring charges principally related to headcount reductions.

The Imaging & Identification segment recorded $256 of restructuring charges principally related to headcount reductions.

The Pumps & Process Solutions segment recorded $3,846 of restructuring expense primarily due to headcount reductions and facility restructuring costs.

The Refrigeration & Food Equipment segment recorded $560 of restructuring expense primarily due to headcount reductions and facility restructuring costs.

Corporate recorded $846 of restructuring charges primarily related to headcount reductions and associated exit costs related to IT centralization initiatives.

The Company’s severance and exit accrual activities were as follows:
 SeveranceExitTotal
Balance at December 31, 2019$13,751  $2,639  $16,390  
Restructuring charges4,014  3,327  7,341  
Payments(6,510) (2,049) (8,559) 
Other, including foreign currency translation184  (2,376) 
(1)
(2,192) 
Balance at March 31, 2020$11,439  $1,541  $12,980  
(1) Other activity in exit reserves primarily represents the non-cash write-off of certain long-lived assets in connection with certain facility closures.


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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated) (Unaudited)
The components of lease costs were as follows:
Three Months Ended March 31, 2019
Operating Lease Costs:
Fixed$12,244 
Variable2,047 
Short-term4,865 
Total*$19,156 
* Finance lease cost and sublease income were immaterial.
Supplemental cash flow information were as follows:
Three Months Ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$12,414 
Operating cash flows from finance leases108 
Financing cash flows from finance leases409 
Total$12,931 
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases10,708 
Finance leases37 
Total$10,745 

Supplemental balance sheet information related to leases were as follows:
March 31, 2019
Operating Leases:
Right of use assets:
Other assets and deferred charges$154,562 
Lease liabilities:
Other accrued expenses$43,247 
Other liabilities118,783 
Total operating lease liabilities$162,030 
Finance Leases:
Right of use assets:
 Property, plant and equipment, net (1)
$11,856 
Lease liabilities:
Other accrued expenses$1,526 
Other liabilities8,350 
Total financing lease liabilities$9,876 
(1) Finance lease assets are recorded net of accumulated depreciation of $909.

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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated) (Unaudited)
The aggregate future lease payments for operating and finance leases as of March 31, 2019 were as follows:
 OperatingFinance
2019 (excluding the three months ending March 31, 2019)$37,090 $1,425 
202039,237 1,881 
202129,666 1,793 
202221,329 1,608 
202313,544 1,204 
Thereafter42,182 4,040 
Total lease payments183,048 11,951 
Less: Interest(21,018)(2,075)
Present value of lease liabilities$162,030 $9,876 

The aggregate future lease payments for operating and capital leases as of December 31, 2018 are as follows:
 OperatingCapital
2019$49,009 $1,802 
202038,620 1,748 
202129,396 1,687 
202221,767 1,392 
202313,994 952 
Thereafter42,087 3,802 
Total$194,873 $11,383 

Average lease terms and discount rates were as follows:
March 31, 2019
Weighted-average remaining lease term (years)
Operating leases5.8
Finance leases6.4
Weighted-average discount rate
Operating leases3.3% 
Finance leases4.4% 

9. Goodwill and Other Intangible Assets
The changes in the carrying value of goodwill by reportable operating segments were as follows:
 Engineered SystemsFluidsRefrigeration & Food EquipmentTotal
Balance at December 31, 2018$1,623,660 $1,507,602 $546,066 $3,677,328 
Acquisitions— 97,817 — 97,817 
Held for sale— (4,739)— (4,739)
Foreign currency translation(1,460)8,386 (55)6,871 
Balance at March 31, 2019$1,622,200 $1,609,066 $546,011 $3,777,277 

During the three months ended March 31, 2019, the Company recorded additions of $97,817 to goodwill as a result of the acquisition discussed in Note 4 — Acquisitions. As noted in Note 5 — Held for Sale, Disposed and Discontinued Operations, the Company classified Finder's assets and liabilities as held for sale as of March 31, 2019. As a result, the Fluids segment goodwill balance was reduced by $4,739.


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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated) (Unaudited)
The Company’s definite-lived and indefinite-lived intangible assets by major asset class were as follows:
March 31, 2019December 31, 2018
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying Amount
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying Amount
Amortized intangible assets:
Customer intangibles$1,404,109 $648,177 $755,932 $1,395,742 $645,305 $750,437 
Trademarks217,996 74,597 143,399 214,774 72,305 142,469 
Patents160,240 129,692 30,548 144,302 128,254 16,048 
Unpatented technologies155,481 89,379 66,102 155,380 85,560 69,820 
Distributor relationships83,804 39,750 44,054 82,970 37,943 45,027 
Drawings & manuals27,707 20,784 6,923 31,849 23,273 8,576 
Other21,434 15,927 5,507 21,046 15,835 5,211 
Total2,070,771 1,018,306 1,052,465 2,046,063 1,008,475 1,037,588 
Unamortized intangible assets:
Trademarks96,671 — 96,671 96,668 — 96,668 
Total intangible assets, net$2,167,442 $1,018,306 $1,149,136 $2,142,731 $1,008,475 $1,134,256 

For the three months ended March 31, 2019 and 2018, amortization expense was $35,550 and $36,461, respectively, including acquisition-related intangible amortization of $35,155 and $35,889, respectively. 

10. Restructuring Activities

The Company's restructuring charges by segment were as follows:
 Three Months Ended March 31, 
 20192018
Engineered Systems$370 $1,375 
Fluids1,119 2,051 
Refrigeration & Food Equipment1,412 45 
Corporate35 749 
Total$2,936 $4,220 
These amounts are classified in the Condensed Consolidated Statements of Earnings as follows:
Cost of goods and services$1,179 $2,339 
Selling, general and administrative expenses1,757 1,881 
Total$2,936 $4,220 

The restructuring expenses of $2,936 incurred during the three months ended March 31, 2019 were related to two significant rightsizing restructuring programs initiated in 2018 comprised primarily of broad-based selling, general and administrative expense reduction and footprint consolidation initiatives designed to increase operating margin, enhance operations and position the Company for sustained growth and investment.

In 2019, the Company expects to incur charges of approximately $5 million related to the selling, general and administrative expense reduction initiative, $2 million of which was incurred during the three months ended March 31, 2019 and $3 million  of which the Company expects to incur during the remainder of 2019. In 2019 and 2020, the Company expects to incur total restructuring charges of approximately $10 million related to footprint consolidation initiatives, $1 million of which was incurred during the three months ended March 31, 2019 and $9 million of which the Company expects to incur in the second quarter of 2019 through 2020. Additional programs, beyond the scope of the announced programs, may be implemented during 2019 with related restructuring charges.

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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated) (Unaudited)
The $2,936 of restructuring charges incurred during the first quarter of 2019 primarily included the following items:
The Engineered Systems segment recorded $370 of restructuring charges related to programs focused on headcount reduction.  

The Fluids segment recorded $1,119 of restructuring charges principally related to headcount reductions and facility restructuring costs. 

The Refrigeration and Food Equipment segment recorded $1,412 of restructuring expense primarily due to headcount reductions and facility restructuring costs.

Corporate recorded $35 of restructuring charges primarily related to headcount reductions.

The Company’s severance and exit accrual activities were as follows:
 SeveranceExitTotal
Balance at December 31, 2018$24,284 $3,880 $28,164 
Restructuring charges1,941 995 2,936 
Payments(10,776)(424)(11,200)
Other, including foreign currency translation(754)(915)(1,669)
Balance at March 31, 2019$14,695 $3,536 $18,231 


11. Borrowings

Borrowings consisted of the following:
March 31, 2019December 31, 2018 March 31, 2020December 31, 2019
Short-termShort-termShort-term
Current portion of long-term debt and short-term borrowings$1,355 $— 
Short-term borrowingsShort-term borrowings$500,000  $—  
Commercial paperCommercial paper344,900 220,318 Commercial paper—  84,700  
Notes payable and current maturities of long-term debt$346,255 $220,318 
Notes payableNotes payable$500,000  $84,700  

Carrying amount (1)
Carrying amount (1)
PrincipalMarch 31, 2019December 31, 2018PrincipalMarch 31, 2020December 31, 2019
Long-termLong-termLong-term
2.125% 7-year notes due December 1, 2020 (euro-denominated)300,000 338,583 339,657 
4.30% 10-year notes due March 1, 2021$450,000 449,293 449,200 
3.150% 10-year notes due November 15, 20253.150% 10-year notes due November 15, 2025$400,000 395,537 395,368 3.150% 10-year notes due November 15, 2025$400,000  $396,210  $396,042  
1.25% 10-year notes due November 9, 2026 (euro-denominated)1.25% 10-year notes due November 9, 2026 (euro-denominated)600,000 670,021 672,103 1.25% 10-year notes due November 9, 2026 (euro-denominated)600,000  645,487  658,089  
0.750% 8-year notes due November 4, 2027 (euro denominated)0.750% 8-year notes due November 4, 2027 (euro denominated)500,000  537,463  548,008  
6.65% 30-year debentures due June 1, 20286.65% 30-year debentures due June 1, 2028$200,000 199,080 199,054 6.65% 30-year debentures due June 1, 2028$200,000  199,180  199,155  
2.950% 10-year notes due November 4, 20292.950% 10-year notes due November 4, 2029$300,000  296,366  296,270  
5.375% 30-year debentures due October 15, 20355.375% 30-year debentures due October 15, 2035$300,000 295,873 295,811 5.375% 30-year debentures due October 15, 2035$300,000  296,122  296,060  
6.60% 30-year notes due March 15, 20386.60% 30-year notes due March 15, 2038$250,000 247,855 247,827 6.60% 30-year notes due March 15, 2038$250,000  247,968  247,939  
5.375% 30-year notes due March 1, 20415.375% 30-year notes due March 1, 2041$350,000 343,946 343,877 5.375% 30-year notes due March 1, 2041$350,000  344,222  344,153  
Other779 763 
Total long-term debtTotal long-term debt2,940,967 2,943,660 Total long-term debt$2,963,018  $2,985,716  
Less long-term debt current portion— — 
Net long-term debt$2,940,967 $2,943,660 
(1) Carrying amount is net of unamortized debt discount and deferred debt issuance costs. Total unamortized debt discounts were
$15.418.3 million and $15.8$18.9 million as of March 31, 20192020 and December 31, 2018,2019, respectively. Total deferred debt issuance costs were $12.6$15.7 million and $13.0$16.2 million as of March 31, 20192020 and December 31, 2018,2019, respectively.

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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated) (Unaudited)
TheMarch 31, 2020, the Company maintainsmaintained a $1.0 billion five-year unsecured revolving credit facility (the "Credit Agreement") with a syndicate of banks which expires on November 10, 2020.October 4, 2024. The Company uses the Credit Agreement as liquidity back-up for its commercial paper program. On March 16, 2020, the Company borrowed $500 million due May 19, 2020 under the Credit Agreement. Proceeds from the borrowing were used to repay all of the Company's outstanding commercial paper and for general corporate purposes. The Company was in compliance with all covenants in the Credit Agreement and other long-term debt covenants at March 31, 20192020 and had aan interest coverage ratio of 9.7consolidated EBITDA to 1.0. The Company uses the Credit Agreement as liquidity back-up for its commercial paper program and has not drawn down any loans under the Credit Agreement and does not anticipate doing so. The Company generally uses commercial paper borrowings for general corporate purposes, fundingconsolidated net interest expense of acquisitions and repurchases of its common stock.11.2 to 1.

As of March 31, 2019,2020, the Company had approximately $142.4$143.5 million outstanding in letters of credit, surety bonds, and performance and other guarantees which expire on various dates through 2028.2029. These letters of credit and bonds are primarily maintainedissued 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.

12.11. Financial Instruments

Derivatives

The Company is exposed to market risk for changes in foreign currency exchange rates due to the global nature of its operations and certain commodity risks. In order to manage these risks, the Company has hedged portions of its forecasted sales and purchases to occur within the next twelve months that are denominated in non-functional currencies, with currency forward contracts designated as cash flow hedges. At March 31, 20192020 and December 31, 2018,2019, the Company had contracts with U.S. dollar equivalenttotal notional amounts of $210,787$170,672 and $153,873,$179,580, respectively, to exchange foreign currencies, principally theEuro, Pound Sterling, Swedish Krona, Chinese Yuan, Swedish Krona,Canadian Dollar, and Swiss Franc, and Canadian Dollar.Franc. The Company believes it is probable that all forecasted cash flow transactions will occur.

In addition, the Company had outstanding contracts with a total notional amount of $91,749$76,553 and $66,906$79,707 as of March 31, 20192020 and December 31, 2018,2019, respectively, that are not designated as hedging instruments. These instruments are used to reduce the
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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated) (Unaudited)
Company's exposure for operating receivables and payables that are denominated in non-functional currencies. Gains and losses on these contracts are recorded in other (income) expense,income, net in the Condensed Consolidated Statements of Earnings.

The following table sets forth the fair values of derivative instruments held by the Company as of March 31, 20192020 and December 31, 20182019 and the balance sheet lines in which they are recorded:
Fair Value Asset (Liability)Fair Value Asset (Liability)
March 31, 2019December 31, 2018Balance Sheet CaptionMarch 31, 2020December 31, 2019Balance Sheet Caption
Foreign currency forwardForeign currency forward$3,996 $1,874 Prepaid / Other current assetsForeign currency forward$1,826  $2,892  Prepaid / Other current assets
Foreign currency forwardForeign currency forward(637)(1,165)Other accrued expensesForeign currency forward(2,979) (476) Other accrued expenses

For a cash flow hedge, the effective portion of the change in estimated fair value of a hedging instrument is recorded in accumulated other comprehensive loss (earnings)(loss) earnings as a separate component of the Condensed Consolidated StatementStatements of Stockholders' Equity and is reclassified into revenues and cost of goods and services in the Condensed Consolidated Statements of Earnings during the period in which the hedged transaction is recognized. The amount of gains or losses from hedging activity recorded in earnings is not significant, and the amount of unrealized gains and losses from cash flow hedges that are expected to be reclassified to earnings in the next twelve months is not significant; therefore, additional tabular disclosures are not presented. There are no amounts excluded from the assessment of hedge effectiveness and the Company's derivative instruments that are subject to credit risk contingent features were not significant.

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

The Company has designated the €600,000 and €300,000€500,000 of euro-denominated notes issued November 9, 2016 and DecemberNovember 4, 2013,2019, respectively, as hedges of a portion of its net investment in euro-denominated operations. Changes in the value of the euro-denominated debt are recognized in foreign currency translation adjustments within other comprehensive earnings of the Condensed Consolidated Statements of Comprehensive Earnings to offset changes in the value of the net investment in euro-denominated operations.

