UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2019~~March 31, 2020

☐ 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 ☑ 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 ☑ 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

☑

Accelerated Filer

☐

Emerging Growth Company

☐

~~Non-Acelerated~~Non-Accelerated Filer

☐

Smaller Reporting Company

☐

~~Emerging Growth 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. ☐

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

The number of shares outstanding of the Registrant’s common stock as of ~~October 10, 2019~~April 14, 2020 was ~~145,266,386.~~

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 ~~and~~ ~~nine~~months ended ~~September~~ ~~30,~~March 31, 2020 and 2019 ~~and 2018~~	1
	Condensed Consolidated Statements of Comprehensive Earnings for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~	2
	Condensed Consolidated Balance Sheets at ~~September~~ ~~30, 2019~~March 31, 2020 and December 31, ~~2018~~2019	3
	Condensed Consolidated Statements of Stockholders’ Equity for the three ~~and~~ ~~nine~~months ended ~~September~~ ~~30,~~March 31, 2020 and 2019 ~~and 2018~~	4
	Condensed Consolidated Statements of Cash Flows for the ~~nine~~three months ended Se ~~ptember~~ ~~30,~~March 31, 2020 and 2019 ~~and 2018~~	5
	Notes to Condensed Consolidated Financial Statements	76
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2922
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4443
Item 4.	Controls and Procedures	4443

PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	4543
Item 1A.	Risk Factors	4543
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4544
Item 3.	Defaults Upon Senior Securities	4544
Item 4.	Mine Safety Disclosures	4544
Item 5.	Other Information	4544
Item 6.	Exhibits	4645
SIGNATURES			4746

Table of Contents

Item 1. Financial Statements

DOVER CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share data)

(Unaudited)


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
		2019		2018		2019		2018			2020		2019
Revenue	Revenue	$	1,825,345	$	1,747,403	$	5,360,808	$	5,183,168	Revenue	$	1,655,939	$	1,724,757
Cost of goods and services	Cost of goods and services	1,151,857		1,100,883		3,391,185		3,268,583		Cost of goods and services	1,043,696		1,101,215
Gross profit	Gross profit	673,488		646,520		1,969,623		1,914,585		Gross profit	612,243		623,542
Selling, general and administrative expenses	Selling, general and administrative expenses	390,775		426,445		1,195,875		1,290,246		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	282,713		220,075		726,802		624,339		Operating earnings	225,302		168,130
Interest expense	Interest expense	31,410		31,192		94,972		98,957		Interest expense	27,268		31,808
Interest income	Interest income	(1,263)		(2,060)		(3,098)		(6,680)		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	(5,364)		(2,073)		(11,059)		(6,641)		Other income, net	(7,732)		(1,106)
Earnings before provision for income taxes	Earnings before provision for income taxes	257,930		193,016		645,987		538,703		Earnings before provision for income taxes	213,500		138,318
Provision for income taxes	Provision for income taxes	51,924		35,711		136,191		105,533		Provision for income taxes	37,221		32,613
Earnings from continuing operations		206,006		157,305		509,796		433,170
Loss from discontinued operations, net		—		—		—		(4,472)

Net earnings	Net earnings	$	206,006	$	157,305	$	509,796	$	428,698	Net earnings	$	176,279	$	105,705

Earnings per share from continuing operations:
Basic		$	1.42	$	1.07	$	3.51	$	2.87
Diluted		$	1.40	$	1.05	$	3.47	$	2.82
Loss per share from discontinued operations:
Basic		$	—	$	—	$	—	$	(0.03)
Diluted		$	—	$	—	$	—	$	(0.03)

Net earnings per share:	Net earnings per share:									Net earnings per share:
Basic	Basic	$	1.42	$	1.07	$	3.51	$	2.84	Basic	$	1.22	$	0.73
Diluted	Diluted	$	1.40	$	1.05	$	3.47	$	2.79	Diluted	$	1.21	$	0.72
Weighted average shares outstanding:	Weighted average shares outstanding:									Weighted average shares outstanding:
Basic	Basic	145,372		147,344		145,276		151,177		Basic	144,259		145,087
Diluted	Diluted	147,051		149,457		147,053		153,429		Diluted	145,782		146,911

See Notes to Condensed Consolidated Financial Statements

Table of Contents

DOVER CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

(In thousands)

(Unaudited)


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
		2019		2018		2019		2018			2020		2019
Net earnings	Net earnings	$	206,006	$	157,305	$	509,796	$	428,698	Net earnings	$	176,279	$	105,705
Other comprehensive (loss) 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 losses		(50,865)		(13,567)		(41,143)		(26,418)
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	(50,865)		(13,567)		(15,804)		(26,418)		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	127		402		379		3,409		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	539		704		1,623		2,699		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	666		1,106		2,002		6,108		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 (losses) arising during period		545		(1,449)		(223)		2,019
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	577		364		(69)		(347)		Net losses (gains) reclassified into earnings	1,121		(230)
Total cash flow hedges	Total cash flow hedges	1,122		(1,085)		(292)		1,672		Total cash flow hedges	(3,953)		2,364

Other comprehensive loss, net of tax		(49,077)		(13,546)		(14,094)		(18,638)
Other comprehensive (loss) earnings, net of tax										Other comprehensive (loss) earnings, net of tax	(95,552)		52,150
Comprehensive earnings	Comprehensive earnings	$	156,929	$	143,759	$	495,702	$	410,060	Comprehensive earnings	$	80,727	$	157,855

See Notes to Condensed Consolidated Financial Statements

Table of Contents

DOVER CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)


		September 30, 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	$	340,532	$	396,221	Cash and cash equivalents	$	508,907	$	397,253

Receivables, net of allowances of $32,340 and $28,469		1,269,150		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	816,563		748,796		Inventories	852,075		806,141
Prepaid and other current assets	Prepaid and other current assets	159,747		126,878		Prepaid and other current assets	122,864		127,846

Total current assets	Total current assets	2,585,992		2,503,754		Total current assets	2,706,000		2,548,430
Property, plant and equipment, net	Property, plant and equipment, net	820,582		806,497		Property, plant and equipment, net	841,813		842,318

Goodwill	Goodwill	3,760,428		3,677,328		Goodwill	3,860,817		3,783,347
Intangible assets, net	Intangible assets, net	1,080,130		1,134,256		Intangible assets, net	1,096,140		1,055,014
Other assets and deferred charges	Other assets and deferred charges	422,169		243,936		Other assets and deferred charges	439,483		440,368

Total assets	Total assets	$	8,669,301	$	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	Notes payable	$	182,700	$	220,318	Notes payable	$	500,000	$	84,700
Accounts payable	Accounts payable	952,708		969,531		Accounts payable	947,006		983,293
Accrued compensation and employee benefits	Accrued compensation and employee benefits	225,515		212,666		Accrued compensation and employee benefits	175,231		226,658
Accrued insurance	Accrued insurance	101,677		97,600		Accrued insurance	99,992		98,432
Other accrued expenses	Other accrued expenses	338,529		313,452		Other accrued expenses	355,837		339,060
Federal and other income taxes	Federal and other income taxes	24,173		13,854		Federal and other income taxes	16,295		17,748

Total current liabilities	Total current liabilities	1,825,302		1,827,421		Total current liabilities	2,094,361		1,749,891
Long-term debt	Long-term debt	2,908,729		2,943,660		Long-term debt	2,963,018		2,985,716
Deferred income taxes	Deferred income taxes	333,886		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	529,438		432,395		Other liabilities	515,607		527,174

Stockholders' equity:	Stockholders' equity:					Stockholders' equity:

Total stockholders' equity	Total stockholders' equity	3,017,643		2,768,666		Total stockholders' equity	2,980,681		3,032,660
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	8,669,301	$	8,365,771	Total liabilities and stockholders' equity	$	8,944,253	$	8,669,477

See Notes to Condensed Consolidated Financial Statements

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 June 30, 2019		$	258,315	$	873,034	$	(5,947,562)	$	7,979,597	$	(208,113)	$	2,955,271
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	—		—		—		206,006		—		206,006		Net earnings	—		—		—		176,279		—		176,279
Dividends paid ($0.49 per share)	Dividends paid ($0.49 per share)	—		—		—		(71,342)		—		(71,342)		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	111		(7,913)		—		—		—		(7,802)		Common stock issued for the exercise of share-based awards	193		(10,212)		—		—		—		(10,019)
Stock-based compensation expense	Stock-based compensation expense	—		7,876		—		—		—		7,876		Stock-based compensation expense	—		3,252		—		—		—		3,252
Common stock acquired	Common stock acquired	—		—		(23,280)		—		—		(23,280)		Common stock acquired	—		—		(52,916)		—		—		(52,916)
Other comprehensive loss, net of tax	Other comprehensive loss, net of tax	—		—		—		—		(49,077)		(49,077)		Other comprehensive loss, net of tax	—		—		—		—		(95,552)		(95,552)
Other, net	Other, net	—		(8)		—		(1)		—		(9)		Other, net	—		(12)		—		—		—		(12)
Balance at September 30, 2019		$	258,426	$	872,989	$	(5,970,842)	$	8,114,260	$	(257,190)	$	3,017,643
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			Common stock $1 par value		Additional paid-in capital		Treasury stock		Retained earnings		Accumulated other comprehensive (loss) earnings		Total stockholders' equity
Balance at June 30, 2018		$	257,394	$	787,132	$	(5,682,016)	$	7,657,860	$	(179,779)	$	2,840,591

Balance at December 31, 2018														Balance at December 31, 2018	$	257,822	$	886,016	$	(5,947,562)	$	7,815,486	$	(243,096)	$	2,768,666
Net earnings	Net earnings	—		—		—		157,305		—		157,305		Net earnings	—		—		—		105,705		—		105,705
Dividends paid ($0.48 per share)	Dividends paid ($0.48 per share)	—		—		—		(70,804)		—		(70,804)		Dividends paid ($0.48 per share)	—		—		—		(69,809)		—		(69,809)

Common stock issued for the exercise of share-based awards	Common stock issued for the exercise of share-based awards	381		(23,622)		—		—		—		(23,241)		Common stock issued for the exercise of share-based awards	392		(20,000)		—		—		—		(19,608)
Stock-based compensation expense	Stock-based compensation expense	—		5,443		—		—		—		5,443		Stock-based compensation expense	—		8,182		—		—		—		8,182
Common stock acquired		—		—		(147,794)		—		—		(147,794)
Other comprehensive loss, net of tax		—		—		—		—		(13,546)		(13,546)

Other comprehensive earnings, net of tax														Other comprehensive earnings, net of tax	—		—		—		—		52,150		52,150
Other, net	Other, net	—		(20)		—		—		—		(20)		Other, net	—		(7,833)		—		—		—		(7,833)
Balance at September 30, 2018		$	257,775	$	768,933	$	(5,829,810)	$	7,744,361	$	(193,325)	$	2,747,934
Balance at March 31, 2019														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 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
Balance at December 31, 2018 $ 257,822 $ 886,016 $ (5,947,562) $ 7,815,486 $ (243,096) $ 2,768,666
Net earnings — — — 509,796 — 509,796
Dividends paid ($1.45 per share) — — — (211,072) — (211,072)
Common stock issued for the exercise of share-based awards 604 (29,615) — — — (29,011)
Stock-based compensation expense — 24,493 — — — 24,493
Common stock acquired — — (23,280) — — (23,280)
Other comprehensive loss, net of tax — — — — (14,094) (14,094)
Other, net — (7,905) — 50 — (7,855)
Balance at September 30, 2019 $ 258,426 $ 872,989 $ (5,970,842) $ 8,114,260 $ (257,190) $ 3,017,643

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 — — — 428,698 — 428,698
Dividends paid ($1.42 per share) — — — (213,126) — (213,126)
Separation of Apergy — — — (939,743) 32,928 (906,815)
Common stock issued for the exercise of share-based awards 783 (45,226) — — — (44,443)
Stock-based compensation expense — 16,590 — — — 16,590
Common stock acquired — (140,000) (752,771) — — (892,771)
Other comprehensive loss, net of tax — — — — (18,638) (18,638)
Other, net — (4,916) — — — (4,916)
Balance at September 30, 2018 $ 257,775 $ 768,933 $ (5,829,810) $ 7,744,361 $ (193,325) $ 2,747,934

~~See Notes to Condensed Consolidated Financial Statements~~

~~Table of Contents~~

~~DOVER CORPORATION~~

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


		Nine Months Ended September 30,							Three Months Ended March 31,
		2019		2018			2020		2019
Operating Activities:	Operating Activities:					Operating Activities:
Net earnings	Net earnings	$	509,796	$	428,698	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:
Loss from discontinued operations, net		—		4,472

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	202,294		206,018		Depreciation and amortization	68,752		67,738
Stock-based compensation expense	Stock-based compensation expense	24,493		15,846		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	(6,107)		(13,946)		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	(67,603)		(119,687)		Accounts receivable, net	(25,313)		(42,252)
Inventories	Inventories	(74,412)		(130,351)		Inventories	(61,936)		(73,041)
Prepaid expenses and other assets	Prepaid expenses and other assets	(29,336)		(34,604)		Prepaid expenses and other assets	(8,654)		(14,921)
Accounts payable	Accounts payable	(3,875)		87,898		Accounts payable	(25,245)		(22,638)
Accrued compensation and employee benefits	Accrued compensation and employee benefits	(5,908)		(17,101)		Accrued compensation and employee benefits	(67,247)		(55,559)
Accrued expenses and other liabilities	Accrued expenses and other liabilities	(3,833)		(8,169)		Accrued expenses and other liabilities	25,321		(16,107)

