Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND

FINANCIAL STATEMENT SCHEDULE

Page
58			Management's Report on Internal Control Over Financial Reporting
59			Report of Independent Registered Public Accounting Firm (PCAOB ID 238)
61			Consolidated Statements of Earnings
62			Consolidated Statements of Comprehensive Earnings
63			Consolidated Balance Sheets
64			Consolidated Statements of Stockholders' Equity
65			Consolidated Statements of Cash Flows
66			Notes to Consolidated Financial Statements
66			Note 1 - Description of Business and Summary of Significant Accounting Policies
71			Note 2 - Revenue
73			Note 3 - Acquisitions
78			Note 4 - Dispositions
79			Note 5 - Inventories, net
79			Note 6 - Property, Plant and Equipment, net
80			Note 7 - Leases
82			Note 8 - Credit Losses
82			Note 9 - Goodwill and Other Intangible Assets
84			Note 10 - Accrued Expenses and Other Liabilities
85			Note 11 - Restructuring Activities
87			Note 12 - Borrowings
88			Note 13 - Financial Instruments
90			Note 14 - Income Taxes
93			Note 15 - Equity and Cash Incentive Program
96			Note 16 - Commitments and Contingent Liabilities
97			Note 17 - Employee Benefit Plans
103			Note 18 - Accumulated Other Comprehensive Earnings (Loss)
104			Note 19 - Segment Information
107			Note 20 - Earnings per Share
107			Note 21 - Shareholder's Equity
108			Financial Statement Schedule - Schedule II, Valuation and Qualifying Accounts for the Years Ended December 31, 2021, 2020, and 2019

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

Table of Contents

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

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

The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2021. In making this assessment, the Company’s management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework (2013).

Based on its assessment under the criteria set forth in Internal Control — Integrated Framework (2013), management concluded that, as of December 31, 2021, the Company’s internal control over financial reporting was effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP.

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2021 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.

Table of Contents

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Dover Corporation

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Dover Corporation and its subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of earnings, of comprehensive earnings, of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2021, including the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

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

Table of Contents

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

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill Impairment Test

As described in Notes 1 and 9 to the consolidated financial statements, the Company’s consolidated goodwill balance was $4.559 billion as of December 31, 2021. Management performs its goodwill impairment test annually in the fourth quarter, or more frequently if events or circumstances indicate that the carrying value of goodwill may be impaired, when some portion but not all of a reporting unit is disposed of or classified as held for sale, or when a change in the composition of reporting units occurs for other reasons. When performing the impairment test, management estimates fair value of each reporting unit using the income-based valuation method, which involves significant judgment. Under the income-based valuation method, fair value is determined based on the present value of estimated future cash flows, discounted at an appropriate risk-adjusted rate. Management uses internal forecasts to estimate future cash flows, which are based on historical performance and future estimated results.

The principal considerations for our determination that performing procedures relating to the goodwill impairment test is a critical audit matter are there was significant judgment by management when developing the fair value measurement of each reporting unit, which in turn led to a high degree of auditor judgment and subjectivity in performing procedures and in evaluating management’s estimate of fair value of the reporting units, specifically related to revenue growth in the estimated future cash flows. In addition, the nature and extent of audit effort required to address the matter was a consideration.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s goodwill impairment test, including controls over the determination of revenue growth in the estimated future cash flows. These procedures also included, among others, testing the appropriateness of the discounted cash flow model, assessing results of sensitivities over the assumptions in the discounted cash flow model, and testing the reasonableness of significant assumptions used by management, specifically revenue growth. When testing revenue growth, we evaluated whether the assumptions were reasonable by (i) understanding management’s process to develop the estimated future cash flows, (ii) comparing management’s forecasted revenue growth to current and prior period performance and (iii) comparing management’s forecasted revenue growth to external market and/or industry data.

/s/			PricewaterhouseCoopers LLP
Chicago, Illinois
February 11, 2022

We have served as the Company's auditor since 1995.

Table of Contents

DOVER CORPORATION

CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share amounts)

			Years Ended December 31,
			2021						2020						2019
Revenue			$	7,907,081					$	6,683,760					$	7,136,397
Cost of goods and services			4,937,295						4,209,741						4,515,459
Gross profit			2,969,786						2,474,019						2,620,938
Selling, general and administrative expenses			1,688,278						1,541,032						1,599,098
Loss on assets held for sale			—						—						46,946
Operating earnings			1,281,508						932,987						974,894
Interest expense			106,319						111,937						125,818
Interest income			(4,441)						(3,571)						(4,526)
Loss on extinguishment of debt			—						—						23,543
Gain on dispositions			(206,338)						(5,213)						—
Other income, net			(14,858)						(11,900)						(12,950)
Earnings before provision for income taxes			1,400,826						841,734						843,009
Provision for income taxes			277,008						158,283						165,091
Net earnings			$	1,123,818					$	683,451					$	677,918
Net earnings per share:
Basic			$	7.81					$	4.74					$	4.67
Diluted			$	7.74					$	4.70					$	4.61
Weighted average shares outstanding:
Basic			143,923						144,050						145,198
Diluted			145,273						145,393						146,992

See Notes to Consolidated Financial Statements

Table of Contents

DOVER CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

(In thousands)

			Years Ended December 31,
			2021						2020						2019
Net earnings			$	1,123,818					$	683,451					$	677,918
Other comprehensive earnings (loss), net of tax
Foreign currency translation adjustments:
Foreign currency translation (losses) gains			(39,819)						55,450						(5,025)
Reclassification of foreign currency translation losses to earnings			—						—						25,339
Total foreign currency translation adjustments (net of $(20,976), $26,957 and $(4,714) tax (provision) benefit, respectively)			(39,819)						55,450						20,314
Pension and other postretirement benefit plans:
Actuarial gains			26,960						705						47
Prior service (cost) credit			(1,433)						828						1,818
Amortization of actuarial losses included in net periodic pension cost			9,451						6,695						596
Amortization of prior service costs included in net periodic pension cost			1,023						1,153						2,141
Settlement and curtailment impact			1,167						18						806
Total pension and other postretirement benefit plans (net of $(9,868), $(3,197) and $(1,184) tax (provision) benefit, respectively)			37,168						9,399						5,408
Changes in fair value of cash flow hedges:
Unrealized net gains (losses)			6,724						(1,445)						1,495
Net gains reclassified into earnings			(4,871)						(632)						(147)
Total cash flow hedges (net of $(532), $607 and $(359) tax (provision) benefit, respectively)			1,853						(2,077)						1,348
Other comprehensive (loss) earnings, net of tax			(798)						62,772						27,070
Comprehensive earnings			$	1,123,020					$	746,223					$	704,988

See Notes to Consolidated Financial Statements

Table of Contents

DOVER CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

			December 31, 2021						December 31, 2020
Assets
Current assets:
Cash and cash equivalents			$	385,504					$	513,075
Receivables, net			1,347,514						1,137,223
Inventories, net			1,191,095						835,804
Prepaid and other current assets			137,596						133,085
Total current assets			3,061,709						2,619,187
Property, plant and equipment, net			957,310						897,326
Goodwill			4,558,822						4,072,542
Intangible assets, net			1,359,522						1,083,772
Other assets and deferred charges			466,264						479,247
Total assets			$	10,403,627					$	9,152,074
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable			$	105,702					$	—
Accounts payable			1,073,568						853,942
Accrued compensation and employee benefits			302,978						239,750
Deferred revenue			227,549						184,845
Accrued insurance			101,448						98,954
Other accrued expenses			347,097						343,637
Federal and other income taxes			91,999						17,670
Total current liabilities			2,250,341						1,738,798
Long-term debt			3,018,714						3,108,829
Deferred income taxes			364,117						298,423
Noncurrent income tax payable			48,385						49,937
Other liabilities			532,542						570,314
Stockholders' equity:
Preferred stock - $100 par value; 100,000 shares authorized; none issued			—						—
Common stock - $1 par value; 500,000,000 shares authorized; 259,457,233 and 258,981,638 shares issued at December 31, 2021 and 2020			259,457						258,982
Additional paid-in capital			857,636						868,882
Retained earnings			9,445,245						8,608,284
Accumulated other comprehensive loss			(154,052)						(153,254)
Treasury stock, at cost: 115,411,548 and 115,228,597 shares at December 31, 2021 and 2020			(6,218,758)						(6,197,121)
Total stockholders' equity			4,189,528						3,385,773
Total liabilities and stockholders' equity			$	10,403,627					$	9,152,074

See Notes to Consolidated Financial Statements

Table of Contents

DOVER CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except per share amounts)

			Common Stock $1 Par Value						Additional Paid-In Capital						Retained Earnings						Accumulated Other Comprehensive Earnings (Loss)						Treasury Stock						Total Stockholders' Equity
Balance at December 31, 2018			$	257,822					$	886,016					$	7,815,486					$	(243,096)					$	(5,947,562)					$	2,768,666
Net earnings			—						—						677,918						—						—						677,918
Dividends paid ($1.94 per share)			—						—						(282,197)						—						—						(282,197)
Common stock issued for the exercise of share-based awards			730						(38,100)						—						—						—						(37,370)
Stock-based compensation expense			—						29,702						—						—						—						29,702
Common stock acquired			—						—						—						—						(143,280)						(143,280)
Other comprehensive earnings, net of tax			—						—						—						27,070						—						27,070
Other			—						(7,899)						50						—						—						(7,849)
Balance at December 31, 2019			258,552						869,719						8,211,257						(216,026)						(6,090,842)						3,032,660
Adoption of ASU 2016-13- CECL			—						—						(2,112)						—						—						(2,112)
Net earnings			—						—						683,451						—						—						683,451
Dividends paid ($1.97 per share)			—						—						(284,312)						—						—						(284,312)
Common stock issued for the exercise of share-based awards			430						(28,906)						—						—						—						(28,476)
Stock-based compensation expense			—						25,026						—						—						—						25,026
Common stock acquired			—						—						—						—						(106,279)						(106,279)
Other comprehensive earnings, net of tax			—						—						—						62,772						—						62,772
Other			—						3,043						—						—						—						3,043
Balance at December 31, 2020			258,982						868,882						8,608,284						(153,254)						(6,197,121)						3,385,773
Net earnings			—						—						1,123,818						—						—						1,123,818
Dividends paid ($1.99 per share)			—						—						(286,896)						—						—						(286,896)
Common stock issued for the exercise of share-based awards			475						(42,399)						—						—						—						(41,924)
Stock-based compensation expense			—						31,111						—						—						—						31,111
Common stock acquired			—						—						—						—						(21,637)						(21,637)
Other comprehensive loss, net of tax			—						—						—						(798)						—						(798)
Other			—						42						39						—						—						81
Balance at December 31, 2021			$	259,457					$	857,636					$	9,445,245					$	(154,052)					$	(6,218,758)					$	4,189,528

See Notes to Consolidated Financial Statements

Table of Contents

DOVER CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

			Years Ended December 31,
			2021						2020						2019
Operating Activities:
Net earnings			$	1,123,818					$	683,451					$	677,918
Adjustments to reconcile net earnings to cash from operating activities:
Depreciation and amortization			290,123						279,051						272,287
Stock-based compensation			31,111						25,026						29,702
Gain on dispositions			(206,338)						(5,213)						—
Provision for losses on accounts receivable (net of recoveries)			5,053						11,171						5,933
Deferred income taxes			(48,322)						(25,643)						(11,966)
Employee benefit plan expense			11,897						7,205						5,844
Loss on assets held for sale			—						—						46,946
Loss on extinguishment of debt			—						—						23,543
Other, net			(7,368)						(6,593)						(3,652)
Cash effect of changes in assets and liabilities (excluding effects of acquisitions, dispositions and foreign exchange):
Accounts receivable			(201,540)						122,407						(7,903)
Inventories			(297,623)						10,519						(56,870)
Prepaid expenses and other assets			(14,303)						(17,915)						(25,797)
Accounts payable			229,334						(95,636)						12,670
Accrued compensation and employee benefits			65,482						12,277						15,580
Accrued expenses and other liabilities			60,734						129,916						(7,056)
Accrued taxes			88,190						(5,412)						(10,437)
Contributions to employee benefit plans			(14,383)						(19,801)						(21,436)
Net cash provided by operating activities			1,115,865						1,104,810						945,306
Investing Activities:
Additions to property, plant and equipment			(171,465)						(165,692)						(186,804)
Acquisitions (net of cash and cash equivalents acquired)			(1,112,075)						(335,786)						(215,687)
Proceeds from sale of property, plant and equipment			7,070						7,207						4,168
Proceeds from dispositions			274,982						15,400						24,218
Other			8,735						(2,508)						(10,150)
Net cash used in investing activities			(992,753)						(481,379)						(384,255)
Financing Activities:
Change in commercial paper and notes payable, net			105,000						(84,700)						(135,650)
Proceeds from long-term debt			—						—						847,469
Repayment of long-term debt			—						—						(805,112)
Dividends to stockholders			(286,896)						(284,312)						(282,197)
Purchase of common stock			(21,637)						(106,279)						(143,280)
Payments for employee tax obligations upon exercise of share-based awards			(41,924)						(28,476)						(37,370)
Other			(4,423)						(2,523)						(1,902)
Net cash used in financing activities			(249,880)						(506,290)						(558,042)
Effect of exchange rate changes on cash and cash equivalents			(803)						(1,319)						(1,977)
Net (decrease) increase in cash and cash equivalents			(127,571)						115,822						1,032
Cash and cash equivalents at beginning of year			513,075						397,253						396,221
Cash and cash equivalents at end of year			$	385,504					$	513,075					$	397,253
Supplemental information - cash paid during the year for:
Income taxes			$	233,631					$	199,657					$	191,084
Interest			102,139						108,119						126,753

See Notes to Consolidated Financial Statements

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

1. Description of Business and Summary of Significant Accounting Policies

Description of Business

Dover Corporation ("Dover" or "Company") is a diversified global manufacturer and solutions provider delivering innovative equipment and components, consumable supplies, aftermarket parts, software and digital solutions and support services. The Company’s businesses are based primarily in the United States and Europe with manufacturing and other operations throughout the world. In view of recent changes to the Company's business portfolio and to better reflect the markets and customers served, the name of the Fueling Solutions segment was changed to Clean Energy & Fueling and the name of the Refrigeration & Food Equipment segment was changed to Climate & Sustainability Technologies. The Company operates through five business segments that are structured around similar business models, go-to market strategies and manufacturing practices: Engineered Products, Clean Energy & Fueling, Imaging & Identification, Pumps & Process Solutions and Climate & Sustainability Technologies. For additional information on the Company’s segments, see Note 19 — Segment Information.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. The results of operations of acquired businesses are included from the dates of acquisitions.

