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, ~~2019~~2020

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

(Exact name of registrant as specified in its charter)


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

3005 Highland Parkway
Downers Grove, Illinois									60515
(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 class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	DOV	New York Stock Exchange
1.250% Notes due 2026	DOV 26	New York Stock Exchange
0.750% Notes due 2027	DOV 27	New 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 Filer

☑

Accelerated Filer

☐

Emerging ~~growth company~~ Growth Company

☐

Non-Accelerated Filer

o☐

Smaller 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 ~~Act~~Act. 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, 2019~~14, 2020 was ~~145,329,437.~~

143,947,008.

Dover Corporation

Form 10-Q

Table of Contents


PART I — FINANCIAL INFORMATION			Page
Item 1.	Financial Statements (unaudited)
	Condensed Consolidated Statements of Earnings for the three months ended March 3 1 ~~, 201~~9 31, 2020 and ~~201~~82019	1
	Condensed Consolidated Statements of Comprehensive Earnings for the three months ended March 3 1 ~~, 201~~9 31, 2020 and ~~201~~82019	2
	Condensed Consolidated Balance Sheets at March 3 1 ~~, 201~~9 31, 2020 and December 31, ~~201~~82019	3
	Condensed Consolidated ~~Statement~~s Statements of Stockholders’ Equity for the three months ended March 3 1 ~~, 201~~9 31, 2020 and ~~2018~~2019	4
	Condensed Consolidated Statements of Cash Flows for the three months ended March 3 1 ~~, 201~~9 31, 2020 and ~~201~~82019	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2822
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4143
Item 4.	Controls and Procedures	4143

PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	4143
Item 1A.	Risk Factors	4143
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4244
Item 3.	Defaults Upon Senior Securities	4244
Item 4.	Mine Safety Disclosures	4244
Item 5.	Other Information	4244
Item 6.	Exhibits	4345
SIGNATURES			4446

Table of ~~Content~~sContents

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,
		2019		2018			2020		2019
Revenue	Revenue	$	1,724,757	$	1,637,671	Revenue	$	1,655,939	$	1,724,757
Cost of goods and services	Cost of goods and services	1,101,215		1,034,842		Cost of goods and services	1,043,696		1,101,215
Gross profit	Gross profit	623,542		602,829		Gross profit	612,243		623,542
Selling, general and administrative expenses	Selling, general and administrative expenses	408,466		435,026		Selling, general and administrative expenses	386,941		408,466
Loss on assets held for sale	Loss on assets held for sale	46,946		—		Loss on assets held for sale	—		46,946
Operating earnings	Operating earnings	168,130		167,803		Operating earnings	225,302		168,130
Interest expense	Interest expense	31,808		35,640		Interest expense	27,268		31,808
Interest income	Interest income	(890)		(2,058)		Interest income	(1,183)		(890)

Gain on sale of a business						Gain on sale of a business	(6,551)		—
Other income, net	Other income, net	(1,106)		(30)		Other income, net	(7,732)		(1,106)
Earnings before provision for income taxes	Earnings before provision for income taxes	138,318		134,251		Earnings before provision for income taxes	213,500		138,318
Provision for income taxes	Provision for income taxes	32,613		24,841		Provision for income taxes	37,221		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:
Basic	Basic	$	0.73	$	0.85	Basic	$	1.22	$	0.73
Diluted	Diluted	$	0.72	$	0.84	Diluted	$	1.21	$	0.72
Weighted average shares outstanding:	Weighted average shares outstanding:					Weighted average shares outstanding:
Basic	Basic	145,087		154,520		Basic	144,259		145,087
Diluted	Diluted	146,911		157,090		Diluted	145,782		146,911

See Notes to Condensed Consolidated Financial Statements

Table of ~~Content~~sContents

DOVER CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

(In thousands)

(Unaudited)


		Three Months Ended March 31,							Three Months Ended March 31,
		2019		2018			2020		2019
Net earnings	Net earnings	$	105,705	$	131,435	Net earnings	$	176,279	$	105,705
Other comprehensive earnings, net of tax
Other comprehensive (loss) earnings, net of tax						Other 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) gains						Foreign currency translation (losses) gains	(93,554)		23,700
Reclassification of foreign currency translation losses to earnings	Reclassification of foreign currency translation losses to earnings	25,339		—		Reclassification of foreign currency translation losses to earnings	—		25,339
Total foreign currency translation adjustments	Total foreign currency translation adjustments	49,039		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 cost	Amortization of actuarial losses included in net periodic pension cost	175		1,939		Amortization of actuarial losses included in net periodic pension cost	1,669		175
Amortization of prior service costs included in net periodic pension cost	Amortization of prior service costs included in net periodic pension cost	572		743		Amortization of prior service costs included in net periodic pension cost	286		572

Total pension and other post-retirement benefit plans	Total pension and other post-retirement benefit plans	747		2,682		Total pension and other post-retirement benefit plans	1,955		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 period		2,594		1,362
Net gains reclassified into earnings		(230)		(253)
Unrealized net (losses) gains arising during period						Unrealized net (losses) gains arising during period	(5,074)		2,594
Net losses (gains) reclassified into earnings						Net losses (gains) reclassified into earnings	1,121		(230)
Total cash flow hedges	Total cash flow hedges	2,364		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 tax						Other comprehensive (loss) earnings, net of tax	(95,552)		52,150
Comprehensive earnings	Comprehensive earnings	$	157,855	$	187,534	Comprehensive earnings	$	80,727	$	157,855

See Notes to Condensed Consolidated Financial Statements

Table of ~~Content~~sContents

DOVER CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)


		March 31, 2019		December 31, 2018			March 31, 2020		December 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 $29,381						Receivables, net of allowances of $33,901 and $29,381	1,222,154		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 sale		44,210		—

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 assets	Total assets	$	8,657,911	$	8,365,771	Total assets	$	8,944,253	$	8,669,477

Liabilities and Stockholders' Equity	Liabilities and Stockholders' Equity									Liabilities 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 debt	Long-term debt	2,940,967		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 payable	Noncurrent income tax payable	54,304		54,304		Noncurrent income tax payable	52,000		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

~~Table of Content~~s

Table of Contents

DOVER CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share data)

(Unaudited)


