Item 1. Financial Statements

DOVER CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share data)

(Unaudited)

			Three Months Ended September 30,												Nine Months Ended September 30,
			2022						2021						2022						2021
Revenue			$	2,158,291					$	2,018,269					$	6,368,907					$	5,917,846
Cost of goods and services			1,385,541						1,263,690						4,071,680						3,669,547
Gross profit			772,750						754,579						2,297,227						2,248,299
Selling, general and administrative expenses			402,339						412,553						1,270,615						1,249,593
Operating earnings			370,411						342,026						1,026,612						998,706
Interest expense			29,789						26,433						83,330						79,917
Interest income			(1,244)						(1,466)						(2,968)						(3,088)
Other income, net			(11,167)						(10,460)						(17,842)						(18,236)
Earnings before provision for income taxes			353,033						327,519						964,092						940,113
Provision for income taxes			67,007						63,763						162,295						179,080
Net earnings			$	286,026					$	263,756					$	801,797					$	761,033
Net earnings per share:
Basic			$	2.01					$	1.83					$	5.59					$	5.29
Diluted			$	2.00					$	1.81					$	5.55					$	5.24
Weighted average shares outstanding:
Basic			142,506						143,976						143,469						143,895
Diluted			143,257						145,440						144,413						145,220

See Notes to Condensed Consolidated Financial Statements

DOVER CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

(In thousands)

(Unaudited)

			Three Months Ended September 30,												Nine Months Ended September 30,
			2022						2021						2022						2021
Net earnings			$	286,026					$	263,756					$	801,797					$	761,033
Other comprehensive loss, net of tax
Foreign currency translation adjustments:
Foreign currency translation losses			(117,460)						(26,155)						(216,665)						(17,567)
Reclassification of foreign currency translation losses to earnings			—						—						5,915						—
Total foreign currency translation adjustments (net of $(21,020), $(5,446), $(39,990) and $(11,669) tax provision, respectively)			(117,460)						(26,155)						(210,750)						(17,567)
Pension and other post-retirement benefit plans:
Amortization of actuarial losses included in net periodic pension cost			327						2,353						1,032						7,080
Amortization of prior service costs included in net periodic pension cost			223						214						670						646
Total pension and other post-retirement benefit plans (net of $(195), $(771), $(605) and $(2,320) tax provision, respectively)			550						2,567						1,702						7,726
Changes in fair value of cash flow hedges:
Unrealized net gains (losses) arising during period			1,503						(212)						2,317						4,107
Net gains reclassified into earnings			(1,290)						(206)						(3,911)						(3,077)
Total cash flow hedges (net of $(61), $122, $458 and $(302) tax benefit (provision), respectively)			213						(418)						(1,594)						1,030
Other comprehensive loss, net of tax			(116,697)						(24,006)						(210,642)						(8,811)
Comprehensive earnings			$	169,329					$	239,750					$	591,155					$	752,222

See Notes to Condensed Consolidated Financial Statements

DOVER CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

			September 30, 2022						December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents			$	306,002					$	385,504
Receivables, net			1,497,062						1,347,514
Inventories, net			1,407,797						1,191,095
Prepaid and other current assets			166,184						137,596
Total current assets			3,377,045						3,061,709
Property, plant and equipment, net			958,894						957,310
Goodwill			4,532,333						4,558,822
Intangible assets, net			1,313,001						1,359,522
Other assets and deferred charges			471,068						466,264
Total assets			$	10,652,341					$	10,403,627
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings			$	788,860					$	105,702
Accounts payable			1,143,253						1,073,568
Accrued compensation and employee benefits			232,247						302,978
Deferred revenue			246,181						227,549
Accrued insurance			105,095						101,448
Other accrued expenses			321,487						347,097
Federal and other income taxes			51,631						91,999
Total current liabilities			2,888,754						2,250,341
Long-term debt			2,842,662						3,018,714
Deferred income taxes			389,133						364,117
Noncurrent income tax payable			44,313						48,385
Other liabilities			496,053						532,542
Stockholders' equity:
Total stockholders' equity			3,991,426						4,189,528
Total liabilities and stockholders' equity			$	10,652,341					$	10,403,627

See Notes to Condensed Consolidated Financial Statements

DOVER CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except per share data)

(Unaudited)