Use of Estimates

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

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, demand deposits and short-term investments, which are highly liquid in nature and have original maturities at the time of purchase of three months or less. The carrying value of cash and cash equivalents approximate fair value.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are recorded at face amounts less an allowance for doubtful accounts. Effective January 1, 2020, the Company adopted Accounting Standards Update ("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 allowance is an estimate based on historical collection experience, current and future economic and market conditions and a review of the current status of each customer's trade accounts receivable. Management evaluates the aging of the accounts receivable balances and the financial condition of its customers and all other forward-looking information that is reasonably available to estimate the amount of accounts receivable that may not be collected in the future and records the appropriate provision. See Note 8 — Credit Losses for additional information.

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Inventories

Inventories are stated at the lower of cost, determined on the first-in, first-out (FIFO) basis, or net realizable value. An immaterial portion of domestic inventories are stated at cost, determined on the last-in, first-out (LIFO) basis, which is less than market value.

Property, Plant and Equipment

Property, plant and equipment includes the historical cost of land, buildings, machinery and equipment, purchased software, finance lease assets and significant improvements to existing plant and equipment or, in the case of acquisitions, the fair value of acquired assets. Expenditures for maintenance, repairs and minor renewals are expensed as incurred. When property or equipment is sold or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts and the gain or loss realized on disposition is reflected in earnings. The Company depreciates its assets on a straight-line basis over their estimated useful lives as follows: buildings and improvements 5 to 31.5 years; machinery and equipment 3 to 15 years; furniture and fixtures 3 to 7 years; vehicles 3 to 7 years; and software 3 to 10 years.

Derivative Financial Instruments

The Company uses derivative financial instruments to hedge its exposures to various risks, including foreign currency exchange rate risk. The Company does not enter into derivative financial instruments for speculative purposes and does not have a material portfolio of derivative financial instruments. Derivative financial instruments used for hedging purposes must be designated and effective as a hedge of the identified risk exposure at inception of the contract. The Company recognizes all derivatives as either assets or liabilities on the consolidated balance sheet and measures those instruments at fair value. For derivatives designated as hedges of the fair value of assets or liabilities, the changes in fair value of both the derivatives and of the hedged items are recorded in current earnings. For derivatives designated as cash flow hedges, the change in the fair value of the derivatives is recorded as a component of other comprehensive earnings and subsequently recognized in net earnings when the hedged items impact earnings.

Goodwill and Other Intangible Assets

Goodwill represents the excess of purchase price over the fair value of net assets acquired. Goodwill and certain other intangible assets deemed to have indefinite lives (primarily trademarks) are not amortized. For goodwill, impairment tests are required at least annually, or more frequently if events or circumstances indicate that it may be impaired, when some portion but not all of a reporting unit is disposed of or classified as assets held for sale, or when a change in the composition of reporting units occurs for other reasons, such as a change in segments. Based on its current organizational structure, the Company identified reporting units for which cash flows are determinable and to which goodwill was allocated.

The Company performs its goodwill impairment test annually in the fourth quarter at the reporting unit level. A quantitative test is used to determine existence of goodwill impairment and the amount of the impairment loss at the reporting unit level. The quantitative test compares the fair value of a reporting unit with its carrying amount, including goodwill. The Company uses an income-based valuation method, determining the present value of estimated future cash flows, to estimate the fair value of a reporting unit. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not impaired. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. Factors used in the impairment analysis require significant judgment, and actual results may differ from assumed and estimated amounts. The Company uses its own market assumptions including internal projections of future cash flows, discount rates and other assumptions considered reasonable in the analysis and reflective of market participant assumptions. These forecasts are based on historical performance and future estimated results. The discount rates used in these analyses vary by reporting unit and are based on a capital asset pricing model and published relevant industry rates. The Company uses discount rates commensurate with the risks and uncertainties inherent to each reporting unit and in the internally developed forecasts. See Note 9 — Goodwill and Other Intangible Assets for further discussion of the Company's annual goodwill impairment test and results. No impairment of goodwill was required for the years ended December 31, 2021, 2020, or 2019.

The Company uses an income-based valuation method to annually test its indefinite-lived intangible assets for impairment. The fair value of the intangible asset is compared to its carrying value. This method uses the Company’s own market assumptions, which are considered reasonable. Any excess of carrying value over the estimated fair value is recognized as an

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

impairment loss. No impairment of indefinite-lived intangible assets was required for the years ended December 31, 2021, 2020, or 2019.

Other intangible assets with determinable lives primarily consist of customer intangibles, unpatented technologies, patents and trademarks. The other intangible assets are amortized over their estimated useful lives, ranging from 5 to 20 years.

Long-lived assets (including definite-lived intangible assets) are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, such as a significant sustained change in the business climate. If an indicator of impairment exists for any grouping of assets, an estimate of undiscounted future cash flows is produced and compared to its carrying value. If an asset group is determined to be impaired, the loss is measured by the excess of the carrying amount of the asset group over its fair value, as determined by an estimate of discounted future cash flows.

Leases

Effective January 1, 2019, the Company adopted Accounting Standard Codification ("ASC") Topic 842, Leases, which requires the recording of operating lease right-of-use assets ("ROU") and operating lease liabilities. 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 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 elected practical expedients under the standard which allow the Company to carry forward historical lease classifications and also account for each separate lease component of a contract and its associated non-lease components as a single lease component, thus causing all fixed payments to be capitalized. 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.

The Company determines if an arrangement is a lease at inception of a contract. Operating lease ROU assets are included in other assets and deferred 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, plant 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 during the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the commencement date based on the net present value of fixed lease payments over the lease term. The lease term includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. ROU assets also include any advance lease payments made and exclude lease incentives. As most 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 the commencement date in determining the present value of lease payments. Finance lease agreements include an interest rate that is used to determine the present value of future lease payments. Fixed operating lease expense and finance lease depreciation expense are recognized on a straight-line basis over the lease term.

Restructuring Accruals

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

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Foreign Currency

Assets and liabilities of non-U.S. subsidiaries, where the functional currency is not the U.S. dollar, have been translated at year-end exchange rates and profit and loss accounts have been translated using weighted-average monthly exchange rates. Foreign currency translation gains and losses are included in the Consolidated Statements of Comprehensive Earnings as a component of other comprehensive earnings (loss). Assets and liabilities of an entity that are denominated in currencies other than an entity’s functional currency are re-measured into the functional currency using end of period exchange rates, where applicable to certain balances. Gains and losses related to these re-measurements are recorded within the Consolidated Statements of Earnings as a component of other income, net. Gains and losses arising from intercompany foreign currency transactions that are of a long-term investment in nature are reported in the same manner as translation adjustments.

Revenue Recognition

The majority of the Company’s revenue is generated through the manufacture and sale of a broad range of specialized products and components, with revenue recognized upon transfer of control, title and risk of loss, which is generally upon shipment. Service revenue represents less than 5% of total revenue and is recognized as the services are performed. In limited cases, revenue arrangements with customers require delivery, installation, testing, certification, or other acceptance provisions to be satisfied before revenue is recognized. The Company includes shipping costs billed to customers in revenue and the related shipping costs in cost of goods and services.

Stock-Based Compensation

The principal awards issued under the Company’s stock-based compensation plans include non-qualified stock appreciation rights ("SARs"), restricted stock units and performance share awards. The cost for such awards is measured at the grant date based on the fair value of the award. At the time of grant, the Company estimates forfeitures, based on historical experience, in order to estimate the portion of the award that will ultimately vest. The value of the portion of the award that is expected to ultimately vest is recognized as expense on a straight-line basis, generally over the explicit service period of three years (except for retirement-eligible employees) and is included in selling, general and administrative expenses in the Consolidated Statements of Earnings. Expense for awards granted to retirement-eligible employees is recorded over the period from the date of grant through the date the employee first becomes eligible to retire and is no longer required to provide service. See Note 15 — Equity and Cash Incentive Program for additional information related to the Company’s stock-based compensation.

Income Taxes

The provision for income taxes includes federal, state, local and non-U.S. taxes. Tax credits, primarily for research and experimentation, are recognized as a reduction of the provision for income taxes in the year in which they are available for tax purposes. Deferred taxes are provided using enacted rates on the future tax consequences of temporary differences. Temporary differences include the differences between the financial statement carrying amounts of assets and liabilities and their respective tax basis and the tax benefit of carryforwards. A valuation allowance is established for deferred tax assets for which it is more likely than not that some portion or all of the deferred tax benefit will not be realized. In assessing the need for a valuation allowance, management considers all available evidence, including the future reversal of existing taxable temporary differences, taxable income in carryback periods, prudent and feasible tax planning strategies and estimated future taxable income. The valuation allowance can be affected by changes to tax regulations, interpretations and rulings, changes to enacted statutory tax rates and changes to future taxable income estimates.

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

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Research and Development Costs

Research and development costs, including qualifying engineering costs, are expensed when incurred and amounted to $157,826 in 2021, $142,101 in 2020 and $140,957 in 2019. These costs as a percent of revenue were 2.0% in 2021, 2.1% in 2020 and 2.0% in 2019. Research and development costs are reported within selling, general and administrative expenses in the Consolidated Statements of Earnings.

Advertising Costs

Advertising costs are expensed when incurred and amounted to $23,685 in 2021, $21,375 in 2020 and $24,609 in 2019. Advertising costs are reported within selling, general and administrative expenses in the Consolidated Statements of Earnings.

Risk, Retention, Insurance

The Company has deductibles for its product and commercial general liability claims up to $5.0 million per occurrence, its workers’ compensation claims up to $0.8 million per occurrence and its automobile liability claims up to $1.0 million per occurrence. Third-party insurance provides primary-level coverage in excess of these amounts up to certain specified limits. In addition, the Company has excess liability insurance from third-party insurers on both an individual occurrence and an aggregate basis well in excess of the limits of the primary coverage. A worldwide program of property insurance covers the Company’s owned and leased property for claims, including business interruption that may occur due to an insured hazard affecting those properties, subject to reasonable deductibles and aggregate limits. The Company’s property and casualty insurance programs contain various deductibles that, based on the Company’s experience, are typical and customary for a company of its size and risk profile. The Company does not consider any of the deductibles to represent a material risk to the Company. The Company generally maintains deductibles for claims and liabilities related primarily to workers’ compensation, health and welfare claims, general commercial, product and automobile liability, cybersecurity risks, property damage and business interruption resulting from certain events. The Company accrues for claim exposures that are probable of occurrence and can be reasonably estimated. As part of the Company’s risk management program, insurance is maintained to transfer risk beyond the level of self-retention and provide protection on both an individual claim and annual aggregate basis.

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 October 2021, the FASB issued ASU 2021-08 Business Combinations (Topic 805)-Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The amendments in this update require that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, Revenue from Contracts with Customers, as if the acquirer had originated the contracts. Under current guidance, the acquirer generally recognizes such contract assets and contract liabilities at fair value on the acquisition date. The amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The amendments in this update should be applied prospectively to business combinations occurring on or after the effective date of the amendments. Early adoption of the amendments is permitted, including adoption in an interim period. The Company is in the process of assessing the impact of this ASU on its Consolidated Financial Statements, but does not expect this update to have a material impact.

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Recently Adopted Accounting Standards

In March 2020 and January 2021, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting and ASU 2021-01, Reference Rate Reform, Scope, respectively. These updates provide optional guidance for a limited time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform, including expedients and exceptions for applying GAAP to contracts, hedging relationships,and other transactions affected by reference rate reform if certain criteria are met. The amendments in these updates are elective and are effective upon issuance for all entities. The Company adopted the guidance during the third quarter of 2021. The adoption did not have a material impact the Company's Consolidated Financial Statements.

In June 2016, the FASB issued ASU 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. In addition, the FASB issued ASU 2019-04, Codification Improvements to Topic 326 which provides clarity on certain aspects of the amendments in ASU 2016-13. The Company adopted this guidance on January 1, 2020 prospectively. 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 8 — Credit Losses for further details.