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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated) (Unaudited)
Amounts recognized in other comprehensive earnings for the gains (losses) on net investment hedges were as follows:
Three Months Ended March 31, 
20192018
Gain (loss) on euro-denominated debt$3,557 $(44,109)
Tax (expense) benefit(747)9,263 
Net gain (loss) on net investment hedges, net of tax$2,810 $(34,846)
Three Months Ended March 31,  
20202019
Gain on euro-denominated debt$23,624  $3,557  
Tax expense(5,139) (747) 
Net gain on net investment hedges, net of tax$18,485  $2,810  

Fair Value Measurements

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

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

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

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


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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated) (Unaudited)
The following table presents the Company’s assets and liabilities measured at fair value on a recurring basis as of March 31, 20192020 and December 31, 2018:2019:
March 31, 2020December 31, 2019
Level 2Level 2Level 2Level 2
Assets:Assets:Assets:
Foreign currency cash flow hedgesForeign currency cash flow hedges$3,996 $1,874 Foreign currency cash flow hedges$1,826  $2,892  
Liabilities:Liabilities:Liabilities:
Foreign currency cash flow hedgesForeign currency cash flow hedges637 1,165 Foreign currency cash flow hedges2,979  476  

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

The estimated fair value of long-term debt, net at March 31, 20192020 and December 31, 20182019, was $3,190,794$3,311,012 and $3,132,330, respectively, compared to the carrying value of $2,940,967 and $2,943,660,$3,322,033, respectively. The estimated fair value of long-term debt is based on quoted market prices for similar instruments and is, therefore, classified as Level 2 within the fair value hierarchy.

The carrying values of cash and cash equivalents, trade receivables, accounts payable and notes payable are reasonable estimates of their fair values as of March 31, 2019,2020 and December 31, 20182019 due to the short-term nature of these instruments.

13.12. Income Taxes

The effective tax rates for the three months ended March 31, 2020 and 2019 were 17.4%and 2018 were 23.6% and 18.5%, respectively.respectively. The increasedecrease in the effective tax rate for the three months ended March 31, 20192020 relative to the prior comparable period was predominantlyis primarily driven by favorable audit settlements.

The three months ended March 31, 2019 includes a discrete tax benefit from stock exercises, partially offset by the exclusion of capital losses on assets held forthe sale of Finder under local tax law. Additionally, the effective tax rates for the three months ended March 31, 2019 and 2018 included discrete tax benefits principally from stock award exercises.  

Dover and its subsidiaries file tax returns in the U.S., including various state and local returns, and in other foreign jurisdictions. We believe adequate provision has been made for all income tax uncertainties. The Company is routinely audited by taxing authorities in its filing jurisdictions, and a number of these audits are currently underway. The Company believes that within the
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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated) (Unaudited)
next twelve months uncertain tax positions may be resolved and statutes of limitations will expire, which could result in a decrease in the gross amount of unrecognized tax benefits of approximately zero0 to $12.2$9.3 million.

14.13. Equity Incentive Program

The Company typically grants equity awards annually at its regularly scheduled first quarter meeting of the Compensation Committee of the Board of Directors. During the three months ended March 31, 2019,2020, the Company issued stock-settled appreciation rights ("SARs") covering 610,979389,603 shares, performance share awards of 34,40249,056 and restricted stock units ("RSUs") of 121,560.78,553.

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

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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated) (Unaudited)
The range of assumptions used in determining the fair value of the SARs awarded during the respective periods were as follows:
SARsSARs
20192018 20202019
Risk-free interest rateRisk-free interest rate2.51 %2.58 %-2.87 %Risk-free interest rate1.44 %2.51 %
Dividend yieldDividend yield2.13 %1.99 %-2.43 %Dividend yield1.65 %2.13 %
Expected life (years)Expected life (years)5.65.6-5.7Expected life (years)5.55.6
VolatilityVolatility22.35 %20.95 %-21.20 %Volatility22.76 %22.35 %
Grant priceGrant price$91.20 $79.75 -$82.09 Grant price$119.86$91.20
Fair value per share at date of grantFair value per share at date of grant$17.55 $14.58 -$15.41 Fair value per share at date of grant$22.54$17.55

The performance share awards granted in 2020 are market condition awards as attainment is based on Dover's performance relative to its peer group (companies listed under the S&P 500 Industrials sector) for the relevant performance period. The performance period and vesting period for these awards is approximately three years. These awards were valued on the date of grant using the Monte Carlo simulation model (a binomial lattice-based valuation model) with the following assumptions, and are generally recognized ratably over the vesting period, and is not subject to change based on future market conditions. The assumptions used in determining the fair value of the performance shares granted in 2020 were as follows:
Performance Shares
2020
Risk-free interest rate1.40 %
Dividend yield1.65 %
Expected life (years)2.9
Volatility23.30 %
Grant price$119.86
Fair value per share at date of grant$165.71

The performance share awards granted in 2019 and 2018 are considered performance condition awards as attainment is based on Dover's performance relative to established internal metrics. The fair value of these awards was determined using Dover's closing stock price on the date of grant. The expected attainment of the internal metrics for these awards is analyzed each reporting period, and the related expense is adjusted based on expected attainment, if that attainment differs from previous estimates. The cumulative effect on current and prior periods of a change in attainment is recognized in selling, general and administrative expenses in the Condensed Consolidated Statements of Earnings in the period of change.  

The fair value and average attainment used in determining stock-based compensation cost for the performance shares issued in 2019 and 2018 is as follows for the three months ended March 31, 2019:2020:
 20192018
Fair value per share at date of grant$91.20 $79.75 $82.09 
Average attainment rate reflected in expense211.68%  267.91%  
Performance Shares
2019
Fair value per share at date of grant$91.20
Average attainment rate reflected in expense209.31% 

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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated) (Unaudited)
The Company also has granted RSUs, and the fair value of these awards was determined using Dover's closing stock price on the date of grant.

Stock-based compensation is reported within selling, general and administrative expenses of continuing operations in the Condensed Consolidated Statements of Earnings. The following table summarizes the Company’s compensation expense relating to all stock-based incentive plans:
Three Months Ended March 31,  Three Months Ended March 31,  
20192018 20202019
Pre-tax stock-based compensation expense (continuing)$8,182 $6,745 
Pre-tax stock-based compensation expensePre-tax stock-based compensation expense$3,252  $8,182  
Tax benefitTax benefit(1,048)(1,496)Tax benefit(349) (1,048) 
Total stock-based compensation expense, net of taxTotal stock-based compensation expense, net of tax$7,134 $5,249 Total stock-based compensation expense, net of tax$2,903  $7,134  

Stock-based compensation expense attributable to Apergy employees for the three months ended March 31, 2018 was $569. These costs are reported within earnings from discontinued operations
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in the Condensed Consolidated Statement of Earnings.thousands except share data and where otherwise indicated) (Unaudited)

15.14. Commitments and Contingent Liabilities

Litigation

Certain of the Company’s subsidiaries are involved in legal proceedings relating to the cleanup of waste disposal sites identified under federal and state statutes that provide for the allocation of such costs among "potentially responsible parties." In each instance, the extent of the Company’s liability appears to be very small in relation to the total projected expenditures and the number of other "potentially responsible parties" involved and is anticipated to be immaterial to the Company. In addition, certain 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 reservesestimated liabilities have been established. At March 31, 20192020 and December 31, 2018,2019, the Company has reserveshad estimated liabilities totaling $31,555$30,233 and $31,797,$30,608, respectively, for environmental and other matters, including private party claims for exposure to hazardous substances that are probable and estimable.

The Company and certain of its subsidiaries are also parties to a number of other legal proceedings incidental to their businesses. These proceedings primarily involve claims by private parties alleging injury arising out of use of the Company’s products, patent infringement, employment matters, and commercial disputes. Management and legal counsel, at least quarterly, review the probable outcome of such proceedings, the costs and expenses reasonably expected to be incurred and currently accrued to-date, and the availability and extent of insurance coverage. The Company has reservesestimated liabilities for legal matters that are probable and estimable, and not otherwise covered by insurance, and at March 31, 20192020 and December 31, 2018,2019, these reservesestimated liabilities were not significant. While it is not possible at this time to predict the outcome of these legal actions, in the opinion of management, based on the aforementioned reviews, the Company is not currently involved in any legal proceedings which, individually or in the aggregate, could have a material effect on its financial position, results of operations, or cash flows.

Warranty Accruals

Estimated warranty program claims are provided for at the time of sale of the Company's products. Amounts provided for are based on historical costs and adjusted for new claims and are included within other accrued expenses and other liabilities in the Condensed Consolidated Balance Sheet. The changes in the carrying amount of product warranties through March 31, 20192020 and 2018,2019, were as follows:
20192018 20202019
Beginning Balance, December 31 of the Prior YearBeginning Balance, December 31 of the Prior Year$50,073 $59,403 Beginning Balance, December 31 of the Prior Year$49,116  $50,073  
Provision for warrantiesProvision for warranties13,955 12,447 Provision for warranties13,360  13,955  
Settlements madeSettlements made(14,993)(14,833)Settlements made(15,526) (14,993) 
Other adjustments, including acquisitions and currency translationOther adjustments, including acquisitions and currency translation(792)848 Other adjustments, including acquisitions and currency translation(1,079) (792) 
Ending Balance, March 31Ending Balance, March 31$48,243 $57,865 Ending Balance, March 31$45,871  $48,243  

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated) (Unaudited)
16.15. Employee Benefit Plans

Retirement Plans

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

The tables below set forth the components of the Company’s net periodic (income) expense relating to retirement benefit plans. The service cost component is recognized within selling, general and administrative expenses and cost of goods and services, depending on the functional area of the underlying employees included in the plans, and the non-operating components of pension costs are included within other income, net in the Condensed Consolidated Statements of Earnings. The amounts recorded to discontinued operations represent the net periodic benefit expense for several non-U.S. qualified and U.S. non-qualified plans that were transferred to Apergy at the spin-off date of May 9, 2018.

Qualified Defined Benefits
 Three Months Ended March 31, 
 U.S. Plan Non-U.S. Plans
 2019201820192018
Service cost$1,754 $2,984 $1,545 $1,577 
Interest cost4,756 5,102 1,241 1,378 
Expected return on plan assets(8,534)(10,211)(1,517)(2,091)
Amortization:
Prior service cost (credit)76 87 (58)(115)
Recognized actuarial loss— 1,931 816 803 
Transition obligation— — — 
Net periodic (income) expense(1,948)(107)2,027 1,553 
Less: Discontinued operations— 677 — 174 
Net periodic (income) expense - Continuing operations$(1,948)$(784)$2,027 $1,379 

Non-Qualified Supplemental Benefits
Three Months Ended March 31, 
20192018
Service cost$486 $695 
Interest cost668 893 
Amortization:
Prior service cost703 963 
Recognized actuarial gain(570)(255)
Net periodic expense$1,287 $2,296 
Less: Discontinued operations— 254 
Net periodic expense - Continuing operations$1,287 $2,042 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated) (Unaudited)
Qualified Defined Benefits
 Three Months Ended March 31,  
 U.S. Plan  Non-U.S. Plans  
 2020201920202019
Service cost$1,706  $1,754  $1,293  $1,545  
Interest cost4,068  4,756  825  1,241  
Expected return on plan assets(7,869) (8,534) (1,677) (1,517) 
Amortization:
Prior service cost (credit)57  76  (119) (58) 
Recognized actuarial loss1,884  —  742  816  
Net periodic (income) expense$(154) $(1,948) $1,064  $2,027  

Non-Qualified Supplemental Benefits
Three Months Ended March 31,  
20202019
Service cost$318  $486  
Interest cost441  668  
Amortization:
   Prior service cost424  703  
   Recognized actuarial gain(464) (570) 
Net periodic expense$719  $1,287  

Post-Retirement Benefit Plans

The Company also maintains post-retirement benefit plans, although these plans are closed to new entrants. The supplemental and post-retirement benefit plans are supported by the general assets of the Company. The following table sets forth the components of the Company’s net periodic expense relating to its post-retirement benefit plans:
Three Months Ended March 31,  Three Months Ended March 31,  
20192018 20202019
Service costService cost$$Service cost$ $ 
Interest costInterest cost78 73 Interest cost60  78  
Amortization:Amortization:Amortization:
Prior service costPrior service cost Prior service cost  
Recognized actuarial gainRecognized actuarial gain(18)(8) Recognized actuarial gain(4) (18) 
Net periodic expenseNet periodic expense$68 $76 Net periodic expense$64  $68  

The total amount amortized out of accumulated other comprehensive earnings into net periodic pension and post-retirement expense totaled $952$2,523 and $3,410$952 for the three months ended March 31, 20192020 and 2018,2019, respectively.

Defined Contribution Retirement Plans

The Company also offers defined contribution retirement plans which cover the majority of its U.S. employees, as well as employees in certain other countries. The Company’s expense relating to defined contribution plans were $12,906$14,048, and $12,870$12,906 for the three months ended March 31, 20192020 and 2018,2019, respectively.


17. Other Comprehensive Earnings

The amounts recognized in other comprehensive earnings were as follows:
Three Months Ended Three Months Ended 
 March 31, 2019March 31, 2018
 Pre-taxTaxNet of taxPre-taxTaxNet of tax
Foreign currency translation adjustments $49,786 $(747)$49,039 $43,045 $9,263 $52,308 
Pension and other post-retirement benefit plans952 (205)747 3,410 (728)2,682 
Changes in fair value of cash flow hedges 2,993 (629)2,364 1,404 (295)1,109 
Total other comprehensive earnings  $53,731 $(1,581)$52,150 $47,859 $8,240 $56,099 

Total comprehensive earnings were as follows:
Three Months Ended March 31,
20192018
Net earnings$105,705 $131,435 
Other comprehensive earnings 52,150 56,099 
Comprehensive earnings$157,855 $187,534 

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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated) (Unaudited)
16. Other Comprehensive Earnings

The amounts recognized in other comprehensive (loss) earnings were as follows:
Three Months Ended  Three Months Ended  
 March 31, 2020March 31, 2019
 Pre-taxTaxNet of taxPre-taxTaxNet of tax
Foreign currency translation adjustments  $(88,415) $(5,139) $(93,554) $49,786  $(747) $49,039  
Pension and other post-retirement benefit plans  2,523  (568) 1,955  952  (205) 747  
Changes in fair value of cash flow hedges  (5,074) 1,121  (3,953) 2,993  (629) 2,364  
Total other comprehensive (loss) earnings $(90,966) $(4,586) $(95,552) $53,731  $(1,581) $52,150  

Total comprehensive earnings were as follows:
Three Months Ended March 31,
20202019
Net earnings$176,279  $105,705  
Other comprehensive (loss) earnings (95,552) 52,150  
Comprehensive earnings$80,727  $157,855  

Amounts reclassified from accumulated other comprehensive loss to earnings during the three months ended March 31, 20192020 and 20182019 were as follows:
Three Months Ended March 31,Three Months Ended March 31,
2019201820202019
Foreign currency translation:Foreign currency translation:Foreign currency translation:
Reclassification of foreign currency translation losses to earnings for assets held for saleReclassification of foreign currency translation losses to earnings for assets held for sale$25,339 $— Reclassification of foreign currency translation losses to earnings for assets held for sale$—  $25,339  
Tax benefitTax benefit— — Tax benefit—  —  
Net of taxNet of tax$25,339 $— Net of tax$—  $25,339  
Pension and other postretirement benefit plans:Pension and other postretirement benefit plans:Pension and other postretirement benefit plans:
Amortization of actuarial lossesAmortization of actuarial losses$228 $2,471 Amortization of actuarial losses$2,158  $228  
Amortization of prior service costsAmortization of prior service costs724 939 Amortization of prior service costs365  724  
Total before taxTotal before tax952 3,410 Total before tax2,523  952  
Tax benefitTax benefit(205)(728)Tax benefit(568) (205) 
Net of taxNet of tax$747 $2,682 Net of tax$1,955  $747  
Cash flow hedges:Cash flow hedges:Cash flow hedges:
Net gains reclassified into earnings $(291)$(320)
Tax provision 61 67 
Net losses (gains) reclassified into earningsNet losses (gains) reclassified into earnings $1,420  $(291) 
Tax (benefit) provisionTax (benefit) provision (299) 61  
Net of taxNet of tax$(230)$(253)Net of tax$1,121  $(230) 

The reclassification of foreign currency translation losses to earnings during the three months ended March 31, 2019 relates to the Finder assets and liabilities held for sale.sale of Finder. See Note 54Held for Sale, Disposed and Discontinued Operations for further details.