			Common stock $1 par value						Additional paid-in capital						Retained earnings						Accumulated other comprehensive loss						Treasury stock						Total stockholders' equity
Balance at June 30, 2022			$	259,601					$	863,717					$	9,816,960					$	(247,997)					$	(6,303,758)					$	4,388,523
Net earnings			—						—						286,026						—						—						286,026
Dividends paid ($0.505 per share)			—						—						(72,580)						—						—						(72,580)
Common stock issued for the exercise of share-based awards			5						(177)						—						—						—						(172)
Stock-based compensation expense			—						6,326						—						—						—						6,326
Common stock acquired, including accelerated share repurchase program			—						(100,000)						—						—						(400,000)						(500,000)
Other comprehensive loss, net of tax			—						—						—						(116,697)						—						(116,697)
Balance at September 30, 2022			$	259,606					$	769,866					$	10,030,406					$	(364,694)					$	(6,703,758)					$	3,991,426

			Common stock $1 par value						Additional paid-in capital						Retained earnings						Accumulated other comprehensive loss						Treasury stock						Total stockholders' equity
Balance at June 30, 2021			$	259,371					$	853,887					$	8,962,863					$	(138,059)					$	(6,218,758)					$	3,719,304
Net earnings			—						—						263,756						—						—						263,756
Dividends paid ($0.50 per share)			—						—						(72,107)						—						—						(72,107)
Common stock issued for the exercise of share-based awards			25						(1,795)						—						—						—						(1,770)
Stock-based compensation expense			—						6,660						—						—						—						6,660
Other comprehensive loss, net of tax			—						—						—						(24,006)						—						(24,006)
Other, net			—						(19)						—						—						—						(19)
Balance at September 30, 2021			$	259,396					$	858,733					$	9,154,512					$	(162,065)					$	(6,218,758)					$	3,891,818

See Notes to Condensed Consolidated Financial Statements

DOVER CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except per share data)

(Unaudited)

			Common stock $1 par value						Additional paid-in capital						Retained earnings						Accumulated other comprehensive loss						Treasury stock						Total stockholders' equity
Balance at December 31, 2021			$	259,457					$	857,636					$	9,445,245					$	(154,052)					$	(6,218,758)					$	4,189,528
Net earnings			—						—						801,797						—						—						801,797
Dividends paid ($1.505 per share)			—						—						(216,636)						—						—						(216,636)
Common stock issued for the exercise of share-based awards			149						(12,427)						—						—						—						(12,278)
Stock-based compensation expense			—						24,657						—						—						—						24,657
Common stock acquired, including accelerated share repurchase program			—						(100,000)						—						—						(485,000)						(585,000)
Other comprehensive loss, net of tax			—						—						—						(210,642)						—						(210,642)
Balance at September 30, 2022			$	259,606					$	769,866					$	10,030,406					$	(364,694)					$	(6,703,758)					$	3,991,426

			Common stock $1 par value						Additional paid-in capital						Retained earnings						Accumulated other comprehensive loss						Treasury stock						Total stockholders' equity
Balance at December 31, 2020			$	258,982					$	868,882					$	8,608,284					$	(153,254)					$	(6,197,121)					$	3,385,773
Net earnings			—						—						761,033						—						—						761,033
Dividends paid ($1.49 per share)			—						—						(214,805)						—						—						(214,805)
Common stock issued for the exercise of share-based awards			414						(35,252)						—						—						—						(34,838)
Stock-based compensation expense			—						25,053						—						—						—						25,053
Common stock acquired			—						—						—						—						(21,637)						(21,637)
Other comprehensive loss, net of tax			—						—						—						(8,811)						—						(8,811)
Other, net			—						50						—						—						—						50
Balance at September 30, 2021			$	259,396					$	858,733					$	9,154,512					$	(162,065)					$	(6,218,758)					$	3,891,818