2. Revenue

Revenue from contracts with customers

A majority of the Company’s revenue is short cycle in nature with shipments within one year from order. A small portion of the Company’s revenue derives from contracts extending over one year. The Company's payment terms generally range between 30 to 90 days and vary by the location of businesses, the type of products manufactured to be sold and the volume of products sold, among other factors.

Disaggregation of Revenue

Revenue from contracts with customers is disaggregated by segment and geographic location, as they best depict the nature and amount of the Company's revenue.

See Note 19 — Segment Information for revenue by segment and geographic location.

Performance Obligations

A majority of the Company’s contracts have a single performance obligation which represents, in most cases, the equipment or product being sold to the customer. Some contracts include multiple performance obligations such as a product and the related installation, extended warranty, software and digital solutions, and/or maintenance services. These contracts require judgment in determining the number of performance obligations.

The Company has elected to use the practical expedient to not adjust the promised amount of consideration for the effects of a significant financing component if it is expected, at contract inception, that the period between when the Company transfers a promised good or service to a customer, and when the customer pays for that good or service, will be one year or less. Thus, the Company may not consider an advance payment to be a significant financing component, if it is received less than one year before product completion.

The majority of the Company’s contracts offer assurance-type warranties in connection with the sale of a product to a customer. Assurance-type warranties provide a customer with assurance that the related product will function as the parties intended because it complies with agreed-upon specifications. Such warranties do not represent a separate performance obligation.

The Company may also offer service-type warranties that provide services to the customer, in addition to the assurance that the product complies with agreed-upon specifications. If a warranty is determined to be a service-type warranty, it represents a distinct service and is treated as a separate performance obligation.

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For contracts with multiple performance obligations, the Company allocates the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling prices of the promised goods or services underlying each performance obligation. The Company uses an observable price to determine the standalone selling price for separate performance obligations or a cost plus margin approach when one is not available.

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 relates to the sale of equipment or services in which the Company transfers control of a good or service over time and the customer simultaneously receives and consumes the benefits as the Company performs, or the Company's performance creates or enhances an asset the customer controls as the asset is created or enhanced, or the Company's performance does not create an asset with an alternative use to the Company and the Company has an enforceable right to payment for its performance to date plus a reasonable margin.

For revenue recognized over time, there are two types of methods for measuring progress and both are relevant to the Company: (1) input methods and (2) output methods. Although this may vary by business, input methods generally are based on costs incurred relative to estimated total costs. Output methods generally are based on a measurement of progress, such as milestone achievement. The businesses use the method and measure of progress that best depicts the transfer of control to the customer of the goods or services to date relative to the remaining goods or services promised under the contract.

Transaction Price Allocated to the Remaining Performance Obligations

At December 31, 2021, we estimated that $263,085 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 43% of our unsatisfied (or partially unsatisfied) performance obligations as revenue in 2022, with the remaining balance to be recognized in 2023 and thereafter.

Remaining consideration, including variable consideration, from contracts with customers is included in the amounts presented in the preceding paragraph and pertains to contracts with multiple performance obligations, extended warranties on products and multi-year maintenance agreements, which are typically recognized as the performance obligation is satisfied.

The Company applied the standard's practical expedient that permits the omission of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which the Company recognizes revenue at the amount to which the Company has the right to invoice for services performed.

Contract Balances

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

						12/31/2021						12/31/2020						12/31/2019
Contract assets						$	11,440					$	15,020					$	14,894
Contract liabilities - current						227,549						184,845						104,901
Contract liabilities - non-current						21,513						13,921						10,921

Contract assets primarily relate to the Company's right to consideration for work completed but not billed at the reporting date and are recorded in prepaid and other current assets in the Consolidated Balance Sheet. Contract assets are transferred to receivables when the right to consideration becomes unconditional. Contract liabilities relate to advance consideration received from customers or advance billings for which revenue has not been recognized. Current contract liabilities are recorded in deferred revenue and non-current contract liabilities are recorded in other liabilities in the Consolidated Balance Sheet. Contract liabilities are reduced when the associated revenue from the contract is recognized. The increase in current contract liabilities balance as of December 31, 2021 primarily relates to advance payments received from customers.

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The revenue recognized during 2021 and 2020 that was included in the contract liabilities at the beginning of the respective periods amounted to $163.5 million and $99.6 million.

Contract Costs

Costs incurred to obtain a customer contract are not material to the Company. The Company elected to apply the practical expedient to not capitalize contract costs to obtain contracts with a duration of one year or less, which are expensed and included within cost of goods and services in the Consolidated Statements of Earnings.

Critical Accounting Estimates

Estimates are used to determine the amount of variable consideration in contracts, the standalone selling price among separate performance obligations and the measure of progress for contracts where revenue is recognized over time. The Company reviews and updates these estimates regularly.

Some contracts with customers include variable consideration primarily related to volume rebates. The Company estimates variable consideration at the most likely amount to determine the total consideration which the Company expects to be entitled. Estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. The Company’s estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of anticipated performance and all information (historical, current and forecasted) that is reasonably available.

3. Acquisitions

2021

During the year ended December 31, 2021, the Company acquired nine businesses in separate transactions for total consideration of $1,125,077, net of cash acquired of $19,040 and including contingent consideration of $13,002. These businesses were acquired to complement and expand upon existing operations within the Clean Energy & Fueling, Engineered Products, Imaging & Identification, and Pumps & Process Solutions segments. The goodwill recorded as a result of these acquisitions represents the economic benefits expected to be derived from the workforce of the acquired businesses and operational synergies. Goodwill of $195,127 is deductible for income tax purposes and $386,990 is non-deductible for income tax purposes for these acquisitions.

RegO

On December 28, 2021, the Company acquired 100% of the voting stock of ECI Holding Company, LLC ("RegO"), a provider of highly-engineered, mission-critical components and services that facilitate the production, storage, and distribution of cryogenic gases, for $624,693, net of cash acquired. The RegO acquisition strengthens the Company's offering for the hydrogen ("H2"), liquefied natural gas ("LNG"), and liquefied petroleum gas ("LPG") applications, as well as Dover's participation in the attractive cryogenic industrial gases end market within the Clean Energy & Fueling segment. In connection with this acquisition, the Company recorded goodwill of $165,810 deductible for income tax purposes and $111,166 non-deductible for income tax purposes and intangible assets of $173,000 for customer intangibles, $40,000 for patents and $21,000 for trademarks. The fair value for customer intangibles at the acquisition date was determined using the multi-period excess earnings method under the income approach. The fair value measurements of intangible assets are based on significant unobservable inputs, and thus represent Level 3 inputs. Significant assumptions used in assessing the fair values of intangible assets include discounted future cash flows, customer attrition rates and discount rates. The fair value of assets acquired also includes trade receivables of $34,252. The gross amount is $34,623, of which $371 is expected to be uncollectible. The fair values of the assets acquired and liabilities assumed, and the related tax balances, are based on preliminary estimates and assumptions. These preliminary estimates and assumptions could change significantly during the measurement period as the Company finalizes the valuations of the assets acquired and liabilities assumed, and the related tax balances.

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The following presents the preliminary allocation of purchase price, net of cash acquired of $10,382, to the assets acquired and liabilities assumed under the RegO acquisition, based on their estimated fair values at acquisition date:

			Total
Accounts receivable			$	34,252
Inventories			77,954
Other current assets			2,958
Property, plant and equipment			52,053
Goodwill			276,976
Intangible assets			234,000
Other assets and deferred charges			884
Current liabilities			(19,480)
Non-current liabilities			(34,904)
Net assets acquired			$	624,693

Acme Cryogenics

On December 16, 2021, the Company acquired 100% of the voting stock of Acme Cryo Intermediate Inc. ("Acme Cryogenics"), a provider of highly-engineered, mission-critical components and services that facilitate the production, storage, and distribution of cryogenic gases, for $293,522, net of cash acquired. The Acme Cryogenics acquisition strengthens the Company's offering for the H2, LNG, and LPG applications, as well as Dover's participation in the attractive cryogenic industrial gases end market within the Clean Energy & Fueling segment. In connection with this acquisition, the Company recorded goodwill of $169,209 non-deductible for income tax purposes and intangible assets of $99,000 for customer intangibles, $21,800 for unpatented technology and $6,500 for trademarks. The fair value for customer intangibles at the acquisition date was determined using the multi-period excess earnings method under the income approach. The fair value measurements of intangible assets are based on significant unobservable inputs, and thus represent Level 3 inputs. Significant assumptions used in assessing the fair values of intangible assets include discounted future cash flows, customer attrition rates and discount rates. The fair value of assets acquired also includes trade receivables of $15,130. The gross amount is $15,798, of which $668 is expected to be uncollectible. The fair values of the assets acquired and liabilities assumed, and the related tax balances, are based on preliminary estimates and assumptions. These preliminary estimates and assumptions could change significantly during the measurement period as the Company finalizes the valuations of the assets acquired and liabilities assumed, and the related tax balances.

The following presents the preliminary allocation of purchase price to the assets acquired and liabilities assumed under the Acme Cryogenics acquisition, based on their estimated fair values at acquisition date:

			Total
Current assets, net of cash acquired			$	29,345
Property, plant and equipment			8,750
Goodwill			169,209
Intangible assets			127,300
Other assets and deferred charges			5,057
Current liabilities			(9,072)
Non-current liabilities			(37,067)
Net assets acquired			$	293,522

Other acquisitions

On October 15, 2021, the Company acquired 100% of the voting stock of LIQAL B.V. ("LIQAL"), a turnkey supplier of LNG, hydrogen refueling equipment and solutions, and micro liquefaction solutions, for $27,701, net of cash acquired and including contingent consideration. The LIQAL acquisition strengthens the Company's offering of LNG and hydrogen products and solutions, as well as significant innovation capabilities and proprietary technologies, within the Clean Energy & Fueling segment. In connection with this acquisition, the Company recorded goodwill of $23,473 and intangible assets of $8,235, primarily related to customer intangibles.

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

On September 15, 2021, the Company acquired 100% of the voting stock of The Espy Corporation ("Espy"), a manufacturer of advanced electronic radio frequency sensor systems, for $60,457, net of cash acquired. The Espy acquisition strengthens the Company's offering of complete signal intelligence systems with integrated software within the Engineered Products segment. In connection with this acquisition, the Company recorded goodwill of $29,317 and intangible assets of $21,100, primarily related to customer intangibles. The Espy acquisition will be treated as an asset acquisition for U.S. income tax purposes, resulting in the goodwill and intangibles being classified as tax deductible.

On July 23, 2021, the Company acquired 100% of the voting stock of CDS Visual, Inc. ("CDS Visual"), a leading provider of 3D visualization solutions tailored for industrial applications, for $29,147, net of cash acquired. The CDS Visual acquisition extends the Company's reach of customer-facing digital capabilities within the Engineered Products segment. In connection with this acquisition, the Company recorded goodwill of $20,863 and intangible assets of $9,930, primarily related to technology.

On June 24, 2021, the Company acquired 100% of the voting stock of Blue Bite LLC ("Blue Bite"), a leading provider of consumer engagement and brand protection software solutions, for $30,143, net of cash acquired and including contingent consideration. The Blue Bite acquisition strengthens the Company's offering of product traceability and authentication solutions within the Imaging & Identification segment. In connection with this acquisition, the Company recorded goodwill of $20,458 and intangible assets of $13,250, primarily related to technology.

On June 23, 2021, the Company acquired 100% of the voting stock of Quantex Arc Limited ("Quantex"), a leading provider of single-use, recyclable pumps, for $23,747, net of cash acquired and including contingent consideration. The Quantex acquisition enhances the offering of single-use pumps for biopharma and other hygienic applications within the Pumps & Process Solutions segment. In connection with this acquisition, the Company recorded goodwill of $14,327 and intangible assets of $11,034, primarily related to patented technology.

On April 19, 2021, the Company acquired 100% of the voting stock of AvaLAN Wireless Systems, Incorporated ("AvaLAN"), a leading provider of secure wireless communications solutions for the convenience and fuel retail industry, for $34,144, net of cash acquired. The AvaLAN acquisition extends the Company's reach into the systems and software offering within the Clean Energy & Fueling segment. In connection with this acquisition, the Company recorded goodwill of $26,803 and intangible assets of $14,630, primarily related to customer intangibles.

One other immaterial acquisition was completed during the year ended December 31, 2021, within the Pumps & Process Solutions segment.

The following presents, for the seven acquisitions other than RegO and Acme Cryogenics, 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			$	12,751
Property, plant and equipment			8,272
Goodwill			135,932
Intangible assets			78,179
Other assets and deferred charges			4,485
Current liabilities			(15,368)
Non-current liabilities			(17,389)
Net assets acquired			$	206,862

The acquisition-related costs incurred for all 2021 acquisitions are not material.

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The amounts assigned to goodwill and major intangible asset classifications for all 2021 acquisitions were as follows:

			Amount allocated						Useful life (in years)
Goodwill - tax deductible			$	195,127					na
Goodwill - non deductible			386,990						na
Customer intangibles			310,819						12			-			15
Patents			49,056						7			-			12
Unpatented technology			44,180						7			-			12
Trademarks			35,424						15			-			16
			$	1,021,596

2020

During the year ended December 31, 2020, the Company acquired six businesses in separate transactions for total consideration of $335,786, net of cash acquired. These businesses were acquired to complement and expand upon existing operations within the Clean Energy & Fueling, Imaging & Identification, Pumps & Process Solutions, 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.