		Common stock $1 par value		Additional paid-in capital		Treasury stock		Retained earnings		Accumulated other comprehensive (loss) earnings		Total stockholders' equity			Common stock $1 par value		Additional paid-in capital		Treasury stock		Retained earnings		Accumulated other comprehensive loss		Total 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 2016-13														Adoption 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 awards	Common stock issued for the exercise of share-based awards	392		(20,000)		—		—		—		(19,608)		Common stock issued for the exercise of share-based awards	193		(10,212)		—		—		—		(10,019)
Stock-based compensation expense	Stock-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 value Additional paid-in capital Treasury stock Retained earnings Accumulated other comprehensive (loss) earnings Total 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 awards 290 (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 value		Additional paid-in capital		Treasury stock		Retained earnings		Accumulated other comprehensive (loss) earnings		Total 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

Table of ~~Content~~sContents

DOVER CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


		Three Months Ended March 31,							Three Months Ended March 31,
		2019		2018			2020		2019
Operating Activities:	Operating Activities:					Operating Activities:
Net earnings	Net 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 sale	Loss on assets held for sale	46,946		—		Loss on assets held for sale	—		46,946
Depreciation and amortization	Depreciation and amortization	67,738		68,625		Depreciation and amortization	68,752		67,738
Stock-based compensation expense	Stock-based compensation expense	8,182		6,745		Stock-based compensation expense	3,252		8,182

Gain on sale of a business						Gain on sale of a business	(6,551)		—
Other, net	Other, net	2,363		(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, net	Accounts receivable, net	(42,252)		22,781		Accounts receivable, net	(25,313)		(42,252)
Inventories	Inventories	(73,041)		(63,554)		Inventories	(61,936)		(73,041)
Prepaid expenses and other assets	Prepaid expenses and other assets	(14,921)		(14,778)		Prepaid expenses and other assets	(8,654)		(14,921)
Accounts payable	Accounts payable	(22,638)		(6,690)		Accounts payable	(25,245)		(22,638)
Accrued compensation and employee benefits	Accrued compensation and employee benefits	(55,559)		(69,554)		Accrued compensation and employee benefits	(67,247)		(55,559)
Accrued expenses and other liabilities	Accrued expenses and other liabilities	(16,107)		(36,029)		Accrued expenses and other liabilities	25,321		(16,107)

Accrued and deferred taxes, net	Accrued and deferred taxes, net	18,108		4,019		Accrued and deferred taxes, net	14,563		18,108
Net cash provided by operating activities	Net cash provided by operating activities	24,524		15,535		Net cash provided by operating activities	75,863		24,524

Investing Activities:	Investing Activities:					Investing Activities:
Additions to property, plant and equipment	Additions to property, plant and equipment	(37,122)		(44,678)		Additions to property, plant and equipment	(40,172)		(37,122)
Acquisitions, net of cash acquired	Acquisitions, net of cash acquired	(175,083)		(68,385)		Acquisitions, net of cash acquired	(208,421)		(175,083)
Proceeds from sale of property, plant and equipment	Proceeds from sale of property, plant and equipment	170		2,160		Proceeds from sale of property, plant and equipment	1,232		170
Proceeds from sale of businesses	Proceeds from sale of businesses	2,245		2,069		Proceeds from sale of businesses	16,850		2,245
Other	Other	(7,900)		(13,763)		Other	—		(7,900)
Net cash used in investing activities	Net 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 stock	Repurchase of common stock	—		(44,977)		Repurchase of common stock	(52,916)		—

Change in commercial paper and notes payable	Change in commercial paper and notes payable	125,893		195,066		Change in commercial paper and notes payable	415,300		125,893
Dividends paid to stockholders	Dividends 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 awards	Payments 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)

Other	Other	(409)		(1,558)		Other	(512)		(409)
Net cash provided by (used in) financing activities		36,067		(289,103)
Net cash provided by financing activities						Net cash provided by financing activities	280,954		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 equivalents	Effect of exchange rate changes on cash and cash equivalents	3,892		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 equivalents						Net increase (decrease) in cash and cash equivalents	111,654		(153,207)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	396,221		753,964		Cash and cash equivalents at beginning of period	397,253		396,221
Cash and cash equivalents at end of period	Cash 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

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 Corporation~~Revenue

~~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 as~~Company’s revenue is short cycle in nature with shipments within one year from order. A small portion of the ~~close~~Company’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 share~~businesses, 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 transferred~~products manufactured to ~~Apergy as part of the separation on May 9, 2018:~~


~~Assets:~~
~~Cash and cash equivalents~~	$	~~10,357~~
~~Current assets~~	~~462,620~~
~~Non-current assets~~	~~1,438,760~~
	$	~~1,911,737~~
~~Liabilities:~~
~~Current liabilities~~	$	~~185,354~~
~~Non-current liabilities~~	~~119,568~~
	$	~~304,922~~

~~Net assets distributed to Apergy Corporation~~	$	~~1,606,815~~
~~Less: Cash received from Apergy Corporation~~	~~700,000~~
~~Net distribution to Apergy Corporation~~	$	~~906,815~~

~~In connection with the spin-off from the company, Apergy issued and~~be 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 as~~volume 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 market~~segment and ~~segment:~~

Three Months Ended March 31,
2019 2018
Printing & Identification $ 282,086 $ 282,522
Industrials 405,105 389,104
Total Engineered Systems segment 687,191 671,626
Fueling & Transport 373,050 319,304
Pumps 177,439 162,309
Process Solutions 152,735 146,485
Total Fluids segment 703,224 628,098
Refrigeration 277,598 278,655
Food Equipment 57,045 59,580
Total Refrigeration & Food Equipment segment 334,643 338,235
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,
2019 2018
United States $ 919,892 $ 853,002
Europe 402,645 387,178
Asia 196,350 194,603
Other Americas 138,118 133,144
Other 67,752 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 ~~2021~~2022 and thereafter.