See Notes to Condensed Consolidated Financial Statements

DOVER CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

			Nine Months Ended September 30,
			2022						2021
Operating Activities:
Net earnings			$	801,797					$	761,033
Adjustments to reconcile net earnings to cash from operating activities:
Depreciation and amortization			230,808						218,236
Stock-based compensation expense			24,657						25,053
Reclassification of foreign currency translation losses to earnings			5,915						—
Other, net			(35,814)						(11,969)
Cash effect of changes in assets and liabilities:
Accounts receivable			(227,831)						(222,521)
Inventories			(286,437)						(225,522)
Prepaid expenses and other assets			(14,001)						(38,290)
Accounts payable			121,513						199,877
Accrued compensation and employee benefits			(62,208)						32,284
Accrued expenses and other liabilities			(19,700)						42,084
Accrued and deferred taxes, net			(71,618)						8,321
Net cash provided by operating activities			467,081						788,586
Investing Activities:
Additions to property, plant and equipment			(166,039)						(121,157)
Acquisitions, net of cash acquired			(229,296)						(171,287)
Proceeds from sale of property, plant and equipment			4,215						6,570
Other			(10,941)						(768)
Net cash used in investing activities			(402,061)						(286,642)
Financing Activities:
Repurchase of common stock, including prepayment under accelerated share repurchase program			(585,000)						(21,637)
Proceeds from commercial paper and other short-term borrowings, net			682,928						—
Dividends paid to stockholders			(216,636)						(214,805)
Payments to settle employee tax obligations on exercise of share-based awards			(12,278)						(34,838)
Other			(2,593)						(3,518)
Net cash used in financing activities			(133,579)						(274,798)
Effect of exchange rate changes on cash and cash equivalents			(10,943)						(1,077)
Net (decrease) increase in cash and cash equivalents			(79,502)						226,069
Cash and cash equivalents at beginning of period			385,504						513,075
Cash and cash equivalents at end of period			$	306,002					$	739,144

See Notes to Condensed Consolidated Financial Statements

DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

1. Basis of Presentation

The accompanying unaudited interim Condensed Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for interim periods and do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America ("GAAP") for complete financial statements. These unaudited interim Condensed Consolidated Financial Statements should therefore be read in conjunction with the Consolidated Financial Statements and Notes for Dover Corporation ("Dover" or the "Company") for the year ended December 31, 2021, included in the Company's Annual Report on Form 10-K filed with the SEC on February 11, 2022. The year-end Condensed Consolidated Balance Sheet was derived from audited financial statements.

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

2. Revenue

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.

Over 95% of the Company’s revenue is recognized at a point in time rather than over time as the Company completes its performance obligations. Specifically, revenue is recognized when control transfers to the customer, typically 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 provided by the Company's performance as the Company performs, or our performance creates or enhances an asset the customer controls as the asset is created or enhanced, or our 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.

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 16 — Segment Information for further details for revenue by segment and geographic location.

At September 30, 2022, we estimated that $318 million in revenue is expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period. We expect to recognize approximately 73% of our unsatisfied (or partially unsatisfied) performance obligations as revenue through 2023, with the remaining balance to be recognized in 2024 and thereafter.

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

						September 30, 2022						December 31, 2021						December 31, 2020
Contract assets						14,660						11,440						15,020
Contract liabilities - current						246,181						227,549						184,845
Contract liabilities - non-current						20,872						21,513						13,921

The revenue recognized during the nine months ended September 30, 2022 and 2021 that was included in contract liabilities at the beginning of the period, inclusive of adjustments, amounted to $178,098 and $155,255, respectively.

DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

3. Acquisitions

2022 Acquisitions

During the nine months ended September 30, 2022, the Company acquired two businesses in separate transactions for total consideration of $229,296, net of cash acquired. Of these transactions, one includes additional consideration contingent on achieving certain financial performance targets. These businesses were acquired to complement and expand upon existing operations within the Pumps & Process Solutions segment. The goodwill recorded as a result of these acquisitions represents the economic benefits expected to be derived from product line expansions and operational synergies. The goodwill is non-deductible for U.S. income tax purposes for these acquisitions.

Malema

On July 1, 2022, the Company acquired 99.7% of the equity interests in Malema Engineering Corporation and its related foreign entities ("Malema"), a designer and manufacturer of flow measurement and control instruments serving customers in the biopharmaceutical, semiconductor and industrial sectors, for $220,843, net of cash acquired, subject to contingent consideration. Subsequent to September 30, 2022, the Company acquired the remaining 0.3% of equity interests in Malema. The Malema acquisition expands the Company's biopharma single-use production offering within the Pumps & Process Solutions segment. The contingent consideration is based upon meeting certain financial performance targets for each twelve-month period over the next two years from March 31, 2022, with a range of payouts from $0 to $50,000. No value is attributed to the current estimated fair value of contingent earn-out liability, which will be reassessed quarterly during the performance periods. In connection with this acquisition, the Company recorded goodwill of $151,701 and intangible assets of $64,000 for customer intangibles, $16,000 for patents, and $4,000 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 $2,928. 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 Malema acquisition, based on their estimated fair values at acquisition date:

						Total
Current assets, net of cash acquired						$	8,985
Property, plant and equipment						2,733
Goodwill						151,701
Intangible assets						84,000
Other assets and deferred charges						1,159
Current liabilities						(5,676)
Non-current liabilities						(22,059)
Net assets acquired						$	220,843

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

			Amount allocated						Useful life (in years)
Goodwill - non-deductible			$	151,701					na
Customer intangibles			64,000						15
Patents			16,000						10
Trademarks			4,000						15
			$	235,701

DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Other acquisitions

On May 2, 2022, the Company acquired 100% of the voting stock of AMN DPI ("AMN"), a designer and manufacturer of polymer pelletizing tools, for $8,453, net of cash acquired. The AMN acquisition extends the Company's reach into polymer processing equipment production within the Pumps & Process Solutions segment. In connection with this acquisition, the Company recorded goodwill of $2,315 and intangible assets of $5,349, primarily related to customer intangibles.

2021 Acquisitions

During the nine months ended September 30, 2021, the Company acquired six businesses in separate transactions for total consideration of $179,161, net of cash acquired and including contingent consideration. These businesses were acquired to complement and expand upon existing operations within the Engineered Products, Imaging & Identification, Pumps & Process Solutions, and Clean Energy & Fueling segments. The goodwill recorded as a result of these acquisitions represents the economic benefits expected to be derived from product line expansions and operational synergies. Goodwill of $29,317 is deductible for income tax purposes and $83,142 is non-deductible for income tax purposes for these acquisitions.

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 was treated as an asset acquisition for U.S. income tax purposes, classifying the goodwill and intangibles 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 nine months ended September 30, 2021 within the Pumps & Process Solutions segment.

RegO

On December 28, 2021, the Company acquired 100% of the voting stock of ECI Holding Company, LLC ("RegO"), a provider of highly-engineered components and services that facilitate the production, storage, and distribution of cryogenic gases, for $626,620, net of cash acquired and inclusive of the impact of measurement period adjustments discussed below. In connection with this acquisition, the Company recorded goodwill of $158,894 deductible for income tax purposes and $122,301 non-deductible for income tax purposes. The Company also recorded intangible assets of $173,000 for customer intangibles,

DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

$40,000 for patents, and $21,000 for trademarks. The fair value of 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 $33,900. The gross amount is $34,606, of which $706 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 during the measurement period as the Company finalizes the valuations of the assets acquired and liabilities assumed, and the related tax balances. During the nine months ended September 30, 2022, the Company recorded measurement period adjustments primarily related to its preliminary estimates of deferred taxes and changes in net working capital. These adjustments are based on facts and circumstances that existed as of the acquisition date which resulted in an increase in goodwill of $4,219.

The following presents the updated 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 their acquisition dates:

						Total
Accounts receivable						$	33,900
Inventories						72,551
Other current assets						2,958
Property, plant and equipment						50,027
Goodwill						281,195
Intangible assets						234,000
Other assets and deferred charges						884
Current liabilities						(20,150)
Non-current liabilities						(28,745)
Net assets acquired						$	626,620

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

			Amount allocated						Useful life (in years)
Goodwill - tax deductible			$	158,894					na
Goodwill - non-deductible			122,301						na
Customer intangibles			173,000						15
Patents			40,000						12
Trademarks			21,000						16
			$	515,195

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 components and services that facilitate the production, storage, and distribution of cryogenic gases, for $292,285, net of cash acquired and inclusive of the impact of measurement period adjustments discussed below. In connection with this acquisition, the Company recorded goodwill of $164,870 non-deductible for income tax purposes. The Company also recorded intangible assets of $99,000 for customer intangibles, $21,800 for unpatented technology and $6,500 for trademarks. The fair value of 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 $14,568. The gross amount is $14,912, of which $344 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 during the measurement period as the Company finalizes the valuations of the assets acquired and liabilities assumed, and the related tax balances. During the nine months ended September 30, 2022, the Company recorded measurement period adjustments primarily related to its preliminary estimates of deferred taxes and changes in net working capital. These adjustments are based on facts and circumstances that existed as of the acquisition date which resulted in a decrease in goodwill of $4,339.

DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

The following presents the updated 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						$	28,332
Property, plant and equipment						8,640
Goodwill						164,870
Intangible assets						127,300
Other assets and deferred charges						5,057
Current liabilities						(7,286)
Non-current liabilities						(34,628)
Net assets acquired						$	292,285

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

			Amount allocated						Useful life (in years)
Goodwill - non-deductible			$	164,870					na
Customer intangibles			99,000						15
Unpatented technologies			21,800						12
Trademarks			6,500						16
			$	292,170

4. Inventories, net

			September 30, 2022						December 31, 2021
Raw materials			$	781,168					$	671,195
Work in progress			311,819						271,659
Finished goods			446,098						377,800
Subtotal			1,539,085						1,320,654
Less reserves			(131,288)						(129,559)
Total			$	1,407,797					$	1,191,095

5. Property, Plant and Equipment, net

			September 30, 2022						December 31, 2021
Land			$	60,706					$	63,656
Buildings and improvements			571,851						582,314
Machinery, equipment and other			1,848,889						1,816,473
Property, plant and equipment, gross			2,481,446						2,462,443
Accumulated depreciation			(1,522,552)						(1,505,133)
Property, plant and equipment, net			$	958,894					$	957,310

Depreciation expense totaled $36,889 and $36,913 for the three months ended September 30, 2022 and 2021, respectively. For the nine months ended September 30, 2022 and 2021, depreciation expense totaled $111,274 and $111,152, respectively.

6. Credit Losses

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 the amount of accounts receivable that may not be collected is based on the aging of the accounts receivable balances and other historical and forward-looking information on the financial condition of customers. Balances are written off when determined to be uncollectible.

DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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.

			2022						2021
Beginning Balance, December 31 of the Prior Year			$	40,126					$	40,474
Provision for expected credit losses, net of recoveries			2,791						4,744
Amounts written off charged against the allowance			(3,320)						(3,991)
Other, including foreign currency translation			(3,202)						371
Ending balance, September 30			$	36,395					$	41,598

7. Goodwill and Other Intangible Assets

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
Balance at December 31, 2021			$	723,283					$	1,427,691					$	1,106,202					$	792,839					$	508,807					$	4,558,822
Acquisitions			—						—						—						154,016						—						154,016
Measurement period adjustments			(286)						44						(1,544)						—						—						(1,786)
Foreign currency translation			(21,852)						(70,344)						(56,274)						(27,867)						(2,382)						(178,719)
Balance at September 30, 2022			$	701,145					$	1,357,391					$	1,048,384					$	918,988					$	506,425					$	4,532,333

During the nine months ended September 30, 2022, the Company recognized additions of $154,016 to goodwill as a result of acquisitions as discussed in Note 3 — Acquisitions. During the nine months ended September 30, 2022, the Company recorded measurement period adjustments that decreased goodwill by $1,786, principally related to deferred taxes and working capital adjustments for 2021 acquisitions within the Imaging & Identification and Engineered Products segments.

DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

			September 30, 2022																		December 31, 2021
			Gross Carrying Amount						Accumulated Amortization						Net Carrying Amount						Gross Carrying Amount						Accumulated Amortization						Net Carrying Amount
Amortized intangible assets:
Customer intangibles			$	1,819,083					$	947,490					$	871,593					$	1,829,492					$	909,776					$	919,716
Trademarks			257,029						125,754						131,275						263,367						116,633						146,734
Patents			215,500						141,621						73,879						205,910						140,327						65,583
Unpatented technologies			243,792						129,646						114,146						221,239						123,464						97,775
Distributor relationships			74,812						53,594						21,218						84,204						55,260						28,944
Drawings and manuals			24,447						24,447						—						27,792						27,303						489
Other			22,503						18,017						4,486						22,347						18,775						3,572
Total			2,657,166						1,440,569						1,216,597						2,654,351						1,391,538						1,262,813
Unamortized intangible assets:
Trademarks			96,404						—						96,404						96,709						—						96,709
Total intangible assets, net**(1)**			$	2,753,570					$	1,440,569					$	1,313,001					$	2,751,060					$	1,391,538					$	1,359,522

(1)The change in intangible assets, net for the nine months ended September 30, 2022 includes a decrease of $48.2 million due to foreign currency translation.

For the three months ended September 30, 2022 and 2021, amortization expense was $39,625 and $35,998, respectively. For the nine months ended September 30, 2022 and 2021, amortization expense was $119,534 and $107,084, respectively. Amortization expense is primarily comprised of acquisition-related intangible amortization.