On December 30, 2020, the Company acquired 100% of the voting stock of Innovative Control Systems, Inc. (“ICS”), a leading provider of car wash controllers, payment terminals, point-of-sale and wash site management software solutions, for $77,030, net of cash acquired. The ICS acquisition enhances the Clean Energy & Fueling segment's participation in the growing vehicle wash market and enhances the Company's offerings, business mix and recurring revenue stream with high-value hardware and software solutions critical to vehicle wash workflows and operations. In connection with this acquisition, the Company recorded goodwill of $47,339 and intangible assets of $33,525, primarily related to customer intangibles.

On August 20, 2020, the Company acquired 100% of the voting stock of Solaris Laser S.A. ("Solaris"), a global manufacturer of product identification and traceability solutions, for $18,680, net of cash acquired. The Solaris acquisition enhances the Imaging & Identification segment's growing laser technology product line and further strengthens its position as a leading provider of marking and coding equipment and solutions. In connection with this acquisition, the Company recorded goodwill of $12,230 and intangible assets of $3,280, primarily related to unpatented technology.

On April 30, 2020, the Company acquired 100% of the voting stock of Em-tec GmbH ("Em-tec"), a leading designer and manufacturer of flow measurement devices that serve a wide array of medical and biopharmaceutical applications, for $30,396, net of cash acquired. The Em-tec acquisition further expands the Company's reach into biopharma and other hygienic applications and enhances its portfolio of flow control technologies within the Pumps & Process Solutions segment. In connection with this acquisition, the Company recorded goodwill of $19,572 and intangible assets of $8,344, primarily related to customer intangibles.

On February 18, 2020, the Company acquired 100% of the voting stock of So. Cal. Soft-Pak, Incorporated ("Soft-Pak"), a leading specialized provider of integrated back office, route management and customer relationship management software solutions to the waste and recycling fleet industry, for $45,500, net of cash acquired. The Soft-Pak acquisition strengthens the digital offerings within the Engineered Products segment. In connection with this acquisition, the Company recorded goodwill of $33,183 and intangible assets of $12,800, primarily related to customer intangibles.

On January 24, 2020, the Company acquired 100% of the voting stock of Sys-Tech Solutions, Inc. ("Systech"), a leading provider of product traceability, regulatory compliance and brand-protection software and solutions to pharmaceutical and consumer products manufacturers, for $161,830, net of cash acquired. The Systech acquisition strengthens the portfolio of solutions offered by the Imaging & Identification segment. In connection with this acquisition, the Company recorded goodwill of $91,493 and intangible assets of $76,100, primarily related to customer intangibles.

One other immaterial acquisition was completed during the year ended December 31, 2020, within the Pumps & Process Solutions segment.

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The following presents the 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			$	44,159
Property, plant and equipment			8,424
Goodwill			205,805
Intangible assets			134,049
Other assets and deferred charges			12,986
Current liabilities			(34,803)
Non-current liabilities			(34,834)
Net assets acquired			$	335,786

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

			Amount allocated						Useful life (in years)
Goodwill - tax deductible			$	33,183					na
Goodwill - non deductible			172,622						na
Customer intangibles			103,310						10			-			14
Unpatented technology			21,125						5			-			9
Trademarks			9,614						15
			$	339,854

2019

During the year ended December 31, 2019, the Company acquired three businesses in separate transactions for total consideration of $216,398, net of cash acquired and including contingent consideration. On May 7, 2019, the Company acquired the assets of the All-Flo Pump Company, Limited business, within the Pumps & Process Solutions segment, for total consideration of $39,954. On January 25, 2019, the Company acquired the assets of Belanger, Inc., within the Clean Energy & Fueling segment for $175,350, net of cash acquired.

One other immaterial acquisition was completed during the year ended December 31, 2019, which included contingent consideration, within the Pumps & Process Solutions segment.

The following presents the 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			$	14,018
Property, plant and equipment			1,030
Goodwill			119,512
Intangible assets			91,980
Other assets and deferred charges			20
Current liabilities			(10,162)
Net assets acquired			$	216,398

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

			Amount allocated						Useful life (in years)
Goodwill			$	119,512					na
Customer intangibles			68,500						9			-			13
Patents			16,000						9
Trademarks			7,480						15
			$	211,492

Pro forma Information (Unaudited)

The following unaudited pro forma results of operations reflect the 2021 acquisitions of RegO and Acme Cryogenics as if they had occurred on January 1, 2020. The pro forma information is not necessarily indicative of the results that actually would have occurred, nor does it indicate future operating results of the combined companies. The 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 tangible and intangible assets; nonrecurring acquisition-related costs, net of tax, of $5,855; and inventory step-up charges, net of tax, of $15,082. These unaudited pro forma adjustments are based upon preliminary purchase price allocations. The actual revenues and earnings for RegO and Acme Cryogenics from the date of acquisition on December 28, 2021 and December 16, 2021, respectively, to December 31, 2021 were not material.

			Years Ended December 31,
			2021						2020
Revenue:
As reported			$	7,907,081					$	6,683,760
Pro forma (unaudited)			8,163,185						6,920,929
Earnings:
As reported			$	1,123,818					$	683,451
Pro forma (unaudited)			1,145,106						669,458

The pro forma results for the remaining seven acquisitions in 2021, as well as the acquisitions in 2020 and 2019 are not presented as they are not considered material.

4. Dispositions

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.

2021

On December 1, 2021, the Company completed the sale of Unified Brands ("UB"), a wholly owned subsidiary of the Company. The Company recognized total consideration of $229,024. This sale resulted in a preliminary pre-tax gain on disposition of $181,615 included within the Consolidated Statements of Earnings and within the Climate & Sustainability Technologies segment for the year ended December 31, 2021. The preliminary total consideration and preliminary pre-tax gain on disposition are subject to standard working capital adjustments. The sale does not represent a strategic shift that will have a major effect on operations and financial results and, therefore, did not qualify for presentation as a discontinued operation.

On November 16, 2021, the Company disposed its equity method investment in Race Winning Brands ("RWB") for a total consideration of $45,958, resulting in a recognized gain of $24,723 included within the Consolidated Statements of Earnings and within the Engineered Products segment for the year ended December 31, 2021.

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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. The Company recognized total consideration of $15,400, which included a working capital adjustment. This sale resulted in a pre-tax gain on disposition of $5,213 included within the Consolidated Statements of Earnings and within the Climate & Sustainability Technologies segment for the year ended December 31, 2020. The sale did not represent a strategic shift that had a major effect on operations and financial results and, therefore, did not qualify for presentation as a discontinued operation.

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 Consolidated Statements of Earnings during the three months ended March 31, 2019. The loss was comprised of an impairment on assets held for sale of $21,607 and $25,339 of foreign currency translation losses reclassified out of accumulated other comprehensive losses.

On April 2, 2019, Dover completed the sale of Finder to Aturia, which generated total cash proceeds of $24,218. The Finder business was included in the results of the Pumps & Process Solutions segment. The sale did not represent a strategic shift that had a major effect on operations and financial results and, therefore, did not qualify for presentation as a discontinued operation.

5. Inventories, net

The components of inventories, net were as follows:

			December 31, 2021						December 31, 2020
Raw materials			$	671,195					$	497,604
Work in progress			271,659						152,360
Finished goods			377,800						304,760
Subtotal			1,320,654						954,724
Less reserves			(129,559)						(118,920)
Total			$	1,191,095					$	835,804

At December 31, 2021 and 2020, approximately 4% of the Company's total inventories were accounted for using the LIFO method.

6. Property, Plant and Equipment, net

The components of property, plant and equipment, net were as follows:

			December 31, 2021						December 31, 2020
Land			$	63,656					$	60,287
Buildings and improvements			582,314						570,366
Machinery, equipment and other			1,816,473						1,772,772
Property, plant and equipment, gross			2,462,443						2,403,425
Total accumulated depreciation			(1,505,133)						(1,506,099)
Property, plant and equipment, net			$	957,310					$	897,326

Total depreciation expense was $147,309, $140,008 and $133,340 for the years ended December 31, 2021, 2020 and 2019, respectively.

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

7. Leases

The Company adopted ASC Topic 842, Leases as of January 1, 2019, using the transition method per ASU No. 2018-11 wherein entities were allowed to initially apply the new leases standard at adoption date. Adoption of ASC Topic 842 resulted in an increase to total assets and liabilities due to the recording of operating lease ROU assets and operating lease liabilities of approximately $163 million, as of January 1, 2019. The adoption did not materially impact the Company’s Consolidated Statements of Earnings or Cash Flows. See Note 1 — Description of Business and Summary of Significant Accounting Policies for further detail on ROU assets and lease liabilities.

The components of lease costs were as follows:

			Years Ended December 31,
			2021						2020						2019
Operating Lease Costs:
Fixed			$	54,397					$	52,875					$	52,317
Variable			6,281						5,973						6,584
Short-term			17,847						18,436						17,387
Total**(1)**			$	78,525					$	77,284					$	76,288

(1) Finance lease cost and sublease income were immaterial.

Supplemental cash flow information related to leases was as follows:

			Years Ended December 31,
			2021						2020						2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases			$	55,921					$	53,903					$	53,450
Operating cash flows for finance leases			357						434						425
Financing cash flows for finance leases			3,073						2,523						1,915
Total			$	59,351					$	56,860					$	55,790
Right-of-use assets obtained in exchange for lease obligations:
Operating leases			$	47,666					$	21,381					$	41,598
Financing leases			2,016						3,708						1,542
Total			$	49,682					$	25,089					$	43,140

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Supplemental balance sheet information related to leases were as follows:

			December 31, 2021						December 31, 2020
Operating Leases
Right-of-use assets:
Other assets and deferred charges			$	169,022					$	170,089
Lease liabilities:
Other accrued expenses			$	43,086					$	48,834
Other liabilities			134,448						133,989
Total operating lease liabilities			$	177,534					$	182,823
Finance Leases
Right-of-use assets:
Property, plant and equipment, net (1)			$	8,588					$	10,388
Lease liabilities:
Other accrued expenses			$	2,475					$	2,641
Other liabilities			6,767						8,709
Total financing lease liabilities			$	9,242					$	11,350

(1) Finance lease right-of-use assets are recorded net of accumulated depreciation of $7,675 and $7,205 for the years ended December 31, 2021 and December 31, 2020, respectively.

The aggregate future lease payments for operating and finance leases as of December 31, 2021 were as follows:

			Operating						Finance
2022			$	47,649					$	2,822
2023			35,713						2,372
2024			28,124						1,845
2025			23,756						1,433
2026			16,058						1,204
Thereafter			39,539						767
Total lease payments			190,839						10,443
Less interest			(13,305)						(1,201)
Present value of lease liabilities			$	177,534					$	9,242

Average lease terms and discount rates were as follows:

			December 31, 2021						December 31, 2020						December 31, 2019
Weighted-average remaining lease term (years)
Operating leases			5.8						5.9						5.9
Finance leases			4.2						4.8						5.9
Weighted-average discount rate
Operating leases			2.7%						2.9%						3.2%
Finance leases			3.4%						3.6%						4.1%

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

8. 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. 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. 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 other historical and forward-looking information on the financial condition of the customers. Balances are written off when determined to be uncollectible.

Estimates are used to determine the allowance. It is based on assessment of anticipated payment and all other historical, current and forward-looking 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. The period prior to January 1, 2020 is presented in accordance with pre-adoption methodology of incurred loss impairment model.

			2021			2020			2019
Beginning Balance, January 1,			$	40,474		$	29,381		$	28,469
Adoption of ASU 2016-13, cumulative-effect adjustment to retained earnings			—			2,706			—
Provision for expected credit losses, net of recoveries			5,053			11,171			5,933
Amounts written off charged against the allowance			(5,307)			(3,863)			(3,464)
Other, including dispositions and foreign currency translation			(94)			1,079			(1,557)
Ending balance, December 31			$	40,126		$	40,474		$	29,381

9. Goodwill and Other Intangible Assets

Goodwill

ASC 350, Intangibles - Goodwill and Other Intangibles, provides guidance on an entity's subsequent measurement and recognition of goodwill and other intangibles, including subsequent changes to carrying amounts, including impairment and fair value adjustments.

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

			Engineered Products						Clean Energy & Fueling						Imaging & Identification						Pumps & Process Solutions						Climate & Sustainability Technologies						Total
Goodwill			$	647,162					$	873,381					$	977,069					$	810,597					$	545,699					$	3,853,908
Accumulated impairment loss			(10,591)						—						—						(59,970)						—						(70,561)
Balance at January 1, 2020			636,571						873,381						977,069						750,627						545,699						3,783,347
Acquisitions			33,183						47,339						103,723						21,560						—						205,805
Disposition of business			—						—						—						—						(2,597)						(2,597)
Foreign currency translation			13,231						20,253						36,797						14,093						1,613						85,987
Balance at December 31, 2020			682,985						940,973						1,117,589						786,280						544,715						4,072,542
Acquisitions			50,180						496,461						20,458						15,018						—						582,117
Purchase price adjustments			—						2,640						(1,926)						—						—						714
Disposition of business			—						—						—						—						(34,662)						(34,662)
Foreign currency translation			(9,882)						(12,383)						(29,919)						(8,459)						(1,246)						(61,889)
Balance at December 31, 2021 (1)			$	723,283					$	1,427,691					$	1,106,202					$	792,839					$	508,807					$	4,558,822

(1) The accumulated impairment loss as of December 31, 2021 was $70,561, of which $59,970 was associated with the Pumps & Process Solutions segment and $10,591 was associated with the Engineered Products segment. These impairment losses were incurred prior to January 1, 2020.