The Company recognizes the amortization of net actuarial gains and losses and prior service costs in other income, net within the Condensed Consolidated Statements of Earnings.

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


18. Segment Information

The Company categorizes its operating companies into three distinct reportable segments. Segment financial information and a reconciliation of segment results to consolidated results is as follows:

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

Fluids segment, serving the Fueling & Transport, Pumps and Process Solutions end markets, is focused on the safe handling of critical fluids, and providing critical components to the retail fueling, chemical, hygienic, oil and gas, power generation and industrial markets.

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

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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated) (Unaudited)
17. Segment Information

The Company categorizes its operating companies into 5 reportable segments as follows:

Engineered Products segment is a provider of a wide range of products, software and services that have broad customer applications across a number of markets, including aftermarket vehicle service, solid waste handling, industrial automation, aerospace and defense, industrial winch and hoist, and fluid dispensing.

Fueling Solutions segment is focused on providing components, equipment and software and service solutions enabling safe transport of fuels and other hazardous fluids along the supply chain, as well as the safe and efficient operation of retail fueling and vehicle wash establishments.

Imaging & Identification segment supplies precision marking and coding, product traceability and digital textile printing equipment, as well as related consumables, software and services.

Pumps & Process Solutions segment manufactures specialty pumps, fluid handling components, plastics and polymer processing equipment, and highly engineered components for rotating and reciprocating machines.

Refrigeration & Food Equipment segment is a provider of innovative and energy-efficient equipment and systems that serve the commercial refrigeration, heating and cooling and food equipment markets.

Segment financial information and a reconciliation of segment results to consolidated results iswas as follows:
 Three Months Ended March 31, 
 20192018
Revenue: 
Engineered Systems $687,191 $671,626 
Fluids 703,224 628,098 
Refrigeration & Food Equipment 334,643 338,235 
Intra-segment eliminations(301)(288)
Total consolidated revenue $1,724,757 $1,637,671 
Earnings from continuing operations: 
Segment earnings: (1)
Engineered Systems $123,074 $102,066 
Fluids (2)
52,221 67,348 
Refrigeration & Food Equipment 24,807 29,182 
Total segment earnings 200,102 198,596 
Corporate expense / other (3)
30,866 30,763 
Interest expense 31,808 35,640 
Interest income(890)(2,058)
Earnings before provision for income taxes and discontinued operations 138,318 134,251 
Provision for income taxes 32,613 24,841 
Earnings from continuing operations $105,705 $109,410 
 Three Months Ended March 31,  
 20202019
Revenue:  
Engineered Products  $408,160  $418,851  
Fueling Solutions  359,982  373,050  
Imaging & Identification  256,765  268,354  
Pumps & Process Solutions  319,536  330,219  
Refrigeration & Food Equipment  311,913  334,643  
Intra-segment eliminations  (417) (360) 
Total consolidated revenue  $1,655,939  $1,724,757  
Net earnings:  
Segment earnings (EBIT): (1)
Engineered Products  $69,094  $67,119  
Fueling Solutions53,498  37,230  
Imaging & Identification  51,482  55,955  
Pumps & Process Solutions (2)
66,079  14,991  
Refrigeration & Food Equipment(3)
23,529  24,807  
Total segment earnings (EBIT) 263,682  200,102  
Corporate expense / other (4)
24,097  30,866  
Interest expense  27,268  31,808  
Interest income(1,183) (890) 
Earnings before provision for income taxes  213,500  138,318  
Provision for income taxes  37,221  32,613  
Net earnings  $176,279  $105,705  
(1)(1) Segment earnings (EBIT) includes non-operating income and expense directly attributable to the segments. Non-operating income and expense includes gain on sale of a business and other income, net.
(2) The three months ended March 31, 2019 includes a $46,946 loss on assets held for sale for Finder. Excluding this loss, Fluids segment earnings was $99,167.
((3) The three months ended March 31, 2020 includes a $6,551 gain on the sale of AMS Chino.
3)(4) 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, shared business services overhead costs, deal related expenses and various administrative expenses relating to the corporate headquarters.

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19.DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated) (Unaudited)
The following table presents revenue disaggregated by geography based on the location of the Company's customer:
Three Months Ended March 31,
Revenue by geography20202019
United States$956,640  $919,892  
Europe361,166  402,645  
Asia154,275  196,350  
Other Americas129,049  138,118  
Other54,809  67,752  
Total$1,655,939  $1,724,757  
18. Share Repurchases

Under the January 2015 authorization which expired on January 9, 2018, the Company repurchased 440,608 shares of common stock during the three months ended March 31, 2018 at a total cost of $44,977, or $102.08 per share. There were 5,271,168 shares available for repurchase under this authorization upon expiration.

In February 2018, the Company's Board of Directors approved a new standing share repurchase authorization, whereby the Company may repurchase up to 20 million shares of its common stock through December 31, 2020. This share repurchase authorization replaced the January 2015 share repurchase authorization.

During the three months ended March 31, 2020, under the February 2018 authorization, the Company repurchased 548,659 shares of common stock at a total cost of $52,916, or $96.45 per share. There were no repurchases under the February 2018 authorization during the three months ended March 31, 2019 and 2018.  2019. The Company has suspended further repurchases as a result of business uncertainty related to COVID-19.

As of March 31, 2019, 9,703,6662020, 7,811,385 shares remain authorized for repurchase under the February 2018 share repurchase authorization.

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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated) (Unaudited)
20.19. Earnings per Share

The following table sets forth a reconciliation of the information used in computing basic and diluted earnings per share:
Three Months Ended March 31,  Three Months Ended March 31,  
20192018 20202019
Earnings from continuing operations$105,705 $109,410 
Earnings from discontinued operations, net— 22,025 
Net earningsNet earnings$105,705 $131,435 Net earnings$176,279  $105,705  
Basic earnings per common share:Basic earnings per common share:Basic earnings per common share:
Earnings from continuing operations$0.73 $0.71 
Earnings from discontinued operations, net$— $0.14 
Net earningsNet earnings$0.73 $0.85 Net earnings$1.22  $0.73  
Weighted average shares outstandingWeighted average shares outstanding145,087,000 154,520,000 Weighted average shares outstanding144,259,000  145,087,000  
Diluted earnings per common share:Diluted earnings per common share:Diluted earnings per common share:
Earnings from continuing operations$0.72 $0.70 
Earnings from discontinued operations, net$— $0.14 
Net earningsNet earnings$0.72 $0.84 Net earnings$1.21  $0.72  
Weighted average shares outstandingWeighted average shares outstanding146,911,000 157,090,000 Weighted average shares outstanding145,782,000  146,911,000  

The following table is a reconciliation of the share amounts used in computing earnings per share:
Three Months Ended March 31,  Three Months Ended March 31,  
20192018 20202019
Weighted average shares outstanding - BasicWeighted average shares outstanding - Basic145,087,000 154,520,000 Weighted average shares outstanding - Basic144,259,000  145,087,000  
Dilutive effect of assumed exercise of SARs and vesting of performance shares and RSUsDilutive effect of assumed exercise of SARs and vesting of performance shares and RSUs1,824,000 2,570,000 Dilutive effect of assumed exercise of SARs and vesting of performance shares and RSUs1,523,000  1,824,000  
Weighted average shares outstanding - DilutedWeighted average shares outstanding - Diluted146,911,000 157,090,000 Weighted average shares outstanding - Diluted145,782,000  146,911,000  

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

The weighted average number of anti-dilutive potential common shares excluded from the calculation above were approximately 42,00065,000 and 13,00042,000 for the three months ended March 31, 2020 and 2019, and 2018, respectively.


21.
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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated) (Unaudited)
20. Recent Accounting Pronouncements

Recently IssuedAdopted Accounting Standards

The following standards, issued by the Financial Accounting Standards Board ("FASB"), will, or are expected to, result in a change in practice and/or have a financial impact to the Company’s Consolidated Financial Statements:

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on certain types of financial instruments, including trade receivables. This may resultresulted in the earlier recognition of allowances for losses. In addition, the FASB issued ASU 2019-04, Codification Improvements to Topic 326 which provides clarity on certain aspects of the amendments in ASU 2016-13. The Company adopted this guidance is effective for interim and annual periods for the Companyprospectively on January 1, 2020. Upon adoption, the Company recorded a noncash cumulative effect adjustment to retained earnings of $2.1 million, net of $0.6 million of income taxes, on the opening consolidated balance sheet as of January 1, 2020. See Note 7 — Credit Losses for further details.
21. Subsequent Events

Subsequent to March 31, 2020, with early adoption permitted. Management has not yet completed its assessmentthe Company reduced production at our operations in response to COVID-19 related government mandates, reduced demand conditions and other operational drivers in several of our businesses. This resulted in temporary, partial closures of several facilities in the U.S. and Europe across our business. Meanwhile, certain facilities that were closed as of March 31, 2020 have re-opened. The extent of the impact of the new standardCOVID-19 outbreak on our operational and financial performance will depend on certain developments, including the Company’s Consolidated Financial Statements. Currently, the Company believes that the most notable impact of this ASU may relate to its processes around the assessmentduration and spread of the adequacy ofoutbreak, its allowance for doubtful accountsimpact on trade accounts receivableour customers and suppliers and the recognitionrange of credit losses.governmental and community reactions to the pandemic, which are uncertain and cannot be fully predicted at this time.



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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated) (Unaudited)
Recently Adopted Accounting Standards

In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. Theamendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments in this update. The Company early adopted this guidance prospectively beginning on January 1, 2019. The adoption of this ASU did not have a material impact on the Company's Consolidated Financial Statements.

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. This ASU provides new guidance about income statement classification and eliminates the requirement to separately measure and report hedge ineffectiveness. The entire change in fair value for qualifying hedge instruments included in the effectiveness will be recorded in Other Comprehensive Income ("OCI") and amounts deferred in OCI will be reclassified to earnings in the same income statement line item in which the earnings effect of the hedged item is reported. The Company adopted this guidance on January 1, 2019. The adoption of this ASU did not have a material impact on the Company's Consolidated Financial Statements.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which amends existing guidance to require lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by long-term leases and to disclose additional quantitative and qualitative information about leasing arrangements. This ASU also provides clarifications surrounding the presentation of the effects of leases in the income statement and statement of cash flows. The Company adopted this guidance on January 1, 2019.

The Company commenced its assessment of ASU 2016-02 in the second half of 2017 and developed a project plan to guide the implementation. The Company completed this project plan, in which it analyzed the ASU's impact on its leases, surveyed the Company's businesses, assessed the portfolio of leases, compiled a central repository of active leases, and established a future lease process to keep the lease accounting portfolio up to date. The Company evaluated the key policy elections and considerations under the standard and completed the internal policy documentation and training to address the new standard requirements. The Company also implemented a new lease accounting software solution to support the new reporting requirements. The Company adopted this new guidance using the updated modified transition method allowed per ASU 2018-11. Upon adoption on January 1, 2019, total assets and liabilities increased due to the recording of right-of-use assets and lease liabilities amounting to approximately $163 million.  See Note 8 — Leases for further details.

22. Subsequent Events

On April 2, 2019 Dover completed the sale of Finder to Aturia, which generated total cash proceeds of $24,218, of which $2,245 was received on March 29, 2019. Any final working capital adjustments, which are not expected to be significant, will be recorded in the second quarter of 2019. The assets and liabilities of Finder were classified as held for sale as of March 31, 2019. See Note 5 — Held for Sale, Disposed and Discontinued Operations for further details.



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

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

Throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A"), we refer to measures used by management to evaluate performance as well as liquidity, including a number of financial measures that are not defined under accounting principles generally accepted in the United States of America ("GAAP"). We believe these measures provide investors with important information that is useful in understanding our business results and trends. Explanations within this MD&A provide more details on the use and derivation of these measures.

On March 11, 2020, the World Health Organization declared the outbreak of the novel coronavirus ("COVID-19") a pandemic. The COVID-19 outbreak and associated counter-acting measures implemented by governments around the world, as well as increased business uncertainty, are having an adverse impact on our financial results and are discussed in more detail below.

OVERVIEW

Dover is a diversified global manufacturer and solutions provider delivering innovative equipment and components, specialty systems, consumable supplies, aftermarket parts, software and digital solutions, and support services through threefive operating segments: Engineered Systems, Fluids,Products, Fueling Solutions, Imaging & Identification, Pumps & Process Solutions, and Refrigeration & Food Equipment. The Company's entrepreneurial business model encourages, promotes and fosters deep customer engagement and collaboration, which has led to Dover's well-established and valued reputation for providing superior customer service and industry-leading product innovation. Unless the context indicates otherwise, references herein to "Dover," "the Company," and words such as "we," "us," or "our" include Dover Corporation and its consolidated subsidiaries.

Dover's threefive operating segments are as follows:

Our Engineered SystemsProducts segment is compriseda provider of two platforms, Printing & Identificationa wide range of products, software and Industrials, and is focused on the design, manufacture and serviceservices that have broad customer applications across a number of critical equipment and components serving the fast-moving consumer goods, digital textile printing,markets, including aftermarket vehicle service, environmental solutionssolid waste handling, industrial automation, aerospace and defense, industrial end markets.winch and hoist, and fluid dispensing.

Our FluidsFueling Solutions segment serving the Fueling & Transport, Pumps and Process Solutions end markets, is focused on providing components, equipment and software and service solutions enabling safe transport of fuels and other hazardous fluids along the supply chain, as well as the safe handlingand efficient operation of critical fluids, and providing critical components to the retail fueling chemical, hygienic, oil and gas, power generationvehicle wash establishments.

Our Imaging & Identification segment supplies precision marking and industrial markets.coding, product traceability and digital textile printing equipment, as well as related consumables, software and services.

Our Pumps & Process Solutions segment manufactures specialty pumps, fluid handling components, plastics and polymer processing equipment, and highly engineered components for rotating and reciprocating machines.

Our Refrigeration & Food Equipment segment is a provider of innovative and energy efficientenergy-efficient equipment and systems servingthat serve the commercial refrigeration, heating and cooling and food equipment end markets.