During the nine months ended September 30, 2022, the Company acquired certain intellectual property assets related to electric refuse collection vehicles for approximately $29,750, including contingent consideration of up to $20,000. These assets were classified as unpatented technologies and included in the Engineered Products segment.

8. Restructuring Activities

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

			Three Months Ended September 30,												Nine Months Ended September 30,
			2022						2021						2022						2021
Engineered Products			$	2,027					$	870					$	3,008					$	9,200
Clean Energy & Fueling			3,063						1,620						4,682						3,084
Imaging & Identification			516						168						2,051						1,032
Pumps & Process Solutions			552						639						2,713						1,526
Climate & Sustainability Technologies			(85)						1,293						5,790						4,637
Corporate			1,242						200						1,537						1,182
Total			$	7,315					$	4,790					$	19,781					$	20,661
These amounts are classified in the Condensed Consolidated Statements of Earnings as follows:
Cost of goods and services			$	2,082					$	2,194					$	3,326					$	10,940
Selling, general and administrative expenses			5,233						2,596						16,455						9,721
Total			$	7,315					$	4,790					$	19,781					$	20,661

The restructuring expenses of $7,315 and $19,781 incurred during the three and nine months ended September 30, 2022 were primarily the result of restructuring programs initiated in 2021 and 2022 in response to demand conditions and broad-based operational efficiency initiatives focusing on footprint consolidation and IT centralization.

DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

The $7,315 of restructuring charges incurred during the third quarter of 2022 primarily included the following items:

• The Engineered Products segment recorded $2,027 of restructuring charges related primarily to headcount reductions.

• The Clean Energy & Fueling segment recorded $3,063 of restructuring charges related primarily to headcount reductions and exit costs undertaken in light of market conditions. The segment will continue to make proactive adjustments to its cost structure through restructuring and other programs to align with current demand trends.

• The Imaging & Identification segment recorded $516 of restructuring charges related primarily to headcount reductions and exit costs.

• The Pumps & Process Solutions segment recorded $552 of restructuring charges related primarily to headcount reductions.

• The Climate & Sustainability Technologies segment recorded $(85) of net restructuring reserve adjustments.

• Corporate recorded $1,242 of restructuring charges related primarily to exit costs and simplification of organizational structure.

The Company’s severance and exit accrual activities were as follows:

			Severance						Exit						Total
Balance at December 31, 2021			$	10,730					$	3,067					$	13,797
Restructuring charges			8,421						11,360			(1)			19,781
Payments			(10,637)						(4,253)						(14,890)
Other, including foreign currency translation			(862)						(6,945)			(1)			(7,807)
Balance at September 30, 2022			$	7,652					$	3,229					$	10,881

(1) Other activity includes non-cash foreign currency translation losses recorded as restructuring charges due to the substantial liquidation of businesses in certain Latin America countries.

9. Borrowings

Borrowings consisted of the following:

			September 30, 2022						December 31, 2021
Short-term:
Commercial paper			$	788,034					$	105,000
Other			826						702
Short-term borrowings			$	788,860					$	105,702

									Carrying amount (1)
			Principal						September 30, 2022						December 31, 2021
Long-term
3.15% 10-year notes due November 15, 2025			$	400,000					$	397,895					$	397,389
1.25% 10-year notes due November 9, 2026 (euro-denominated)			€	600,000					577,288						674,217
0.750% 8-year notes due November 4, 2027 (euro-denominated)			€	500,000					480,484						561,293
6.65% 30-year debentures due June 1, 2028			$	200,000					199,431						199,356
2.950% 10-year notes due November 4, 2029			$	300,000					297,313						297,029
5.375% 30-year debentures due October 15, 2035			$	300,000					296,746						296,559
6.60% 30-year notes due March 15, 2038			$	250,000					248,251						248,166
5.375% 30-year notes due March 1, 2041			$	350,000					344,913						344,705
Other									341						—
Total long-term debt									$	2,842,662					$	3,018,714

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

$12.8 million and $15.1 million as of September 30, 2022 and December 31, 2021, respectively. Total deferred debt issuance costs were $11.2 million and $12.5 million as of September 30, 2022 and December 31, 2021, respectively.

DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

During the nine months ended September 30, 2022, commercial paper borrowings increased $683,034. The borrowings outstanding under the commercial paper program had a weighted average annual interest rate of 3.34% and 0.38% as of September 30, 2022 and December 31, 2021, respectively.