During 2021 and 2020, the Company recognized additions of $582,117 and $205,805, respectively, to goodwill as a result of acquisitions as discussed in Note 3 — Acquisitions. During 2021 and 2020, the Company disposed of $34,662 and $2,597, respectively, of goodwill as a result of dispositions of businesses as discussed in Note 4 — Dispositions. The Company reallocated goodwill upon disposal based upon the fair value of the disposed business relative to the remaining entities in its reporting unit.

Annual impairment testing

The Company tests goodwill for impairment annually in the fourth quarter of each year, whenever events or circumstances indicate an impairment may have occurred, or when a change in the composition of reporting units occurs for other reasons, such as a change in segments.

The Company performed its annual goodwill impairment test during the fourth quarter of 2021 using a discounted cash flow analysis as discussed in Note 1 — Description of Business and Summary of Significant Accounting Policies. The Company performed a quantitative goodwill impairment test for each of its reporting units, concluding that the fair values of all of its reporting units were substantially in excess of their carrying values. No impairment of goodwill was required. As previously noted, the fair values of each of the Company’s reporting units was determined using a discounted cash flow analysis which includes management’s current assumptions as to future cash flows and long-term growth rates. The discount rates used in these analyses varied by reporting unit and were based on a capital asset pricing model and published relevant industry rates. The Company used discount rates commensurate with the risks and uncertainties inherent to each reporting unit and in our internally developed forecasts. Discount rates used in the 2021 reporting unit valuations ranged from 8.0% to 9.0%. Further, the Company assessed the current market capitalization, forecasts and the amount of headroom in the 2021 impairment test.

While the Company believes the assumptions used in the 2021 impairment analysis are reasonable and representative of expected results, actual results may differ from expectations.

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Intangible Assets

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

			December 31, 2021																		December 31, 2020
			Gross Amount						Accumulated Amortization						Net Carrying Amount						Gross Amount						Accumulated Amortization						Net Carrying Amount
Amortized intangible assets:
Customer intangibles			$	1,829,492					$	909,776					$	919,716					$	1,559,771					$	834,798					$	724,973
Trademarks			263,367						116,633						146,734						233,205						103,907						129,298
Patents			205,910						140,327						65,583						163,299						141,182						22,117
Unpatented technologies			221,239						123,464						97,775						180,947						113,404						67,543
Distributor relationships			84,204						55,260						28,944						87,028						51,611						35,417
Drawings & manuals			27,792						27,303						489						29,198						26,193						3,005
Other			22,347						18,775						3,572						23,901						19,324						4,577
Total			2,654,351						1,391,538						1,262,813						2,277,349						1,290,419						986,930
Unamortized intangible assets:
Trademarks			96,709						—						96,709						96,842						—						96,842
Total intangible assets, net			$	2,751,060					$	1,391,538					$	1,359,522					$	2,374,191					$	1,290,419					$	1,083,772

The Company recorded $439,479 of acquired intangible assets in 2021. See Note 3 — Acquisitions for further information.

Amortization expense was $142,814, $139,043 and $138,947, including acquisition-related intangible amortization of $141,134, $137,071 and $136,963, for the years ended December 31, 2021, 2020 and 2019, respectively.

Estimated future amortization expense related to intangible assets held at December 31, 2021 is as follows:

			Estimated Amortization
2022			$	153,937
2023			144,167
2024			139,696
2025			135,608
2026			127,539

10. Accrued Expenses and Other Liabilities

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

			December 31, 2021						December 31, 2020
Accrued rebates and volume discounts			$	52,909					$	49,929
Taxes other than income (1)			49,992						52,829
Warranty			43,449						45,433
Operating lease liability			43,086						48,834
Accrued interest			20,426						20,822
Accrued commissions (non-employee)			16,273						14,243
Restructuring and exit costs			13,797						14,913
Other (none of which are individually significant)			107,165						96,634
Total other accrued expenses			$	347,097					$	343,637

(1) Taxes other than income includes a $15.3 million and $15.8 million deferral of employment taxes related to the U.S. CARES Act as of December 31, 2021 and 2020, respectively.

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

			December 31, 2021						December 31, 2020
Defined benefit and other post-retirement benefit plans			$	138,992					$	177,623
Operating lease liabilities			134,448						133,989
Deferred compensation			88,681						82,814
Unrecognized tax benefits			79,757						90,097
Legal and environmental			31,304						28,483
Deferred revenue			21,513						13,921
Warranty			5,119						5,655
Deferred employment taxes (1)			—						15,783
Other			32,728						21,949
Total other liabilities			$	532,542					$	570,314

(1) Balance as of December 31, 2020 includes deferred employment taxes of $15.8 million related to the U.S. CARES Act.

Warranty

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

			Years Ended December 31,
			2021						2020						2019
Beginning Balance, December 31 of the Prior Year			$	51,088					$	49,116					$	50,073
Provision for warranties			67,212						60,902						63,957
Settlements made			(65,498)						(60,853)						(63,574)
Other adjustments, including acquisitions and currency translation			(4,234)						1,923						(1,340)
Ending Balance, December 31			$	48,568					$	51,088					$	49,116

11. Restructuring Activities

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

			Years Ended December 31,
			2021						2020						2019
Engineered Products			$	9,507					$	10,307					$	3,155
Clean Energy & Fueling			3,609						6,681						4,943
Imaging & Identification			4,589						5,946						6,426
Pumps & Process Solutions			1,911						13,374						5,666
Climate & Sustainability Technologies			5,068						4,015						3,671
Corporate			2,021						4,145						2,961
Total			$	26,705					$	44,468					$	26,822
These amounts are classified in the Consolidated Statements of Earnings as follows:
Cost of goods and services			$	12,895					$	18,895					$	8,910
Selling, general and administrative expenses			13,810						25,573						17,912
Total			$	26,705					$	44,468					$	26,822

Total restructuring charges of $26,705 incurred during the year ended December 31, 2021, were primarily a result of restructuring programs initiated in 2020 and 2021 in response to demand conditions, asset charges related to a product line exit, as well as broad-based operational efficiency initiatives focusing on footprint consolidation and IT centralization. Additional programs, beyond the scope of the announced programs may be implemented during 2022 with related restructuring charges.

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The $26,705 of restructuring charges incurred during 2021 primarily included the following items:

• The Engineered Products segment recorded $9,507 of restructuring charges related primarily to asset charges related to a product line exit.

• The Clean Energy & Fueling segment recorded $3,609 of restructuring charges primarily due to asset charges, headcount reductions and facility exit costs.

• The Imaging & Identification segment recorded $4,589 of restructuring charges related primarily to headcount reductions.

• The Pumps & Process Solutions segment recorded $1,911 of restructuring charges related primarily to headcount reductions and asset charges.

• The Climate & Sustainability Technologies segment recorded $5,068 of restructuring charges related primarily to headcount reductions and asset charges.

• Corporate recorded $2,021 of restructuring charges primarily related to exit costs related to IT centralization initiatives.

Restructuring expenses incurred in 2020 and 2019 also included headcount reduction, targeted facility consolidations at certain businesses, and actions taken to optimize the Company's cost structure.

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

			Severance						Exit						Total
Balance at January 1, 2019			$	24,284					$	3,880					$	28,164
Restructuring charges			20,271						6,551						26,822
Payments			(29,887)						(3,383)						(33,270)
Other, including foreign currency translation			(917)						(4,409)			(1)			(5,326)
Balance at December 31, 2019			13,751						2,639						16,390
Restructuring charges			25,716						18,752						44,468
Payments			(29,768)						(6,035)						(35,803)
Other, including foreign currency translation			848						(10,990)			(1)			(10,142)
Balance at December 31, 2020			10,547						4,366						14,913
Restructuring charges			11,561						15,144						26,705
Payments			(10,951)						(6,171)						(17,122)
Other, including foreign currency translation			(427)						(10,272)			(2)			(10,699)
Balance at December 31, 2021			$	10,730					$	3,067					$	13,797

(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.

(2) Other activity in exit reserves primarily represents asset charges related to product line exit.

The restructuring accrual balances at December 31, 2021 primarily reflect restructuring plans initiated during the year.

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

12. Borrowings

Borrowings consist of the following:

			December 31, 2021						December 31, 2020
Short-term:
Short-term borrowings			$	702					$	—
Commercial paper			105,000						—
Notes payable			$	105,702					$	—

									Carrying amount (1)
			Principal						December 31, 2021						December 31, 2020
Long-term:
3.15% 10-year notes due November 15, 2025			$	400,000					$	397,389					$	396,716
1.25% 10-year notes due November 9, 2026 (euro-denominated)			€	600,000					674,217						724,310
0.750% 8-year notes due November 4, 2027 (euro denominated)			€	500,000					561,293						603,107
6.65% 30-year debentures due June 1, 2028			$	200,000					199,356						199,255
2.950% 10-year notes due November 4, 2029			$	300,000					297,029						296,650
5.375% 30-year debentures due October 15, 2035			$	300,000					296,559						296,309
6.60% 30-year notes due March 15, 2038			$	250,000					248,166						248,053
5.375% 30-year notes due March 1, 2041			$	350,000					344,705						344,429
Total long-term debt									$	3,018,714					$	3,108,829

(1) Carrying amount is net of unamortized debt discount and deferred debt issuance costs. Total unamortized debt discounts were $15.1 million and $17.6 million as of December 31, 2021 and 2020, respectively. Total deferred debt issuance costs were $12.5 million and $14.4 million as of December 31, 2021 and 2020, respectively.

The discounts are being amortized to interest expense using the effective interest method over the life of the issuances. The deferred issuance costs are amortized on a straight-line basis over the life of the debt, as this approximates the effective interest method.

As of December 31, 2021, the Company maintained a $1 billion five-year unsecured revolving credit facility (the “Credit Agreement”) with a syndicate of banks, which expires on October 4, 2024. At the Company's election, loans under the Credit Agreement will bear interest at a base rate plus an applicable margin. The Credit Agreement requires the Company to pay a facility fee and imposes various restrictions on the Company such as, among other things, a requirement to maintain a minimum interest coverage ratio of EBITDA to consolidated net interest expense of not less than 3.0 to 1. The Company primarily uses this facility as liquidity back-up for its commercial paper program and for general corporate purposes. As of December 31, 2021, there were no outstanding borrowings under the Credit Agreement.

The Company was in compliance with all covenants in the Credit Agreement and other long-term debt covenants at December 31, 2021 and had an interest coverage ratio of consolidated EBITDA to consolidated net interest expense of 17.6 to 1.

As of December 31, 2021, the future maturities of long-term debt were as follows:

			Future Maturities
2022			$	—
2023			—
2024			—
2025			400,000
2026			679,810
2027 and thereafter			1,966,508
Total			$	3,046,318

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Letters of Credit and other Guarantees

As of December 31, 2021, the Company had approximately $155.9 million outstanding in letters of credit, surety bonds, and performance and other guarantees with financial institutions, which expire on various dates through 2029. These letters of credit and bonds are primarily issued as security for insurance, warranty and other performance obligations. In general, the Company would only be liable for the amount of these guarantees in the event of default in the performance of its obligations, the probability of which is believed to be remote.

13. 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, which occur within the next twelve months that are denominated in non-functional currencies, with currency forward contracts designated as cash flow hedges. At December 31, 2021 and 2020, the Company had contracts with U.S. dollar equivalent notional amounts of $180,929 and $173,674, respectively, to exchange foreign currencies, principally the euro, pound sterling, Swedish krona, Canadian dollar, Chinese yuan, and Swiss franc. The Company believes it is probable that all forecasted cash flow transactions will occur.

In addition, the Company had outstanding contracts at December 31, 2021 and 2020 with a total notional amount of $108,736 and $73,755, respectively, that are not designated as hedging instruments. These instruments are used to reduce the Company's exposure to 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 Consolidated Statements of Earnings.

The following table sets forth the fair values of derivative instruments held by the Company as of December 31, 2021 and 2020 and the balance sheet lines in which they are recorded:

			Fair Value Asset (Liability)
			December 31, 2021						December 31, 2020						Balance Sheet Caption
Foreign currency forward			$	2,825					$	2,325					Prepaid and other current assets
Foreign currency forward			(433)						(2,057)						Other accrued expenses

For a cash flow hedge, the change in estimated fair value of a hedging instrument is recorded in accumulated other comprehensive earnings (loss), net of tax as a separate component of the Consolidated Statements of Stockholders' Equity and is reclassified into revenues and cost of goods and services in the 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 €500,000 of euro-denominated notes issued November 9, 2016 and November 4, 2019, respectively, as hedges 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 (loss) of the Consolidated Statements of Comprehensive Earnings to offset changes in the value of the net investment in euro-denominated operations. Changes in the value of the euro-denominated debt resulting from exchange rate differences are offset by changes in the net investment due to the high degree of effectiveness between the hedging instruments and the exposure being hedged.