In the first quarter of 2019,2020, revenue was $1.7 billion, which increased $87.1decreased $68.8 million, or 4.0%, as compared to the first quarter of 2018.2019. Results were driven by an organic revenue decline of 2.7%, an unfavorable impact from foreign currency translation of 1.4% and a 0.7% impact due to dispositions. This growth of 8.3% andwas partially offset by acquisition-related revenue growth of 0.5%0.8%. This

The 2.7% organic revenue decline was broad based across our segments, compared to strong sales performance in the comparable first quarter of 2019 of 5.3% revenue growth, in which organic revenue growth was 8.3%, and the current quarter decline was also due to the slowing demand environment in several of our end-markets driven by the outbreak of COVID-19. The Imaging & Identification and Refrigeration & Food Equipment segments both experienced organic revenue decline of 4.3%, reflecting primarily weaker demand for textile digital printing equipment and for commercial foodservice and heat exchange equipment, respectively. Fueling Solutions segment organic revenue declined 2.6% which was driven by weaker demand for transportation, vehicle wash and underground retail fueling equipment. Engineered Products segment organic revenue declined 1.9% as a result of a slowing of demand in industrial automation and winch markets, as well as vehicle aftermarket, partially offset by strong performance in our waste handling business. Pumps & Process Solutions segment organic
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revenue declined 1.1% as a result of reduced demand for pumps and precision components, including from the oil & gas industry.

From a geographic perspective, in the first quarter, organic revenue for the U.S., our largest market, grew 4%, while organic revenue in Europe and Asia declined 7% and 19% respectively, year over year. U.S. organic growth was driven primarily by strength in our Fueling Solutions and Engineered Products segments, partially offset by a slight decline in our Refrigeration & Food Equipment segment. The decline in Europe was broad-based across four segments, except Pumps and Process Solutions, as the region faced significant operational and demand headwinds from the developing pandemic. The decline in Asia was driven mainly by a sharp decline in China and weakness in India across all segments as a result of the outbreak of COVID-19.

Bookings were $1.8 billion for the three months ended March 31, 2020, flat compared to the prior year period. Included in this result was organic growth of 0.9%, acquisition-related bookings growth of 1.0%, offset by an unfavorable impact from foreign currency translation of 3.4%1.2% and decline of 0.1%a 0.7% impact due to previously disposed businesses in 2018.

The 8.3% organic revenuedispositions. Organic bookings growth was led by 15.1% organicprimarily due to robust activity in our Fueling Solutions segment as well as growth in our FluidsPumps & Process Solutions segment, which was drivenoffset by strong activity in international retail fueling, industrial pumps, biopharma and other industrial markets. Engineered Systems segment organic revenue increased 5.8%, reflecting broad-based growth across the segment with particular strength in our Printing & Identification platform, environmental solutions, vehicle service and industrial winch businesses. Organic revenue increased 0.7%a decline in our Refrigeration & Food Equipment segment driven by increased refrigeration remodel activity and increased demand for heat exchanger products, partially offset by project timing in our can-shaping business. 
From a geographic perspective, revenue for the U.S., our largest market, and Europe grew 7% and 14% organically year over year, respectively. U.S. organic growth was driven by strength across our Fluids and Engineered Systems segments while Europe growthProducts segments. Backlog as of March 31, 2020 was broad-based across all three segments.$1.6 billion, an increase from $1.4 billion from the prior year. See definition of bookings and backlog within "Segment Results of Operations".

During the three months ended March 31, 2019,2020, we acquired Belanger,Sys-Tech Solutions, Inc. ("Belanger"Systech"), a leading full-line car wash equipment manufacturer and So. Cal. Soft-Pak, Incorporated ("Soft-Pak") Software Solutions for $175.1an aggregate price of $208.4 million, net of cash acquired. Systech is a leading provider of software and solutions for product traceability, regulatory compliance and brand protection and will strengthen the portfolio of solutions offered by our Imaging & Identification segment to customers in the pharmaceutical and consumer products industries. Soft-Pak is a leading specialized provider of integrated back office, route management and customer relationship management software solutions to the waste and recycling fleet industry and will further strengthen the digital offerings of our waste handling business in our Engineered Products segment.

During the three months ended March 31, 2020, we divested the Chino, California branch of The acquisitionAMS Group ("AMS Chino"), a regional aftermarket refrigeration services and solutions provider based in Southern California. The AMS Group was a wholly owned subsidiary, which was part of Belanger strengthens our positionRefrigeration & Food Equipment segment. We sold the business and recorded a pre-tax gain on sale of $6.6 million.

During the three months ended March 31, 2020, we continued to execute on our previously announced rightsizing programs to further optimize operations. Rightsizing charges included restructuring costs of $7.3 million and other costs of $0.5 million for the three months ended March 31, 2020. Restructuring expense was comprised primarily of broad-based selling, general and administrative expense reduction initiatives and broad-based operational efficiency initiatives focusing on footprint consolidation, operational optimization and IT centralization. These restructuring charges were broad-based across all segments as well as corporate. We expect to incur $6 million of restructuring charges during the remainder of 2020 for these initiatives.

We also purchased 0.5 million shares of our common stock for a total cost of $52.9 million, or $96.45 per share, during the three months ended March 31, 2020. We have suspended repurchases as a result of business uncertainty related to COVID-19.

The recent outbreak of COVID-19 has resulted and will continue to result in significant economic disruption and has and will adversely affect our business, including our supply chain and operations. We also have experienced and expect to continue to experience reductions in customer demand in several of our end-markets. We expect that the social distancing measures, the reduced operational status of our suppliers and reductions in production at certain facilities will more meaningfully impact our operations in the second quarter, and general business uncertainty will continue to negatively impact demand in several of our end-markets in the second quarter, and possibly beyond. During the first quarter, the impact of COVID-19 on Dover's businesses was most pronounced in China and Italy, where we experienced interruption of our operations due to regulatory requirements as well as weakening demand and supply chain difficulties.

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Our foremost focus has been on the health and safety of our employees, business partners and customers. In response to the outbreak, we established a central global response team, initiated enhanced health and safety measures across our facilities and enacted information technology ("IT") security protocols in response to new “work-from-home” patterns for office staff. More specifically, we have modified practices at our manufacturing locations and offices to adhere to guidance from the U.S. Centers for Disease Control and Prevention and local health and governmental authorities with respect to social distancing, physical separation, personal protective equipment and sanitization, and have restricted the number of employees permitted in common areas at any given time. Further, we have enhanced our operational excellence model by memorializing our approach to sanitized manufacturing which includes procedures for dealing with confirmed COVID-19 cases, compliance auditing, and manufacturing line design. We are approaching our response to this outbreak with a recognition that our operating companies provide essential and important products and services on which our customers and broader society rely upon daily to support crucial functions. For example:

Our Engineered Products segment includes our waste handling business that provides a broad range of products and services to support municipal waste collection.

Our Fueling Solutions segment supports the ongoing operation of gas stations and broader fuel supply chain with equipment, components and services.

Our Imaging & Identification segment supplies equipment, consumables and services that enable the food and personal goods industries to comply with product marking regulations and provide product identification and traceability for consumers (such as product expiration dates).

Our Pumps & Process Solutions segment include businesses in the biopharma and medical markets that produce components that are used in the research and production of pharmaceuticals. Other businesses provide products for diluting and dispensing chemicals specifically used for facility cleaning and sanitizing, equipment and components that support the safe operation of paper production plants, chemical facilities, fuel refineries and many other industries and equipment that supports the recycling of plastic waste.

Our Refrigeration & Food Equipment segment supports food stores with refrigeration equipment, parts and services.

Accordingly, we consider our companies to be essential suppliers to our customers and business partners and therefore most of our U.S. and global facilities have remained substantially operational during the outbreak while implementing enhanced safety protocols designed to protect the well-being of our employees. Operations at the facilities in countries with broad-based mandated shutdowns (China, Italy, India, Malaysia) were suspended for a portion of the first quarter.

As of March 31, 2020, approximately 78% of our major global facilities (by count) were fully operational, approximately 9% were partially operational, and the remaining 13% were fully closed. From a geographic perspective, U.S. production continues for most of our businesses. However, in March, in the U.S., we voluntarily closed a plant serving the automotive industry as the customer base has largely temporarily ceased operation, and we closed our plants serving the vehicle wash industry due to local government mandates. In Italy, while operations have been suspended since mid-to-late March due to government mandates, we anticipate resuming at least some limited operations in the second quarter. In China, all operations were halted in late January and early February, but were back to fully operational by early March and we expect to see improvement in the currently lagging demand environment. To a lesser extent (due to a smaller scale presence), we have also been impacted by government-mandated shutdowns in India and Malaysia.

Subsequent to March 31, 2020, we have continued to reduce production at operations in several of our businesses in response to government mandates, reduced demand conditions and other operational drivers. This resulted in temporary, partial closures of several facilities in the U.S. and Europe (across the Fueling Solutions, Engineered Products and Refrigeration & Food Equipment segments). As of April 17, 2020, 7% of our major global facilities (by count) were closed completely and 11% were partially closed or operated with a reduced capacity. Meanwhile, certain facilities that were closed as of March 31, 2020 have re-opened. We anticipate that we will experience additional temporary shut-downs in Europe and in the U.S. in the second quarter.

Beginning in early-to-mid-March 2020, the commercial paper market began to experience very high levels of volatility as a result of COVID 19-related uncertainties. As a result, on March 16, 2020, in the spirit of prudent liquidity management, we borrowed $500 million due May 19, 2020 under our $1 billion revolving credit facility, even though we have no long-term debt maturities until 2025. Proceeds from the borrowing were used to repay all of our outstanding commercial paper and for general corporate purposes. See "Financial Condition - Capitalization" for further discussion.

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While we are encouraged that approximately 30% of our overall revenue represents recurring demand, which includes parts, consumables, services and software, we expect a weak demand environment in the second quarter and likely into the third quarter in several of our end-markets, such as the commercial refrigeration, vehicle service and apparel and textile printing markets. We are taking steps across the portfolio and at the corporate center to reduce our controllable costs, including short-term actions to reduce labor costs, including furloughs, eliminating non-essential travel and reducing discretionary spend. Additionally, we are proactively managing our working capital and have significantly reduced our capital spending plan for the year, without deferring strategic ongoing initiatives. We also continue to monitor government economic stabilization efforts and expect to participate in certain legislative provisions, such as deferring estimated tax payments to later in the year or the following two years and utilizing job retention subsidies.

The extent of the impact of the COVID-19 outbreak on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, its impact on our customers and suppliers and the range of governmental and community reactions to the pandemic, which are uncertain and cannot be fully predicted at this time. We will continue to proactively respond to the situation and may take further actions that alter our business operations as may be required by governmental authorities, or that we determine are in the best interests of our employees and customers.











































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CONSOLIDATED RESULTS OF OPERATIONS

 Three Months Ended March 31,  
(dollars in thousands, except per share data)20202019% Change
Revenue$1,655,939  $1,724,757  (4.0)%
Cost of goods and services1,043,696  1,101,215  (5.2)%
Gross profit612,243  623,542  (1.8)%
Gross profit margin37.0 %36.2 %0.8  
Selling, general and administrative expenses386,941  408,466  (5.3)%
Selling, general and administrative expenses as a percent of revenue23.4 %23.7 %(0.3) 
Loss on assets held for sale—  46,946  nm*  
Operating earnings225,302  168,130  
Interest expense27,268  31,808  (14.3)%
Interest income(1,183) (890) 32.9 %
Gain on sale of a business(6,551) —  nm*  
Other income, net(7,732) (1,106) nm*  
Earnings before provision for income taxes213,500  138,318  54.4 %
Provision for income taxes37,221  32,613  14.1 %
Effective tax rate17.4 %23.6 %(6.2) 
Net earnings$176,279  $105,705  66.8 %
Net earnings per common share - diluted$1.21  $0.72  68.1 %
* nm - not meaningful  

Revenue

In the first quarter of 2020, revenue decreased $68.8 million, or 4.0%, from the comparable period. Results included an organic revenue decline of 2.7% across all our segments primarily due to the adverse impact of the recent outbreak of COVID-19. Acquisition-related revenue growth was 0.8% led by our Imaging & Identification and Pumps & Process Solutions segments, partially offset by an unfavorable impact from foreign currency translation of 1.4% and a 0.7% impact from dispositions within the FuelingPumps & Transport end marketProcess Solutions and Refrigeration & Food Equipment segments. Customer pricing favorably impacted revenue by approximately 0.7% in the first quarter of 2020.

Gross Profit

Gross profit for the Fluids segment.three months ended March 31, 2020 decreased $11.3 million, or 1.8%, from the comparable period, primarily due to an organic revenue decline of 2.7%, increased material and inflation costs due to the impact of COVID-19, partially offset by pricing initiatives, benefits from productivity initiatives and rightsizing actions and cost containment actions. Gross profit margin increased 80 basis points to 37.0% for the three months ended March 31, 2020 from the comparable period primarily due to benefits from productivity initiatives and rightsizing costs and cost containment actions. We are managing the operating plants' production aggressively to match demand.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended March 31, 2020 decreased $21.5 million, or 5.3%, from the comparable period, primarily due to a reduction in discretionary and planned spend and benefits from rightsizing actions. As a percentage of revenue, selling, general and administrative expenses decreased 30 basis points to 23.4%, reflecting the decrease in expenses. We are taking proactive cost reduction efforts as we monitor the impact of COVID-19. We expect the second quarter to require continued and more significant actions to reduce costs to offset revenue decline and under-absorption of production fixed overhead, such as further reducing discretionary spend and headcount to match demand.

Research and development costs, including qualifying engineering costs, are expensed when incurred and amounted to $35.5 million and $34.6 million for the three months ended March 31, 2020 and 2019, respectively. These costs as a percent of revenue were 2.1% and 2.0% for the three months ended March 31, 2020 and 2019, respectively.
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Loss on assets held for sale

On March 29, 2019, we entered into a definitive agreement to sell Finder Pompe S.r.lS.r.l. ("Finder"), a wholly owned subsidiary, to Gruppo Aturia S.p.A for total consideration of approximately $23.6 million net of estimated selling costs. As of March 31, 2019, Finder met the criteria to be classified as held for sale. We classified Finder's assets and liabilities separately on the
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consolidated balance sheet as of March 31, 2019 and recorded a loss of $46.9 million on the net assets held for sale. Subsequently, on April 2, 2019, we completed the sale of Finder.

During the three months ended March 31, 2019, we continued to execute on our previously announced rightsizing initiatives to further optimize operations. Rightsizing programs in 2019 include: 1) broad-based selling, general and administrative expense reduction initiatives and 2) footprint consolidation actions. These actions resulted in approximately $4.0 million of rightsizing and other related costs across our segments, inclusive of restructuring costs. These charges relate to employee reductions and facility restructuring costs. We incurred rightsizing and other related costs of $0.5 million in Engineered Systems, $1.2 million in Fluids and $2.3 million in Refrigeration & Food Equipment. These charges were recorded in cost of goods and services and selling, general and administrative expenses in the Condensed Consolidated Statement of Earnings. In 2019 and 2020, we expect to incur total rightsizing and other related charges, inclusive of restructuring costs, of approximately $20 million related to the completion of our selling, general and administrative expense reduction actions and continuation of our footprint consolidation initiatives. We incurred $4.0 million of charges during the three months ended March 31, 2019 and expect to incur approximately $11 million during the remainder of 2019 and approximately $5 million in 2020.