The following table provides information about contract assets and contract liabilities from contracts with customers:


		March 31, 2019		December 31, 2018		At Adoption			March 31, 2020		December 31, 2019		January 1, 2019

Contract assets	Contract assets	$	11,443	$	9,330	$	11,932	Contract assets	$	13,841	$	14,894	$	9,330
Contract liabilities - current	Contract liabilities - current	39,733		36,461		48,268		Contract liabilities - current	61,508		44,001		36,461
Contract liabilities - non-current	Contract liabilities - non-current	9,731		9,382		9,916		Contract liabilities - non-current	10,363		9,121		9,382

The revenue recognized during the three months ended March 31, ~~2019~~2020 and ~~2018~~2019 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 equipment	1,580
Goodwill	125,381
Intangible assets	88,900

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 allocated		Useful life (in years)
Goodwill - tax deductible	$	33,125	na
Goodwill - non deductible	92,256		na
Customer intangibles	74,100		12

Trademarks	5,100		15
Other intangibles	9,700		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 Fluids~~Solutions 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 equipment~~

~~597~~

~~Goodwill~~

~~97,817~~

~~Intangible assets~~

~~77,000~~

~~Other assets and deferred charges~~

~~Current liabilities~~

~~(9,743)~~

~~Net assets acquired~~

~~175,083~~

~~The amounts assigned to goodwill and major intangible asset classifications are as follows:~~

Amount allocated Useful life (in years)
Goodwill - Tax deductible 97,817 na
Customer intangibles 54,500 9
Patents 16,000 9
Trademarks 6,500 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 ~~2019~~2020 and ~~2018~~2019 acquisitions on the Company’s revenue and earnings from operations for the three months ended March 31, ~~2019~~2020 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 ~~2019~~2020 and ~~2018~~2019 acquisitions had taken place at the beginning of the prior year, ~~2018~~2019 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, ~~2019~~2020 and ~~2018~~2019 were as follows:


		Three Months Ended March 31,							Three Months Ended March 31,
		2019		2018			2020		2019
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.

~~Assets~~2020

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 Held~~within the Refrigeration & Food Equipment Segment for ~~Sale~~the 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 approximatel~~y~~$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 assets~~	~~17,441~~
~~Property, plant and equipment, net~~	~~13,596~~
~~Goodwill and intangible assets, net~~	~~34,524~~
~~Other assets and deferred charges~~	~~256~~
~~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 ~~Fluids~~Pumps & 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~~

Table of ~~Finder.~~Contents

DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

5. Inventories


	March 31, 2020		December 31, 2019
Raw materials	$	486,866	$	467,912
Work in progress	172,173		162,670
Finished goods	300,725		280,051
Subtotal	959,764		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, 2020		December 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, gross	2,239,270		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 during~~For the three months ended March 31, 2020 and 2019, depreciation expense was $34,555 and ~~2018.~~$32,188, respectively.

7. Credit Losses

~~Discontinued Operations~~Effective 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 as~~The 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 business~~allowance. 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 earnings	2,706
Provision for expected credit losses	3,703
Amounts written off charged against the allowance	(811)
Other, including dispositions and foreign currency translation	(1,078)
Ending Balance, March 31,	$	33,901

119

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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 are~~goodwill by reportable operating segments were as follows:


	Engineered Products		Fueling Solutions		Imaging & Identification		Pumps & Process Solutions		Refrigeration & Food Equipment		Total
Balance at December 31, 2019	$	636,571	$	873,381	$	977,069	$	750,627	$	545,699	$	3,783,347
Acquisitions	33,125		—		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 services~~

~~177,928~~

~~Gross profit~~

~~106,113~~

~~Selling, general and administrative expenses~~

~~79,123~~

~~Operating earnings~~

~~26,990~~

~~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, 2019 December 31, 2018
Raw materials $ 474,204 $ 439,616
Work in progress 177,544 154,878
Finished goods 288,986 265,722
Subtotal 940,734 860,216
Less reserves (112,436) (111,420)
Total $ 828,298 $ 748,796

~~7. Property, Plant and Equipment, net~~

March 31, 2019 December 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, gross 2,157,935 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 for~~During the three months ended March 31, ~~2019 and 2018, respectively.~~

~~8. Leases~~

~~The~~2020, the Company ~~adopted ASC Topic 842 - Leases~~recorded 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 to~~Imaging & Identification segments discussed in Note 3 — Acquisitions. During the ~~comparative periods presented. Adoption~~three 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:


	March 31, 2020										December 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
Trademarks	220,805		89,123		131,682		218,064		85,791		132,273
Patents	158,612		134,360		24,252		159,376		133,677		25,699
Unpatented technologies	162,763		100,858		61,905		154,505		99,276		55,229
Distributor relationships	80,237		44,889		35,348		82,779		44,202		38,577
Drawings & manuals	26,619		22,228		4,391		27,500		22,403		5,097
Other	22,908		17,482		5,426		22,355		16,939		5,416
Total	2,139,910		1,140,331		999,579		2,075,215		1,116,854		958,361
Unamortized intangible assets:
Trademarks	96,561		—		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 deferred~~Company'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,
	2020		2019
Engineered Products	$	358	$	79
Fueling Solutions	1,475		738
Imaging & Identification	256		291
Pumps & Process Solutions	3,846		381
Refrigeration & Food Equipment	560		1,412
Corporate	846		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 expenses	5,799		1,757
Total	$	7,341	$	2,936

~~ROU assets represent the Company's right to use an underlying asset~~The restructuring expenses of $7,341 incurred during the ~~lease term~~three 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 represent~~administrative 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 obligation~~Company for sustained growth and investment. The Company expects to ~~make lease payments arising from~~incur additional charges of approximately $6 million during the ~~lease. ROU assets and liabilities are recognized at commencement date based on~~remainder 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.

•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:


	Severance		Exit			Total
Balance at December 31, 2019	$	13,751	$	2,639		$	16,390
Restructuring charges	4,014		3,327			7,341
Payments	(6,510)		(2,049)			(8,559)


Other, including foreign currency translation	184		(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~~

~~Variable~~

~~2,047~~

~~Short-term~~

~~4,865~~

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 leases~~

~~108~~

~~Financing cash flows from finance leases~~

~~409~~

~~Total~~

~~12,931~~

~~Right-of-use assets obtained in exchange for new lease obligations:~~

~~Operating leases~~

~~10,708~~

~~Finance leases~~

~~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 liabilities~~

~~118,783~~

~~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 liabilities~~

~~8,350~~

~~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:~~

Operating Finance
2019 (excluding the three months ending March 31, 2019) $ 37,090 $ 1,425
2020 39,237 1,881
2021 29,666 1,793
2022 21,329 1,608
2023 13,544 1,204
Thereafter 42,182 4,040
Total lease payments 183,048 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:~~

Operating Capital
2019 $ 49,009 $ 1,802
2020 38,620 1,748
2021 29,396 1,687
2022 21,767 1,392
2023 13,994 952
Thereafter 42,087 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 leases~~