Accrued and deferred taxes, net	Accrued and deferred taxes, net	(8,357)		(390)		Accrued and deferred taxes, net	14,563		18,108
Net cash provided by operating activities	Net cash provided by operating activities	584,098		418,684		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	(137,276)		(134,556)		Additions to property, plant and equipment	(40,172)		(37,122)
Acquisitions, net of cash acquired	Acquisitions, net of cash acquired	(215,687)		(68,557)		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	2,838		4,681		Proceeds from sale of property, plant and equipment	1,232		170
Proceeds from sale of businesses	Proceeds from sale of businesses	24,218		2,069		Proceeds from sale of businesses	16,850		2,245
Other	Other	(10,150)		(13,762)		Other	—		(7,900)
Net cash used in investing activities	Net cash used in investing activities	(336,057)		(210,125)		Net cash used in investing activities	(230,511)		(217,690)

Financing Activities:	Financing Activities:					Financing Activities:
Cash received from Apergy, net of cash distributed		—		689,643
Repurchase of common stock	Repurchase of common stock	(23,280)		(892,771)		Repurchase of common stock	(52,916)		—

Change in commercial paper and notes payable	Change in commercial paper and notes payable	(37,650)		67,617		Change in commercial paper and notes payable	415,300		125,893
Dividends paid to stockholders	Dividends paid to stockholders	(211,072)		(213,126)		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	(29,011)		(44,443)		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	(1,417)		(6,233)		Other	(512)		(409)
Net cash used in financing activities		(302,430)		(749,313)
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		—		15,790
Net cash used in investing activities of discontinued operations		—		(23,705)

Net cash used in discontinued operations		—		(7,915)

Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(1,300)		3,982		Effect of exchange rate changes on cash and cash equivalents	(14,652)		3,892

Net decrease in cash and cash equivalents		(55,689)		(544,687)
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	$	340,532	$	209,277	Cash and cash equivalents at end of period	$	508,907	$	243,014

See Notes to Condensed Consolidated Financial Statements

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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 and cash flows as discontinued operations for all periods presented herein. Subsequent to the spin-off of Apergy, effective the second quarter of 2018, the Company is aligned into three reportable segments. See Note 18 — Segment Information for additional information regarding the segments, including segment results for the three and nine months ended September 30, 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~~

On May 9, 2018, Dover completed the distribution of Apergy to its shareholders. The transaction was completed through the pro rata distribution of 100% of the common stock of Apergy to Dover's shareholders of record as of the close of business on April 30, 2018. Each Dover shareholder received one share of Apergy common stock for every two shares of Dover common stock held as of the record date.

~~The following is a summary of the assets and liabilities transferred 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~~

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~~DOVER CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

In connection with the spin-off from the company, Apergy issued and 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 and cash flows have been reclassified to discontinued operations for all periods presented herein. See Note 5 — 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,~~A majority of the ~~Company adopted Accounting Standard Codification ("ASC") Topic 606, Revenue~~Company’s revenue is short cycle in nature with shipments within one year from ~~Contracts with Customers("Topic 606” or “ASC 606”), using~~order. A small portion of the ~~modified retrospective method applied to those~~Company’s revenue derives from contracts ~~which were not completed as 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~~extending over one year. The Company's payment terms ~~are identified~~generally range between 30 to 90 days and ~~collectability is probable. Once~~vary by the ~~Company has entered a contract, it is evaluated~~location of businesses, the type of products manufactured to ~~identify performance obligations. For each performance obligation, revenue is recognized as control~~be sold and the volume 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 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.

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.

~~Table of Contents~~

~~DOVER CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Amounts in thousands except share data~~ See Note 17 — Segment Information for revenue by segment and ~~where otherwise indicated) (Unaudited)~~

~~The following table presents revenue disaggregated by end market and segment:~~

Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
Printing & Identification $ 287,157 $ 283,232 $ 848,056 $ 865,588
Industrials 414,634 388,302 1,237,427 1,180,561
Total Engineered Systems segment 701,791 671,534 2,085,483 2,046,149
Fueling & Transport 411,769 367,617 1,175,405 1,050,276
Pumps ⁽¹⁾
169,678 167,542 523,730 503,157
Process Solutions 171,599 154,906 486,568 458,396
Total Fluids segment 753,046 690,065 2,185,703 2,011,829
Refrigeration 313,908 328,281 905,084 937,168
Food Equipment 56,427 57,933 185,368 189,047
Total Refrigeration & Food Equipment segment 370,335 386,214 1,090,452 1,126,215
Intra-segment eliminations 173 (410) (830) (1,025)
Total Consolidated Revenue $ 1,825,345 $ 1,747,403 $ 5,360,808 $ 5,183,168

⁽¹⁾~~Finder Pompe S.r.l was sold on April 2, 2019.~~

~~The following table presents revenue disaggregated by geography based on the location of the Company's customer:~~

Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
United States $ 1,002,349 $ 922,261 $ 2,883,147 $ 2,707,470
Europe 376,601 369,479 1,184,520 1,158,891
Asia 229,210 219,645 623,838 633,280
Other Americas 150,257 166,182 466,591 467,523
Other 66,928 69,836 202,712 216,004
Total $ 1,825,345 $ 1,747,403 $ 5,360,808 $ 5,183,168

geographic locations.

At ~~September 30, 2019,~~March 31, 2020, we estimated that ~~$81.6~~$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 ~~58%~~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:


		September 30, 2019		December 31, 2018		At Adoption			March 31, 2020		December 31, 2019		January 1, 2019

Contract assets	Contract assets	$	13,924	$	9,330	$	11,932	Contract assets	$	13,841	$	14,894	$	9,330
Contract liabilities - current	Contract liabilities - current	39,656		36,461		48,268		Contract liabilities - current	61,508		44,001		36,461
Contract liabilities - non-current	Contract liabilities - non-current	9,121		9,382		9,916		Contract liabilities - non-current	10,363		9,121		9,382

The revenue recognized during the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ that was included in contract liabilities at the beginning of the period amounted to ~~$25,977~~$21,133 and ~~$37,579,~~$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)

4.3. Acquisitions

~~2019~~2020 Acquisitions

During the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, the Company acquired ~~three~~two businesses in separate transactions for total consideration of ~~$216,398,~~$208,421, net of cash ~~acquired and including contingent consideration.~~acquired. These businesses were acquired to complement and expand upon existing operations within the ~~Fluids segment.~~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. ~~The~~Goodwill in the amount of $33,125 is deductible for U.S. income tax purposes and goodwill in the amount of $92,256 is ~~deductible~~non-deductible for U.S. income tax purposes for these acquisitions.

On ~~May 7, 2019,~~January 24, 2020, the Company acquired ~~the assets~~100% of the ~~All-Flo Pump Company, Limited business ("All-Flo"), a growing manufacturer~~voting stock of ~~specialty pumps for $39,954. The All-Flo acquisition strengthens Dover's position in the growing market for air-operated double-diaphragm pumps within the Pumps end market of the Fluids segment.~~

~~On January 25, 2019, the Company acquired the assets of Belanger,~~Sys-Tech Solutions, Inc. ("~~Belanger"~~Systech"), a leading ~~full-line car wash equipment manufacturer~~provider of product traceability, regulatory compliance and brand-protection software and solutions to pharmaceutical and consumer products manufacturers, for ~~$175,350,~~$162,942, net of cash acquired. The ~~Belanger~~Systech acquisition strengthens ~~Dover's position in~~ the ~~vehicle wash business within~~portfolio of solutions offered by the ~~Fueling~~Imaging & ~~Transport end market~~Identification segment. In connection with this acquisition, the Company recorded goodwill of ~~the Fluids segment.~~$92,256 and intangible assets of $76,100, primarily related to customer intangibles.

~~One other immaterial~~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 ~~was completed during~~strengthens the ~~nine months ended September 30, 2019, which included contingent consideration,~~digital offerings within the ~~Fluids~~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

~~14,353~~19,816

Property, plant and equipment

~~1,030~~1,580

Goodwill

~~119,363~~125,381

Intangible assets

~~91,980~~88,900

~~Other assets and deferred charges~~

Current liabilities

~~(10,348)~~(15,073)

Other liabilities

(12,183)

Net assets acquired

~~216,398~~208,421

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

Amount allocated Useful life (in years)
Goodwill $ 119,363 na
Customer intangibles 68,500 9 - 13
Patents 16,000 9
Trademarks 7,480 15
$ 211,343

~~2018 Acquisitions~~

During the nine months ended September 30, 2018, the Company acquired two businesses in separate transactions for total consideration of $68,557, 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 $53,218, net of cash acquired. In connection with this acquisition, the Company recorded goodwill of $36,493 and intangible assets of $19,907, primarily related to customer intangibles. The intangible assets are being amortized over 8 to 15 years.


	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)

2019 Acquisitions

On January ~~12, 2018,~~25, 2019, the Company acquired ~~100%~~the assets of ~~the voting stock of Rosario Handel B.V.~~Belanger, Inc. ("~~Rosario"~~Belanger"), ~~within the Refrigeration & Food Equipment segment~~a leading full-line car wash equipment manufacturer for ~~total consideration of $15,339,~~$175,083, net of cash acquired. The Belanger acquisition strengthens Dover's position in the vehicle wash business within the Fueling Solutions segment. In connection with this

acquisition, the Company recorded goodwill of ~~$10,402~~$97,817 and aintangible assets of $77,000, primarily related to customer intangibles. The intangible ~~asset of $4,149. The customer intangible asset is~~assets are being amortized over 109 to 15 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 ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively.

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 ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ were as follows:


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
		2019		2018		2019		2018			2020		2019
Revenue:	Revenue:									Revenue:
As reported	As reported	$	1,825,345	$	1,747,403	$	5,360,808	$	5,183,168	As reported	$	1,655,939	$	1,724,757
Pro forma	Pro forma	1,825,510		1,764,397		5,369,686		5,233,912		Pro forma	1,661,825		1,746,533
Earnings from continuing operations:
Net earnings:										Net earnings:
As reported	As reported	$	206,006	$	157,305	$	509,796	$	433,170	As reported	$	176,279	$	105,705
Pro forma	Pro forma	206,091		159,122		512,679		440,603		Pro forma	180,433		106,188
Basic earnings per share from continuing operations:
As reported		$	1.42	$	1.07	$	3.51	$	2.87
Pro forma		1.42		1.08		3.53		2.91
Diluted earnings per share from continuing operations:
As reported		$	1.40	$	1.05	$	3.47	$	2.82
Pro forma		1.40		1.06		3.49		2.87

5.4. 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.

~~Disposed Operations~~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 within the Refrigeration & Food Equipment Segment for 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”). 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.

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, of which $2,245 was received on March 29, 2019.~~$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.

Table of 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

~~There were no dispositions during~~

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

For the ~~nine~~three months ended ~~September 30, 2018.~~March 31, 2020 and 2019, depreciation expense was $34,555 and $32,188, respectively.

7. Credit Losses

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.

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 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.

Estimates are used to determine the allowance. It is based on assessment of anticipated payment and all other historical, current and future information that 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

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DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

~~Discontinued Operations~~

8. Goodwill and Other Intangible Assets

The changes in the carrying value of 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

~~There were no discontinued operations for~~During the three months ended March 31, 2020, the Company recorded additions of $125,381 to goodwill as a result of the acquisitions with the Engineered Products and ~~nine~~Imaging & Identification segments discussed in Note 3 — Acquisitions. During the three months ~~ending September 30, 2019.~~

~~In 2018,~~ended March 31, 2020, the ~~Apergy businesses,~~Company disposed of $2,841 of the Refrigeration & Food Equipment segment goodwill as a result of the sale of a business as discussed in Note 2, met the criteria to be reported as discontinued operations because the spin-off was a strategic shift in business that has a major effect on the Company's operations and financial results. Therefore, the results of discontinued operations for the three and nine months ended September 30, 2018 include the historical results of Apergy prior to its distribution on May 9, 2018. The three and nine months ended September 30, 2018 included costs incurred by Dover to complete the spin-off of Apergy amounting to $0 and $46,384, respectively, reflected in selling, general and administrative expenses in discontinued operations. See Note 24 — ~~Spin-off of Apergy Corporation for further information.~~Disposed Operations.

~~Summarized results~~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 ~~discontinued operations~~operations.

The Company’s definite-lived and indefinite-lived intangible assets by major asset class were as follows:

~~Three Months Ended September 30, 2018~~

~~Nine Months Ended September 30, 2018~~

~~Revenue~~

—

~~403,688~~

~~Cost of goods and services~~

—

~~254,205~~

~~Gross profit~~

—

~~149,483~~

~~Selling, general and administrative expenses~~

—

~~144,114~~

~~Operating earnings~~

—

~~5,369~~

~~Other expense, net~~

—

~~349~~

~~Earnings from discontinued operations before taxes~~

—

~~5,020~~

~~Provision for income taxes~~

—

~~9,492~~

~~Loss from discontinued operations, net of tax~~

—

~~(4,472)~~


	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

~~6. Inventories~~

September 30, 2019 December 31, 2018
Raw materials $ 470,088 $ 439,616
Work in progress 169,639 154,878
Finished goods 289,779 265,722
Subtotal 929,506 860,216
Less reserves (112,943) (111,420)
Total $ 816,563 $ 748,796

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

September 30, 2019 December 31, 2018
Land $ 48,935 $ 53,623
Buildings and improvements 512,985 529,982
Machinery, equipment and other 1,635,444 1,555,345
Property, plant and equipment, gross 2,197,364 2,138,950
Accumulated depreciation (1,376,782) (1,332,453)
Property, plant and equipment, net $ 820,582 $ 806,497

~~Depreciation expense totaled $32,145 and $32,514 for~~For the three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018, respectively. For the nine months ended September 30, 2019 and 2018, depreciation~~amortization expense was ~~$97,364~~$34,197 and ~~$97,625,~~$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)

~~8. Leases~~

The Company adopted ASC Topic 842 - Leases as 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 accordance with the previous ASC Topic 840 - Leases, and no retrospective adjustments were made to the comparative periods presented. Adoption of ASC Topic 842 resulted 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 Topic 842, as finance lease liabilities and the corresponding ROU assets were already recorded in the balance sheet under the previous guidance, ASC Topic 840. The adoption did not materially impact the Company’s Consolidated Statements of Earnings or Cash Flows.9. Restructuring Activities

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 componentsCompany's restructuring charges by segment were 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.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

The ~~Company determines if an arrangement is a lease at inception~~restructuring expenses of a contract. Operating lease ROU assets are included in other assets and deferred 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.