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CONSOLIDATED RESULTS OF OPERATIONS

 Three Months Ended March 31, 
(dollars in thousands, except per share data)20192018% Change
Revenue$1,724,757 $1,637,671 5.3 %
Cost of goods and services1,101,215 1,034,842 6.4 %
Gross profit623,542 602,829 3.4 %
Gross profit margin36.2 %36.8 %(0.6)%
Selling, general and administrative expenses408,466 435,026 (6.1)%
Selling, general and administrative expenses as a percent of revenue23.7 %26.6 %(2.9)%
Loss on assets held for sale46,946 — nm* 
Interest expense31,808 35,640 (10.8)%
Interest income(890)(2,058)(56.8)%
Other income, net(1,106)(30)nm* 
Earnings before provision for income taxes and discontinued operations138,318 134,251 
Provision for income taxes32,613 24,841 31.3 %
Effective tax rate23.6 %18.5 %5.1 %
Earnings from continuing operations105,705 109,410 (3.4)%
Earnings from discontinued operations, net— 22,025 nm*  
Net earnings105,705 131,435 (19.6)%
Earnings from continuing operations per common share - diluted$0.72 $0.70 2.9 %
Net earnings per common share - diluted$0.72 $0.84 (14.3)%
* nm - not meaningful  

Revenue

In the first quarter of 2019, revenue increased $87.1 million, or 5.3%, from the comparable period. Results included organic revenue growth of 8.3% led by our Fluids and Engineered Systems segments and acquisition-related revenue growth of 0.5% from our Fluids segment. This growth was partially offset by an unfavorable impact from foreign currency translation of 3.4% and a revenue decline of 0.1% due to businesses previously disposed of in 2018 within the Fluids segment. Customer pricing favorably impacted revenue by approximately 1.1% in the first quarter of 2019.

Gross Profit

Gross profit for the three months ended March 31, 2019 increased $20.7 million, or 3.4%, from the comparable period, primarily due to organic revenue growth of 8.3%, benefits from productivity initiatives and the benefits of rightsizing and other restructuring actions taken in 2018, partially offset by increased material costs and U.S. Sections 232 and 301 tariff exposure as well as unfavorable business and regional mix. Gross profit margin decreased by 60 basis points for the three months ended March 31, 2019 from the comparable period.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended March 31, 2019 decreased $26.6 million, or 6.1%, from the comparable period, primarily due to $28 million of benefits from rightsizing actions started in 2018. As a percentage of revenue, selling, general and administrative expenses decreased 290 basis points to 23.7%, reflecting the leverage of costs on a higher revenue base and the decrease in expenses.

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Research and development costs, including qualifying engineering costs, are expensed when incurred and amounted to $34.6 million and $35.8 million, for the three months ended March 31, 2019 and 2018, respectively. These costs as a percent of revenue were 2.0% and 2.2% for the three months ended March 31, 2019 and 2018, respectively.

Loss on assets held for sale

On March 29, 2019, the Company entered into a definitive agreement to sell Finder for total consideration of approximately $23.6 million net of estimated selling costs. As of March 31, 2019, Finder met the criteria to be classified as held for sale and based on the total consideration from the sale, net of selling costs, the Companywe recorded a loss on the assets held for sale of $46.9 million. The loss was comprised of an impairment on assets held for sale of $21.6 million and foreign currency translation losses reclassified from accumulated other comprehensive losses to current earnings of $25.3 million. We subsequently sold Finder on April 2, 2019, which generated total cash proceeds of $24.2 million.

Gain on sale of a business

On March 6, 2020, the Company sold AMS Chino within the Refrigeration & Food Equipment segment, for net cash proceeds of $16.9 million, of which gain on sale of $6.6 million was recognized. The disposal did not represent a strategic shift in operations and, therefore, did not qualify for presentation as discontinued operations.

Other income, net

Other income, net for the three months ended March 31, 2020 increased $6.6 million primarily due to increased foreign exchange gains from the remeasurement of foreign currency denominated balances and increased earnings from our equity method investments.

Income Taxes

The effective tax rates for the three months ended March 31, 2020 and 2019 were 17.4% and 2018 were 23.6% and 18.5%, respectively. The increasedecrease in the effective tax rate for the three months ended March 31, 20192020 relative to the prior comparable period was predominantlyprimarily driven by favorable audit settlements.

The three months ended March 31, 2019 includes a discrete tax benefit from stock exercises, partially offset by the exclusion of capital losses on assets held forthe sale of Finder under local tax law. Additionally, the effective tax rates for the three months ended March 31, 2019 and 2018 included discrete tax benefits principally from stock award exercises.  

Dover and its subsidiaries file tax returns in the U.S., including various state and local returns, and in other foreign jurisdictions. We believe adequate provision has been made for all income tax uncertainties. The Company is routinely audited by taxing authorities in its filing jurisdictions, and a number of these audits are currently underway. The Company believes that within the next twelve months uncertain tax positions may be resolved and statutes of limitations will expire, which could result in a decrease in the gross amount of unrecognized tax benefits of approximately zero to $12.2$9.3 million.
Net earnings

Earnings from Continuing Operations

Earnings from continuing operationsNet earnings for the three months ended March 31, 2019 decreased 3.4%2020 increased 66.8% to $105.7$176.3 million, or $0.72$1.21 diluted earnings per share, from $109.4$105.7 million, or $0.70$0.72 diluted earnings per share, from the comparable period. The decreaseincrease in net earnings from continuing operations iswas mainly attributable to thepricing initiatives, benefits from productivity and rightsizing actions, and broad-based cost reductions, as well a loss on assets held for sale for Finderof $46.9 million in the Fluids segment of $46.9 million. Excluding the loss on assets held for sale, earnings from continuing operations increasedprior period. These benefits were partially offset by $43.2 million or 39.5% or $0.29 diluted earnings per share, mainly driven by the 3.4% increase in gross profitreduced volume due to an increase in revenues led by the Fluidsimpact of COVID-19 and Engineered Systems segmentsincreased material and 6.1% decrease in selling, general and administrative expenses due to benefits from restructuring programs initiated in 2018.inflation costs.

Discontinued Operations

For the three months ended March 31, 2019, there were no earnings or losses presented as discontinued operations. For the three months ended March 31, 2018, the historical results of Apergy were presented as discontinued operations as the May 9, 2018 spin-off represented a strategic shift in operations with a major impact on our operations and financial results.

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Rightsizing Activities, which includes Restructuring and Other Costs

During the three months ended March 31, 2020, rightsizing activities included restructuring charges of $7.3 million and other costs of $0.5 million. Restructuring expense was comprised primarily of broad-based selling, general and administrative expense reduction initiatives and broad-based operational efficiency initiatives focusing on footprint consolidation, operational optimization and IT centralization designed to increase operating margin, enhance operations and position the Company for sustained growth and investment. Other costs were comprised primarily of other charges related to the restructuring actions. These rightsizing charges were recorded in cost of goods and services and selling, general and administrative expenses in the Condensed Consolidated Statement of Earnings. We expect to incur additional rightsizing restructuring charges of $6 million during the remainder of 2020. COVID-19 has not resulted in significant restructuring costs. Additional programs, beyond the scope of the announced programs may be implemented during 2020 with related restructuring charges. We recorded the following rightsizing costs for the three months ended March 31, 2020:

Three Months Ended March 31, 2020
(dollars in thousands)Engineered ProductsFueling SolutionsImaging & IdentificationPumps & Process SolutionsRefrigeration & Food EquipmentCorporateTotal
Restructuring (GAAP)$358  $1,475  $256  $3,846  $560  $846  $7,341  
Other costs, net 18   —  144  345  518  
Rightsizing (Non-GAAP)$361  $1,493  $264  $3,846  $704  $1,191  $7,859  

During the three months ended March 31, 2019, rightsizing activities included restructuring charges of $2.9 million and other costs of $1 million. Restructuring expense was related to two significant rightsizing restructuring programs initiated in 2018, comprised primarily of broad-based selling, general and administrative expense reduction and footprint consolidation initiatives. Other costs were comprised primarily of other charges related to the restructuring actions. These rightsizing charges were recorded in cost of goods and services and selling, general and administrative expenses in the Condensed Consolidated Statement of Earnings. We recorded the following rightsizing costs for the three months ended March 31, 2019:

Three Months Ended March 31, 2019
(dollars in thousands)Engineered ProductsFueling SolutionsImaging & IdentificationPumps & Process SolutionsRefrigeration & Food EquipmentCorporateTotal
Restructuring (GAAP)$79  $738  $291  $381  $1,412  $35  $2,936  
Other costs, net 14  98  33  881  —  1,027  
Rightsizing (Non-GAAP)$80  $752  $389  $414  $2,293  $35  $3,963  





















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SEGMENT RESULTS OF OPERATIONS

Engineered Systems
Our Engineered Systems segmentThe summary that follows provides a discussion of the results of operations of each of our five reportable operating segments (Engineered Products, Fueling Solutions, Imaging & Identification, Pumps & Process Solutions, and Refrigeration & Food Equipment). Each of these segments is comprised of two platforms, Printing & Identification and Industrials, and is focused on the design, manufacturevarious product and service offerings that serve multiple markets. See Note 17 — Segment Information in the Condensed Consolidated Financial Statements in Item 1 of critical equipmentthis Form 10-Q for a reconciliation of segment revenue, earnings and components servingmargin to our consolidated revenue, net earnings and margin. For further information, see "Non-GAAP Disclosures" at the fast-moving consumer goods, digital textile printing, vehicle service, environmental solutions and industrial end markets.of this Item 2.

 Three Months Ended March 31, 
(dollars in thousands)20192018% Change
Revenue:
Printing & Identification$282,086 $282,522 (0.2)%
Industrials405,105 389,104 4.1 %
Total$687,191 $671,626 2.3 %
Segment earnings$123,074 $102,066 20.6 %
Segment margin17.9 %15.2 %
Segment EBITDA$140,869 $121,305 16.1 %
Segment EBITDA margin20.5 %18.1 %
Other measures:
Depreciation and amortization$17,795 $19,239 (7.5)%
Bookings:
Printing & Identification$280,658 $284,437 (1.3)%
Industrials414,786 466,722 (11.1)%
$695,444 $751,159 (7.4)%
Backlog:
Printing & Identification$121,374 $135,915 (10.7)%
Industrials448,137 376,474 19.0 %
$569,511 $512,389 11.1 %
Components of revenue growth:
Organic growth5.8 %
Foreign currency translation(3.5)%
 2.3 %
Additionally, we use the following operational metrics in monitoring the performance of the business. We believe the operational metrics are useful to investors and other users of our financial information in assessing the performance of our segments:

Bookings represent total orders received from customers in the current reporting period. This metric is an important measure of performance and an indicator of revenue order trends.

Backlog represents an estimate of the total remaining bookings at a point in time for which performance obligations have not yet been satisfied. This metric is useful as it represents the aggregate amount we expect to recognize as revenue in the future.

Book-to-bill is a ratio of the amount of bookings received from customers during a period divided by the amount of revenue recorded during that same period. This metric is a useful indicator of demand.

Engineered Products
Our Engineered Products segment is a provider of a wide range of products, software and services that have broad customer applications across a number of markets, including aftermarket vehicle service, solid waste handling, industrial automation, aerospace and defense, industrial winch and hoist, and fluid dispensing.

 Three Months Ended March 31,  
(dollars in thousands)20202019% Change
Revenue$408,160  $418,851  (2.6)%
Segment earnings (EBIT)$69,094  $67,119  2.9 %
Depreciation and amortization10,122  10,359  (2.3)%
Segment EBITDA$79,216  $77,478  2.2 %
Segment margin16.9 %16.0 %
Segment EBITDA margin19.4 %18.5 %
Other measures:
Bookings$414,972  $427,697  (3.0)%
Backlog$453,867  $451,335  0.6 %
Components of revenue decline:
Organic decline(1.9)%
Acquisitions0.1 %
Foreign currency translation(0.8)%
 (2.6)%

First Quarter 20192020 Compared to the First Quarter 2018 2019

Engineered Systems revenueProducts segment revenue for the first quarter of 2019 increased $15.62020 decreased $10.7 million, or 2.3%2.6%, as compared to the first quarter of 2018,2019, comprised of broad-based organic growthdecline of 5.8% partially offset by1.9% and an unfavorable impact from foreign currency translation of 3.5%0.8%, partially offset by acquisition-related growth of 0.1%. Acquisition-related growth was driven by the acquisition of SoftPak. Customer pricing favorably impacteddid not have a significant impact on revenue by approximately 1.8% in the first quarter of 2019.
2020.Printing & Identification revenue (representing 41.0% of segment revenue) decreased $0.4 million, or 0.2%, as compared to the prior year quarter. The decrease was primarily driven by organic revenue growth of 5.3% which was more than offset by an unfavorable impact from foreign currency translation of 5.5%. Organic revenue growth was led by strong activity in digital printing, complemented by growth in marking and coding. 

Industrials revenue (representing 59.0% of segment revenue) increased $16.0 million, or 4.1%, as compared to the prior year quarter. The increase was primarily driven by organic revenue growth of 6.2% partially offset by an unfavorable impact of foreign currency translation of 2.1%. Organic revenue growth was broad-based, with particular strength in our environmental solutions, vehicle service, and industrial winch businesses.

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The organic revenue decline was primarily driven by the global impact of COVID-19 on our operations, as well as the operations of our customers and suppliers. This impact was particularly notable in our vehicle service business, whose operations in China and Italy were disrupted by government ordered facility shutdowns and whose customers in the global automotive aftermarket experienced reduced end customer demand due to mobility restrictions and lower demand for automotive maintenance and repairs. Additionally, we have voluntarily suspended production at a U.S. facility serving the automotive original equipment manufacturer ("OEM") market due to the suspension of operations by a majority of their customers. Impacts from COVID-19 were also experienced to a lesser degree in our industrial automation and fluid dispensing businesses, whose operations in China were most notably impacted by government-required facility shutdowns in the quarter.Additionally, our industrial automation and industrial winch and hoist businesses experienced decreases in customer demand due to challenging end-market conditions. These headwinds more than offset continued strong performance in our environmental solutions business, driven by growth in refuse truck shipments and continued strong growth in our digital solutions product line.

The global COVID-19 pandemic is expected to significantly impact segment results in the second quarter, as facility shutdowns impacting both our facilities and our customers' facilities have accelerated in the U.S. and across Europe, creating near-term operational disruptions and demand headwinds across several of our businesses. However, we believe that once government restrictions related to COVID-19 ease, the demand for our products will continue its long term favorable growth trend and the fundamental long term demand drivers across our end-markets will remain constructive.

Engineered SystemsProducts segment earnings increased $21.0$2.0 million, or 20.6%2.9%, compared to the first quarter of 2018. 2019. This increase was primarilyprimarily driven by solid conversion on organic volume growth, favorable pricing and productivity initiativesactions including the benefitsbenefit of rightsizing actions and cost reduction initiatives, across both platforms. and selling, general and administrative expenses cost containment actions.These benefitsimpacts more than offset increases in material costs primarilythe negative impact from earnings conversion on lower organic revenues, driven by U.S. Section 232 tariffs, most notably commodity cost increases impacting steel, U.S. Section 301 tariffs, and unfavorable foreign currency translation. the impacts of COVID-19. Segment marginsoperating margin increased 27090 basis points to 17.9%16.9% from 15.2 %16.0% as compared to the prior year quarter.