~~5.8~~

~~Finance leases~~

~~6.4~~

~~Weighted-average discount rate~~

~~Operating leases~~

~~3.3%~~

~~Finance leases~~

~~4.4%~~

~~9. Goodwill and Other Intangible Assets~~

~~The changes in the carrying value of goodwill by reportable operating segments were as follows:~~

Engineered Systems Fluids Refrigeration & Food Equipment Total
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, 2019 December 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
Trademarks 217,996 74,597 143,399 214,774 72,305 142,469
Patents 160,240 129,692 30,548 144,302 128,254 16,048
Unpatented technologies 155,481 89,379 66,102 155,380 85,560 69,820
Distributor relationships 83,804 39,750 44,054 82,970 37,943 45,027
Drawings & manuals 27,707 20,784 6,923 31,849 23,273 8,576
Other 21,434 15,927 5,507 21,046 15,835 5,211
Total 2,070,771 1,018,306 1,052,465 2,046,063 1,008,475 1,037,588
Unamortized intangible assets:
Trademarks 96,671 — 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,
2019 2018
Engineered Systems $ 370 $ 1,375
Fluids 1,119 2,051
Refrigeration & Food Equipment 1,412 45
Corporate 35 749
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 expenses 1,757 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:~~

Severance Exit Total
Balance at December 31, 2018 $ 24,284 $ 3,880 $ 28,164
Restructuring charges 1,941 995 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, 2019		December 31, 2018			March 31, 2020		December 31, 2019
Short-term	Short-term					Short-term
Current portion of long-term debt and short-term borrowings		$	1,355	$	—
Short-term borrowings						Short-term borrowings	$	500,000	$	—
Commercial paper	Commercial paper	344,900		220,318		Commercial paper	—		84,700
Notes payable and current maturities of long-term debt		$	346,255	$	220,318
Notes payable						Notes payable	$	500,000	$	84,700


				Carrying amount ⁽¹⁾									Carrying amount ⁽¹⁾
		Principal		March 31, 2019		December 31, 2018			Principal		March 31, 2020		December 31, 2019
Long-term	Long-term							Long-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, 2025	3.150% 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, 2028	6.65% 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, 2029								2.950% 10-year notes due November 4, 2029	$	300,000	296,366		296,270
5.375% 30-year debentures due October 15, 2035	5.375% 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, 2038	6.60% 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, 2041	5.375% 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
Other				779		763

Total long-term debt	Total long-term debt			2,940,967		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

$~~15.4~~18.3 million and ~~$15.8~~$18.9 million as of March 31, ~~2019~~2020 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, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively.

~~Table~~As of ~~Contents~~

~~DOVER CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

~~The~~March 31, 2020, the Company ~~maintains~~maintained 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, ~~2019~~2020 and had aan interest coverage ratio of ~~9.7~~consolidated 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 ~~maintained~~issued 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, ~~2019~~2020 and December 31, ~~2018,~~2019, the Company had contracts with ~~U.S. dollar equivalent~~total notional amounts of ~~$210,787~~$170,672 and ~~$153,873,~~$179,580, respectively, to exchange ~~foreign~~ currencies, principally ~~the~~Euro, 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, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively, that are not designated as hedging instruments. These instruments are used to reduce the

Table of Contents

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, ~~2019~~2020 and December 31, ~~2018~~2019 and the balance sheet lines in which they are recorded:


		Fair Value Asset (Liability)								Fair Value Asset (Liability)
		March 31, 2019		December 31, 2018		Balance Sheet Caption		March 31, 2020		December 31, 2019		Balance Sheet Caption
Foreign currency forward	Foreign currency forward	$	3,996	$	1,874	Prepaid / Other current assets	Foreign currency forward	$	1,826	$	2,892	Prepaid / Other current assets
Foreign currency forward	Foreign currency forward	(637)		(1,165)		Other accrued expenses	Foreign 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 ~~Statement~~Statements 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 ~~December~~November 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.

~~Table of Contents~~

~~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,
2019 2018
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,
	2020		2019
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.

Table of Contents

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, ~~2019~~2020 and December 31, ~~2018:~~2019:


							March 31, 2020		December 31, 2019
		Level 2		Level 2			Level 2		Level 2
Assets:	Assets:					Assets:
Foreign currency cash flow hedges	Foreign currency cash flow hedges	$	3,996	$	1,874	Foreign currency cash flow hedges	$	1,826	$	2,892
Liabilities:	Liabilities:					Liabilities:
Foreign currency cash flow hedges	Foreign currency cash flow hedges	637		1,165		Foreign currency cash flow hedges	2,979		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, ~~2019~~2020 and December 31, ~~2018~~2019, 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, ~~2018~~2019 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 ~~increase~~decrease in the effective tax rate for the three months ended March 31, ~~2019~~2020 relative to the prior comparable period ~~was predominantly~~is 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 for~~the 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.~~

~~Table of Contents~~

~~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 ~~zero~~0 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 ~~610,979~~389,603 shares, performance share awards of ~~34,402~~49,056 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.

Table of Contents

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:


		SARs												SARs
		2019		2018								2020		2019
Risk-free interest rate	Risk-free interest rate	2.51	%	2.58	%	-	2.87	%	Risk-free interest rate	1.44	%	2.51	%
Dividend yield	Dividend yield	2.13	%	1.99	%	-	2.43	%	Dividend yield	1.65	%	2.13	%
Expected life (years)	Expected life (years)	5.6		5.6		-	5.7		Expected life (years)	5.5		5.6
Volatility	Volatility	22.35	%	20.95	%	-	21.20	%	Volatility	22.76	%	22.35	%

Grant price	Grant price	$91.20		$79.75		-	$82.09		Grant price	$119.86		$91.20
Fair value per share at date of grant	Fair 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 rate	1.40	%
Dividend yield	1.65	%
Expected life (years)	2.9
Volatility	23.30	%

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:

2019 2018
Fair value per share at date of grant $91.20 $79.75 - $82.09
Average attainment rate reflected in expense 211.68% 267.91%


			Performance Shares
			2019
Fair value per share at date of grant			$91.20
Average attainment rate reflected in expense			209.31%

~~Table of Contents~~

~~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,
		2019		2018			2020		2019
Pre-tax stock-based compensation expense (continuing)		$	8,182	$	6,745
Pre-tax stock-based compensation expense						Pre-tax stock-based compensation expense	$	3,252	$	8,182
Tax benefit	Tax benefit	(1,048)		(1,496)		Tax benefit	(349)		(1,048)
Total stock-based compensation expense, net of tax	Total 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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DOVER CORPORATION