~~ROU assets represent the Company's right to use an underlying asset~~$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 ~~components~~$7,341 of ~~lease~~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:

Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019
Operating Lease Costs:
Fixed $ 13,557 $ 38,520
Variable 1,634 5,274
Short-term 3,998 13,736
Total* $ 19,189 $ 57,530
* Finance lease cost and sublease income were immaterial.


	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

~~Supplemental cash flow information were as follows:~~⁽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)

Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 13,836 $ 39,237
Operating cash flows from finance leases 107 326
Financing cash flows from finance leases 490 1,430
Total $ 14,433 $ 40,993
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases 9,632 28,566
Finance leases 460 827
Total $ 10,092 $ 29,393

~~Supplemental balance sheet information related to leases were as follows:~~

~~September 30, 2019~~

~~Operating Leases:~~

~~Right of use assets:~~

~~Other assets and deferred charges~~

~~151,655~~

~~Lease liabilities:~~

~~Other accrued expenses~~

~~41,719~~

~~Other liabilities~~

~~117,595~~

~~Total operating lease liabilities~~

~~159,314~~

~~Finance Leases:~~

~~Right of use assets:~~

~~Property, plant and equipment, net~~ ⁽¹⁾

~~8,678~~

~~Lease liabilities:~~

~~Other accrued expenses~~

~~1,601~~

~~Other liabilities~~

~~7,939~~

~~Total financing lease liabilities~~

~~9,540~~

⁽¹⁾~~Finance lease assets are recorded net of accumulated depreciation of $4,203.~~

~~The aggregate future lease payments for operating and finance leases as of September 30, 2019 were as follows:~~

Operating Finance
2019 (excluding the nine months ending September 30, 2019) $ 12,410 $ 523
2020 43,000 2,069
2021 33,983 1,962
2022 24,536 1,651
2023 16,018 1,219
Thereafter 46,931 3,925
Total lease payments 176,878 11,349
Less: Interest (17,564) (1,809)
Present value of lease liabilities $ 159,314 $ 9,540

~~The aggregate future lease payments for operating and capital leases as of December 31, 2018 were as follows:~~

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~~DOVER CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

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:~~

~~September 30, 2019~~

~~Weighted-average remaining lease term (years)~~

~~Operating leases~~

~~5.8~~

~~Finance leases~~

~~6.2~~

~~Weighted-average discount rate~~

~~Operating leases~~

~~3.3%~~

~~Finance leases~~

~~4.2%~~

~~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 — 119,363 — 119,363
Disposition of business — (4,739) — (4,739)
Foreign currency translation (18,082) (12,855) (587) (31,524)
Balance at September 30, 2019 $ 1,605,578 $ 1,609,371 $ 545,479 $ 3,760,428

~~During the nine months ended September 30, 2019, the Company recorded additions of $119,363 to goodwill as a result of the acquisitions with the Fluids segment discussed in Note 4 — Acquisitions~~. During the nine months ended September 30, 2019, the Company disposed of $4,739 of the Fluids segment goodwill as a result of the sale of a business as discussed in Note 5 — Disposed and Discontinued Operations.

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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:~~

September 30, 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 $ 1,401,618 $ 687,947 $ 713,671 $ 1,395,742 $ 645,305 $ 750,437
Trademarks 216,706 81,503 135,203 214,774 72,305 142,469
Patents 159,291 132,294 26,997 144,302 128,254 16,048
Unpatented technologies 153,528 95,583 57,945 155,380 85,560 69,820
Distributor relationships 81,215 42,137 39,078 82,970 37,943 45,027
Drawings & manuals 27,201 21,586 5,615 31,849 23,273 8,576
Other 21,740 16,739 5,001 21,046 15,835 5,211
Total 2,061,299 1,077,789 983,510 2,046,063 1,008,475 1,037,588
Unamortized intangible assets:
Trademarks 96,620 — 96,620 96,668 — 96,668
Total intangible assets, net $ 2,157,919 $ 1,077,789 $ 1,080,130 $ 2,142,731 $ 1,008,475 $ 1,134,256

Amortization expense was $34,642 and $35,576, respectively, including acquisition-related intangible amortization of $34,157 and $35,258 for the three months ended September 30, 2019 and 2018, respectively. For the nine months ended September 30, 2019 and 2018, amortization expense was $104,930 and $108,393, respectively, including acquisition-related intangible amortization of $103,531 and $107,092, respectively.

10. ~~Restructuring Activities~~

~~The Company's restructuring charges by segment were as follows:~~

Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
Engineered Systems $ 852 $ 10,637 $ 3,730 $ 13,872
Fluids 1,732 10,473 5,128 16,021
Refrigeration & Food Equipment 495 452 2,134 598
Corporate 257 2,639 1,018 5,932
Total $ 3,336 $ 24,201 $ 12,010 $ 36,423
These amounts are classified in the Condensed Consolidated Statements of Earnings as follows:
Cost of goods and services $ 2,073 $ 3,586 $ 4,435 $ 7,985
Selling, general and administrative expenses 1,263 20,615 7,575 28,438
Total $ 3,336 $ 24,201 $ 12,010 $ 36,423

The restructuring expenses of $3,336 and $12,010 incurred during the three and nine months ended September 30, 2019, respectively, were primarily related to two significant rightsizing restructuring programs initiated in 2018 comprised principally 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 $9 million related to the selling, general and administrative expense reduction initiatives, $7 million of which was incurred during the nine months ended September 30, 2019 and $2 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, $4 million of which was incurred during the nine months ended September 30, 2019 and $6 million of which the Company expects to incur in the remainder of 2019 through 2020. Additional programs, beyond the scope of the announced programs, are expected to 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 $3,336 of restructuring charges incurred during the third quarter of 2019 primarily included the following items:~~

•~~The Engineered Systems segment recorded $852 of restructuring charges related to programs focused on headcount reductions and facility restructuring costs.~~

•~~The Fluids segment recorded $1,732 of restructuring charges principally related to headcount reductions.~~

•~~The Refrigeration and Food Equipment segment recorded $495 of restructuring expense primarily due to headcount reductions and facility restructuring costs.~~

•~~Corporate recorded $257 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 8,695 3,315 12,010
Payments (23,583) (2,336) (25,919)
Other, including foreign currency translation (644) (2,567)
⁽¹⁾
(3,211)
Balance at September 30, 2019 $ 8,752 $ 2,292 $ 11,044

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

~~11.~~ Borrowings

Borrowings consisted of the following:


		September 30, 2019		December 31, 2018			March 31, 2020		December 31, 2019
Short-term	Short-term					Short-term

Short-term borrowings						Short-term borrowings	$	500,000	$	—
Commercial paper	Commercial paper	$	182,700	$	220,318	Commercial paper	—		84,700
Notes payable	Notes payable	$	182,700	$	220,318	Notes payable	$	500,000	$	84,700


				Carrying amount ⁽¹⁾									Carrying amount ⁽¹⁾
		Principal		September 30, 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	$	327,726	$	339,657
4.30% 10-year notes due March 1, 2021		$	450,000	449,477		449,200
3.150% 10-year notes due November 15, 2025	3.150% 10-year notes due November 15, 2025	$	400,000	395,874		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	648,551		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	199,130		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	295,998		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	247,911		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	344,062		343,877		5.375% 30-year notes due March 1, 2041	$	350,000	344,222		344,153
Other				—		763

Total long-term debt	Total long-term debt			$	2,908,729	$	2,943,660	Total long-term debt			$	2,963,018	$	2,985,716

⁽¹⁾ Carrying amount is net of unamortized debt discount and deferred debt issuance costs. Total unamortized debt discounts were

$~~14.5~~18.3 million and ~~$15.8~~$18.9 million as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively. Total deferred debt issuance costs were ~~$11.6~~$15.7 million and ~~$13.0~~$16.2 million as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively.

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~~DOVER CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

As of ~~September 30, 2019,~~March 31, 2020, the Company 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 ~~September 30, 2019~~March 31, 2020 and had an interest coverage ratio of consolidated EBITDA to consolidated net interest expense of ~~10.5~~11.2 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, funding of acquisitions and repurchases of its common stock. On October 4, 2019, the Company entered into a new credit facility and terminated the Credit Agreement, as discussed in Note 22 — Subsequent Events.1.

As of ~~September 30, 2019,~~March 31, 2020, the Company had approximately ~~$145.5~~$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 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 ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, the Company had contracts with total notional amounts of ~~$182,722~~$170,672 and ~~$193,649,~~$179,580, respectively, to exchange currencies, principally ~~the~~Euro, Pound Sterling, ~~Euro,~~ Swedish Krona, Chinese Yuan, Canadian Dollar, and Swiss 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 ~~$88,599~~$76,553 and ~~$66,906~~$79,707 as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively, that are not designated as hedging instruments. These instruments are used to reduce the

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DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Company's exposure for operating receivables and payables that are denominated in non-functional currencies. Gains and losses on these contracts are recorded in other income, 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 ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 and the balance sheet lines in which they are recorded:


		Fair Value Asset (Liability)								Fair Value Asset (Liability)
		September 30, 2019		December 31, 2018		Balance Sheet Caption		March 31, 2020		December 31, 2019		Balance Sheet Caption
Foreign currency forward	Foreign currency forward	$	2,052	$	1,874	Prepaid / Other current assets	Foreign currency forward	$	1,826	$	2,892	Prepaid / Other current assets
Foreign currency forward	Foreign currency forward	(1,454)		(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.

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~~DOVER CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

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

Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
Gain (loss) on euro-denominated debt $ 37,783 $ (6,155) $ 36,630 $ 7,734
Tax (expense) benefit (7,934) 1,293 (7,692) (1,624)
Net gain (loss) on net investment hedges, net of tax $ 29,849 $ (4,862) $ 28,938 $ 6,110


	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.

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DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

The following table presents the Company’s assets and liabilities measured at fair value on a recurring basis as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018:~~2019:

September 30, 2019

December 31, 2018

March 31, 2020

December 31, 2019

Level 2

Assets:

Foreign currency cash flow hedges

2,052

1,874

Foreign currency cash flow hedges

1,826

2,892

Liabilities:

Foreign currency cash flow hedges

1,454

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 ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019, was ~~$3,296,860~~$3,311,012 and ~~$3,132,330,~~$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 ~~September 30, 2019,~~March 31, 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 ~~September 30,~~March 31, 2020 and 2019 were 17.4%and ~~2018 were 20.1% and 18.5%~~23.6%, ~~respectively.~~respectively. The ~~increase~~decrease in the effective tax rate for the three months ended ~~September 30, 2019 relative to the prior comparable period was principally due to a higher benefit from the impact of discrete tax items in the prior period.~~

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~~DOVER CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

The effective tax rates for the nine months ended September 30, 2019 and 2018 were 21.1% and 19.6%, respectively. The increase in the effective tax rate for the nine months ended September 30, 2019March 31, 2020 relative to the prior comparable period is primarily driven by ~~the exclusion of capital losses on the sale of Finder under local tax law partially offset by the impact of changes in tax law and the impact of other discrete tax items.~~favorable audit settlements.

The ~~discrete items for the~~ three months ended ~~September 30,~~March 31, 2019 ~~primarily resulted from the net~~ includes a discrete tax benefit from stock exercises, ~~and favorable audit settlements. The discrete items for the three months ended~~ ~~September 30, 2018 were driven by~~ ~~the net tax benefit from stock exercises. The discrete items for the~~ ~~nine months~~ ~~ended~~ ~~September 30, 2019~~ ~~primarily resulted from the benefit of stock exercises and favorable audit settlements~~ partially offset by the exclusion of capital losses on the sale of Finder under local tax law. ~~The discrete items for the~~ ~~nine months~~ ~~ended September 30, 2018 primarily resulted from the benefit of stock exercises and 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 0 to ~~$11.5~~$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. ~~Additionally, in the second quarter of 2018, the Company granted equity awards to its new President and Chief Executive Officer.~~ During the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, the Company issued stock-settled appreciation rights ("SARs") covering ~~615,089~~389,603 shares, performance share awards of ~~35,172~~49,056 and restricted stock units ("RSUs") of ~~124,929.~~78,553.

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

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DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

The ~~range of~~ assumptions used in determining the fair value of the SARs awarded during the respective periods were as follows:


		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.