As of September 30, 2022, the Company maintained a $1.0 billion five-year unsecured revolving credit facility (the "Credit Agreement") with a syndicate of banks which expires on October 4, 2024. The Company uses the Credit Agreement principally as liquidity back-up for its commercial paper program and for general corporate purposes. 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 consolidated EBITDA to consolidated net interest expense of not less than 3.0 to 1. As of September 30, 2022 and December 31, 2021, there were no borrowings under the Credit Agreement.

The Company was in compliance with all covenants in the Credit Agreement and other long-term debt covenants at September 30, 2022 and had an interest coverage ratio of consolidated EBITDA to consolidated net interest expense of 17.5 to 1.

Letters of Credit and other Guarantees

As of September 30, 2022, the Company had approximately $168 million outstanding in letters of credit, surety bonds, and performance and other guarantees which expire on various dates through 2039. These letters of credit and bonds are primarily issued as security for insurance, warranty and other performance obligations. In general, we would only be liable for the amount of these guarantees in the event of default in the performance of our obligations.

10. Financial Instruments

Derivatives

The Company is exposed to market risk for changes in foreign currency exchange rates due to the global nature of its operations 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 September 30, 2022 and December 31, 2021, the Company had contracts with total notional amounts of $163,384 and $180,929, respectively, to exchange currencies, principally 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 with a total notional amount of $112,646 and $108,736 as of September 30, 2022 and December 31, 2021, respectively, that are not designated as hedging instruments. These instruments are used to reduce the Company's exposure for operating receivables and payables that are denominated in non-functional currencies. Gains and losses on these contracts are recorded in other income, net in the Condensed Consolidated Statements of Earnings.

The following table sets forth the fair values of derivative instruments held by the Company as of September 30, 2022 and December 31, 2021 and the balance sheet lines in which they are recorded:

			Fair Value Asset (Liability)
			September 30, 2022						December 31, 2021						Balance Sheet Caption
Foreign currency forward			$	3,866					$	2,825					Prepaid and other current assets
Foreign currency forward			(5,377)						(433)						Other accrued expenses

For a cash flow hedge, the change in estimated fair value of a hedging instrument is recorded in accumulated other comprehensive (loss) earnings as a separate component of the Condensed Consolidated Statements of Stockholders' Equity and is reclassified into revenues, cost of goods and services, or selling, general and administrative expenses in the Condensed Consolidated Statements of Earnings during the period in which the hedged transaction is settled. 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.

DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

			Three Months Ended September 30,												Nine Months Ended September 30,
			2022						2021						2022						2021
Gain on euro-denominated debt			$	94,731					$	24,032					$	179,221					$	51,571
Tax expense			(21,020)						(5,446)						(39,990)						(11,669)
Net gain on net investment hedges, net of tax			$	73,711					$	18,586					$	139,231					$	39,902

Fair Value Measurements

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

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

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

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

The following table presents the Company’s assets and liabilities measured at fair value on a recurring basis as of September 30, 2022 and December 31, 2021:

									September 30, 2022												December 31, 2021
									Level 2																		Level 2
Assets:
Foreign currency cash flow hedges									$	3,866																	$	2,825
Liabilities:
Foreign currency cash flow hedges									5,377																		433

The estimated fair value of long-term debt at September 30, 2022 and December 31, 2021, was $2,658,903 and $3,440,501, respectively. The estimated fair value of long-term debt is based on quoted market prices for similar instruments and is, therefore, classified as Level 2 within the fair value hierarchy.

The carrying values of cash and cash equivalents, trade receivables, accounts payable and short-term borrowings are reasonable estimates of their fair values as of September 30, 2022 and December 31, 2021 due to the short-term nature of these instruments.

DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

11. Income Taxes

The effective tax rates for the three months ended September 30, 2022 and 2021 were 19.0% and 19.5%, respectively. The decrease in the effective tax rate for the three months ended September 30, 2022 relative to the prior year comparable period was primarily driven by favorable audit resolutions and recording of previously unrecognized tax attributes.

The effective tax rates for the nine months ended September 30, 2022 and 2021 were 16.8% and 19.0%, respectively. The decrease in the effective tax rate for the nine months ended September 30, 2022 relative to the prior year comparable period was primarily driven by favorable audit resolutions, as well as $22.6 million related to the Tax Cuts and Jobs Act.