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 ~~reserves~~estimated liabilities have been established. At March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, the Company ~~has reserves~~had 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 ~~reserves~~estimated liabilities for legal matters that are probable and estimable, and ~~not otherwise covered by insurance, and~~ at March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, these ~~reserves~~estimated 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, ~~2019~~2020 and ~~2018,~~2019, were as follows:


		2019		2018			2020		2019
Beginning Balance, December 31 of the Prior Year	Beginning 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 warranties	Provision for warranties	13,955		12,447		Provision for warranties	13,360		13,955
Settlements made	Settlements made	(14,993)		(14,833)		Settlements made	(15,526)		(14,993)
Other adjustments, including acquisitions and currency translation	Other adjustments, including acquisitions and currency translation	(792)		848		Other adjustments, including acquisitions and currency translation	(1,079)		(792)
Ending Balance, March 31	Ending Balance, March 31	$	48,243	$	57,865	Ending Balance, March 31	$	45,871	$	48,243

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~~DOVER CORPORATION~~

~~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
2019 2018 2019 2018
Service cost $ 1,754 $ 2,984 $ 1,545 $ 1,577
Interest cost 4,756 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 — — — 1
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,
2019 2018
Service cost $ 486 $ 695
Interest cost 668 893
Amortization:
Prior service cost 703 963
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

2216

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DOVER CORPORATION

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
	2020		2019		2020		2019
Service cost	$	1,706	$	1,754	$	1,293	$	1,545
Interest cost	4,068		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 loss	1,884		—		742		816



Net periodic (income) expense	$	(154)	$	(1,948)	$	1,064	$	2,027

Non-Qualified Supplemental Benefits


	Three Months Ended March 31,
	2020		2019
Service cost	$	318	$	486
Interest cost	441		668
Amortization:
Prior service cost	424		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,
		2019		2018			2020		2019
Service cost	Service cost	$	5	$	8	Service cost	$	5	$	5
Interest cost	Interest cost	78		73		Interest cost	60		78
Amortization:	Amortization:					Amortization:
Prior service cost	Prior service cost	3		3		Prior service cost	3		3
Recognized actuarial gain	Recognized actuarial gain	(18)		(8)		Recognized actuarial gain	(4)		(18)

Net periodic expense	Net 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, ~~2019~~2020 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, ~~2019~~2020 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, 2019 March 31, 2018
Pre-tax Tax Net of tax Pre-tax Tax Net of tax
Foreign currency translation adjustments $ 49,786 $ (747) $ 49,039 $ 43,045 $ 9,263 $ 52,308
Pension and other post-retirement benefit plans 952 (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,
2019 2018
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, 2020										March 31, 2019
	Pre-tax		Tax		Net of tax		Pre-tax		Tax		Net 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,
	2020		2019
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, ~~2019~~2020 and ~~2018~~2019 were as follows:


		Three Months Ended March 31,							Three Months Ended March 31,
		2019		2018			2020		2019
Foreign currency translation:	Foreign currency translation:					Foreign currency translation:
Reclassification of foreign currency translation losses to earnings for assets held for sale	Reclassification 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 benefit	Tax benefit	—		—		Tax benefit	—		—
Net of tax	Net 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 losses	Amortization of actuarial losses	$	228	$	2,471	Amortization of actuarial losses	$	2,158	$	228
Amortization of prior service costs	Amortization of prior service costs	724		939		Amortization of prior service costs	365		724

Total before tax	Total before tax	952		3,410		Total before tax	2,523		952
Tax benefit	Tax benefit	(205)		(728)		Tax benefit	(568)		(205)
Net of tax	Net 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 earnings						Net losses (gains) reclassified into earnings	$	1,420	$	(291)
Tax (benefit) provision						Tax (benefit) provision	(299)		61
Net of tax	Net 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 54 — ~~Held 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,
2019 2018
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,
	2020		2019
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 Solutions	53,498		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 geography	2020		2019
United States	$	956,640	$	919,892
Europe	361,166		402,645
Asia	154,275		196,350
Other Americas	129,049		138,118
Other	54,809		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, 9,703,666~~2020, 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,
		2019		2018			2020		2019
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
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 earnings	Net earnings	$	0.73	$	0.85	Net earnings	$	1.22	$	0.73

Weighted average shares outstanding	Weighted average shares outstanding	145,087,000		154,520,000		Weighted average shares outstanding	144,259,000		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 earnings	Net earnings	$	0.72	$	0.84	Net earnings	$	1.21	$	0.72

Weighted average shares outstanding	Weighted average shares outstanding	146,911,000		157,090,000		Weighted average shares outstanding	145,782,000		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,
		2019	2018		2020	2019
Weighted average shares outstanding - Basic	Weighted average shares outstanding - Basic	145,087,000	154,520,000	Weighted average shares outstanding - Basic	144,259,000	145,087,000
Dilutive effect of assumed exercise of SARs and vesting of performance shares and RSUs	Dilutive effect of assumed exercise of SARs and vesting of performance shares and RSUs	1,824,000	2,570,000	Dilutive effect of assumed exercise of SARs and vesting of performance shares and RSUs	1,523,000	1,824,000
Weighted average shares outstanding - Diluted	Weighted average shares outstanding - Diluted	146,911,000	157,090,000	Weighted average shares outstanding - Diluted	145,782,000	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 ~~42,000~~65,000 and ~~13,000~~42,000 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 ~~Issued~~Adopted 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 result~~resulted 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 Company~~prospectively 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 assessment~~the 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 standard~~COVID-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 assessment~~duration and spread of the ~~adequacy of~~outbreak, its ~~allowance for doubtful accounts~~impact on ~~trade accounts receivable~~our customers and suppliers and the ~~recognition~~range 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 ~~three~~five 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 ~~three~~five operating segments are as follows:

•Our Engineered ~~Systems~~Products segment is ~~comprised~~a provider of ~~two platforms, Printing & Identification~~a wide range of products, software and ~~Industrials, and is focused on the design, manufacture and service~~services 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 solutions~~solid waste handling, industrial automation, aerospace and defense, industrial ~~end markets.~~winch and hoist, and fluid dispensing.