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~~DOVER CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

The fair value and average attainment used in determining stock-based compensation cost for the performance shares issued in 2019 ~~and 2018 were~~is as follows for the ~~nine~~three months ended ~~September 30, 2019:~~March 31, 2020:

Performance Shares
2019 2018
Fair value per share at date of grant $91.20 $79.75 - $82.09
Average attainment rate reflected in expense 223.04% 293.36%


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

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 September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
		2019		2018		2019		2018			2020		2019
Pre-tax stock-based compensation expense (continuing)		$	7,876	$	5,443	$	24,493	$	15,846
Pre-tax stock-based compensation expense										Pre-tax stock-based compensation expense	$	3,252	$	8,182
Tax benefit	Tax benefit	(489)		(1,207)		(2,035)		(3,520)		Tax benefit	(349)		(1,048)
Total stock-based compensation expense, net of tax	Total stock-based compensation expense, net of tax	$	7,387	$	4,236	$	22,458	$	12,326	Total stock-based compensation expense, net of tax	$	2,903	$	7,134

~~Stock-based compensation expense attributable to Apergy employees for the three~~

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DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and ~~nine months ended September 30, 2018 was $0 and $744, respectively. These costs are reported within earnings from discontinued operations in the Condensed Consolidated Statement of Earnings.~~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 ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, the Company ~~has reserves~~had estimated liabilities totaling ~~$30,926~~$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 ~~September 30, 2019~~March 31, 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.

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~~DOVER CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

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 ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ 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	46,123		46,076		Provision for warranties	13,360		13,955
Settlements made	Settlements made	(46,406)		(50,110)		Settlements made	(15,526)		(14,993)
Other adjustments, including acquisitions and currency translation	Other adjustments, including acquisitions and currency translation	(1,609)		(770)		Other adjustments, including acquisitions and currency translation	(1,079)		(792)
Ending Balance, September 30		$	48,181	$	54,599
Ending Balance, March 31						Ending Balance, March 31	$	45,871	$	48,243

~~16.~~15. Employee Benefit Plans

Retirement Plans

The Company sponsors qualified defined benefit pension plans covering certain employees of the Company and its 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 September 30, Nine Months Ended September 30,
U.S. Plan Non-U.S. Plans U.S. Plan Non-U.S. Plans
2019 2018 2019 2018 2019 2018 2019 2018
Service cost $ 1,754 $ 1,861 $ 1,429 $ 1,054 $ 5,262 $ 7,148 $ 4,265 $ 4,165
Interest cost 4,756 5,236 1,193 1,098 14,269 15,491 3,641 3,819
Expected return on plan assets (8,534) (9,518) (1,538) (1,710) (25,602) (29,474) (4,664) (5,838)
Amortization:
Prior service cost (credit) 76 69 (102) (112) 227 495 (298) (338)
Recognized actuarial loss — 150 763 673 — 2,951 2,288 2,258
Transition obligation — — — — — — — 2
Net periodic (income) expense $ (1,948) $ (2,202) $ 1,745 $ 1,003 $ (5,844) $ (3,389) $ 5,232 $ 4,068
Less: Discontinued operations — — — — — 950 — 247
Net periodic (income) expense - Continuing operations $ (1,948) $ (2,202) $ 1,745 $ 1,003 $ (5,844) $ (4,339) $ 5,232 $ 3,821

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 September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
		2019		2018		2019		2018			2020		2019
Service cost	Service cost	$	486	$	635	$	1,457	$	1,990	Service cost	$	318	$	486
Interest cost	Interest cost	668		751		2,003		2,452		Interest cost	441		668
Amortization:	Amortization:									Amortization:
Prior service cost	Prior service cost	703		931		2,109		3,245		Prior service cost	424		703
Recognized actuarial gain	Recognized actuarial gain	(570)		(298)		(1,710)		(834)		Recognized actuarial gain	(464)		(570)

Net periodic expense	Net periodic expense	$	1,287	$	2,019	$	3,859	$	6,853	Net periodic expense	$	719	$	1,287
Less: Discontinued operations		—		—		—		351
Net periodic expense - Continuing operations		$	1,287	$	2,019	$	3,859	$	6,502

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 September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
		2019		2018		2019		2018			2020		2019
Service cost	Service cost	$	5	$	8	$	15	$	23	Service cost	$	5	$	5
Interest cost	Interest cost	78		73		234		218		Interest cost	60		78
Amortization:	Amortization:									Amortization:
Prior service cost	Prior service cost	3		3		10		10		Prior service cost	3		3
Recognized actuarial gain	Recognized actuarial gain	(17)		(8)		(52)		(23)		Recognized actuarial gain	(4)		(18)

Net periodic expense	Net periodic expense	$	69	$	76	$	207	$	228	Net periodic expense	$	64	$	68

The total amount amortized out of accumulated other comprehensive earnings into net periodic pension and post-retirement expense totaled ~~$856~~$2,523 and ~~$1,407~~$952 for the three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018, respectively, and $2,574 and $7,765 for the nine months ended September 30, 2019 and 2018,~~ 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 ~~$12,188,~~$14,048, and ~~$11,230~~$12,906 for the three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018, respectively, and $38,340 and $35,243 for the nine months ended September 30, 2019 and 2018.~~respectively.

~~17. Other Comprehensive Earnings~~

~~The amounts recognized in other comprehensive (loss) earnings were as follows:~~

Three Months Ended Three Months Ended
September 30, 2019 September 30, 2018
Pre-tax Tax Net of tax Pre-tax Tax Net of tax
Foreign currency translation adjustments $ (42,931) $ (7,934) $ (50,865) $ (14,860) $ 1,293 $ (13,567)
Pension and other post-retirement benefit plans 856 (190) 666 1,407 (301) 1,106
Changes in fair value of cash flow hedges 1,419 (297) 1,122 (1,374) 289 (1,085)
Total other comprehensive (loss) earnings $ (40,656) $ (8,421) $ (49,077) $ (14,827) $ 1,281 $ (13,546)

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DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Nine Months Ended Nine Months Ended
September 30, 2019 September 30, 2018
Pre-tax Tax Net of tax Pre-tax Tax Net of tax
Foreign currency translation adjustments $ (8,112) $ (7,692) $ (15,804) $ (24,794) $ (1,624) $ (26,418)
Pension and other post-retirement benefit plans 2,574 (572) 2,002 7,765 (1,657) 6,108
Changes in fair value of cash flow hedges (368) 76 (292) 2,116 (444) 1,672
Total other comprehensive earnings (loss) $ (5,906) $ (8,188) $ (14,094) $ (14,913) $ (3,725) $ (18,638)
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 September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
		2019		2018		2019		2018			2020		2019
Net earnings	Net earnings	$	206,006	$	157,305	$	509,796	$	428,698	Net earnings	$	176,279	$	105,705
Other comprehensive loss		(49,077)		(13,546)		(14,094)		(18,638)
Other comprehensive (loss) earnings										Other comprehensive (loss) earnings	(95,552)		52,150
Comprehensive earnings	Comprehensive earnings	$	156,929	$	143,759	$	495,702	$	410,060	Comprehensive earnings	$	80,727	$	157,855

Amounts reclassified from accumulated other comprehensive loss to earnings during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ were as follows:


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
		2019		2018		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	$	176	$	517	$	526	$	4,354	Amortization of actuarial losses	$	2,158	$	228
Amortization of prior service costs	Amortization of prior service costs	680		890		2,048		3,411		Amortization of prior service costs	365		724

Total before tax	Total before tax	856		1,407		2,574		7,765		Total before tax	2,523		952
Tax benefit	Tax benefit	(190)		(301)		(572)		(1,657)		Tax benefit	(568)		(205)
Net of tax	Net of tax	$	666	$	1,106	$	2,002	$	6,108	Net of tax	$	1,955	$	747
Cash flow hedges:	Cash flow hedges:									Cash flow hedges:
Net losses (gains) reclassified into earnings	Net losses (gains) reclassified into earnings	$	730	$	460	$	(85)	$	(439)	Net losses (gains) reclassified into earnings	$	1,420	$	(291)
Tax (benefit) provision	Tax (benefit) provision	(153)		(96)		16		92		Tax (benefit) provision	(299)		61
Net of tax	Net of tax	$	577	$	364	$	(69)	$	(347)	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 sale of Finder. See Note 54 — 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 3 distinct reportable segments. Segment financial information and a reconciliation of segment results to consolidated results is as follows:~~

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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 ~~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.

•~~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.

•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.

•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~~energy-efficient equipment and systems ~~serving~~that serve the commercial refrigeration, heating and cooling and food equipment ~~end~~ markets.

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

Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
Revenue:
Engineered Systems $ 701,791 $ 671,534 $ 2,085,483 $ 2,046,149
Fluids 753,046 690,065 2,185,703 2,011,829
Refrigeration & Food Equipment 370,335 386,214 1,090,452 1,126,215
Intra-segment eliminations 173 (410) (830) (1,025)
Total consolidated revenue $ 1,825,345 $ 1,747,403 $ 5,360,808 $ 5,183,168
Earnings from continuing operations:
Segment earnings: ⁽¹⁾

Engineered Systems $ 136,022 $ 108,714 $ 390,866 $ 337,429
Fluids ⁽²⁾
145,502 101,207 326,638 261,583
Refrigeration & Food Equipment 35,211 42,434 104,393 122,988
Total segment earnings 316,735 252,355 821,897 722,000
Corporate expense / other ⁽³⁾
28,658 30,207 84,036 91,020
Interest expense 31,410 31,192 94,972 98,957
Interest income (1,263) (2,060) (3,098) (6,680)
Earnings before provision for income taxes and discontinued operations 257,930 193,016 645,987 538,703
Provision for income taxes 51,924 35,711 136,191 105,533
Earnings from continuing operations $ 206,006 $ 157,305 $ 509,796 $ 433,170


	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⁾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 ~~nine~~three months ended ~~September 30,~~March 31, 2019 includes a $46,946 loss on assets held for sale for Finder. ~~Excluding this loss, Fluids segment earnings was $373,584.~~

⁽³⁾ The three months ended March 31, 2020 includes a $6,551 gain on the sale of AMS Chino.

⁽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.

~~Effective October 1, 2019, the Company changed its reportable segments from three to five, as discussed in Note 22 — Subsequent Events.~~

2519

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DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

~~19.~~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

The Company's prior January 2015 share repurchase authorization expired on January 9, 2018. From January 1 to January 9, 2018, the Company repurchased 440,608 shares of common stock 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.

On May 22, 2018, the Company entered into a $700,000 accelerated share repurchase agreement (the “ASR Agreement”) with Goldman Sachs & Co. LLC (“Goldman Sachs”) to repurchase its shares in an accelerated share repurchase program (the “ASR Program”). The Company conducted the ASR Program under the February 2018 share repurchase authorization. The Company funded the ASR Program with funds received from Apergy in connection with the consummation of the Apergy spin-off.

Under the terms of the ASR Agreement, the Company paid Goldman Sachs $700,000 on May 24, 2018 and on that date received initial deliveries of 7,078,751 shares, representing a substantial majority of the shares expected to be retired over the course of the ASR Agreement. In December 2018, Goldman Sachs delivered a total of 1,463,815 shares which completed the ASR Program. During 2018, the Company received a total of 8,542,566 shares as part of the ASR Agreement. The total number of shares ultimately repurchased under the ASR Agreement was based on the volume-weighted average share price of Dover’s common stock during the calculation period of the ASR Program, less a discount, which was $81.94 over the term of the ASR Program.

During the three ~~and nine~~ months ended ~~September 30, 2019 and 2018,~~March 31, 2020, under the February 2018 authorization, ~~exclusive of the ASR agreement,~~ the Company repurchased ~~261,807 and 1,729,048~~548,659 shares of common stock at a total cost of ~~$23,280 and$147,793,~~$52,916, or ~~$88.92 and $85.48~~$96.45 per ~~share, respectively.~~share. There were no repurchases under the February 2018 authorization during the three months ended March 31, 2019. The Company has suspended further repurchases as a result of business uncertainty related to COVID-19.

As of ~~September 30, 2019, 9,441,859~~March 31, 2020, 7,811,385 shares remain authorized for repurchase under the February 2018 share repurchase authorization.

~~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 September 30, Nine Months Ended September 30,
2019 2018 2019 2018
Earnings from continuing operations $ 206,006 $ 157,305 $ 509,796 $ 433,170
Loss from discontinued operations, net — — — (4,472)
Net earnings $ 206,006 $ 157,305 $ 509,796 $ 428,698
Basic earnings (loss) per common share:
Earnings from continuing operations $ 1.42 $ 1.07 $ 3.51 $ 2.87
Loss from discontinued operations, net $ — $ — $ — $ (0.03)
Net earnings $ 1.42 $ 1.07 $ 3.51 $ 2.84
Weighted average shares outstanding 145,372,000 147,344,000 145,276,000 151,177,000
Diluted earnings (loss) per common share:
Earnings from continuing operations $ 1.40 $ 1.05 $ 3.47 $ 2.82
Loss from discontinued operations, net $ — $ — $ — $ (0.03)
Net earnings $ 1.40 $ 1.05 $ 3.47 $ 2.79
Weighted average shares outstanding 147,051,000 149,457,000 147,053,000 153,429,000


	Three Months Ended March 31,
	2020		2019


Net earnings	$	176,279	$	105,705
Basic earnings per common share:


Net earnings	$	1.22	$	0.73

Weighted average shares outstanding	144,259,000		145,087,000
Diluted earnings per common share:


Net earnings	$	1.21	$	0.72

Weighted average shares outstanding	145,782,000		146,911,000

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


		Three Months Ended September 30,			Nine Months Ended September 30,				Three Months Ended March 31,
		2019	2018	2019	2018		2020	2019
Weighted average shares outstanding - Basic	Weighted average shares outstanding - Basic	145,372,000	147,344,000	145,276,000	151,177,000	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	1,679,000	2,113,000	1,777,000	2,252,000	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	147,051,000	149,457,000	147,053,000	153,429,000	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 ~~28,000~~65,000 and ~~10,000~~42,000 for the three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018, respectively, and 9,000 and 1,000 for the nine months ended September 30, 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 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 in the earlier recognition of allowances for losses. The guidance is effective for interim and annual periods for the Company on January 1, 2020. Management is in the process of its assessment of the impact of the new standard on 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 of the adequacy of its allowance for doubtful accounts on trade accounts receivable and the recognition of credit losses. Management does not expect this update to have a material impact to the Company's Consolidated Financial Statements.