Bookings decreased 7.4%3.0% for the segment, including an organic decline of 4.4%2.3% and an unfavorable impact of 3.0% from foreign currency translation. Bookings forof 0.9%, partially offset by acquisition-related growth of 0.2%. The organic bookings decline was primarily driven by the global impact on customer demand of the COVID-19 pandemic, reduced end market demand in our Industrialsindustrial automation and industrial winch and hoist businesses, and order placement timing in our aerospace and defense busine platform decreased 11.1%,ss. Segment book-to-bill was 1.02. Backlog increased 0.6% compared to the prior year quarter.



























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Fueling Solutions
Our Fueling Solutions segment is focused on providing components, equipment and software and service solutions enabling safe transport of fuels and other hazardous fluids along the supply chain, as well as the safe and efficient operation of retail fueling and vehicle wash establishments.

 Three Months Ended March 31,  
(dollars in thousands)20202019% Change
Revenue$359,982  $373,050  (3.5)%
Segment earnings$53,498  $37,230  43.7 %
Depreciation and amortization18,339  17,879  2.6 %
Segment EBITDA$71,837  $55,109  30.4 %
Segment margin14.9 %10.0 %
Segment EBITDA margin20.0 %14.8 %
Other measures:
Bookings$373,070  $343,083  8.7 %
Backlog$211,518  $185,847  13.8 %
Components of revenue decline:
Organic decline(2.6)%
Acquisitions0.8 %
Foreign currency translation(1.7)%
 (3.5)%

First Quarter 2020 Compared to the First Quarter 2019

Fueling Solutions segment revenue for the first quarter of 2020 decreased $13.1 million, or 3.5%, comprised of an organic decline of 2.6% and an unfavorable impact from foreign currency translation of 1.7%, partially offset by acquisition-related growth of 0.8%. Customer pricing favorably impacted revenue by approximately 1.6% in the first quarter of 2020.

Order trends remained robust during the quarter in the U.S. supported by the demand for Europay, Mastercard, and Visa ("EMV")-compliant equipment. The strength in the U.S. was more than offset by a decline outside of the U.S. principally as a result of actions to contain the spread of COVID-19 implemented by governments across the world, which began to impact our business with the shutdown of manufacturing operations in China in February, accelerated in March with the restrictions implemented in Italy, and have continued to spread, impacting our supply chain and manufacturing operations, as well as those of our customers. Additionally, our vehicle wash facilities in the U.S. were shut down in March due to local government mandates. The organic revenue decline was also impacted by reduced volume in underground equipment in China due to tapering of government-mandated site infrastructure upgrade activity. Additionally, our businesses serving the transportation and vehicle wash markets have seen slowing in order rates and sales due to the impact of lower oil prices on capital budgets within the fuel supply chain markets and COVID-19 related project deferrals, respectively. We expect the operational curtailments and demand deferrals to continue into the second quarter and to have a negative impact on segment results.

Fueling Solutions segment earnings increased $16.3 million, or 43.7%, over the prior year quarter. The increase was driven by favorable geographic and product mix, pricing initiatives, benefits of selling, general and administrative cost reductions being realized, productivity actions and a strong prior period for our environmental solutionsfavorable impact from foreign currency translation. The cost reduction actions include the elimination of non-essential travel, third party and vehicle service businesses, along withother expenses, and re-prioritization of all planned investments and hiring plans. These benefits were partially offset by the unfavorablepreviously discussed global impact of foreign currency translCOVID-19 on volume, increased material costs and inflation costs.ation of 1.6%. Our Printing & Identification Segment margin increased 490 basis points over the prior year quarter.

Overall bookings decreased 1.3%increased 8.7% as compared to the prior year quarter, driven by organic growth of 4.1% which was more than offset by the impact from unfavorable foreign currency translation of 5.4%. Segment book-to-bill was 1.01.


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Fluids
Our Fluids segment, serving the Fueling & Transport, Pumps and Process Solutions end markets, is focused on the safe handling of critical fluids, and providing critical components to the retail fueling, chemical, hygienic, oil and gas, power generation and industrial markets. 
 Three Months Ended March 31, 
(dollars in thousands)20192018% Change
Revenue:
Fueling & Transport$373,050 $319,304 16.8 %
Pumps177,439 162,309 9.3 %
Process Solutions152,735 146,485 4.3 %
$703,224 $628,098 12.0 %
Segment earnings (1)
$52,221 $67,348 (22.5)%
Segment margin (1)
7.4 %10.7 %
Segment EBITDA (2)
$87,647 $101,797 (13.9)%
Segment EBITDA margin (2)
12.5 %16.2 %
Other measures:
Depreciation and amortization$35,426 $34,449 2.8 %
Bookings712,856 703,461 1.3 %
Backlog538,888 544,250 (1.0)%
Components of revenue growth:
Organic growth15.1 %
Acquisitions1.3 %
Dispositions(0.3)%
Foreign currency translation(4.1)%
 12.0 %
(1) Excluding a loss on assets held for sale for Finder, segment earnings was $99,167 and $67,348 for the three months ended March 31, 2019 and 2018, respectively. Segment margin was 14.1% and 10.7% for the three months ended March 31, 2019 and 2018, respectively.
(2) Excluding a loss on assets held for sale for Finder, segment EBITDA was $134,593 and $101,797 for the three months ended March 31, 2019 and 2018, respectively. Segment EBITDA margin was 19.1% and 16.2% for the three months ended March 31, 2019 and 2018, respectively. See "Non-GAAP Disclosures" for definitions of segment EBITDA and segment EBITDA margin.

First Quarter 2019 Compared to the First Quarter 2018 

Fluids revenue for the first quarter of 2019 increased $75.1 million, or 12.0%, comprised of organic growth of 15.1%9.5% and acquisition-related growth of 1.3%1.1%, partially offset by an unfavorable impact from foreign currency translation of 4.1% and a 0.3% decrease due1.9%. Organic growth was primarily driven by acceleration in demand for EMV compliant equipment in North America. Segment book to businesses previously disposed of in 2018. Customer pricing favorably impacted revenue by approximately 0.9% in the first quarter of 2019.

Fueling & Transport revenue (representing 53.0% of segment revenue)bill was 1.04. Backlog increased $53.7 million, or 16.8%,13.8% as compared to the prior year quarter on the back of strong new bookings.

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Imaging & Identification

Our Imaging & Identification segment supplies precision marking and coding, product traceability and digital textile printing equipment, as well as related consumables, software and services.

 Three Months Ended March 31,  
(dollars in thousands)20202019% Change
Revenue$256,765  $268,354  (4.3)%
Segment earnings$51,482  $55,955  (8.0)%
Depreciation and amortization8,769  7,435  17.9 %
Segment EBITDA$60,251  $63,390  (5.0)%
Segment margin20.1 %20.9 %
Segment EBITDA margin23.5 %23.6 %
Other measures:
Bookings$272,604  $267,762  1.8 %
Backlog$170,119  $118,177  44.0 %
Components of revenue decline:
Organic decline(4.3)%
Acquisitions2.8 %
Foreign currency translation(2.8)%
 (4.3)%

First Quarter 2020 Compared to the First Quarter 2019

Imaging & Identification segment revenue for the first quarter of 2020 decreased $11.6 million, or 4.3%, comprised of an organic decline of 4.3% and an unfavorable impact from foreign currency translation of 2.8%, partially offset by acquisition-related growth of 2.8%. Acquisition-related growth was driven by the acquisition of Systech. Customer pricing favorably impacted revenue by approximately 0.4% in the first quarter of 2020.

The organic revenue decline was primarily driven by continued strong international retail fueling activity, specificallythe global impact of COVID-19 on our operations, as well as the operations of our customers and suppliers. Actions to contain the spread of COVID-19, implemented by governments across the world, began to impact our business with the shutdown of manufacturing operations in China in February, affecting our marking and coding manufacturing facilities, which returned to fully operational by March. In March, restrictions were implemented in Italy, where our digital printing business headquarters and main manufacturing facilities reside in the country’s northern region. Digital textile printing operations have been largely shut down since mid-March. Restrictions globally have continued to spread, impacting our supply chain, manufacturing operations and customer demand in Asia, Pacific region, strong dispenser growth inEurope, North America and South America. Additionally, the acquisitionexpansion of Belanger. Transport revenue improvedgovernment mandated shutdowns worldwide have hampered our sales and service functions globally, and has led to a significant temporary reduction in demand for the digital textile printing equipment, as our customers are facing near-term uncertainty about end-demand for textiles, fashion and apparel goods in light of global retail outlet closures and economic uncertainty. Although demand for consumables in marking and coding, particularly inks for food and beverage, cleaning supplies, pharmaceuticals, and medical supplies remain robust, we are seeing delays in orders for new and replacement marking and coding capital equipment. This reduction led to lower manufacturing utilization at our marking and coding operations in France. Additionally, we saw slowing demand in industrial end-markets for our marking & coding business and travel restrictions have impacted our ability to provide maintenance services.

We expect these demand headwinds and operational interruptions to continue into the second quarter and to negatively impact segment results. However, we believe that once government restrictions related to COVID-19 ease, demand for marking and coding equipment will continue its long term favorable growth trend, supported by constructive secular trends in demand for product traceability, identification, differentiation and brand protection solutions. Additionally, we believe the long term growth outlook for our digital printing products remain robust, as demand for clothing and apparel globally will continue to grow due to population growth and the continued transition from analog to digital printing by our customers due to performance and environmental benefits.

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Imaging & Identification segment earnings decreased $4.5 million, or 8.0%, over the prior year quarter. The decrease was primarily driven by the previously discussed impacts associated with widespread actions by governments across the globe to contain the spread of COVID-19, partially offset by significant cost containment initiatives undertaken as demand levels began to deteriorate. These initiatives include actions to adjust direct and indirect manufacturing cost to current demand levels, the railexecution of short-term actions to reduce labor costs, the elimination of non-essential travel, third party and other expenses, the recognition of adjustments to variable compensation to reflect current conditions, the execution of selective structural cost actions aimed at streamlining our business, experienced strongand a detailed review and re-prioritization of all planned investments and hiring plans. These actions have been taken deliberately and strategically, and allow us to rationalize current spending to levels appropriate given near-term market conditions, while preserving our ability to capitalize on long-term secular growth trends. These actions will continue into the second quarter and remain in part, due to softer volumes experiencedplace until we see improvements in near-term demand. Segment margin decreased 80 basis points over the prior year quarter and the continued rebound of aftermarket volumes.quarter.

Pumps revenue (representing 25.2% of segment revenue)Overall bookings increased $15.1 million, or 9.3%,1.8% as compared to the prior year quarter. This increase reflectsquarter, reflecting organic growth of 0.3% and acquisition-related growth of 4.1%, partially offset by an unfavorable impact from foreign currency translation of 2.6%. Strong orders for consumables in our marking and coding business more than offset reductions in equipment and services bookings in marking and coding and reduced bookings in our digital printing business, driven by the global impacts from COVID-19. Segment book to bill was 1.06. Backlog increased 44.0% as compared to the prior year quarter driven by the inclusion of backlog from the Systech acquisition, and strong bookings for consumables in marking and coding.







































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Pumps & Process Solutions

Our Pumps & Process Solutions segment manufactures specialty pumps, fluid handling components, plastics and polymer processing equipment, and highly engineered components for rotating and reciprocating machines.

 Three Months Ended March 31,  
(dollars in thousands)20202019% Change
Revenue$319,536  $330,219  (3.2)%
Segment earnings (1)
$66,079  $14,991  340.8 %
Depreciation and amortization18,336  17,548  4.5 %
Segment EBITDA (1)
$84,415  $32,539  159.4 %
Segment margin (1)
20.7 %4.5 %
Segment EBITDA margin (1)
26.4 %9.9 %
Other measures:
Bookings$369,403  $369,801  (0.1)%
Backlog$397,969  $353,066  12.7 %
Components of revenue decline:
Organic decline(1.1)%
Acquisitions0.9 %
Dispositions(1.9)%
Foreign currency translation(1.1)%
 (3.2)%
(1)Segment earnings (EBIT) and segment EBITDA for the three months ended 2019 include a $46,946 loss on assets held for sale for Finder.

First Quarter 2020 Compared to the First Quarter 2019

Pumps & Process Solutions segment revenue for the first quarter of 2020 decreased $10.7 million, or 3.2%, comprised of organic decline of 1.1%, an unfavorable impact from foreign currency translation of 1.1% and a 1.9% impact from dispositions, partially offset by acquisition-related growth of 0.9%. Customer pricing favorably impacted revenue by approximately 1.1% in the first quarter of 2020.

The organic revenue decline was principally driven by the adverse impact of COVID-19, as well as the slowing demand in the oil & gas end-market, partially offset by growth in North America where bookingsthe biopharma and hygienic markets (including for products directly used in the fight against the COVID-19 pandemic). As a result of the COVID-19 pandemic, several facilities across the globe were subjected to mandatory government shutdowns beginning in February in China and with further restrictions in India and Mexico in March. These shutdowns disrupted manufacturing and supply chain operations, as well as the operations of some of our customers and suppliers. Additionally, the fall in the price of oil has led to a reduction in demand from customers in the oil & gas end-market for rotating and reciprocating machinery components and aftermarket services. The above factors have led to a temporary reduction in demand, which is likely to continue into the second quarter and may unfavorably impact segment results in the ensuing quarter. Activity in our plastics and polymer processing business remained constructive as it primarily serves large long-term capital projects around the world.

Pumps & Process Solutions segment earnings increased 17.0%$51.1 million, or 340.8%, over the prior year quarter. Segment earnings in the first quarter of 2019 included a loss on assets held for sale for Finder of $46.9 million. Excluding the loss, segment earnings increased driven by pricing initiatives, productivity actions, restructuring benefits, and continued strengthselling, general and administrative cost reductions. The aforementioned cost reductions include the elimination of non-essential travel, third party and other expenses, and re-prioritization of all planned investments and hiring plans. These actions as well as line rate reductions and selected furloughs will continue into the second quarter and remain in place until we see improvements in near-term demand. These benefits were partially offset by the global impact of COVID-19 on volume, increased material and inflation costs, and an unfavorable impact from industrial pump salesforeign currency translation. Segment margin increased to large original equipment manufacturers ("OEMs"). Additionally, strong activity in other industrial markets, specifically biopharma, continue to trend positively.20.7% from 4.5% from the prior year quarter, which included the loss on Finder.

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Process Solutions revenue (representing 21.8% of segment revenue) increased $6.3 million, or 4.3%,Overall bookings were flat as compared to the prior year quarter. This revenue increase was driven by broad-based strength in critical component for rotating equipmentquarter, reflecting an unfavorable impact from foreign currency translation of 1.1% and plastic & polymers equipment.

Fluids segment earnings decreased $15.1 million, or 22.5%, over the prior year quarter. The decrease was predominantly driven by the $46.9 million loss on the Finder assets held for sale during the quarter. Excluding this loss, earnings increased $31.8 million, or 47.2%, over the prior year quarter, driven by pricing initiatives, volume leverage, productivity actions and benefits of selling, general and administrative cost reduction realized. These benefits werea 2.0% impact from a disposition, partially offset by organic growth of 2.2% and acquisition-related growth of 0.8%. Segment book to bill was 1.16. Backlog increased material costs and U.S. Sections 232 and 301 exposure, along with unfavorable product and regional mix. Segment margin decreased 330 basis points over the prior year quarter. Excluding the previously mentioned loss on assets held for sale, segment margin improved 340 basis points over the prior year quarter.