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

			2021						2020						2019
Gain (loss) on euro-denominated debt			$	94,003					$	(119,298)					$	22,449
Tax (expense) benefit			(20,976)						26,957						(4,714)
Net gain (loss) on net investment hedges, net of tax			$	73,027					$	(92,341)					$	17,735

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 as follows:

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

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

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

The Company's assets and liabilities measured at fair value on a recurring basis as of December 31, 2021 and 2020 were as follows:

									December 31, 2021												December 31, 2020
									Level 2																		Level 2
Assets:
Foreign currency cash flow hedges									$	2,825																	$	2,325
Liabilities:
Foreign currency cash flow hedges									433																		2,057

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

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

The estimated fair value of long-term debt at December 31, 2021 and 2020 was $3,440,501 and $3,635,673, 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 equivalents, trade receivables, accounts payable and notes payable are reasonable estimates of their fair values as of December 31, 2021 and 2020 due to the short-term nature of these instruments.

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

14. Income Taxes

Income taxes have been based on the following components of earnings before provision for income taxes in the Consolidated Statements of Earnings:

			Years Ended December 31,
			2021						2020						2019
Domestic			$	835,773					$	464,145					$	448,301
Foreign			565,053						377,589						394,708
Total			$	1,400,826					$	841,734					$	843,009

Income tax expense (benefit) for the years ended December 31, 2021, 2020 and 2019 is comprised of the following:

			Years Ended December 31,
			2021						2020						2019
Current:
U.S. federal			$	150,990					$	79,305					$	71,069
State and local			28,106						13,312						16,709
Foreign			154,147						97,106						102,284
Total current			333,243						189,723						190,062
Deferred:
U.S. federal			(14,143)						2,777						(6,033)
State and local			3,165						(10,526)						1,770
Foreign			(45,257)						(23,691)						(20,708)
Total deferred			(56,235)						(31,440)						(24,971)
Total expense			$	277,008					$	158,283					$	165,091

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

			Years Ended December 31,
			2021						2020						2019
U.S. federal income tax rate			21.0		%				21.0		%				21.0		%
State and local taxes, net of federal income tax benefit			1.8						1.7						1.7
Foreign operations tax effect			(0.2)						(0.8)						(1.3)
Foreign tax credits			—						—						(0.1)
Foreign-derived intangible income			(0.8)						(1.1)						(1.0)
Share awards			(0.8)						(1.2)						(1.7)
Dispositions			0.3						—						1.2
Audit resolutions			(1.4)						(0.9)						0.3
Other			(0.1)						0.1						(0.5)
Effective tax rate			19.8		%				18.8		%				19.6		%

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

			December 31, 2021						December 31, 2020
Deferred Tax Assets:
Accrued compensation, principally postretirement and other employee benefits			$	61,388					$	60,797
Accrued expenses, principally for state income taxes, interest and warranty			30,143						32,418
Net operating loss and other carryforwards			334,483						319,291
Inventories, principally due to reserves for financial reporting purposes and capitalization for tax purposes			28,698						23,723
Accounts receivable, principally due to allowance for doubtful accounts			9,988						7,118
Accrued insurance			4,708						4,165
Long-term liabilities, principally warranty, environmental and exit costs			3,043						2,273
Lease obligations			41,653						40,984
Total gross deferred tax assets			514,104						490,769
Valuation allowance			(306,066)						(287,679)
Total deferred tax assets, net of valuation allowances			$	208,038					$	203,090
Deferred Tax Liabilities:
Intangible assets, principally due to different tax and financial reporting bases and amortization lives			$	(392,208)					$	(387,897)
Property, plant and equipment, principally due to differences in depreciation			(77,918)						(62,667)
Lease right-of-use assets			(40,181)						(38,742)
Other liabilities			(28,786)						9,992
Total gross deferred tax liabilities			(539,093)						(479,314)
Net deferred tax liability			$	(331,055)					$	(276,224)
Classified as follows in the Consolidated Balance Sheets:
Other assets and deferred charges			$	33,062					$	22,199
Deferred income taxes			(364,117)						(298,423)
			$	(331,055)					$	(276,224)

As of December 31, 2021, the Company had non-U.S loss carryforwards of $1,128.7 million primarily resulting from non-operating activities. The entire balance of the non-U.S. losses as of December 31, 2021 is available to be carried forward, with $274.4 million of these losses expiring during the years 2022 through 2042. The remaining $854.3 million of such losses can be carried forward indefinitely.

The Company has $305.1 million of state tax loss carryovers as of December 31, 2021. The balance of the state losses as of December 31, 2021 is available for carry over, with $289.3 million of these losses expiring during the years 2022 and 2042, and the remaining $15.8 million being carried over indefinitely.

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The Company maintains valuation allowances by jurisdiction against the deferred tax assets related to certain of these carryforwards for which it is more likely than not that some portion or all will not be realized.

Unrecognized Tax Benefits

The Company files federal, state, local and foreign tax returns. The Company is routinely audited by the tax authorities in these jurisdictions, and a number of audits are currently underway. It is reasonably possible during the next twelve months that uncertain tax positions may be settled, which could result in a decrease in the gross amount of unrecognized tax benefits. This decrease may result in an income tax benefit. Due to the potential for resolution of federal, state and foreign examinations, and the expiration of various statutes of limitation, the Company's gross unrecognized tax benefits balance may change within the next twelve months by a range of zero to $30.6 million. All significant federal, state, local and international matters have been concluded through 2016. The Company believes adequate provision has been made for all income tax uncertainties.

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

															Total
Unrecognized tax benefits at January 1, 2019															$	93,461
Additions based on tax positions related to the current year															4,493
Additions for tax positions of prior years															6,668
Reductions for tax positions of prior years															(9,217)
Cash settlements															(922)
Lapse of statutes															(11,269)
Unrecognized tax benefits at December 31, 2019															83,214
Additions based on tax positions related to the current year															3,134
Additions for tax positions of prior years															5,490
Reductions for tax positions of prior years															(3,599)
Cash settlements															(6,214)
Lapse of statutes															(9,687)
Unrecognized tax benefits at December 31, 2020 (1)															72,338
Additions based on tax positions related to the current year															5,859
Additions for tax positions of prior years															3,784
Reductions for tax positions of prior years															(13,008)
Cash settlements															(1,490)
Lapse of statutes															(2,831)
Unrecognized tax benefits at December 31, 2021 (1)															$	64,652

(1) If recognized, the net amount of potential tax benefits that would impact the Company’s effective tax rate is $58.0 million. During the years ended December 31, 2021, 2020 and 2019, the Company recorded income of $2.7 million, $0.1 million and $0.6 million, respectively, as a component of provision for income taxes related to the accrued interest and penalties on net reductions to unrecognized tax benefits. The Company had accrued interest and penalties of $15.1 million at December 31, 2021 and $17.8 million at December 31, 2020, which are not included in the above table.

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

15. Equity and Cash Incentive Program

The Company's share-based awards are typically granted annually at its regularly scheduled first quarter Compensation Committee meeting. For the years presented herein, employee awards were made pursuant to the terms of the Company's 2021 Omnibus Incentive Plan (the "2021 Plan") and 2012 Equity and Cash Incentive Plan (the "2012 Plan").

On May 7, 2021, the shareholders approved the 2021 Plan, to replace the 2012 Plan, which otherwise would have terminated according to its terms on May 3, 2022. Upon approval of the 2021 Plan, no additional awards could be granted under the 2012 Plan, and the remaining 4,888,197 shares available for additional award grant purposes under the former 2012 Plan became available for issuance under the 2021 Plan. The 2021 Plan provides for stock options and stock-settled appreciation rights ("SARs"), restricted stock awards, restricted stock unit awards, performance share awards, cash performance awards, directors' shares and deferred stock units. Under the 2021 Plan, a total of 8,300,000 newly authorized shares of common stock are reserved for issuance, resulting in a total of 13,188,197 authorized shares available for issuance. These shares are subject to adjustments resulting from stock dividends, stock splits, recapitalizations, reorganizations and other similar changes.

Under the 2012 Plan, which was approved by shareholders on May 3, 2012 to replace the 2005 Equity and Cash Incentive Plan (the "2005 Plan"), a total of 17,000,000 shares of common stock were reserved for grants (stock options and SARs, restricted stock unit awards, performance share awards, cash performance awards, directors' shares and deferred stock units) to key personnel. Of these 17,000,000 shares, 4,888,197 shares remained available under the 2012 Plan as of the date that shareholders approved the 2021 Plan, and those remaining shares became available for issuance under the 2021 Plan.

Officers and other key employees, as well as non-employee directors, are eligible to participate in the 2021 Plan, and were also eligible under the 2012 Plan, which had a ten-year term between May 3, 2012 to May 3, 2022.

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

			Years Ended December 31,
			2021						2020						2019
Pre-tax stock-based compensation expense			$	31,111					$	25,026					$	29,702
Tax benefit			(2,859)						(2,731)						(2,490)
Total stock-based compensation expense, net of tax			$	28,252					$	22,295					$	27,212

SARs

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

In 2021, 2020 and 2019, the Company issued SARs covering 413,173, 390,780 and 615,089 shares, respectively. The fair value of each SAR grant was estimated on the date of grant using a Black-Scholes option-pricing model with the following assumptions:

			2021						2020						2019
Risk-free interest rate			0.59		%				1.44		%				2.51		%
Dividend yield			1.62		%				1.65		%				2.13		%
Expected life (years)			5.5						5.5						5.6
Volatility			30.49		%				22.76		%				22.35		%
Grant price			$122.73						$119.86						$91.20
Fair value at date of grant			$29.08						$22.54						$17.55

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

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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 awards is based on the U.S. Treasury yield curve in effect at the time of grant.

A summary of activity relating to SARs granted under the 2021 Plan and the predecessor plans for the year ended December 31, 2021 is as follows:

			SARs
			Number of Shares						Weighted Average Exercise Price						Weighted Average Remaining Contractual Term (Years)
Outstanding at January 1, 2021			2,979,933						$	79.36
Granted			413,173						122.73
Forfeited / expired			(89,899)						110.58
Exercised			(925,823)						69.99
Outstanding at December 31, 2021			2,377,384						89.49						6.5
Exercisable at December 31, 2021			1,125,435						$	67.69					4.8

The following table summarizes information about outstanding SARs at December 31, 2021:

						SARs Outstanding																								SARs Exercisable
Range of Exercise Prices						Number of Shares						Weighted Average Exercise Price						Weighted Average Remaining Life in Years						Aggregate Intrinsic Value						Number of Shares						Weighted Average Exercise Price						Weighted Average Remaining Life in Years						Aggregate Intrinsic Value
$48.28 - $82.51						1,125,435						$	67.69					4.8						$	128,213					1,125,435						$	67.69					4.8						$	128,213
$84.94 - $119.86						868,923						$	103.04					7.5						68,262						—						$	—					0						—
$122.73 - $155.65						383,026						$	122.82					9.1						22,516						—						$	—					0						—
						2,377,384																		$	218,991					1,125,435																		$	128,213

Unrecognized compensation expense related to SARs not yet exercisable was $8,800 at December 31, 2021. This cost is expected to be recognized over a weighted average period of 1.7 years.

Other information regarding the exercise of SARs is listed below:

			2021						2020						2019
Fair value of SARs that became exercisable			$	10,199					$	8,585					$	8,611
Aggregate intrinsic value of SARs exercised			$	62,895					$	55,031					$	89,473

Performance Share Awards

Performance share awards granted are expensed over the three-year requisite performance and service period. Awards become vested if (1) the Company achieves certain market conditions or specified internal metrics and (2) the employee remains continuously employed by the Company during the performance period. Partial vesting may occur after separation from service in the case of certain terminations not for cause and for retirements.

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

In 2021, 2020 and 2019, the Company issued performance shares covering 50,371, 49,056 and 35,172 shares, respectively.

The performance share awards granted in 2021 and 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), and are generally recognized ratably over the vesting period, and the fair value is not subject to change based on future market conditions. The assumptions used in determining the fair value of the performance shares granted in 2021 and 2020 were as follows:

			2021						2020
Risk-free interest rate			0.19		%				1.40		%
Dividend yield			1.62		%				1.65		%
Expected life (years)			2.9						2.9
Volatility			31.90		%				23.30		%
Grant price			$122.73						$119.86
Fair value per share at date of grant			$148.29						$165.71

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

The fair value and average attainment used in determining compensation cost of the performance shares issued in 2019 are as follows for the year ended December 31, 2021:

						2019
Fair value per share at date of grant						$91.20
Average attainment rate reflected in expense						260.6		%

A summary of activity for performance share awards for the year ended December 31, 2021 is as follows:

			Number of Shares						Weighted Average Grant-Date Fair Value
Unvested at January 1, 2021			77,979						$	138.14
Granted			50,371						148.29
Vested			(27,031)						91.37
Unvested at December 31, 2021			96,129						$	156.88

Unrecognized compensation expense related to unvested performance shares as of December 31, 2021 was $7,743, which will be recognized over a weighted average period of 1.7 years.