Recently Adopted Accounting Standards

In ~~July 2019,~~June 2016, the FASB issued ASU ~~2019-07,~~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 resulted in the earlier recognition of allowances for losses. In addition, the FASB issued ASU 2019-04, Codification ~~Updates~~Improvements to SEC Sections. This ASU amends various SEC paragraphs pursuant to the issuance of SEC Final Rule Releases No. 33-10532, Disclosure Update and Simplification, and Nos. 33-10231 and 33-10442, Investment Company Reporting Modernization. OneTopic 326 which provides clarity on certain aspects of the ~~changes~~amendments in ~~the~~ ASU requires a presentation of changes in stockholders’ equity in the form of a reconciliation, either as a separate financial statement or in the notes to the financial statements, for the current and comparative year-to-date interim periods.2016-13. The Company ~~presented changes in stockholders' equity as separate financial statements for the current and comparative year-to-date interim periods beginning~~adopted this guidance prospectively on January 1, ~~2019.~~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, 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 ~~additional elements~~extent of the ~~ASU did not have a material~~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 ~~Company's Consolidated Financial Statements. This guidance was effective immediately upon issuance.~~range of governmental and community reactions to the pandemic, which are uncertain and cannot be fully predicted at this time.

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

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~~DOVER CORPORATION~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

~~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~~

Effective October 1, 2019, the Company transitioned from a three-segment to a five-segment structure as a result of a change to its internal organization. This new structure will increase management efficiency and better align the Company’s operations with its strategic initiatives and capital allocation priorities across its businesses. The five reportable segments are as follows:

•~~Engineered Products~~

•~~Fueling Solutions~~

•~~Imaging & Identification~~

•~~Pumps & Process Solutions~~

•~~Refrigeration & Food Equipment~~

~~Beginning with the year ending December 31, 2019, the Company's segment results and disclosures will reflect the new segment structure for all periods presented.~~

On October 4, 2019, the Company entered into a new $1 billion five-year unsecured revolving credit facility with a syndicate of banks on substantially similar terms as the existing Credit Agreement. The new credit facility replaced the existing $1 billion five-year Credit Agreement, which was terminated by the Company upon execution of the new credit facility. The new credit facility will expire on October 4, 2024.

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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 ~~third~~first quarter of ~~2019,~~2020, revenue was ~~$1.8~~$1.7 billion, which ~~increased $77.9~~decreased $68.8 million, or ~~4.5%~~4.0%, as compared to the ~~third~~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 5.6% and~~was partially offset by acquisition-related revenue growth of ~~1.0%~~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 ~~1.6%~~1.2% and ~~0.5%~~a 0.7% impact due to dispositions.

~~The 5.6% organic revenue~~ Organic bookings growth was ~~led by 9.8% organic~~primarily due to robust activity in our Fueling Solutions segment as well as growth in our ~~Fluids~~Pumps & Process Solutions segment, ~~reflecting continued robust trading conditions and solid production across the segment. Engineered Systems segment organic revenue increased 6.3%, which was driven~~offset by ~~growth in~~ ~~both our Printing & Identification and Industrial platforms. Organic revenue decreased 3.2%~~a decline in our Refrigeration & Food Equipment ~~segment driven by softer demand activity in our U.S. commercial refrigeration business and heat exchanger~~ ~~business in Asia, partially offset by growth in our can-shaping equipment business.~~

From a geographic perspective, organic revenue for the U.S., our largest market, Europe, and Asia grew 7%, 8% and 6%, respectively, year over year. U.S. organic growth was driven by strength across our Fluids and Engineered ~~Systems segments, partially offset by~~Products segments. Backlog as of March 31, 2020 was $1.6 billion, an increase from $1.4 billion from the ~~Refrigeration & Food Equipment segment. The growth in Europe was broad-based across all three segments. The growth in Asia was driven by our Fluids~~prior year. See definition of bookings and ~~Engineered Systems segments, partially offset by the Refrigeration & Food Equipment segment. Growth in Asia was driven by organic growth~~backlog within "Segment Results of ~~20% in China, led principally by our retail fueling and process solutions businesses.~~Operations".

During the three months ended ~~September 30, 2019,~~March 31, 2020, we acquired Sys-Tech Solutions, Inc. ("Systech") and So. Cal. Soft-Pak, Incorporated ("Soft-Pak") Software Solutions for 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 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 our 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 ~~initiatives~~programs to further optimize operations. Rightsizing ~~programs in 2019~~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 ~~include: 1)~~of broad-based selling, general and administrative expense reduction initiatives and 2)broad-based operational efficiency initiatives focusing on footprint consolidation, ~~actions.~~operational optimization and IT centralization. These ~~actions resulted in approximately $3.8 million of rightsizing and other related costs in the third quarter of 2019~~restructuring charges were broad-based across ~~our~~all segments as well as ~~at the Corporate level, inclusive~~corporate. We expect to incur $6 million of restructuring ~~costs. These rightsizing~~ charges ~~relate to employee reductions and facility restructuring costs.~~ during the remainder of 2020 for these initiatives.

We ~~incurred rightsizing and other related costs~~also purchased 0.5 million shares of ~~$0.9 million in Engineered Systems, $1.8 million in Fluids, $0.8 million in Refrigeration & Food Equipment and $0.3 million at the Corporate level. These charges were recorded in~~our common stock for a total cost of ~~goods~~$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 ~~selling, general~~personal goods industries to comply with product marking regulations and ~~administrative expenses~~provide product identification and traceability for consumers (such as product expiration dates).

•Our Pumps & Process Solutions segment include businesses in the ~~Condensed Consolidated Statement~~biopharma and medical markets that produce components that are used in the research and production of ~~Earnings.~~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 ~~2019~~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 ~~2020,~~early February, but were back to fully operational by early March and we expect to ~~incur total rightsizing~~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 other related charges, inclusive of restructuring costs, of approximately $24 million primarily related to the completion of our selling, general and administrative expense reduction actions and continuation of our footprint consolidation initiatives. We incurred $14 million of charges during the nine months ended September 30, 2019 and expect to incur approximately $6 million during the remainder of 2019 and approximately $4 million in 2020.Malaysia.

~~Effective October 1, 2019,~~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 ~~Company transitioned from~~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 ~~three-segment~~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 ~~a five-segment structure~~experience very high levels of volatility as a result of COVID 19-related uncertainties. As a ~~change~~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 ~~its internal organization. This new structure will increase management efficiency~~repay all of our outstanding commercial paper and ~~better align the Company’s operations with its strategic initiatives and capital allocation priorities across its businesses. The five reportable segments are as follows:~~

•~~Engineered Products~~

•~~Fueling Solutions~~

•~~Imaging & Identification~~

•~~Pumps & Process Solutions~~

•~~Refrigeration & Food Equipment~~for general corporate purposes. See "Financial Condition - Capitalization" for further discussion.

~~Beginning with the year ending December 31, 2019, the Company's segment results and disclosures will reflect the new segment structure for all periods presented.~~

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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 September 30,														Nine Months Ended September 30,											Three Months Ended March 31,
(dollars in thousands, except per share data)	(dollars in thousands, except per share data)	2019			2018			% Change		2019			2018			% Change		(dollars in thousands, except per share data)	2020			2019			% Change
Revenue	Revenue	$	1,825,345		$	1,747,403		4.5	%	$	5,360,808		$	5,183,168		3.4	%	Revenue	$	1,655,939		$	1,724,757		(4.0)	%
Cost of goods and services	Cost of goods and services	1,151,857			1,100,883			4.6	%	3,391,185			3,268,583			3.8	%	Cost of goods and services	1,043,696			1,101,215			(5.2)	%
Gross profit	Gross profit	673,488			646,520			4.2	%	1,969,623			1,914,585			2.9	%	Gross profit	612,243			623,542			(1.8)	%
Gross profit margin	Gross profit margin	36.9		%	37.0		%	(0.1)		36.7		%	36.9		%	(0.2)		Gross profit margin	37.0		%	36.2		%	0.8

Selling, general and administrative expenses	Selling, general and administrative expenses	390,775			426,445			(8.4)	%	1,195,875			1,290,246			(7.3)	%	Selling, general and administrative expenses	386,941			408,466			(5.3)	%
Selling, general and administrative expenses as a percent of revenue	Selling, general and administrative expenses as a percent of revenue	21.4		%	24.4		%	(3.0)		22.3		%	24.9		%	(2.6)		Selling, general and administrative expenses as a percent of revenue	23.4		%	23.7		%	(0.3)

Loss on assets held for sale	Loss on assets held for sale	—			—			nm*		46,946			—			nm*		Loss on assets held for sale	—			46,946			nm*

Operating earnings																		Operating earnings	225,302			168,130
Interest expense	Interest expense	31,410			31,192			0.7	%	94,972			98,957			(4.0)	%	Interest expense	27,268			31,808			(14.3)	%
Interest income	Interest income	(1,263)			(2,060)			(38.7)	%	(3,098)			(6,680)			(53.6)	%	Interest income	(1,183)			(890)			32.9	%

Gain on sale of a business																		Gain on sale of a business	(6,551)			—			nm*
Other income, net	Other income, net	(5,364)			(2,073)			nm*		(11,059)			(6,641)			nm*		Other income, net	(7,732)			(1,106)			nm*

Earnings before provision for income taxes and discontinued operations		$	257,930		$	193,016		33.6	%	645,987			538,703			19.9	%
Earnings before provision for income taxes																		Earnings before provision for income taxes	213,500			138,318			54.4	%
Provision for income taxes	Provision for income taxes	51,924			35,711			45.4	%	136,191			105,533			29.1	%	Provision for income taxes	37,221			32,613			14.1	%
Effective tax rate	Effective tax rate	20.1		%	18.5		%	1.6		21.1		%	19.6		%	1.5		Effective tax rate	17.4		%	23.6		%	(6.2)

Earnings from continuing operations		$	206,006		$	157,305		31.0	%	$	509,796		$	433,170		17.7	%
Loss from discontinued operations, net		—			—			nm*		—			(4,472)			nm*

Net earnings	Net earnings	$	206,006		$	157,305		31.0	%	$	509,796		$	428,698		18.9	%	Net earnings	$	176,279		$	105,705		66.8	%
Earnings from continuing operations per common share - diluted		$	1.40		$	1.05		33.3	%	$	3.47		$	2.82		23.0	%

Net earnings per common share - diluted	Net earnings per common share - diluted	$	1.40		$	1.05		33.3	%	$	3.47		$	2.79		24.4	%	Net earnings per common share - diluted	$	1.21		$	0.72		68.1	%

* nm - not meaningful

Revenue

In the ~~third~~first quarter of ~~2019,~~2020, revenue ~~increased $77.9~~decreased $68.8 million, or ~~4.5%~~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 ~~of 5.6%~~was 0.8% led by our ~~Fluids~~Imaging & Identification and ~~Engineered Systems~~Pumps & Process Solutions segments, ~~and acquisition-related revenue growth of 1.0% from our Fluids segment. This growth was~~ partially offset by an unfavorable impact from foreign currency translation of ~~1.6%~~1.4% and a ~~0.5%~~0.7% impact from dispositions within the ~~Fluids segment.~~ Pumps & Process Solutions and Refrigeration & Food Equipment segments. Customer pricing favorably impacted revenue by approximately ~~1.0%~~0.7% in the ~~third~~first quarter of ~~2019.~~2020.

Revenue for the nine months ended September 30, 2019 increased $177.6 million, or 3.4%, from the comparable period. The increase primarily reflects organic revenue growth of 5.5%, led by our Fluids and Engineered Systems segments and acquisition-related growth of 0.8% from our Fluids segment. This growth was partially offset by an unfavorable impact from foreign currency translation of 2.5% and a 0.4% impact from dispositions within the Fluids segment. Customer pricing favorably impacted revenue by approximately 1.1% for the nine months ended September 30, 2019.

Gross Profit

Gross profit for the three months ended ~~September 30, 2019 increased $27.0~~March 31, 2020 decreased $11.3 million, or ~~4.2%~~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, ~~and~~ benefits from productivity initiatives and rightsizing actions ~~partially offset by increased~~

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~~material costs~~ and ~~unfavorable business and regional mix.~~cost containment actions. Gross profit margin ~~remained relatively flat~~increased 80 basis points to 37.0% for the three months ended ~~September 30, 2019 from the comparable period.~~

~~Gross profit for the nine months ended September 30, 2019 increased $55.0 million, or 2.9%,~~March 31, 2020 from the comparable period primarily due to ~~organic revenue growth of 5.5% and~~ benefits from productivity initiatives and rightsizing ~~actions, partially offset by increased material~~ costs and ~~unfavorable business and regional mix. Gross profit margin decreased by 20 basis points for~~cost containment actions. We are managing the ~~nine months ended September 30, 2019 from the comparable period.~~operating plants' production aggressively to match demand.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended ~~September 30, 2019~~March 31, 2020 decreased ~~$35.7~~$21.5 million, or ~~8.4%~~5.3%, from the comparable period, primarily due to a reduction in discretionary and planned spend and benefits from rightsizing ~~actions started in 2018.~~actions. As a percentage of revenue, selling, general and administrative expenses ~~decreased 300~~decreased 30 basis points to ~~21.4%~~23.4%, reflecting ~~the leverage of costs on a higher revenue base and~~ the decrease in expenses.