Overall bookings increased 1.3%12.7% as compared to the prior year quarter driven by strong new order rates in our Pumpsbiopharma and Process Solutions end markets. Segment book to bill was 1.01.plastics and polymer equipment businesses.



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Refrigeration & Food Equipment
Our Refrigeration & Food Equipment segment is a provider of innovative and energy efficientenergy-efficient equipment and systems servingthat serve the commercial refrigeration, heating and cooling and food equipment end markets.
 Three Months Ended March 31, 
(dollars in thousands)20192018% Change
Revenue:
Refrigeration$277,598 $278,655 (0.4)%
Food Equipment57,045 59,580 (4.3)%
Total$334,643 $338,235 (1.1)%
Segment earnings$24,807 $29,182 (15.0)%
Segment margin7.4 %8.6 %
Segment EBITDA$37,818 $42,761 (11.6)%
Segment EBITDA margin11.3 %12.6 %
Other measures:
Depreciation and amortization$13,011 $13,579 (4.2)%
Bookings376,998 372,701 1.2 %
Backlog311,632 283,250 10.0 %
Components of revenue decline:
Organic growth0.7 %
Foreign currency translation(1.8)%
 (1.1)%

 Three Months Ended March 31,  
(dollars in thousands)20202019% Change
Revenue$311,913  $334,643  (6.8)%
Segment earnings(1)
$23,529  $24,807  (5.2)%
Depreciation and amortization11,548  13,011  (11.2)%
Segment EBITDA(1)
$35,077  $37,818  (7.2)%
Segment margin(1)
7.5 %7.4 %
Segment EBITDA margin(1)
11.2 %11.3 %
Other measures:
Bookings$355,157  $376,998  (5.8)%
Backlog$356,133  $311,632  14.3 %
Components of revenue decline:
Organic decline(4.3)%
Dispositions(1.8)%
Foreign currency translation(0.7)%
 (6.8)%
(1) Segment earnings (EBIT) and Segment EBITDA for the three months ended March 31, 2020, includes a $6,551 gain on the sale of AMS Chino.

First Quarter 20192020 Compared to the First Quarter 2018 2019

Refrigeration & Food Equipment segment revenue decreased $3.6$22.7 million, or 1.1%6.8%, as compared to the first quarter of 2018,2019, reflecting an organic revenue growthdecline of 0.7% which was more than offset by4.3%, a 1.8% impact from the disposition of AMS Chino, and an unfavorable impact from foreign currency translation of 1.8%0.7%. Customer pricing did not have a significant impact on revenue in the first quarter of 2019.2020.

The organic revenue decline was principally driven by the impact of COVID-19. Government actions to contain the spread of the virus, such as mandated plant shutdowns and social distancing measures, resulted in deferred customer orders and operational curtailments and inefficiencies across the segment. Our operations in the segment were shut down in China and Malaysia for a period of time during the quarter and we experienced intermittent interruptions in our North American facilities due to various operational factors related to the pandemic. Many key customers in our retail refrigeration business delayed previously planned projects related to new store construction and existing store remodels and deferred their near-term capital investment plans in favor of focusing on maximizing store uptime and meeting the needs of surging customer traffic as they experienced surging demand during the quarter as a result of social distancing and restaurant closure mandates. These remodel deferrals will have a substantial impact on revenue in the near-term, however we believe demand for refrigeration and foodservice equipment will normalize once government restrictions related to COVID-19 ease, as the current wear and tear on existing assets will drive the need for increased equipment replacement programs. Demand from our U.S. commercial foodservice customers has slowed significantly during the quarter as restaurants were closed in many localities and customer traffic declined significantly, leading restaurants to delay their capital expenditures. Additionally, we experienced slower sales in our heat exchanger business in Asia and Europe.

Refrigeration revenue (representing 83.0% of segment revenue) decreased $1.1 million, or 0.4%, as compared to the prior year quarter. Organic revenue growth of 1.8% was more than offset by the unfavorable impact of foreign currency translation of 2.2%. Organic growth was principally driven by increased remodel activity across a broad based group of retailers and increased demand for heat exchanger products, most notably in Europe.
Food Equipment revenue (representing 17.0% of segment revenue) decreased $2.5 million, or 4.3%, as compared to the prior year quarter, due to project timing in our can-shaping equipment business, partially offset by modest growth in foodservice equipment driven by increased demand from restaurant chains.
Refrigeration & Food Equipment segment earningsearnings decreased $4.4$1.3 million, or 15.0%5.2%, as compared to the first quarter of 2018.2019. Segment margin decreasedincreased to 7.4%7.5% from 8.6%7.4% in the prior year quarter due to unfavorable business mix primarily in our can-shaping business, higher material costs, and expenses related to footprint consolidation activities more than offsetting benefits from prior year restructuring actions and improved productivity.

Bookings in the first quarter of 2019 increased 1.2% from the prior year quarterquarter. The earnings decline was driven by increased project orders in our can-shaping businessreduced volumes and operational inefficiencies associated with impacts from COVID-19, partially offset by unfavorable foreign currency translation. Segment bookthe gain on sale from the disposition ofAMS Chino and other broad based cost reduction activities, including adjusting direct and indirect manufacturing costs to bill for the first quartercurrent demand levels, reduction of 2019 was 1.13. Backlog increased 10.0% over the prior year quarter as a result of increased demand for retail refrigerationdiscretionary expenses, adjustments to variable compensation to match current outlook, and can-shaping equipment products.

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deferral of planned selling, general, and administrative investments.These actions as well as planned furloughs will continue in the second quarter and remain in place until we see improvements in near-term revenue demand.

Bookings in the first quarter of 2020 decreased 5.8% from the prior year quarter, reflecting an organic decline of 4.2%, a 1.1% impact from the disposition of AMS Chino, and an unfavorable impact from foreign currency translation of 0.5%. Organic decline was driven primarily by COVID-19 demand reductions in our foodservice equipment and heat exchanger businesses as well as timing of projects for aluminum can shaping equipment, which operates with a strong long-term backlog. Retail refrigeration’s organic bookings grew 1.2%, as key supermarket chain order trends remained healthy, albeit with request for delivery date timing beyond normal lead times. Segment book to bill for the first quarter of 2020 was 1.14. Backlog increased 14.3% over the prior year quarter, driven mainly by increases in our heat exchanger and aluminum can shaping equipment businesses.















































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FINANCIAL CONDITION

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

Cash Flow Summary

The following table is derived from our Condensed Consolidated Statements of Cash Flows:
Three Months Ended March 31,  Three Months Ended March 31,  
Cash Flows from Continuing Operations (in thousands)
20192018
Cash Flows (dollars in thousands)
Cash Flows (dollars in thousands)
20202019
Net Cash Flows Provided By (Used In):Net Cash Flows Provided By (Used In):  Net Cash Flows Provided By (Used In):  
Operating activitiesOperating activities$24,524 $15,535 Operating activities$75,863  $24,524  
Investing activitiesInvesting activities(217,690)(122,597)Investing activities(230,511) (217,690) 
Financing activitiesFinancing activities36,067 (289,103)Financing activities280,954  36,067  

Operating Activities

Cash provided by operating activities for the three months ended March 31, 20192020 increased approximately $9.0$51.3 million compared to the comparable periodperiod in 2018.2019. This increase was primarily driven by higher continuingnet earnings, beforeexcluding the impact of depreciation, amortization, loss on assets held for sale and lossgain on sale of assets.a business. The increase was partially offset by higher investmentsalso attributable to improvements in working capital of $90.5$25.4 million relative to the prior year primarily dueyear.

We also continue to strong sales duringmonitor government economic stabilization efforts and expect to participate in certain legislative provisions to enhance our liquidity. We deferred approximately $15 million of non-US tax payments from the period.first quarter to predominantly the second quarter of 2020. We expect to defer approximately $50 million of U.S. and state income tax payments from the second to the third quarter of 2020. Additionally under the U.S. CARES Act, we expect to defer the payment of approximately $5 million of payroll taxes each quarter for the remainder of 2020 to be paid equally in the fourth quarters of 2021 and 2022.

Adjusted Working Capital: We believe adjusted working capital (a non-GAAP measure calculated as accounts receivable, plus inventory, less accounts payable) provides a meaningful measure of our operational results by showing changes caused solely by revenue.
Adjusted Working Capital (dollars in thousands)
Adjusted Working Capital (dollars in thousands)
March 31, 2019December 31, 2018
Adjusted Working Capital (dollars in thousands)
March 31, 2020December 31, 2019
Accounts receivableAccounts receivable$1,272,053 $1,231,859 Accounts receivable$1,222,154  $1,217,190  
InventoriesInventories828,298 748,796 Inventories852,075  806,141  
Less: Accounts payableLess: Accounts payable952,162 969,531 Less: Accounts payable947,006  983,293  
Adjusted working capitalAdjusted working capital$1,148,189 $1,011,124 Adjusted working capital$1,127,223  $1,040,038  

Adjusted working capital increased from December 31, 20182019 by $137.1$87.2 million, or 13.6%8.4%, to $1.1 billion at March 31, 2019,2020, which reflected an increase of $40.2$5.0 million in accounts receivable, and an increase of $79.5$45.9 million in inventory, partially offset byand a decrease in accounts payable of $17.4$36.3 million. Excluding acquisitions, dispositions, and the effects of foreign currency translation, adjusted working capital increased by $137.9 million, or 13.6%, for the three months ended March 31, 2019 primarily driven by higher investments in working capital to support strong sales during the period.

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Investing Activities

Cash provided by or used in investing activities generally results from cash outflows for capital expenditures and acquisitions, offset by proceeds from sales of businesses and property, plant and equipment. For the three months ended March 31, 20192020 and 2018,2019, we used cash throughin investing activities of $217.7$230.5 million and $122.6$217.7 million, respectively, driven mainly by the following factors:

Acquisitions: During the three months ended March 31, 2019,2020, we acquired Belanger,Systech and Soft-Pak within the Fluids segmentImaging & Identification and Engineered Products segments, respectively, for $175.1$208.4 million, net of cash acquired. During the three months ended March 31, 2018,2019, we acquired Ettlinger,Belanger, Inc., within the FluidsFueling Solutions segment for $53.1 million, net of cash acquired, and Rosario, within the Refrigeration & Food Equipment segment for $15.3$175.1 million, net of cash acquired.

Capital spending: Our capital expenditures decreased $7.6increased $3.1 million on major projects in progress during the three months ended March 31, 20192020 compared to the three months ended March 31, 2018.2019. We have initiated a plan to significantly reduce our capital spend for the year, without deferring strategic ongoing initiatives

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Proceeds from sale of businesses: For the three months ended March 31, 2020, we received proceeds of $16.9 million from the sale of AMS Chino within the Refrigeration & Food Equipment segment. For the three months ended March 31, 2019, we received partial proceeds of $2.2 million from the sale of Finder in the second quarter of 2019. This sale was completed on April 2, 2019 at which time the remainder of the cash on sale was received. For the three months ended March 31, 2018, we generated cash of $2.1 million primarily from the sale of a small business in the fourth quarter of 2017.

We have significantly reduced our capital spending plan for the year as a result of COVID-19, without deferring strategic ongoing initiatives. We anticipate that capital expenditures and any acquisitions we make through the remainder of 20192020 will be funded from available cash and internally generated funds and through the issuance of commercial paper, use of established lines of credit or public or private debt or equity markets, as necessary.

Financing Activities

Our cash flow from financing activities generally relates to the use of cash for the repurchase of our common stock and payments of dividends, offset by net borrowing activity and proceeds from the exercises of share-based awards.activity. For the three months ended March 31, 2020 and 2019, and 2018, we generated cash totalingprovided by financing activities was $281.0 million and $36.1 million, and used cash totaling $289.1 million, respectively, for financing activities, with the activity primarily attributable to the following:

Repurchase of common stockcomm:on stock: During the three months ended March 31, 2020, we used $52.9 million to repurchase 548,659 shares. There were no shareshare repurchases during the three months ended March 31, 2019. During three months ended March 31, 2018, we used $45.0 millionWe have suspended repurchases as a result of business uncertainty related to repurchase 440,608 shares under our January 2015 authorization, which expired on January 9, 2018. COVID-19.

Long-term debt,, commercial paper and notes payable: During the three months ended March 31, 2020, we borrowed $500 million due May 19, 2020 under the $1.0 billion five-year unsecured revolving credit facility ("Credit Agreement"). Proceeds from the borrowing were used to repay all of the Company's outstanding commercial paper and for general corporate purposes. During the three months ended March 31, 2019, we received net proceeds from commercial paper and notes payable of $125.9 million primarily to fund the acquisition of Belanger. During the three months ended March 31, 2018, commercial paper and notes payable increased by $195.1 million used to fund the repayment of the Company's $350.0 million 5.45% notes, which matured on March 15, 2018.  

Dividend payments: Dividends paid to shareholders during the three months ended March 31, 20192020 totaled $69.8$70.9 million as compared to $72.7$69.8 million during the same period in 2018.2019. Our dividends paid per common share increased 2.0%2.1% to $0.48$0.49 during the three months ended March 31, 20192020 compared to $0.47$0.48 during the same period in 2018.2019. The number of common shares outstanding decreased during the three months ended March 31, 20192020 compared to the same period in 20182019 as a result of share buyback programsrepurchases completed in 2018.2020 and the second half of 2019.

Payments to settle employee tax obligations: Payments to settle tax obligations from the exercise of share based awards increased $4.7declined $9.6 million compared to the prior year period. This increaseThe decrease is primarily due to the increaseddecrease in the number of shares exercised as well aspartially offset by an increase in the average stock price compared to the prior year period.

Cash Flows from Discontinued Operations
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Our cash flows from discontinued operations for the three months ended March 31, 2018 generated $6.5 million. These cash flows reflect the operating results of Apergy prior to its separation during the second quarter of 2018. Cash flows generated by discontinued operations for the three months ended March 31, 2018 primarily reflects cash provided by operating activities of approximately $20.0 million, partially offset by capital expenditures.

Liquidity and Capital Resources

Free Cash Flow

In addition to measuring our cash flow generation and usage based upon the operating, investing and financing classifications included in the Condensed Consolidated Statements of Cash Flows, we also measure free cash flow (a non-GAAP measure) which represents net cash provided by operating activities minus capital expenditures. We believe that free cash flow is an important measure of operating performance because it provides management and investors a measurement of cash generated from operations that is available for mandatory payment obligations and investment opportunities, such as funding acquisitions, paying dividends, repaying debt and repurchasing our common stock.