•Our ~~Fluids~~Fueling 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 ~~handling~~and efficient operation of ~~critical fluids, and providing critical components to the~~ retail fueling ~~chemical, hygienic, oil~~ and ~~gas, power generation~~vehicle 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 efficient~~energy-efficient equipment and systems ~~serving~~that 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 $87.1~~decreased $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% and~~was 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 revenue~~dispositions. Organic bookings growth was ~~led by 15.1% organic~~primarily due to robust activity in our Fueling Solutions segment as well as growth in our ~~Fluids~~Pumps & Process Solutions segment, ~~which was driven~~offset 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 growth~~Products 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 ~~$175.1~~an 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 ~~acquisition~~AMS 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 ~~position~~Refrigeration & 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)	2020			2019			% Change
Revenue	$	1,655,939		$	1,724,757		(4.0)	%
Cost of goods and services	1,043,696			1,101,215			(5.2)	%
Gross profit	612,243			623,542			(1.8)	%
Gross profit margin	37.0		%	36.2		%	0.8

Selling, general and administrative expenses	386,941			408,466			(5.3)	%
Selling, general and administrative expenses as a percent of revenue	23.4		%	23.7		%	(0.3)
Loss on assets held for sale	—			46,946			nm*
Operating earnings	225,302			168,130
Interest expense	27,268			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 taxes	213,500			138,318			54.4	%
Provision for income taxes	37,221			32,613			14.1	%
Effective tax rate	17.4		%	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 ~~Fueling~~Pumps & ~~Transport end market~~Process 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.l~~S.r.l. ("Finder")~~, a wholly owned subsidiary, to Gruppo Aturia S.p.A for total consideration of approximatel~~y ~~$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) 2019 2018 % Change
Revenue $ 1,724,757 $ 1,637,671 5.3 %
Cost of goods and services 1,101,215 1,034,842 6.4 %
Gross profit 623,542 602,829 3.4 %
Gross profit margin 36.2 % 36.8 % (0.6) %
Selling, general and administrative expenses 408,466 435,026 (6.1) %
Selling, general and administrative expenses as a percent of revenue 23.7 % 26.6 % (2.9) %
Loss on assets held for sale 46,946 — nm*
Interest expense 31,808 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 operations 138,318 134,251
Provision for income taxes 32,613 24,841 31.3 %
Effective tax rate 23.6 % 18.5 % 5.1 %
Earnings from continuing operations 105,705 109,410 (3.4) %
Earnings from discontinued operations, net — 22,025 nm*
Net earnings 105,705 131,435 (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 Company~~we 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 ~~increase~~decrease in the effective tax rate for the three months ended March 31, ~~2019~~2020 relative to the prior comparable period was ~~predominantly~~primarily driven by favorable audit settlements.

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 operations~~Net 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 ~~decrease~~increase in net earnings ~~from continuing operations is~~was mainly attributable to ~~the~~pricing initiatives, benefits from productivity and rightsizing actions, and broad-based cost reductions, as well a loss on assets held for sale ~~for Finder~~of $46.9 million in the ~~Fluids segment of $46.9 million. Excluding the loss on assets held for sale, earnings from continuing operations increased~~prior 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 profit~~reduced volume due to ~~an increase in revenues led by~~ the ~~Fluids~~impact of COVID-19 and ~~Engineered Systems segments~~increased 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 Products		Fueling Solutions		Imaging & Identification		Pumps & Process Solutions		Refrigeration & Food Equipment		Corporate		Total
Restructuring (GAAP)	$	358	$	1,475	$	256	$	3,846	$	560	$	846	$	7,341
Other costs, net	3		18		8		—		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 Products		Fueling Solutions		Imaging & Identification		Pumps & Process Solutions		Refrigeration & Food Equipment		Corporate		Total
Restructuring (GAAP)	$	79	$	738	$	291	$	381	$	1,412	$	35	$	2,936
Other costs, net	1		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 segment~~The 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, manufacture~~various product and service offerings that serve multiple markets. See Note 17 — Segment Information in the Condensed Consolidated Financial Statements in Item 1 of ~~critical equipment~~this Form 10-Q for a reconciliation of segment revenue, earnings and ~~components serving~~margin 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) 2019 2018 % Change
Revenue:
Printing & Identification $ 282,086 $ 282,522 (0.2) %
Industrials 405,105 389,104 4.1 %
Total $ 687,191 $ 671,626 2.3 %
Segment earnings $ 123,074 $ 102,066 20.6 %
Segment margin 17.9 % 15.2 %
Segment EBITDA $ 140,869 $ 121,305 16.1 %
Segment EBITDA margin 20.5 % 18.1 %
Other measures:
Depreciation and amortization $ 17,795 $ 19,239 (7.5) %
Bookings:
Printing & Identification $ 280,658 $ 284,437 (1.3) %
Industrials 414,786 466,722 (11.1) %
$ 695,444 $ 751,159 (7.4) %
Backlog:
Printing & Identification $ 121,374 $ 135,915 (10.7) %
Industrials 448,137 376,474 19.0 %
$ 569,511 $ 512,389 11.1 %
Components of revenue growth:
Organic growth 5.8 %
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)	2020			2019			% Change
Revenue	$	408,160		$	418,851		(2.6)	%

Segment earnings (EBIT)	$	69,094		$	67,119		2.9	%
Depreciation and amortization	10,122			10,359			(2.3)	%
Segment EBITDA	$	79,216		$	77,478		2.2	%

Segment margin	16.9		%	16.0		%
Segment EBITDA margin	19.4		%	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)	%
Acquisitions							0.1	%

Foreign currency translation							(0.8)	%
							(2.6)	%

First Quarter ~~2019~~2020 Compared to the First Quarter ~~2018~~ 2019

Engineered ~~Systems revenue~~Products segment revenue for the first quarter of ~~2019 increased $15.6~~2020 decreased $10.7 million, or ~~2.3%~~2.6%, as compared to the first quarter of ~~2018,~~2019, comprised of ~~broad-based~~ organic ~~growth~~decline of ~~5.8% partially offset by~~1.9% 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 impacted~~did 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 im~~pact 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 grow~~th 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 ~~Systems~~Products segment earnings increased ~~$21.0~~$2.0 million, or ~~20.6%~~2.9%, compared to the first quarter of ~~2018.~~ 2019. This increase was ~~primarily~~primarily driven by ~~solid conversion on organic volume growth, favorable pricing and~~ productivity ~~initiatives~~actions including the ~~benefits~~benefit of rightsizing actions and cost reduction initiatives, ~~across both platforms.~~ and selling, general and administrative expenses cost containment actions.These ~~benefits~~impacts more than offset ~~increases in material costs primarily~~the 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 ~~margins~~operating margin increased ~~270~~90 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 for~~of 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 ~~Industrials~~industrial 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)	2020			2019			% Change
Revenue	$	359,982		$	373,050		(3.5)	%