~~Selling, general~~ We are taking proactive cost reduction efforts as we monitor the impact of COVID-19. We expect the second quarter to require continued and ~~administrative expenses for the nine months ended September 30, 2019 decreased $94.4 million, or 7.3%, from the comparable period, reflecting benefits from rightsizing~~more significant actions ~~started in 2018. Selling, general~~to reduce costs to offset revenue decline and ~~administrative expenses~~under-absorption of production fixed overhead, such as ~~a percentage of revenue improved 260 basis points as compared~~further reducing discretionary spend and headcount to ~~the prior year comparable period.~~match demand.

Research and development costs, including qualifying engineering costs, are expensed when incurred and amounted to ~~$32.1~~$35.5 million and ~~$34.8~~$34.6 million for the three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018, respectively, and $102.0 million and $106.1 million, for the nine months ended September 30, 2019 and 2018,~~ respectively. These costs as a percent of revenue were ~~1.8%~~2.1% and 2.0% for the three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018, respectively, and 1.9% and 2.0% for the nine months ended September 30, 2019 and 2018,~~ respectively.

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Loss on assets held for sale

On March 29, 2019, ~~the Co~~we~~mpany~~ entered into a definitive agreement to sell Finder Pompe S.r.l. ("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. ~~The Company~~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 ~~September 30, 2019~~March 31, 2020 increased ~~$3.3~~$6.6 million primarily due to increased ~~earnings from our equity method investments and a reduction in~~ foreign ~~currency~~ exchange ~~losses~~gains from the remeasurement of foreign currency denominated ~~balances.~~

~~Other income, net for the nine months ended September 30, 2019 increased $4.4 million primarily due to~~balances and increased earnings from our equity method ~~investments and a reduction in foreign currency exchange losses from the remeasurement of foreign currency denominated balances.~~investments.

Income Taxes

The effective tax rates for the three months ended ~~September 30,~~March 31, 2020 and 2019 were 17.4% and ~~2018 were 20.1% and 18.5%~~23.6%, respectively. The ~~increase~~decrease in the effective tax rate for the three months ended ~~September 30, 2019~~March 31, 2020 relative to the prior comparable period was ~~principally due to a higher benefit from the impact of discrete tax items in the prior period.~~primarily driven by favorable audit settlements.

The effective tax rates for the nine months ended September 30, 2019 and 2018 were 21.1% and 19.6%, respectively. The increase in the effective tax rate for the nine months ended September 30, 2019 relative to the prior comparable period is primarily driven by the exclusion of capital losses on the sale of Finder under local tax law partially offset by the impact of changes in tax law and the impact of other discrete tax items.

~~The discrete items for the~~ three months ended ~~September 30,~~March 31, 2019 ~~primarily resulted from the net~~ includes a discrete tax benefit from stock exercises, ~~and favorable audit settlements. The discrete items for the three months ended September 30, 2018~~ ~~were driven by~~ ~~the net tax benefit from stock exercises. The discrete items for the~~ ~~nine months~~ ~~ended~~ ~~September 30, 2019~~ ~~primarily resulted from~~

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~~the benefit of stock exercises and favorable audit settlements~~ partially offset by the exclusion of capital losses on the sale of Finder under local tax law. ~~The discrete items for the~~ ~~nine months~~ ~~ended September 30, 2018 primarily resulted from the benefit of stock exercises and favorable audit settlements.~~

~~Earnings from Continuing Operations~~Net earnings

~~Earnings from continuing operations~~Net earnings for the three months ended ~~September 30, 2019~~March 31, 2020 increased ~~31.0%~~66.8% to ~~$206.0~~$176.3 million, or ~~$1.40~~$1.21 diluted earnings per share, from ~~$157.3~~$105.7 million, or ~~$1.05~~$0.72 diluted earnings per share, from the comparable period. The increase in net earnings ~~from continuing operations~~ was mainly attributable to ~~volume leverage,~~ pricing initiatives, benefits from productivity and rightsizing actions, and ~~benefits from rightsizing actions.~~broad-based cost reductions, as well a loss on assets held for sale of $46.9 million in the prior period. These benefits were partially offset by reduced volume due to the impact of COVID-19 and increased material ~~costs, as well as unfavorable business~~ and ~~regional mix.~~inflation costs.

Earnings from continuing operations for the nine months ended September 30, 2019 increased 17.7% to $509.8 million, or $3.47 diluted earnings per share, from $433.2 million, or $2.82 diluted earnings per share from the comparable period. Excluding the $46.9 million loss on sale of assets held for sale for Finder, earnings from continuing operations increased by $123.5 million or 28.5% or $3.79 diluted earnings per share. This increase in earnings from continuing operations was principally attributable to volume leverage, pricing initiatives, productivity actions and benefits from rightsizing actions. These benefits were partially offset by increased material costs, as well as unfavorable business and regional mix.

~~Discontinued Operations~~

~~For the three and~~ ~~nine months~~ ~~ended September 30, 2019, there were no earnings or losses presented as discontinued operations.~~

For the three and nine months ended September 30, 2018, the historical results of Apergy were presented as discontinued operations as the spin-off on May 9, 2018 represented a strategic shift in operations with a major impact on our operations and financial results. For the three months ended September 30, 2018, there were no earnings or losses presented as discontinued operations. For the nine months ended September 30, 2018, losses from discontinued operations were $4.5 million which included costs incurred by Dover to complete the spin-off of Apergy amounting to $46.4 million.

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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

The summary that follows provides a discussion of the results of operations of each of our ~~three~~five reportable operating segments (Engineered ~~Systems, Fluids,~~Products, Fueling Solutions, Imaging & Identification, Pumps & Process Solutions, and Refrigeration & Food Equipment). Each of these segments is comprised of various product and service offerings that serve multiple ~~end~~ markets. See Note 1817 — Segment Information in the Condensed Consolidated Financial Statements in Item 1 of this Form 10-Q for a reconciliation of segment revenue, ~~earnings~~earnings and margin to our consolidated revenue, net earnings ~~from continuing operations~~ and margin. For further information, see "Non-GAAP Disclosures" at the end of this Item 2.

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 2020 Compared to the First Quarter 2019

Engineered Products segment revenue for the first quarter of 2020 decreased $10.7 million, or 2.6%, as compared to the first quarter of 2019, comprised of organic decline of 1.9% and an unfavorable impact from foreign currency translation of 0.8%, partially offset by acquisition-related growth of 0.1%. Acquisition-related growth was driven by the acquisition of SoftPak. Customer pricing did not have a significant impact on revenue in the first quarter of 2020.

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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 Products segment earnings increased $2.0 million, or 2.9%, compared to the first quarter of 2019. This increase was primarily driven by productivity actions including the benefit of rightsizing actions and cost reduction initiatives, and selling, general and administrative expenses cost containment actions.These impacts more than offset the negative impact from earnings conversion on lower organic revenues, driven by the impacts of COVID-19. Segment operating margin increased 90 basis points to 16.9% from 16.0% as compared to the prior year quarter.

Bookings decreased 3.0% for the segment, including an organic decline of 2.3% and an unfavorable impact from foreign currency 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 industrial automation and industrial winch and hoist businesses, and order placement timing in our aerospace and defense business. Segment book-to-bill was 1.02. Backlog increased 0.6% compared to the prior year quarter.

~~Engineered Systems~~

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

Three Months Ended September 30, Nine Months Ended September 30,
(dollars in thousands) 2019 2018 % Change 2019 2018 % Change
Revenue:
Printing & Identification $ 287,157 $ 283,232 1.4 % $ 848,056 $ 865,588 (2.0) %
Industrials 414,634 388,302 6.8 % 1,237,427 1,180,561 4.8 %
Total $ 701,791 $ 671,534 4.5 % $ 2,085,483 $ 2,046,149 1.9 %
Segment earnings $ 136,022 $ 108,714 25.1 % $ 390,866 $ 337,429 15.8 %
Segment margin 19.4 % 16.2 % 18.7 % 16.5 %
Segment EBITDA $ 153,477 $ 126,918 20.9 % $ 443,981 $ 394,075 12.7 %
Segment EBITDA margin 21.9 % 18.9 % 21.3 % 19.3 %
Other measures:
Depreciation and amortization $ 17,455 $ 18,204 (4.1) % $ 53,115 $ 56,646 (6.2) %
Bookings:
Printing & Identification $ 296,654 $ 271,367 9.3 % $ 853,714 $ 862,574 (1.0) %
Industrials 413,925 390,606 6.0 % 1,213,892 1,270,108 (4.4) %
$ 710,579 $ 661,973 7.3 % $ 2,067,606 $ 2,132,682 (3.1) %
Backlog:
Printing & Identification $ 125,084 $ 126,609 (1.2) %
Industrials 412,817 367,963 12.2 %
$ 537,901 $ 494,572 8.8 %
Components of revenue growth:
Organic growth 6.3 % 4.5 %
Foreign currency translation (1.8) % (2.6) %
4.5 % 1.9 %

~~Third Quarter 2019 Compared to the Third Quarter 2018~~

~~Engineered Systems r~~

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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 rev~~evenue~~enue for the ~~third~~first quarter of ~~2019 increased $30.3~~2020 decreased $13.1 million, or ~~4.5%~~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 favorable impact from foreign currency translation. The cost reduction actions include the elimination of non-essential travel, third party and other expenses, and re-prioritization of all planned investments and hiring plans. These benefits were partially offset by the previously discussed global impact of COVID-19 on volume, increased material costs and inflation costs. Segment margin increased 490 basis points over the prior year quarter.

Overall bookings increased 8.7% as compared to the ~~third~~prior year quarter, ~~of 2018, comprised of~~driven by organic growth of ~~6.3%~~9.5% and acquisition-related growth of 1.1%, partially offset by an unfavorable impact from foreign currency translation of ~~1.8%~~1.9%. Organic growth was primarily driven by acceleration in demand for EMV compliant equipment in North America. Segment book to bill was 1.04. Backlog increased 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 ~~1.3%~~0.4% in th~~e third~~the first quarter of ~~2019.~~2020.

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. 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, Europe, North America and South America. Additionally, the expansion of 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 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, 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 place until we see improvements in near-term demand. Segment margin decreased 80 basis points over the prior year quarter.

•~~Printing & Identification revenue (representing 40.9%~~ ~~of segment revenue)~~Overall bookings increased ~~$3.9 million, or 1.4%,~~1.8% as compared to the prior year ~~quarter. The increase was primarily driven by an~~quarter, reflecting organic ~~revenue~~growth of 0.3% and acquisition-related growth of 4.1%, partially offset by an unfavorable impact from foreign currency translation of ~~2.7%~~2.6%. ~~The organic revenue growth was primarily driven by volume growth~~Strong orders for consumables in ~~digital printing, resulting from strong activity after a major industry trade show and increasing market demand for digital printing solutions. Organic revenue growth was also driven by~~ our marking and coding ~~business.~~

•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. ~~Industrials revenue (representing 59.1% of segment revenue)~~Segment book to bill was 1.06. Backlog increased ~~$26.3 million, or 6.8%,~~44.0% as compared to the prior year ~~quarter. The increase was primarily~~quarter driven by ~~organic revenue growth~~the inclusion of ~~7.8% partially offset by an unfavorable impact of foreign currency translation of 1.0%. Organic revenue growth was driven principally by~~backlog from the Systech acquisition, and strong ~~activity~~bookings for consumables in ~~the refuse truck~~marking and ~~digital solutions product lines in our environmental solutions business, as well as growth in our vehicle service business.~~coding.

Engineered Systems segment earnings increased $27.3 million, or 25.1%, compared to the third quarter of 2018. This increase was primarily driven by conversion on volume growth in digital print and refuse trucks, pricing actions, and productivity initiatives including the benefits from rightsizing actions and cost reduction initiatives across both platforms. These benefits more than offset increases in material costs, driven by U.S. Section 232 tariffs, most notably commodity cost increases impacting steel, U.S. Section 301 tariffs, along with unfavorable foreign currency translation. Segment margins increased 320 basis points to 19.4% from 16.2% as compared to the prior year quarter.

~~Bookings increased 7.3%~~

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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 ~~segment, including organic growth of 9.3% partially offset by an unfavorable impact from foreign currency of 2.0%. Our Printing & Identification bookings increased 9.3% compared~~three months ended 2019 include a $46,946 loss on assets held for sale for Finder.