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The following table reconciles our free cash flow to cash flow provided by operating activities:
Three Months Ended March 31,  Three Months Ended March 31,  
Free Cash Flow (dollars in thousands)
Free Cash Flow (dollars in thousands)
20192018
Free Cash Flow (dollars in thousands)
20202019
Cash flow provided by operating activitiesCash flow provided by operating activities$24,524 $15,535 Cash flow provided by operating activities$75,863  $24,524  
Less: Capital expendituresLess: Capital expenditures(37,122)(44,678)Less: Capital expenditures(40,172) (37,122) 
Free cash flowFree cash flow$(12,598)$(29,143)Free cash flow$35,691  $(12,598) 
Free cash flow as a percentage of revenueFree cash flow as a percentage of revenue(0.7)%(1.8)%Free cash flow as a percentage of revenue2.2 %(0.7)%
Free cash flow as a percentage of net earningsFree cash flow as a percentage of net earnings20.2 %(11.9)%
 
For the three months ended March 31, 2019,2020, we usedgenerated free cash flow of $12.6$35.7 million, representing 0.7%2.2% of revenue.revenue and 20.2% of net earnings. Free cash flow for the three months ended March 31, 20192020 increased $16.5$48.3 million compared to the prior year period, primarily due to higher cash flow provided by operations, as previously noted, as well as lowerpartially offset by higher capital expenditures. The adoption of Accounting Standard Codification Topic 842 - Leases on January 1, 2019 did not did not materially impact

We have maintained positive free cash flow.flow in the first quarter by proactively managing our working capital. We will continue this focus in the second quarter and beyond and also initiated a plan to significantly reduce our capital spend for the year, without deferring strategic ongoing initiatives. We are reducing discretionary spend and other costs to align with current demand levels in order to support strong free cash flow generation. We also continue to monitor government economic stabilization efforts and expect to participate in certain legislative provisions to enhance our liquidity. We deferred approximately $15 million of non-US tax payments from the first quarter to predominantly the second quarter of 2020. We expect to defer approximately $50 million of U.S. and state income tax payments from the second to the third quarter of 2020. Additionally under the U.S. CARES Act, we expect to defer the payment of approximately $5 million of payroll taxes each quarter for the remainder of 2020 to be paid equally in the fourth quarters of 2021 and 2022.

Capitalization

We use commercial paper borrowings for general corporate purposes, including the funding of acquisitions and the repurchase of our common stock. We maintainAs of March 31, 2020, we maintained a $1.0 billion, five-year, unsecured committed revolving credit facility (the "Credit Agreement")Credit Agreement with a syndicate of banks which will expire on November 10, 2020.with an expiration date of October 4, 2024. The Credit Agreement is used as liquidity back-up for our commercial paper program. We have not drawn down any loansBeginning in early-to-mid-March 2020, the commercial paper market began to experience very high levels of volatility as a result of COVID-19 related uncertainties. Volatility was most pronounced for "Tier-2" issuers, such as Dover, and impacted both market access and pricing. As a result, on March 16, 2020, the Company borrowed $500 million due May 19, 2020 under the Credit Agreement nor do we anticipate doing so.Agreement. Proceeds from the borrowing were used to repay all of the Company's outstanding commercial paper and for general corporate purposes. We plan to continue to use commercial paper borrowings to the extent available and are exploring other short-term financing alternatives available to investment grade issuers depending on conditions in the commercial paper market. Under the Credit Agreement, we are required to pay a facility fee and to maintain an interest coverage ratio of consolidated EBITDA to consolidated net interest expense of not less than 3.0 to 1.0. We were in compliance with this covenant and our other long-term debt covenants at March 31, 20192020 and had a coverage ratio of 9.711.2 to 1.0.1. We are not aware of any potential impairment to our liquidity and expect to remain in compliance with all of our debt covenants. Additionally, our earliest long-term debt maturity is in 2025.

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

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At March 31, 2019,2020, our cash and cash equivalents totaled $243.0$508.9 million, of which $204.1$215.8 million was held outside the United States. At December 31, 2018,2019, our cash and cash equivalents totaled $396.2$397.3 million, of which $247.5$273.1 million was held outside the United States. CashCash and cash equivalents are invested in highly liquid investment-grade money market instrumentsinstruments and bank deposits with maturities of three months or less. We regularly invest any cash in excess of near-term requirements in money market instruments or short-term investments, which consist of investment grade time deposits with original maturity dates at the time of purchase of no greater than three months.  

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

Net Debt to Net Capitalization Ratio (dollars in thousands)
Net Debt to Net Capitalization Ratio (dollars in thousands)
March 31, 2019December 31, 2018
Net Debt to Net Capitalization Ratio (dollars in thousands)
March 31, 2020December 31, 2019
Current maturities of long-term debt$1,355 $— 
Short term borrowingsShort term borrowings$500,000  $—  
Commercial paperCommercial paper344,900 220,318 Commercial paper—  84,700  
Notes payable and current maturities of long-term debt346,255 220,318 
Notes payablesNotes payables500,000  84,700  
Long-term debtLong-term debt2,940,967 2,943,660 Long-term debt2,963,018  2,985,716  
Total debtTotal debt3,287,222 3,163,978 Total debt3,463,018  3,070,416  
Less: Cash and cash equivalentsLess: Cash and cash equivalents(243,014)(396,221)Less: Cash and cash equivalents(508,907) (397,253) 
Net debtNet debt3,044,208 2,767,757 Net debt2,954,111  2,673,163  
Add: Stockholders' equityAdd: Stockholders' equity2,837,453 2,768,666 Add: Stockholders' equity2,980,681  3,032,660  
Net capitalizationNet capitalization$5,881,661 $5,536,423 Net capitalization$5,934,792  $5,705,823  
Net debt to net capitalizationNet debt to net capitalization51.8 %50.0 %Net debt to net capitalization49.8 %46.8 %

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Our net debt to net capitalization ratio increased to 51.8%49.8% at March 31, 2019 from 50.0%2020 compared to 46.8% at December 31, 2018. The increase in this ratio was driven primarily by the increase in net debt which exceeded the increase in stockholders' equity during the three months ended March 31, 2019.2019. Net debt increased $276.5$280.9 million during the period primarily due to an increase in short term borrowings as a result of the Company borrowing $500 million under the Credit Agreement partially offset by a decrease in commercial paper and a reductionan increase in cash levels to fund the acquisition of Belanger, dividends, and other operating purposes.cash equivalents. Stockholders' equity increased $68.8decreased $52.0 million primarily as a result of higherforeign currency translation adjustments, dividends paid and share repurchases, partially offset by earnings during the period.

Operating cash flow, existing capacity of our Credit Agreement and access to capital markets are expected to satisfy our various cash flow requirements, including acquisitions, capital expenditures and capital expenditures. Acquisition spending and/or share repurchases could potentially increase our debt.repurchases.

Critical Accounting Policies and Estimates

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

Recent Accounting Standards

See Part 1, Notes to Condensed Consolidated Financial Statements, Note 2120 — Recent Accounting Pronouncements.  The adoption of recent accounting standards as included in Note 2120 — Recent Accounting Pronouncements in the Condensed Consolidated Financial Statements has not had, and is not expected to have, a significant impact on our revenue, earnings or liquidity.

Special Notes Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, especially "Management’s Discussion and Analysis of Financial Condition and Results of Operations," contains "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements in this document other than statements of historical fact are statements that are, or could be deemed, “forward-looking” statements. Some of these statements may be indicated by words such as “may”, “anticipate”, “expect”, believe”, “intend”
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“intend”, “guidance”, “estimates”, “suggest”, “will”, “plan”, “should”, “would”, “could”, “forecast” and other words and terms that use the future tense or have a similar meaning. Forward-looking statements are based on current expectations and are subject to numerous important risks, uncertainties, assumptions and other factors, some of which are beyond the Company’s control. Factors that could cause actual results to differ materially from current expectations include, among other things, the impacts of COVID-19, or other future pandemics, on the global economy and on our customers, suppliers, employees, business and cash flows, other general economic conditions and conditions in the particular markets in which we operate, changes in customer demand and capital spending, competitive factors and pricing pressures, our ability to develop and launch new products in a cost-effective manner, changes in law, including the effect of U.S. tax reform and developments with respect to trade policy and tariffs, our ability to identify and complete acquisitions and integrate and realize synergies from newly acquired businesses, the impact of interest rate and currency exchange rate fluctuations, capital allocation plans and changes in those plans, including with respect to dividends, share repurchases, investments in research and development, capital expenditures and acquisitions, our ability to derive expected benefits from restructuring, productivity initiatives and other cost reduction actions, changes in material costs or the supply of input materials, the impact of legal compliance risks and litigation, including with respect to product quality and safety, cybersecurity and privacy, our ability to capture and protect intellectual property rights, and various other factors that are described in our periodic reports filed with or furnished to the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2018.2019. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.

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

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Non-GAAP Disclosures
In an effort to provide investors with additional information regarding our results as determined by GAAP, we also disclose non-GAAP information thatwhich we believe provides useful information to investors. Segment EBITDA, segment EBITDA margin, free cash flow, free cash flow as a percentage of revenue, free cash flow as a percentage of earnings from continuing operations, net debt, net capitalization, the net debt to net capitalization ratio, adjusted working capital, and organic revenue growth and rightsizing costs are not financial measures under GAAP and should not be considered as a substitute for earnings, cash flows from operating activities, debt or equity, earnings,working capital, revenue or working capitalrestructuring costs as determined in accordance with GAAP, and they may not be comparable to similarly titled measures reported by other companies.
We believe that segment EBITDA and segment EBITDA margin are useful to investors and other users of our financial information in evaluating ongoing operating profitability as they exclude the depreciation and amortization expense related primarily to capital expenditures and acquisitions that occurred in prior years, as well as in evaluating operating performance in relation to our competitors. Segment EBITDA is calculated by adding back depreciation and amortization expense to segment earnings, which is the most directly comparable GAAP measure. We do not present segment net income because corporate expenses, interest and taxes are not allocated at a segment level. Segment EBITDA margin is calculated as segment EBITDA divided by segment revenue.
We believe the net debt to net capitalization ratio and free cash flow are important measures of liquidity. Net debt to net capitalization is helpful in evaluating our capital structure and the amount of leverage we employ. Free cash flow providesand free cash flow ratios provide both management and investors a measurement of cash generated from operations that is available to fund acquisitions, pay dividends, repay debt and repurchase our common stock. ReconciliationsFree cash flow as a percentage of revenue equals free cash flow net debt and net capitalization can be found above in this Item 2, MD&A.divided by revenue. Free cash flow as a percentage of earnings from continuing operations equals free cash flow divided by earnings from continuing operations. We believe that reporting adjusted working capital, which is calculated as accounts receivable, plus inventory, less accounts payable, provides a meaningful measure of our operational results by showing the changes caused solely by revenue. We believe that reporting organic revenue and organic revenue growth, which excludeexcludes the impact of foreign currency exchange rates and the impact of acquisitions and divestitures, provides a useful comparison of our revenue performance and trends between periods. We believe that reporting rightsizing costs, which include restructuring and other charges, is important as it enables management and investors to better understand the financial impact of our broad-based cost reduction and operational improvement initiatives.
Reconciliations of non-GAAP measures can be found above in this Item 2, Management's Discussion & Analysis.


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Item 3. Quantitative and Qualitative Disclosures About Market Risk

There has been no significant change in our exposure to market risk during the three months ended March 31, 2019.2020. For a discussion of our exposure to market risk, refer to Item 7A, "Quantitative and Qualitative Disclosures about Market Risk," contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018.2019.

Item 4. Controls and Procedures

At the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(e). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2019.2020.

During the first quarter of 2019,2020, there were no changes in the Company’s internal control over financial reporting that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.


PART II — OTHER INFORMATION

Item 1. Legal Proceedings

See Part I, Notes to Condensed Consolidated Financial Statements, Note 1514 — Commitments and Contingent Liabilities.

Item 1A. Risk Factors

ThereThe risk factors disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (the “Form 10-K”) should be considered together with information included in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and should not be considered the only risks to which we are exposed. In general, we are subject to the same general risks and uncertainties that impact many other industrial companies such as general economic, industry and/or market conditions and growth rates; the impact of natural disasters and their effect on global markets; and changes in laws or accounting rules. Additional risks and uncertainties not currently known to us or that we currently believe are immaterial also may impair our business, including our results of operations, liquidity and financial condition. We are providing the following information regarding changes that have occurred to the previously disclosed risk factors in our Form 10-K. Except for such additional information, we believe there have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018.10-K.

The COVID-19 pandemic has adversely impacted, and poses risks to, our business, the nature and extent of which are highly uncertain and unpredictable.

We are monitoring the global outbreak of the COVID-19 and taking steps to mitigate the risks to us posed by its spread, including by working with our customers, employees, suppliers and other stakeholders. The pandemic is adversely affecting, and is expected to continue to adversely affect, certain elements of our business (including our supply chain, distribution systems, production levels and research and development activities) and our operations have been negatively impacted due to significant portions of our workforce are unable to work effectively due to quarantines, government orders and guidance, facility closures, illness, travel restrictions, implementation of precautionary measures and other restrictions. We also have experienced and expect to continue to experience unpredictable volatility in demand in several of our end-markets. If the pandemic continues and conditions worsen, we expect to experience additional adverse impacts on our operational and commercial activities, costs, customer orders and purchases and our collections of accounts receivable, which may be material, and the extent of these adverse impacts on future operational and commercial activities, costs, customer orders and purchases and our collections remains uncertain even if conditions begin to improve. Furthermore, the pandemic has impacted and may further impact the broader economies of affected countries, including negatively impacting economic growth, the proper functioning of financial and capital markets, foreign currency exchange rates and interest rates. For example, in recent weeks, the continued spread of COVID-19 has led to disruption and volatility in the global capital markets, which increases the cost of capital and adversely impacts access to capital including the commercial paper markets. Due to the speed with which the situation is developing, the global breadth of its spread and the range of governmental and community reactions thereto, there is uncertainty around its duration, ultimate impact and the timing of recovery. Therefore, the pandemic could lead to an extended disruption of economic activity and the impact on our consolidated results of operations, financial position and cash flows could be material.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

a.Not applicable.
b.Not applicable.
c.The table below presents shares of Dover stock that we acquired during the quarter.
PeriodTotal Number of Shares PurchasedAverage Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or Programs
Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased under the Plans or Programs (1)
January 1 to January 31—  $—  —  8,360,044  
February 1 to February 29—  —  —  8,360,044  
March 1 to March 31548,659  96.45  548,659  7,811,385  
For the Third Quarter548,659  $96.45  548,659  7,811,385  

(1)In February 2018, the Company's Board of Directors approved a new standing share repurchase authorization, whereby the Company may repurchase up to 20 million shares of its common stock through December 31, 2020. No share repurchases were madeThe Company repurchased 548,659 shares under the February 2018 authorization during the three months ended March 31, 2019.2020. As of March 31, 2019,2020, the number of shares still available for repurchase under the February 2018 share repurchase authorization was 9,703,666.7,811,385.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.
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Item 6. Exhibits
3.1
10.1
10.2
10.3
10.4
31.1
31.2
32
101 The following materials from Dover Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 20192020 formatted in iXBRL (Inline eXtensible Business Reporting Language):  (i) the Condensed Consolidated Statements of Earnings, (ii) the Condensed Consolidated Statements of Comprehensive Earnings, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statement of Stockholders’ Equity, (v) the Condensed Consolidated Statements of Cash Flows, and (vi) Notes to the Condensed Consolidated Financial Statements.
*104 Cover Page formatted in Inline XBRL and contained in Exhibit 101.
*  Executive compensation plan or arrangement





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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.

 DOVER CORPORATION
  
Date:April 18, 201921, 2020/s/ Brad M. Cerepak 
 Brad M. Cerepak
 Senior Vice President & Chief Financial Officer
 (Principal Financial Officer)
  
Date:April 18, 201921, 2020/s/ Carrie AndersonRyan W. Paulson
 Carrie AndersonRyan W. Paulson
 Vice President, Controller
 (Principal Accounting Officer)

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