Restricted Stock Units

The Company also has restricted stock authorized for grant. Common stock of the Company may be granted at no cost to certain officers and key employees. In general, restrictions limit the sale or transfer of these shares during a three-year period, and restrictions lapse proportionately over the three-year period. The Company granted 87,177, 83,512 and 124,929 of restricted stock units in 2021, 2020 and 2019, respectively. The fair value of these awards was determined using Dover's closing stock price on the date of grant, which were $122.73, $119.86, and $91.20 in 2021, 2020 and 2019, respectively.

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

A summary of activity for restricted stock units for the year ended December 31, 2021 is as follows:

			Number of Shares						Weighted Average Grant-Date Fair Value
Unvested at January 1, 2021			252,907						$	93.43
Granted			87,177						122.73
Forfeited			(10,741)						114.85
Vested			(126,661)						91.75
Unvested at December 31, 2021			202,682						$	107.03

Unrecognized compensation expense relating to unvested restricted stock units as of December 31, 2021 was $12,013, which will be recognized over a weighted average period of 1.3 years.

Directors' Shares

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

			Years ended December 31,
			2021						2020						2019
Aggregate shares granted			7,917						9,854						10,838
Deferred stock units			(5,322)						(6,278)						(6,168)
Net shares issued			2,595						3,576						4,670

16. Commitments and Contingent Liabilities

Guarantees

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

Litigation

A few of the Company’s subsidiaries are involved in legal proceedings relating to the cleanup of waste disposal sites identified under federal and state statutes which provide for the allocation of such costs among “potentially responsible parties.” In each instance, the extent of the Company’s liability appears to be relatively insignificant in relation to the total projected expenditures and the number of other “potentially responsible parties” involved and is anticipated to be immaterial to the Company. In addition, a few of the Company’s subsidiaries are involved in ongoing remedial activities at certain current and former plant sites, in cooperation with regulatory agencies, and appropriate estimated liabilities have been established. See Note 10 — Accrued Expenses and Other Liabilities for additional details.

The Company and some 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 consider the availability and extent of insurance coverage. The Company has estimated liabilities for these other legal matters that are probable and estimable, and at December 31, 2021 and 2020, these liabilities were immaterial. 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.

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

17. Employee Benefit Plans

The Company offers defined contribution retirement plans which cover the majority of its U.S. employees, as well as employees in certain other countries. The Company’s expense relating to defined contribution plans was $59,719, $52,629 and $50,031 for the years ended December 31, 2021, 2020 and 2019, respectively.

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

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

The Company also maintains other post-retirement benefit plans. These plans are closed to new entrants and not considered to be significant. The supplemental and other post-retirement benefit plans are supported by the general assets of the Company.

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Obligations and Funded Status

The following tables summarize the change in benefit obligations, change in plan assets, and funded status associated with the Company's significant defined benefit plans and the amounts recognized in the consolidated balance sheets at December 31, 2021 and 2020:

			Qualified Defined Benefits																								Non-Qualified Supplemental Benefits
			U.S. Plan												Non-U.S. Plans
			2021						2020						2021						2020						2021						2020
Change in benefit obligation:
Benefit obligation at beginning of year			$	524,181					$	490,228					$	340,829					$	296,534					$	51,194					$	60,183
Service cost			7,134						6,824						5,749						5,345						1,561						1,272
Interest cost			13,605						16,272						3,590						3,697						1,232						1,765
Plan participants' contributions			—						—						2,009						1,707						—						—
Benefits paid			(18,221)						(36,303)						(7,519)						(8,613)						(5,331)						(12,324)
Actuarial (gain) loss(1)			(19,393)						47,160						(20,766)						19,558						(4,568)						298
Amendments			—						—						1,828						(1,401)						—						—
Settlements and curtailments			(28,960)						—						(3,517)						(294)						(1,183)						—
Currency translation and other			—						—						(7,488)						24,296						—						—
Benefit obligation at end of year			478,346						524,181						314,715						340,829						42,905						51,194
Change in plan assets:
Fair value of plan assets at beginning of year			606,896						550,238						212,748						185,590						—						—
Actual return on plan assets			13,385						92,961						10,664						13,560						—						—
Company contributions			—						—						8,121						7,315						6,262						12,324
Plan participants' contributions			—						—						2,009						1,707						—						—
Benefits paid			(18,221)						(36,303)						(7,519)						(8,613)						(5,331)						(12,324)
Settlements and curtailments			(28,960)						—						(2,287)						(294)						(931)						—
Currency translation and other			—						—						(4,059)						13,483						—						—
Fair value of plan assets at end of year			573,100						606,896						219,677						212,748						—						—
Funded (Unfunded) status			$	94,754					$	82,715					$	(95,038)					$	(128,081)					$	(42,905)					$	(51,194)
Amounts recognized in the consolidated balance sheets consist of:
Assets and Liabilities:
Other assets and deferred charges			$	94,754					$	82,715					$	1,575					$	653					$	—					$	—
Accrued compensation and employee benefits			—						—						(1,729)						(1,691)						(4,776)						(4,899)
Other liabilities (deferred compensation)			—						—						(94,884)						(127,043)						(38,129)						(46,295)
Total assets (liabilities)			94,754						82,715						(95,038)						(128,081)						(42,905)						(51,194)
Accumulated Other Comprehensive Loss (Earnings):
Net actuarial losses (gains)			33,545						49,386						50,878						80,472						(20,724)						(18,400)
Prior service cost (credit)			110						322						(1,303)						(3,632)						2,980						4,593
Tax (benefit) expense			(6,686)						(10,272)						(11,836)						(17,144)						3,840						2,961
Total accumulated other comprehensive loss (earnings), net of tax			26,969						39,436						37,739						59,696						(13,904)						(10,846)
Net amount recognized at December 31,			$	121,723					$	122,151					$	(57,299)					$	(68,385)					$	(56,809)					$	(62,040)
Accumulated benefit obligations			$	471,871					$	511,292					$	302,929					$	326,317					$	41,110					$	47,358

(1) The actuarial gains and losses were primarily due to discount rate fluctuations.

The Company’s net unfunded status at December 31, 2021 and 2020 includes net liabilities of $95,038 and $128,081, respectively, relating to the Company’s significant international qualified plans, some in locations where it is not economically advantageous to pre-fund the plans due to local regulations. The majority of the international obligations relate to defined pension plans operated by the Company’s businesses in Germany, France, the United Kingdom, Italy, and Switzerland.

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The accumulated benefit obligation for all defined benefit pension plans was $815,910 and $884,967 at December 31, 2021 and 2020, respectively. Pension plans with projected benefit obligations and accumulated benefit obligations in excess of plan assets consist of the following at December 31, 2021 and 2020:

			2021						2020
Projected benefit obligation (PBO)			$	244,837					$	383,244
Accumulated benefit obligation (ABO)			234,820						364,895
Fair value of plan assets			106,519						203,314

Net Periodic Benefit Cost

The operating expense component of net periodic benefit cost (service cost) is reported with similar compensation costs in the Company's Consolidated Statement of Earnings. The non-operating components (all other components of net periodic benefit expense, including interest cost, amortization of prior service cost, curtailments and settlements, etc.) are reported outside of operating income in other income, net in the Consolidated Statement of Earnings.

Components of the net periodic benefit cost were as follows:

Defined Benefit Plans

			Qualified Defined Benefits																																				Non-Qualified Supplemental Benefits
			U.S. Plan																		Non-U.S. Plans
			2021						2020						2019						2021						2020						2019						2021						2020						2019
Service cost			$	7,134					$	6,824					$	7,016					$	5,749					$	5,345					$	5,665					$	1,561					$	1,272					$	1,942
Interest cost			13,605						16,272						19,026						3,590						3,697						5,101						1,232						1,765						2,670
Expected return on plan assets			(28,980)						(31,475)						(34,136)						(7,188)						(6,837)						(6,220)						—						—						—
Amortization of:
Prior service cost (credit)			212						227						303						(453)						(493)						(398)						1,531						1,695						2,811
Recognized actuarial loss (gain)			10,012						7,536						—						3,938						3,047						3,109						(1,672)						(1,857)						(2,280)
Settlement and curtailment loss (gain)			2,031						—						—						194						25						961						(743)						—						—
Net periodic expense (benefit)			$	4,014					$	(616)					$	(7,791)					$	5,830					$	4,784					$	8,218					$	1,909					$	2,875					$	5,143

Assumptions

The Company determines actuarial assumptions on an annual basis. The weighted average assumptions used in determining the benefit obligations were as follows:

			Qualified Defined Benefits																								Non-Qualified Supplemental Benefits
			U.S. Plan												Non-U.S. Plans
			2021						2020						2021						2020						2021						2020
Discount rate			2.95		%				2.65		%				1.18		%				0.79		%				2.90		%				2.45		%
Average wage increase			4.00		%				4.00		%				1.53		%				1.51		%				4.50		%				4.50		%

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

			Qualified Defined Benefits																																				Non- Qualified Supplemental Benefits
			U.S. Plan																		Non-U.S. Plans
			2021						2020						2019						2021						2020						2019						2021						2020						2019
Discount rate			2.65		%				3.40		%				4.35		%				0.79		%				1.18		%				1.83		%				2.45		%				3.20		%				4.30		%
Average wage increase			4.00		%				4.00		%				4.00		%				1.51		%				1.80		%				2.10		%				4.50		%				4.50		%				4.50		%
Expected return on plan assets			5.60		%				6.30		%				6.80		%				3.40		%				3.69		%				3.67		%				na						na						na

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

Plan Assets

The primary financial objective of the plans is to secure participant retirement benefits. Accordingly, the key objective in the plans’ financial management is to promote stability and, to the extent appropriate, growth in the funded status. Related and supporting financial objectives are established in conjunction with a review of current and projected plan financial requirements.

As it relates to the funded defined benefit pension plans, the Company’s funding policy is consistent with the funding requirements of the Employment Retirement Income Security Act ("ERISA") and applicable international laws. The Company is responsible for overseeing the management of the investments of the plans’ assets and otherwise ensuring that the plans’ investment programs are in compliance with ERISA, other relevant legislation and related plan documents. Where relevant, the Company has retained professional investment managers to manage the plans’ assets and implement the investment process. The investment managers, in implementing their investment processes, have the authority and responsibility to select appropriate investments in the asset classes specified by the terms of their applicable prospectus or investment manager agreements with the plans.

The assets of the plans are invested to achieve an appropriate return for the plans consistent with a prudent level of risk. The plans' long-term investment objective is to generate investment returns that provide adequate assets to meet all benefit obligations in accordance with applicable regulations. The expected return on assets assumption used for net periodic benefit cost is developed through analysis of historical and forecasted market returns, statistical analysis, current market conditions and the past experience of plan asset investments.

The Company’s actual and target weighted average asset allocation for our U.S. Qualified Defined Benefits Plan was as follows:

			2021						2020						Current Target
Return-seeking investments			29		%				22		%				30		%
Liability hedging investments			69		%				77		%				70		%
Other			2		%				1		%				—		%
Total			100		%				100		%				100		%

Return-seeking investments include diversified foreign and domestic equities, U.S. high yield fixed income investments, and emerging market debt. Liability hedging investments primarily include a diversified portfolio of U.S. long duration fixed income assets. While the non-U.S. investment policies are different for each country, the long-term objectives are generally the same as for the U.S. pension assets.

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The fair values of both U.S. and non-U.S. pension plan assets by asset category within the fair value hierarchy (as defined in Note 13 — Financial Instruments) were as follows:

			U.S. Qualified Defined Benefits Plan
			12/31/2021																		12/31/2020
			Level 1						Level 2												Total Fair Value						Level 1						Level 2												Total Fair Value
Corporate bonds			$	—					$	316,367											$	316,367					$	—					$	329,800											$	329,800
Government securities			—						73,115												73,115						8,533						72,018												80,551
Interest-bearing cash and short-term investments			3,227						—												3,227						3,117						—												3,117
Total investments at fair value			3,227						389,482												392,709						11,650						401,818												413,468
Investments measured at net asset value*
Collective funds			—						—												167,551						—						—												180,103
Short-term investment funds			—						—												12,840						—						—												13,325
Total investments			$	3,227					$	389,482											$	573,100					$	11,650					$	401,818											$	606,896

			Non-U.S. Plans
			12/31/2021																								12/31/2020
			Level 1						Level 2						Level 3						Total Fair Value						Level 1						Level 2						Level 3						Total Fair Value
Common stocks			$	58,054					$	—					$	—					$	58,054					$	52,865					$	—					$	—					$	52,865
Fixed income investments			—						27,034						—						27,034						—						26,068						—						26,068
Mutual funds			30,675						—						—						30,675						29,413						—						—						29,413
Cash and cash equivalents			3,634						—						—						3,634						2,822						—						—						2,822
Other			—						2,877						20,252						23,129						—						1,181						21,276						22,457
Total investments at fair value			92,363						29,911						20,252						142,526						85,100						27,249						21,276						133,625
Investments measured at net asset value*
Collective funds			—						—						—						72,235						—						—						—						74,138
Other			—						—						—						4,916						—						—						—						4,985
Total investments			$	92,363					$	29,911					$	20,252					$	219,677					$	85,100					$	27,249					$	21,276					$	212,748

• In accordance with Fair Value Measurement Topic 820 (Subtopic 820-10), certain investments that are measured at fair value using the net asset value per share (or its equivalent) as a practical expedient were not classified in the fair value hierarchy. These are included to permit reconciliation of the fair value hierarchy to the aggregate pension plan assets.