First Quarter 2020 Compared to the ~~prior year~~First Quarter 2019

Pumps & Process Solutions segment revenue for the first quarter ~~with an~~of 2020 decreased $10.7 million, or 3.2%, comprised of organic ~~increase~~decline of ~~12.3% primarily due to increased order activity in our digital printing business after an industry trade show, partially offset by~~1.1%, an unfavorable impact from foreign currency translation of 3.0%. Bookings in our Industrials platform increased 6.0%, with an organic increase of 7.1%, compared to the prior year quarter. This increase was principally driven by strong demand for refuse trucks in our environmental solutions business. This growth was1.1% and a 1.9% impact from dispositions, partially offset by an~~unfavorable impact from foreign currency translation~~acquisition-related growth of ~~1.2%~~0.9%. ~~Segment book-to-bill was 1.01.~~

~~Nine Months Ended September 30, 2019 Compared to the Nine Months Ended September 30,~~ ~~2018~~

Engineered Systems revenue for the nine months ended September 30, 2019 increased $39.3 million, or 1.9%, compared to the prior year comparable period. This was comprised of 4.5% organic revenue growth offset by an unfavorable impact from foreign currency translation of 2.6%. Organic revenue growth was driven by strong activity in the refuse truck and digital solutions product lines within our environmental solutions business, continued expansion in our digital printing business and growth in our global marking and coding business, as well as growth in our vehicle service business. Customer pricing favorably impacted revenue by approximately ~~1.7% for~~1.1% in the ~~nine months ended September 30, 2019.~~

Segment earnings for the nine months ended September 30, 2019 increased $53.4 million, or 15.8% as compared to the 2018 period. This increase was primarily driven by solid conversion on organic volume growth, pricing actions, and productivity initiatives including the benefitsfirst quarter of rightsizing actions and cost reduction initiatives across both platforms. These benefits more than offset increases in material costs driven by U.S. Section 232 tariffs, most notably commodity cost increases impacting steel and U.S. Section 301 tariffs, along with unfavorable foreign currency translation. Segment margin increased from 16.5% to 18.7% as compared to the prior year comparable period.

2020.

The organic revenue decline

~~Table~~was principally driven by the adverse impact of ~~Contents~~COVID-19, as well as the slowing demand in the oil & gas end-market, partially offset by growth in 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.

~~Fluids~~

~~Our Fluids segment, serving the Fueling & Transport,~~ Pumps ~~and~~& Process Solutions ~~end markets, is focused on~~segment earnings increased $51.1 million, or 340.8%, over the ~~safe handling~~prior year quarter. Segment earnings in the first quarter of ~~critical fluids, and providing critical components to the retail fueling, chemical, hygienic, oil and gas, power generation and industrial markets.~~

Three Months Ended September 30, Nine Months Ended September 30,
(dollars in thousands) 2019 2018 % Change 2019 2018 % Change
Revenue:
Fueling & Transport $ 411,769 $ 367,617 12.0 % $ 1,175,405 $ 1,050,276 11.9 %
Pumps 169,678 167,542 1.3 % 523,730 503,157 4.1 %
Process Solutions 171,599 154,906 10.8 % 486,568 458,396 6.1 %
$ 753,046 $ 690,065 9.1 % $ 2,185,703 $ 2,011,829 8.6 %
Segment earnings⁽¹⁾
$ 145,502 $ 101,207 43.8 % $ 326,638 $ 261,583 24.9 %
Segment margin ⁽¹⁾
19.3 % 14.7 % 14.9 % 13.0 %
Segment EBITDA ⁽²⁾
$ 180,264 $ 136,161 32.4 % $ 431,972 $ 365,967 18.0 %
Segment EBITDA margin ⁽²⁾
23.9 % 19.7 % 19.8 % 18.2 %
Other measures:
Depreciation and amortization $ 34,762 $ 34,954 (0.5) % $ 105,334 $ 104,384 0.9 %
Bookings 780,320 723,996 7.8 % 2,263,267 2,164,797 4.5 %
Backlog 584,539 588,632 (0.7) %
Components of revenue growth:
Organic growth 9.8 % 10.7 %
Acquisitions 2.6 % 2.0 %
Dispositions (1.3) % (1.0) %
Foreign currency translation (2.0) % (3.1) %
9.1 % 8.6 %

⁽¹⁾ ~~Excluding~~2019 included a loss on assets held for sale for Finder of $46.9 million. Excluding the loss, segment earnings ~~was $373,584~~increased driven by pricing initiatives, productivity actions, restructuring benefits, and ~~$261,583 for~~selling, general and administrative cost reductions. The aforementioned cost reductions include the ~~nine months ended September 30, 2019~~elimination of non-essential travel, third party and ~~2018, respectively.~~ 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 foreign currency translation. Segment margin ~~was 17.1% and 13.0% for~~increased to 20.7% from 4.5% from the ~~nine months ended September 30, 2019 and 2018, respectively.~~

⁽²⁾ ~~Excluding a~~prior year quarter, which included the loss on assets held for sale for Finder, segment EBITDA was $478,918 and $365,967 for the nine months ended September 30, 2019 and 2018, respectively. Segment EBITDA margin was 21.9% and 18.2% for the nine months ended September 30, 2019 and 2018, respectively.Finder.

~~Third Quarter 2019 Compared~~

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Overall bookings were flat as compared to the ~~Third Quarter 2018~~

~~Fluids revenue for the third~~prior year quarter, ~~of 2019 increased $63.0 million, or 9.1%, comprised of organic growth of 9.8% and acquisition-related growth of 2.6%, partially offset by~~reflecting an unfavorable impact from foreign currency translation of ~~2.0%~~1.1% and a ~~1.3%~~2.0% impact from ~~dispositions. Customer pricing favorably impacted revenue by approximately 1.3% in the third quarter of 2019.~~

•~~Fueling & Transport revenue (representing 54.7% of segment revenue) increased $44.2 million, or 12.0%, as compared to the prior year quarter. Growth was driven by~~ a 10.7% organic increase primarily due to continued strong demand in the global retail fueling industry, particularly in the US and Europe, and growth in transportation components volume. Growth was also driven by the acquisition of Belanger, Inc. ("Belanger").

•Pumps revenue (representing 22.5% of segment revenue) increased $2.1 million, or 1.3%, as compared to the prior year quarter. This increase reflects organic growth of 5.0% driven by strong activity in industrial, biopharma and thermal management markets.

•~~Process Solutions revenue (representing 22.8% of segment revenue) increased $16.7 million, or 10.8%, as compared to the prior year quarter. This revenue increase was driven~~disposition, partially offset by organic growth of ~~12.7% supported by continued strong demand from our original equipment manufacturer ("OEM") customers for rotating equipment components, as well as pump~~2.2% and ~~other equipment for plastics and polymer production.~~

~~Table~~acquisition-related growth of ~~Contents~~

~~Fluids segment earnings~~0.8%. Segment book to bill was 1.16. Backlog increased $44.3 million, or 43.8%, over the prior year quarter. The increase was driven by volume leverage, pricing initiatives, productivity actions and benefits of selling, general and administrative cost reduction realized. These benefits were partially offset by increased material costs driven by U.S. Section 232 tariffs, U.S. Section 301 tariffs, inflation costs and unfavorable product and regional mix. Segment margin increased 460 basis points over the prior year quarter.

~~Overall bookings increased 7.8%~~12.7% as compared to the prior year quarter driven by ~~growth of 17.5% from~~strong new order rates in our ~~Fueling & Transport end market. Segment book to bill was 1.04.~~

~~Nine Months Ended September 30, 2019 Compared to the Nine Months Ended September 30, 2018~~

~~Fluids segment revenue increased $173.9 million, or 8.6%, as compared to the nine months ended September 30, 2018, attributable to organic growth of 10.7%~~biopharma and ~~acquisition-related growth of 2.0%, partially offset by an unfavorable impact from foreign currency translation of 3.1%~~plastics and ~~a 1.0% impact from dispositions. All businesses drove organic growth. Customer pricing favorably impacted revenue by approximately 1.1% for the nine months ended September 30, 2019.~~polymer equipment businesses.

Fluids segment earnings increased $65.1 million, or 24.9%, for the nine months ended September 30, 2019. Excluding the loss on assets held for sale for Finder in the first quarter, segment earnings increased $112.0 million predominantly driven by volume leverage, pricing initiatives, productivity actions and acquisitions. These benefits were partially offset by increased material costs driven by U.S. Section 232 tariffs, U.S. Section 301 tariffs, inflation costs, and unfavorable product and regional mix. Excluding the previously mentioned loss on assets held for sale, segment margin improved 410 basis points over the prior year comparable period.

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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 September 30, Nine Months Ended September 30,
(dollars in thousands) 2019 2018 % Change 2019 2018 % Change
Revenue:
Refrigeration $ 313,908 $ 328,281 (4.4) % $ 905,084 $ 937,168 (3.4) %
Food Equipment 56,427 57,933 (2.6) % 185,368 189,047 (1.9) %
Total $ 370,335 $ 386,214 (4.1) % $ 1,090,452 $ 1,126,215 (3.2) %
Segment earnings $ 35,211 $ 42,434 (17.0) % $ 104,393 $ 122,988 (15.1) %
Segment margin 9.5 % 11.0 % 9.6 % 10.9 %
Segment EBITDA $ 48,258 $ 55,967 (13.8) % $ 143,228 $ 163,624 (12.5) %
Segment EBITDA margin 13.0 % 14.5 % 13.1 % 14.5 %
Other measures:
Depreciation and amortization $ 13,047 $ 13,533 (3.6) % $ 38,835 $ 40,636 (4.4) %
Bookings 323,422 331,979 (2.6) % 1,084,785 1,133,496 (4.3) %
Backlog 262,870 255,783 2.8 %
Components of revenue decline:
Organic decline (3.2) % (1.9) %
Foreign currency translation (0.9) % (1.3) %
(4.1) % (3.2) %

~~Third~~


	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 ~~Third~~First Quarter ~~2018~~2019

Refrigeration & Food Equipment segment revenue decreased ~~$15.9~~$22.7 million, or ~~4.1%~~6.8%, as compared to the ~~third~~first quarter of ~~2018,~~2019, reflecting an organic revenue decline of ~~3.2%~~4.3%, a 1.8% impact from the disposition of AMS Chino, and an unfavorable impact from foreign currency translation of ~~0.9%~~0.7%. Customer pricing did not have a significant impact on revenue in the ~~third~~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 & Food Equipment segment earning~~Refrigeration revenue (representing 84.8% of segment revenue)~~s decreased ~~$14.4~~$1.3 million, or ~~4.4%~~5.2%, as compared to the first quarter of 2019. Segment margin increased to 7.5% from 7.4% in the prior year ~~quarter, reflecting an organic revenue~~quarter. The earnings decline ~~of 3.3%~~was driven by reduced volumes and ~~an unfavorable impact of foreign currency translation of 1.1%. Solid store remodel activity drove growth in our core door case product line, which was more than~~operational inefficiencies associated with impacts from COVID-19, partially offset by ~~soft~~the gain on sale from the disposition ofAMS Chino and other broad based cost reduction activities, including adjusting direct and indirect manufacturing costs to current demand ~~for commercial refrigeration equipment~~levels, reduction of discretionary expenses, adjustments to variable compensation to match current outlook, and ~~shift~~

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deferral of planned selling, general, and administrative investments.These actions as well as planned furloughs will continue in ~~timing of several orders, as new store build activity~~the second quarter and remain in ~~food retail continues to be slow. The organic decline was also driven by continued weakness~~place until we see improvements in ~~demand for heat exchanger products in Asia.~~near-term revenue demand.

•
~~Food Equipment revenue (representing 15.2%~~

Bookings in the first quarter of ~~segment revenue)~~2020 decreased ~~$1.5 million, or 2.6%, as compared to~~5.8% from the prior year quarter, reflecting an organic decline of ~~2.8% with growth in our can-shaping equipment business offset~~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 ~~slower activity~~COVID-19 demand reductions in our foodservice equipment ~~business due to reduced restaurant chain~~and heat exchanger businesses as well as timing of projects for aluminum can shaping equipment, ~~roll-out programs compared to the prior year.~~

~~Refrigeration & Food Equipment segment earnings decreased $7.2 million, or 17.0%~~which operates with a strong long-term backlog. Retail refrigeration’s organic bookings grew 1.2%, as ~~compared~~key supermarket chain order trends remained healthy, albeit with request for delivery date timing beyond normal lead times. Segment book to bill for the ~~third~~first quarter of ~~2018. Segment margin decreased to 9.5% from 11.0% in the prior year quarter due to reduced overall volume and~~2020 was 1.14. Backlog increased ~~costs associated with facility restructuring, partially offset by~~ ~~benefits from prior year restructuring actions.~~

~~Bookings in the third quarter of 2019 decreased 2.6% (organic decline of 2.3%) from~~14.3% over the prior year quarter, driven ~~primarily~~mainly by ~~slower activity in retail refrigeration. Segment book to bill for the third quarter of 2019 was 0.87. Backlog increased 2.8% over the prior year quarter due to strengthening demand~~increases in our heat exchanger and ~~can-shaping~~aluminum can shaping equipment businesses.

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~~Nine Months Ended September 30, 2019 Compared to the Nine Months Ended September 30, 2018~~

Refrigeration & Food Equipment segment revenue decreased $35.8 million, or 3.2%, compared to the nine months ended September 30, 2018, reflecting an organic revenue decline of 1.9% and an unfavorable foreign currency translation of 1.3%. The organic revenue decrease for the nine months ended September 30, 2019 was driven primarily by softer heat exchanger, retail refrigeration, and foodservice equipment market activity. Customer pricing did not have a significant impact on revenue ~~for the nine months ended September 30, 2019.~~

Refrigeration & Food Equipment segment earnings decreased $18.6 million, or 15.1%, for the nine months ended September 30, 2019, as compared to the prior year period. Segment margin decreased to 9.6% from 10.9% in the prior year period due to reduced volumes and unfavorable business mix in retail refrigeration and foodservice equipment, partially offset by increased earnings in the can-shaping business as well as improved productivity and benefits from prior year restructuring actions.