Segment earnings	$	53,498		$	37,230		43.7	%
Depreciation and amortization	18,339			17,879			2.6	%
Segment EBITDA	$	71,837		$	55,109		30.4	%

Segment margin	14.9		%	10.0		%
Segment EBITDA margin	20.0		%	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)	%
Acquisitions							0.8	%

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 solutions~~favorable impact from foreign currency translation. The cost reduction actions include the elimination of non-essential travel, third party and ~~vehicle service businesses, along with~~other expenses, and re-prioritization of all planned investments and hiring plans. These benefits were partially offset by the ~~unfavorable~~previously discussed global impact of ~~foreign currency transl~~COVID-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) 2019 2018 % Change
Revenue:
Fueling & Transport $ 373,050 $ 319,304 16.8 %
Pumps 177,439 162,309 9.3 %
Process Solutions 152,735 146,485 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 %
Bookings 712,856 703,461 1.3 %
Backlog 538,888 544,250 (1.0) %
Components of revenue growth:
Organic growth 15.1 %
Acquisitions 1.3 %
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 due~~1.9%. 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)	2020			2019			% Change
Revenue	$	256,765		$	268,354		(4.3)	%

Segment earnings	$	51,482		$	55,955		(8.0)	%
Depreciation and amortization	8,769			7,435			17.9	%
Segment EBITDA	$	60,251		$	63,390		(5.0)	%

Segment margin	20.1		%	20.9		%
Segment EBITDA margin	23.5		%	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)	%
Acquisitions							2.8	%

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, specifically~~the 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 in~~Europe, North America and South America. Additionally, the ~~acquisition~~expansion of ~~Belanger. Transport revenue improved~~government 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 ~~rail~~execution 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 strong~~and 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 experienced~~place 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 reflects~~quarter, 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)	2020			2019			% Change
Revenue	$	319,536		$	330,219		(3.2)	%

Segment earnings⁽¹⁾	$	66,079		$	14,991		340.8	%
Depreciation and amortization	18,336			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)	%
Acquisitions							0.9	%
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 bookings~~the 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 strength~~selling, 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 sales~~foreign 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 equipment~~quarter, reflecting an unfavorable impact from foreign currency translation of 1.1% and ~~plastic & polymers equipment.~~

~~Fluids segment ear~~nings 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 ~~Pumps~~biopharma 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 efficient~~energy-efficient equipment and systems ~~serving~~that serve the commercial refrigeration, heating and cooling and food equipment ~~end~~ markets.

Three Months Ended March 31,
(dollars in thousands) 2019 2018 % Change
Revenue:
Refrigeration $ 277,598 $ 278,655 (0.4) %
Food Equipment 57,045 59,580 (4.3) %
Total $ 334,643 $ 338,235 (1.1) %
Segment earnings $ 24,807 $ 29,182 (15.0) %
Segment margin 7.4 % 8.6 %
Segment EBITDA $ 37,818 $ 42,761 (11.6) %
Segment EBITDA margin 11.3 % 12.6 %
Other measures:
Depreciation and amortization $ 13,011 $ 13,579 (4.2) %
Bookings 376,998 372,701 1.2 %
Backlog 311,632 283,250 10.0 %
Components of revenue decline:
Organic growth 0.7 %
Foreign currency translation (1.8) %
(1.1) %


	Three Months Ended March 31,
(dollars in thousands)	2020			2019			% Change
Revenue	$	311,913		$	334,643		(6.8)	%

Segment earnings⁽¹⁾	$	23,529		$	24,807		(5.2)	%
Depreciation and amortization	11,548			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 ~~2019~~2020 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 ~~growth~~decline of ~~0.7% which was more than offset by~~4.3%, 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 ~~earnings~~earnings decreased ~~$4.4~~$1.3 million, or ~~15.0%~~5.2%, as compared to the first quarter of ~~2018.~~2019. Segment margin ~~decreased~~increased 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 quarter~~quarter. The earnings decline was driven by ~~increased project orders in our can-shaping business~~reduced volumes and operational inefficiencies associated with impacts from COVID-19, partially offset by ~~unfavorable foreign currency translation. Segment book~~the 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 quarter~~current 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 refrigeration~~discretionary 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 reinvestment~~to support continued operations, reinvest in existing businesses and fund strategic acquisitions, while ~~managing~~maintaining 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)		2019		2018
Cash Flows (dollars in thousands)						Cash Flows (dollars in thousands)	2020		2019
Net Cash Flows Provided By (Used In):	Net Cash Flows Provided By (Used In):					Net Cash Flows Provided By (Used In):
Operating activities	Operating activities	$	24,524	$	15,535	Operating activities	$	75,863	$	24,524
Investing activities	Investing activities	(217,690)		(122,597)		Investing activities	(230,511)		(217,690)
Financing activities	Financing activities	36,067		(289,103)		Financing activities	280,954		36,067

Operating Activities

Cash provided by operating activities for the three months ended March 31, ~~2019~~2020 increased approximately ~~$9.0~~$51.3 million compared to the comparable ~~period~~period in ~~2018.~~2019. This increase was primarily driven by higher ~~continuing~~net earnings, ~~before~~excluding the impact of depreciation, amortization, loss on assets held for sale and ~~loss~~gain on sale of ~~assets.~~a business. The increase was ~~partially offset by higher investments~~also attributable to improvements in working capital of ~~$90.5~~$25.4 million relative to the prior ~~year primarily due~~year.