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

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

Mutual funds are categorized as either Level 1, 2 or Net Asset Value ("NAV") as a practical expedient depending on the nature of the observable inputs. Collective funds and short-term investment funds are valued using NAV as a practical expedient as of the last business day of the year. The NAV is based on the underlying value of the assets owned by the fund, minus its liabilities, and then divided by the number of shares outstanding.

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

The availability of observable data is monitored by plan management to assess appropriate classification of financial instruments within the fair value hierarchy. Depending upon the availability of such inputs, specific securities may transfer between levels. In such instances, the transfer is reported at the end of the reporting period.

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The fair value measurement of plan assets using significant unobservable inputs (Level 3) changed during 2020 and 2021, due to the following:

			Level 3
Balance at December 31, 2019			$	18,597
Actual return on plan assets:
Relating to assets still held at December 31, 2020			349
Relating to assets sold during the period			6
Purchases			1,715
Sales and settlements			(1,111)
Foreign currency translation			1,720
Balance at December 31, 2020			21,276
Actual return on plan assets:
Relating to assets still held at December 31, 2021			48
Relating to assets sold during the period			—
Purchases			1,664
Sales and settlements			(2,158)
Foreign currency translation			(578)
Balance at December 31, 2021			$	20,252

Future Estimates

Benefit Payments

Estimated future benefit payments to retirees, which reflect expected future service except to the extent frozen, are as follows:

			Qualified Defined Benefits												Non-Qualified Supplemental Benefits
			U.S. Plan						Non-U.S. Plans
2022			$	36,495					$	11,003					$	4,845
2023			33,845						11,554						4,039
2024			34,445						12,872						5,699
2025			32,670						11,534						2,297
2026			31,727						12,674						5,856
2027 - 2031			134,159						72,555						15,140

Contributions

In 2022, the Company expects to make payments of approximately $7.7 million to its non-US plans and $4.8 million to its non-qualified U.S. plan. No payments are expected for the qualified U.S. plan in 2022.

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

18. Accumulated Other Comprehensive Earnings (Loss)

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

			December 31, 2021						December 31, 2020
Cumulative foreign currency translation adjustments			$	(107,130)					$	(66,802)
Pension and other postretirement benefit plans			(50,448)						(88,126)
Changes in fair value of cash flow hedges and other			3,526						1,674
			$	(154,052)					$	(153,254)

Amounts reclassified from accumulated other comprehensive earnings (loss) to earnings (loss) during the year ended December 31, 2021, 2020 and 2019 were as follows:

			Years Ended December 31,
			2021						2020						2019
Foreign currency translation:
Reclassification of foreign currency translation losses to earnings			$	—					$	—					$	25,339
Tax benefit			—						—						—
Net of tax			$	—					$	—					$	25,339
Pension and other postretirement benefit plans:
Amortization of actuarial losses			$	12,278					$	8,583					$	759
Amortization of prior service costs and transition obligation			1,304						1,442						2,729
Settlement and curtailment			1,482						25						961
Total before tax			15,064						10,050						4,449
Tax benefit			(3,423)						(2,184)						(906)
Net of tax			$	11,641					$	7,866					$	3,543
Cash flow hedges:
Net gains reclassified into earnings			$	(6,271)					$	(817)					$	(186)
Tax expense			1,400						185						39
Net of tax			$	(4,871)					$	(632)					$	(147)

The Company recognizes the amortization of net actuarial losses, prior service costs and transition obligation as well as settlements and curtailments, in other income, net in the 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 in the Consolidated Statements of Earnings.

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

19. Segment Information

The Company categorizes its operating companies into five reportable segments: Engineered Products, Clean Energy & Fueling, Imaging & Identification, Pumps & Process Solutions, and Climate & Sustainability Technologies. The Company's businesses are structured around similar business models, go-to market strategies, manufacturing practices and product categories which increases management efficiency and better aligns Dover's operations with its strategic initiatives and capital allocation priorities, and provides greater transparency about performance. Operating segments are defined as the components of an enterprise for which separate financial information is available, engages in business activities from which it may recognize revenues and incur expenses, and regularly evaluated by the entity's chief operating decision maker or decision-making group, which is composed of Dover's executive leadership team, in making resource allocation decisions and evaluating performance.

The five reportable segments are as follows:

• Engineered Products segment provides a wide range of equipment, components, software, solutions and services vehicle aftermarket, waste handling, industrial automation, aerospace and defense, industrial winch and hoist, and fluid dispensing end-markets.

• Clean Energy & Fueling segment provides components, equipment, and software and service solutions enabling safe transport of traditional and clean fuels and other hazardous substances along the supply chain, as well as the safe and efficient operation of convenience retail, retail fueling and vehicle wash establishments.

• Imaging & Identification segment supplies precision marking and coding, product traceability and digital textile printing equipment, as well as related consumables, software and services to the global packaged and consumer goods, pharmaceutical, industrial manufacturing, fashion and apparel and other end-markets.

• Pumps & Process Solutions segment manufactures specialty pumps and flow meters, fluid connecting solutions, plastics and polymer processing equipment, and highly engineered precision components for rotating and reciprocating machines serving single-use biopharmaceutical production, diversified industrial manufacturing, polymer processing, midstream and downstream oil and gas and other end-markets.

• Climate & Sustainability Technologies segment is a provider of innovative and energy-efficient equipment and systems that serve the commercial refrigeration, heating and cooling and beverage container-making equipment markets.

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

			Years Ended December 31,
			2021						2020						2019
Revenue:
Engineered Products			$	1,780,827					$	1,531,277					$	1,697,557
Clean Energy & Fueling			1,648,153						1,476,282						1,620,177
Imaging & Identification			1,163,367						1,038,178						1,084,471
Pumps & Process Solutions			1,708,634						1,324,003						1,338,528
Climate & Sustainability Technologies			1,608,175						1,316,090						1,396,617
Intercompany eliminations			(2,075)						(2,070)						(953)
Total consolidated revenue			$	7,907,081					$	6,683,760					$	7,136,397
Net earnings:
Segment earnings (EBIT): (1)
Engineered Products (2)			$	285,511					$	238,167					$	291,848
Clean Energy & Fueling			271,388						236,974						231,873
Imaging & Identification			237,147						193,473						229,484
Pumps & Process Solutions (3)			546,863						305,276						240,081
Climate & Sustainability Technologies (4)			322,622						102,872						118,832
Total segment earnings (EBIT)			1,663,531						1,076,762						1,112,118
Corporate expense / other (5)			160,827						126,662						124,274
Interest expense			106,319						111,937						125,818
Interest income			(4,441)						(3,571)						(4,526)
Loss on extinguishment of debt			—						—						23,543
Earnings before provision for income taxes			1,400,826						841,734						843,009
Provision for income taxes			277,008						158,283						165,091
Net earnings			$	1,123,818					$	683,451					$	677,918
Segment margins:
Engineered Products (2)			16.0%						15.6%						17.2%
Clean Energy & Fueling			16.5%						16.1%						14.3%
Imaging & Identification			20.4%						18.6%						21.2%
Pumps & Process Solutions (3)			32.0%						23.1%						17.9%
Climate & Sustainability Technologies (4)			20.1%						7.8%						8.5%
Total Segments			21.0%						16.1%						15.6%
Net earnings			14.2%						10.2%						9.5%
Depreciation and amortization:
Engineered Products			$	48,644					$	42,603					$	41,032
Clean Energy & Fueling			78,010						72,803						75,045
Imaging & Identification			38,510						38,378						30,530
Pumps & Process Solutions			69,075						72,191						67,584
Climate & Sustainability Technologies			48,634						46,541						51,360
Corporate			7,250						6,535						6,736
Consolidated total			$	290,123					$	279,051					$	272,287
Capital expenditures:
Engineered Products			$	48,453					$	23,515					$	38,049
Clean Energy & Fueling			25,167						26,903						21,780
Imaging & Identification			10,671						10,690						18,593
Pumps & Process Solutions			44,578						52,804						50,442
Climate & Sustainability Technologies			34,335						42,923						51,052
Corporate			8,261						8,857						6,888
Consolidated total			$	171,465					$	165,692					$	186,804

(1) Segment earnings (EBIT) includes non-operating income and expense directly attributable to the segments. Non-operating income and expense includes gain on dispositions and other income, net.

(2) For the year ended December 31, 2021, includes a $24,723 gain related to the sale of RWB equity method investment.

(3) For the year ended December 31, 2019, includes a $46,946 loss on assets held for sale for Finder.

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

(4) For the year ended December 31, 2021, includes a pre-tax $181,615 gain on the disposition of UB, a $12,073 other than temporary impairment charge related to an equity method investment, and a $6,072 write-off of assets related to an exit from certain Latin America countries. For the year ended December 31, 2020, includes a $5,213 pre-tax gain on the sale of AMS Chino and a $3,640 write-off of assets.

(5) 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.

Selected financial information by segment (continued):

Total assets at December 31:			2021						2020
Engineered Products			$	1,678,317					$	1,482,430
Clean Energy & Fueling (6)			3,201,504						2,125,900
Imaging & Identification			1,871,039						1,919,223
Pumps & Process Solutions			1,709,852						1,591,441
Climate & Sustainability Technologies			1,358,118						1,320,950
Corporate (7)			584,797						712,130
Total assets			$	10,403,627					$	9,152,074

(6) Increase primarily driven by 2021 acquisitions. See Note 3 — Acquisitions for additional information.

(7) The significant portion of corporate assets are principally cash and cash equivalents.

			Revenue																		Long-Lived Assets (8)
			Years Ended December 31,																		At December 31,
			2021						2020						2019						2021						2020
United States			$	4,305,957					$	3,677,285					$	3,806,033					$	584,948					$	518,679
Europe			1,797,138						1,482,520						1,571,901						283,952						289,657
Asia			901,141						745,150						863,050						62,210						61,235
Other Americas			612,751						535,091						625,707						20,627						21,174
Other			290,094						243,714						269,706						5,573						6,581
Consolidated total			$	7,907,081					$	6,683,760					$	7,136,397					$	957,310					$	897,326

(8) Long-lived assets are comprised of net property, plant and equipment.

The U.S. was the largest geographical market for the Engineered Products, Clean Energy & Fueling, Pumps & Process Solutions, and Climate & Sustainability Technologies segments, and Europe was the largest market for the Imaging & Identification segment.

Revenue is attributed to regions based on the location of the Company’s customer, which in some instances is an intermediary and not necessarily the end user. The Company’s businesses serve thousands of customers, none of which accounted for more than 10% of consolidated revenue.

DOVER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

20. Earnings per Share

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

			Years Ended December 31,
			2021						2020						2019
Net earnings			$	1,123,818					$	683,451					$	677,918
Basic earnings per common share:
Net earnings			$	7.81					$	4.74					$	4.67
Weighted average basic shares outstanding			143,923,000						144,050,000						145,198,000
Diluted earnings per common share:
Net earnings			$	7.74					$	4.70					$	4.61
Weighted average diluted shares outstanding			145,273,000						145,393,000						146,992,000

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

			Years Ended December 31,
			2021						2020						2019
Weighted average shares outstanding - Basic			143,923,000						144,050,000						145,198,000
Dilutive effect of assumed exercise of SARs and vesting of performance shares and RSUs			1,350,000						1,343,000						1,794,000
Weighted average shares outstanding - Diluted			145,273,000						145,393,000						146,992,000

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. For the years ended December 31, 2021, 2020 and 2019, the weighted average number of anti-dilutive potential common shares excluded from the calculation above totaled 1,072, 30,378 and 28,096, respectively.

21. Stockholders' Equity

Share Repurchases

In November 2020, the Company's Board of Directors approved a new standing share repurchase authorization, whereby the Company may repurchase up to 20 million shares beginning on January 1, 2021 through December 31, 2023. This share repurchase authorization replaced the February 2018 share repurchase authorization.

The Company's prior February 2018 share repurchase authorization, whereby the Company was authorized to repurchase up to 20 million shares of its common stock, expired on December 31, 2020. Upon expiration, there were 7,380,879 shares remaining.

During the year ended December 31, 2021 and 2020 the Company repurchased 182,951 and 979,165 shares of common stock at a total cost of $21,637 and $106,279 or $118.27 and $108.54 per share, respectively.

As of December 31, 2021, 19,817,049 shares remain authorized for repurchase under the November 2020 share repurchase authorization.

SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS

Years Ended December 31, 2021, 2020 and 2019

(In thousands)

Deferred Tax Valuation Allowance						Balance at Beginning of Year						Additions						Reductions												Balance at End of Year
Year Ended December 31, 2021						$	287,679					38,514						(20,127)												$	306,066
Year Ended December 31, 2020						$	244,153					49,130						(5,604)												$	287,679
Year Ended December 31, 2019						$	264,398					14,189						(34,434)												$	244,153
LIFO Reserve						Balance at Beginning of Year						Charged to Cost and Expense						Reductions												Balance at End of Year
Year Ended December 31, 2021						$	7,149					7,220						(1,214)												$	13,155
Year Ended December 31, 2020						$	11,428					357						(4,636)												$	7,149
Year Ended December 31, 2019						$	20,020					491						(9,083)												$	11,428