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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:


		Nine Months Ended September 30,							Three Months Ended March 31,
Cash Flows from Continuing Operations (dollars 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	$	584,098	$	418,684	Operating activities	$	75,863	$	24,524
Investing activities	Investing activities	(336,057)		(210,125)		Investing activities	(230,511)		(217,690)
Financing activities	Financing activities	(302,430)		(749,313)		Financing activities	280,954		36,067

Operating Activities

Cash provided by operating activities for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 increased approximately ~~$165.4~~$51.3 million compared to the comparable 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 also attributable to improvements in working capital of ~~$16.3~~$25.4 million relative to the prior year.

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.

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)	September 30, 2019		December 31, 2018		Adjusted Working Capital (dollars in thousands)	March 31, 2020		December 31, 2019
Accounts receivable	Accounts receivable	$	1,269,150	$	1,231,859	Accounts receivable	$	1,222,154	$	1,217,190
Inventories	Inventories	816,563		748,796		Inventories	852,075		806,141
Less: Accounts payable	Less: Accounts payable	952,708		969,531		Less: Accounts payable	947,006		983,293
Adjusted working capital	Adjusted working capital	$	1,133,005	$	1,011,124	Adjusted working capital	$	1,127,223	$	1,040,038

Adjusted working capital increased from December 31, ~~2018~~2019 by ~~$121.9~~$87.2 million, or ~~12.1%~~8.4%, to $1.1 billion at ~~September 30, 2019,~~March 31, 2020, which reflected an increase of ~~$37.3~~$5.0 million in accounts receivable, an increase of ~~$67.8~~$45.9 million in inventory, and a decrease in accounts payable of ~~$16.8~~$36.3 million. ~~Excluding acquisitions, dispositions, and the effects of foreign currency translation, adjusted working capital increased by $145.9 million, or 14.4%, for the nine months ended September 30, 2019~~ ~~primarily driven by increases in working capital to support strong sales during the period, and, with respect to inventory, to also support anticipated shipping activity in the fourth quarter.~~

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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 ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ we used cash in investing activities of ~~$336.1~~$230.5 million and ~~$210.1~~$217.7 million, respectively, driven mainly by the following factors:

•Acquisitions: During the ~~nine~~three months ended ~~September 30,~~March 31, 2020, we acquired Systech and Soft-Pak within the Imaging & Identification and Engineered Products segments, respectively, for $208.4 million, net of cash acquired. During the three months ended March 31, 2019, we acquired Belanger, ~~All-Flo and an immaterial business~~Inc., within the ~~Fluids~~Fueling Solutions segment for $215.7 million, net of cash acquired, respectively. During the nine months ended September 30, 2018, we acquired Ettlinger, within the Fluids segment, for $53.2 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 increased ~~$2.7~~$3.1 million on major projects in progress during the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 compared to the ~~nine~~three months ended ~~September 30, 2018.~~March 31, 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 ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, we received proceeds of ~~$24.2~~$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. ~~For the nine months ended September 30, 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. For the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018, we used~~ cash ~~totaling $302.4~~provided by financing activities was $281.0 million and ~~$749.3~~$36.1 million, respectively, ~~for financing activities,~~ with the activity primarily attributable to the following:

•Repurchase of ~~common~~common stock: During the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, we used ~~$23.3~~$52.9 million to repurchase ~~261,807~~548,659 shares. ~~During~~There were no share repurchases during the ~~nine~~three months ended ~~September 30, 2018, we used $45.0 million~~March 31, 2019. We have suspended repurchases as a result of business uncertainty related to repurchase 440,608 shares under the January 2015 authorization, which expired on January 9, 2018 and, under a new share repurchase authorization adopted by the Board of Directors in February 2018, we repurchased 1,729,048 shares of common stock at a total cost of $147.8 million and used $700 million to repurchase a variable number of shares through an accelerated share repurchase transaction.COVID-19.

•Long-term debt, commercial paper and notes payable: During the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, we ~~repaid $37.7~~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 ~~notes payable. Durin~~gfor general corporate purposes. During the ~~nine~~three months ended ~~September 30, 2018,~~March 31, 2019, we received net proceeds from commercial paper and notes payable ~~increased by $67.6~~of $125.9 million primarily to ~~partially~~ fund the ~~repayment~~acquisition of ~~the Company's $350.0 million 5.45% notes, which matured on March 15, 2018, offset by a decrease in net borrowings from commercial paper paid down by cash repatriated to the U.S.~~Belanger.

•Dividend payments: Dividends paid to shareholders during the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 totaled ~~$211.1~~$70.9 million as compared to ~~$213.1~~$69.8 million during the same period in ~~2018.~~2019. Our dividends paid per common share increased 2.1% to ~~$1.45~~$0.49 during the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 compared to ~~$1.42~~$0.48 during the same period in ~~2018.~~2019. The number of common shares outstanding decreased during the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 compared to the same period in ~~2018~~2019 as a result of share repurchases completed in ~~2019~~2020 and ~~2018.~~the second half of 2019.

•Payments to settle employee tax obligations: Payments to settle tax obligations from the exercise of share based awards declined ~~$15.4~~$9.6 million compared to the prior year period. The decrease is primarily due to the decrease in the number of shares exercised ~~as well as a decrease~~partially offset by an increase in the average stock price compared to the prior year period.

•~~Cash received from Apergy, net of cash distributed:~~ In 2018, in connection with the separation of Apergy from Dover, Apergy incurred borrowings to fund a one-time cash payment of $700.0 million to Dover in connection with Dover's contribution to Apergy of stock and assets relating to the businesses spun off with Apergy. Dover received net cash of $689.6 million upon separation, which reflects $10.4 million of cash held by Apergy at the time of distribution and retained by it in connection with its separation from Dover.

~~Cash Flows from Discontinued Operations~~

Our cash flows from discontinued operations for the nine months ended September 30, 2018 used $7.9 million. These cash flows reflect the operating results of Apergy prior to its separation during the second quarter of 2018. Cash flow used in discontinued operations for the nine months ended September 30, 2018 primarily reflects cash payments of spin-off costs of $46.0 million and capital expenditures, partially offset by cash provided by operations of approximately $61.8 million.

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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.

The following table reconciles our free cash flow to cash flow provided by operating activities:


		Nine Months Ended September 30,										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	$	584,098		$	418,684		Cash flow provided by operating activities	$	75,863		$	24,524
Less: Capital expenditures	Less: Capital expenditures	(137,276)			(134,556)			Less: Capital expenditures	(40,172)			(37,122)

Free cash flow	Free cash flow	$	446,822		$	284,128		Free cash flow	$	35,691		$	(12,598)

Free cash flow as a percentage of revenue	Free cash flow as a percentage of revenue	8.3		%	5.5		%	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 ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, we generated free cash flow of ~~$446.8~~$35.7 million, representing ~~8.3%~~2.2% of ~~revenue.~~revenue and 20.2% of net earnings. Free cash flow for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 increased ~~$162.7~~$48.3 million compared to the prior year period, primarily due to higher cash flow provided by operations, as previously noted, 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. As of ~~September 30, 2019,~~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 with an expiration date of ~~November 10, 2020.~~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 ~~September 30, 2019~~March 31, 2020 and had a coverage ratio of ~~10.5~~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.

On October 4, 2019, we entered into a new $1 billion five-year unsecured revolving credit facility with a syndicate of banks on substantially similar terms as the existing Credit Agreement. The new credit facility replaced the existing $1 billion five-year Credit Agreement noted above, which was terminated by the Company upon execution of the new credit facility. The new credit facility will expire on October 4, 2024. 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 ~~September 30, 2019,~~March 31, 2020, our cash and cash equivalents totaled ~~$340.5~~$508.9 million, of which ~~$308.5~~$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. Cash and cash equivalents are invested in highly liquid investment-grade money market instruments and bank deposits with maturities of three months or less. We 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.

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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)	September 30, 2019			December 31, 2018			Net Debt to Net Capitalization Ratio (dollars in thousands)	March 31, 2020			December 31, 2019

Short term borrowings								Short term borrowings	$	500,000		$	—
Commercial paper	Commercial paper	$	182,700		$	220,318		Commercial paper	—			84,700

Notes payables								Notes payables	500,000			84,700
Long-term debt	Long-term debt	2,908,729			2,943,660			Long-term debt	2,963,018			2,985,716
Total debt	Total debt	3,091,429			3,163,978			Total debt	3,463,018			3,070,416
Less: Cash and cash equivalents	Less: Cash and cash equivalents	(340,532)			(396,221)			Less: Cash and cash equivalents	(508,907)			(397,253)
Net debt	Net debt	2,750,897			2,767,757			Net debt	2,954,111			2,673,163
Add: Stockholders' equity	Add: Stockholders' equity	3,017,643			2,768,666			Add: Stockholders' equity	2,980,681			3,032,660
Net capitalization	Net capitalization	$	5,768,540		$	5,536,423		Net capitalization	$	5,934,792		$	5,705,823
Net debt to net capitalization	Net debt to net capitalization	47.7		%	50.0		%	Net debt to net capitalization	49.8		%	46.8		%

Our net debt to net capitalization ratio ~~decreased~~increased to ~~47.7%~~49.8% at ~~September 30, 2019~~March 31, 2020 compared to ~~50.0%~~46.8% at December 31, ~~2018.~~2019. Net debt ~~decreased $16.9~~increased $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 ~~both~~ commercial paper and ~~long-term debt,~~an increase in cash and cash equivalents. Stockholders' equity decreased $52.0 million primarily as a result of foreign currency translation ~~on our euro-denominated debt. Stockholders' equity increased $249.0 million primarily as a result of higher~~adjustments, dividends paid and share repurchases, partially offset by earnings during the ~~period partially offset by dividends paid.~~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

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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.

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 ~~nine~~three months ended ~~September 30, 2019.~~March 31, 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 ~~September 30, 2019.~~March 31, 2020.

During the ~~third~~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.

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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⁾
July 1 to July 31 — $ — — 9,703,666
August 1 to August 31 261,807 88.92 261,807 9,441,859
September 1 to September 30 — — — 9,441,859
For the Third Quarter 261,807 $ 88.92 261,807 9,441,859


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. The Company repurchased ~~261,807~~548,659 shares under the February 2018 authorization during the three months ended ~~September 30, 2019.~~March 31, 2020. As of ~~September 30, 2019,~~March 31, 2020, the number of shares still available for repurchase under the February 2018 share repurchase authorization was ~~9,441,859.~~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 ~~Dover Corporation (as amended through August 1, 2019),~~the Company, effective as of February 14, 2020, filed as Exhibit 3.1 to the Company's Current Report on ~~Form~~form 8-K filed ~~August 2, 2019~~on February 19, 2020 (SEC ~~File~~file No. 001-04018), isare incorporated by reference.

10.1			~~Credit Agreement, dated as~~Form of ~~October 4, 2019, among~~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 ~~Lenders party thereto,~~Dover Corporation 2012 Equity and Cash Incentive Plan.*

10.3			Form of 2020 award grant letter for performance share awards made under the ~~Borrowing Subsidiaries party thereto from time to time~~Dover Corporation 2012 Equity and ~~JPMorgan Chase Bank, N.A. as Administrative Agent, filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed October 10, 2019 (SEC File No. 001-04018), is incorporated by reference.~~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			~~Certification~~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			~~Certification~~Certificate pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, signed and dated by Richard J. Tobin.

32			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 ~~September 30, 2019~~March 31, 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:	~~October 17, 2019~~April 21, 2020	/s/ Brad M. Cerepak
		Brad M. Cerepak
		Senior Vice President & Chief Financial Officer
		(Principal Financial Officer)

Date:	~~October 17, 2019~~April 21, 2020	/s/ Ryan W. Paulson
		Ryan W. Paulson
		Vice President, Controller
		(Principal Accounting Officer)

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	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Operating Lease Costs:
Fixed	$	13,557	$	38,520
Variable	1,634		5,274
Short-term	3,998		13,736
Total*	$	19,189	$	57,530
* Finance lease cost and sublease income were immaterial.


	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	13,836	$	39,237
Operating cash flows from finance leases	107		326
Financing cash flows from finance leases	490		1,430
Total	$	14,433	$	40,993
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	9,632		28,566
Finance leases	460		827
Total	$	10,092	$	29,393


	Operating		Finance
2019 (excluding the nine months ending September 30, 2019)	$	12,410	$	523
2020	43,000		2,069
2021	33,983		1,962
2022	24,536		1,651
2023	16,018		1,219
Thereafter	46,931		3,925
Total lease payments	176,878		11,349
Less: Interest	(17,564)		(1,809)
Present value of lease liabilities	$	159,314	$	9,540


	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	—		119,363		—		119,363

Disposition of business	—		(4,739)		—		(4,739)
Foreign currency translation	(18,082)		(12,855)		(587)		(31,524)
Balance at September 30, 2019	$	1,605,578	$	1,609,371	$	545,479	$	3,760,428


	Nine Months Ended										Nine Months Ended
	September 30, 2019										September 30, 2018
	Pre-tax		Tax		Net of tax		Pre-tax		Tax		Net of tax
Foreign currency translation adjustments	$	(8,112)	$	(7,692)	$	(15,804)	$	(24,794)	$	(1,624)	$	(26,418)
Pension and other post-retirement benefit plans	2,574		(572)		2,002		7,765		(1,657)		6,108
Changes in fair value of cash flow hedges	(368)		76		(292)		2,116		(444)		1,672

Total other comprehensive earnings (loss)	$	(5,906)	$	(8,188)	$	(14,094)	$	(14,913)	$	(3,725)	$	(18,638)