We also continue to ~~strong sales during~~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 ~~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, 2019		December 31, 2018		Adjusted Working Capital (dollars in thousands)	March 31, 2020		December 31, 2019
Accounts receivable	Accounts receivable	$	1,272,053	$	1,231,859	Accounts receivable	$	1,222,154	$	1,217,190
Inventories	Inventories	828,298		748,796		Inventories	852,075		806,141
Less: Accounts payable	Less: Accounts payable	952,162		969,531		Less: Accounts payable	947,006		983,293
Adjusted working capital	Adjusted working capital	$	1,148,189	$	1,011,124	Adjusted working capital	$	1,127,223	$	1,040,038

Adjusted working capital increased from December 31, ~~2018~~2019 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 by~~and 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, ~~2019~~2020 and ~~2018,~~2019, we used cash ~~through~~in 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 segment~~Imaging & 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 ~~Fluids~~Fueling 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 $7.6~~increased $3.1 million on major projects in progress during the three months ended March 31, ~~2019~~2020 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 ~~2019~~2020 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 ~~totaling~~provided 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 stock~~comm:on stock: During the three months ended March 31, 2020, we used $52.9 million to repurchase 548,659 shares. There were no ~~shar~~eshare repurchases during the three months ended March 31, 2019. ~~During three months ended March 31, 2018, we used $45.0 million~~We 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, ~~2019~~2020 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, ~~2019~~2020 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, ~~2019~~2020 compared to the same period in ~~2018~~2019 as a result of share ~~buyback programs~~repurchases 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 $4.7~~declined $9.6 million compared to the prior year period. ~~This increase~~The decrease is primarily due to the ~~increased~~decrease in the number of shares exercised ~~as well as~~partially 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)	2019			2018			Free Cash Flow (dollars in thousands)	2020			2019
Cash flow provided by operating activities	Cash flow provided by operating activities	$	24,524		$	15,535		Cash flow provided by operating activities	$	75,863		$	24,524
Less: Capital expenditures	Less: Capital expenditures	(37,122)			(44,678)			Less: Capital expenditures	(40,172)			(37,122)

Free cash flow	Free cash flow	$	(12,598)		$	(29,143)		Free cash flow	$	35,691		$	(12,598)

Free cash flow as a percentage of revenue	Free cash flow as a percentage of revenue	(0.7)		%	(1.8)		%	Free cash flow as a percentage of revenue	2.2		%	(0.7)		%

Free cash flow as a percentage of net earnings								Free cash flow as a percentage of net earnings	20.2		%	(11.9)		%

For the three months ended March 31, ~~2019,~~2020, we ~~used~~generated 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, ~~2019~~2020 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 lower~~partially 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 maintain~~As 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 loans~~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. 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, ~~2019~~2020 and had a coverage ratio of ~~9.7~~11.2 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 ~~instruments~~instruments 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, 2019			December 31, 2018			Net Debt to Net Capitalization Ratio (dollars in thousands)	March 31, 2020			December 31, 2019
Current maturities of long-term debt		$	1,355		$	—
Short term borrowings								Short term borrowings	$	500,000		$	—
Commercial paper	Commercial paper	344,900			220,318			Commercial paper	—			84,700
Notes payable and current maturities of long-term debt		346,255			220,318
Notes payables								Notes payables	500,000			84,700
Long-term debt	Long-term debt	2,940,967			2,943,660			Long-term debt	2,963,018			2,985,716
Total debt	Total debt	3,287,222			3,163,978			Total debt	3,463,018			3,070,416
Less: Cash and cash equivalents	Less: Cash and cash equivalents	(243,014)			(396,221)			Less: Cash and cash equivalents	(508,907)			(397,253)
Net debt	Net debt	3,044,208			2,767,757			Net debt	2,954,111			2,673,163
Add: Stockholders' equity	Add: Stockholders' equity	2,837,453			2,768,666			Add: Stockholders' equity	2,980,681			3,032,660
Net capitalization	Net capitalization	$	5,881,661		$	5,536,423		Net capitalization	$	5,934,792		$	5,705,823
Net debt to net capitalization	Net debt to net capitalization	51.8		%	50.0		%	Net debt to net capitalization	49.8		%	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 reduction~~an increase in cash ~~levels to fund the acquisition of Belanger, dividends,~~ and ~~other operating purposes.~~cash equivalents. Stockholders' equity ~~increased $68.8~~decreased $52.0 million primarily as a result of ~~higher~~foreign 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 ~~are~~is 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 ~~that~~which 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 capital~~restructuring 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 ~~provides~~and 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. ~~Reconciliations~~Free 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 ~~exclude~~excludes 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

~~There~~The 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.


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total 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 31	548,659	96.45		548,659	7,811,385
For the Third Quarter	548,659	$	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 made~~The 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			Amended and Restated Bylaws of the Company, effective as of February 14, 2020, filed as Exhibit 3.1 to the Company's Current Report on form 8-K filed on February 19, 2020 (SEC file No. 001-04018), are incorporated by reference.

10.1			Form of 2020 award grant letter for SSAR grants made under the Dover Corporation 2012 Equity and Cash Incentive Plan.*

10.2			Form of 2020 award grant letter for cash performance awards made under the Dover Corporation 2012 Equity and Cash Incentive Plan.*

10.3			Form of 2020 award grant letter for performance share awards made under the Dover Corporation 2012 Equity and Cash Incentive Plan.*

10.4			Form of 2020 award grant letter for RSU awards made under the Dover Corporation 2012 Equity and Cash Incentive Plan.*

31.1			Certificate pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, signed and dated by Brad M. Cerepak.

31.2			Certificate pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, signed and dated by Richard J. Tobin.

32			~~Certificate~~Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed and dated by Richard J. Tobin and Brad M. Cerepak.

101			The following materials from Dover Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2019~~2020 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, 2019~~21, 2020	/s/ Brad M. Cerepak
		Brad M. Cerepak
		Senior Vice President & Chief Financial Officer
		(Principal Financial Officer)

Date:	April ~~18, 2019~~21, 2020	/s/ ~~Carrie Anderson~~Ryan W. Paulson
		~~Carrie Anderson~~Ryan W. Paulson
		Vice President, Controller
		(Principal Accounting Officer)

4446


	Operating		Finance
2019 (excluding the three months ending March 31, 2019)	$	37,090	$	1,425
2020	39,237		1,881
2021	29,666		1,793
2022	21,329		1,608
2023	13,544		1,204
Thereafter	42,182		4,040
Total lease payments	183,048		11,951
Less: Interest	(21,018)		(2,075)
Present value of lease liabilities	$	162,030	$	9,876


	Operating		Capital
2019	$	49,009	$	1,802
2020	38,620		1,748
2021	29,396		1,687
2022	21,767		1,392
2023	13,994		952
Thereafter	42,087		3,802
Total	$	194,873	$	11,383


	Engineered Systems		Fluids		Refrigeration & Food Equipment		Total
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