Dover and its subsidiaries file tax returns in the U.S., including various state and local returns, and in other foreign jurisdictions. We believe adequate provision has been made for all income tax uncertainties. The Company is routinely audited by taxing authorities in its filing jurisdictions, and a number of these audits are currently underway. The Company believes that within the next twelve months uncertain tax positions may be resolved and statutes of limitations will expire, which could result in a decrease in the gross amount of unrecognized tax benefits of approximately $0 to $4.8 million.

12. Equity Incentive Program

The Company typically makes its annual grants of equity awards pursuant to actions taken by the Compensation Committee of the Board of Directors at its regularly scheduled first quarter meeting. During the nine months ended September 30, 2022, the Company issued stock-settled appreciation rights ("SARs") covering 335,285 shares, performance share awards of 40,087 and restricted stock units ("RSUs") of 79,556.

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

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

			SARs
			2022						2021
Risk-free interest rate			1.86		%				0.59		%
Dividend yield			1.25		%				1.62		%
Expected life (years)			5.4						5.5
Volatility			29.46		%				30.49		%
Grant price			$160.21						$122.73
Fair value per share at date of grant			$42.07						$29.08

The performance share awards granted in 2022 and 2021 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 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 the respective periods were as follows:

DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

			Performance Shares
			2022						2021
Risk-free interest rate			1.68		%				0.19		%
Dividend yield			1.25		%				1.62		%
Expected life (years)			2.9						2.9
Volatility			31.10		%				31.90		%
Grant price			$160.21						$122.73
Fair value per share at date of grant			$196.40						$148.29

The Company also has granted RSUs, and the fair value of these awards was determined using Dover's closing stock price on the date of grant, which was $160.21 and $122.73 for RSUs granted in 2022 and 2021, respectively.

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

			Three Months Ended September 30,												Nine Months Ended September 30,
			2022						2021						2022						2021
Pre-tax stock-based compensation expense			$	6,326					$	6,660					$	24,657					$	25,053
Tax benefit			(591)						(576)						(2,437)						(2,357)
Total stock-based compensation expense, net of tax			$	5,735					$	6,084					$	22,220					$	22,696

13. Commitments and Contingent Liabilities

Litigation

Certain of the Company’s subsidiaries are involved in legal proceedings relating to the cleanup of waste disposal sites identified under federal and state statutes that provide for the allocation of such costs among "potentially responsible parties." In each instance, the extent of the Company’s liability appears to be very small in relation to the total projected expenditures and the number of other "potentially responsible parties" involved, and is anticipated to be immaterial to the Company. In addition, certain of the Company’s subsidiaries are involved in ongoing remedial activities at certain current and former plant sites, in cooperation with regulatory agencies, and appropriate estimated liabilities have been established. At September 30, 2022 and December 31, 2021, these estimated liabilities for environmental and other matters, including private party claims for exposure to hazardous substances that are probable and estimable, were not material.

The Company and certain of its subsidiaries are also parties to a number of other legal proceedings incidental to their businesses. These proceedings primarily involve claims by private parties alleging injury arising out of use of the Company’s products, patent infringement, employment matters, and commercial disputes. Management and legal counsel, at least quarterly, review the probable outcome of such proceedings, the costs and expenses reasonably expected to be incurred and currently accrued to-date, and the availability and extent of insurance coverage. The Company has estimated liabilities for legal matters that are probable and estimable, and at September 30, 2022 and December 31, 2021, these estimated liabilities were not material. 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 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Warranty Accruals

Estimated warranty program claims are provided for at the time of sale of the Company's products. Amounts provided for are based on historical costs and adjusted for new claims and are included within other accrued expenses and other liabilities in the Condensed Consolidated Balance Sheet. The changes in the carrying amount of product warranties through September 30, 2022 and 2021, were as follows:

			2022						2021
Beginning Balance, December 31 of the Prior Year			$	48,568					$	51,088
Provision for warranties			46,096						53,747
Settlements made			(46,135)						(50,350)
Other adjustments, including acquisitions and currency translation			(2,233)						(1,301)
Ending balance, September 30			$	46,296					$	53,184

14. Employee Benefit Plans

Retirement Plans

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

The tables below set forth the components of the Company’s net periodic (income) expense relating to retirement benefit plans. The service cost component is recognized within selling, general and administrative expenses and cost of goods and services, depending on the functional area of the underlying employees included in the plans, and the non-operating components of pension costs are included within other income, net in the Condensed Consolidated Statements of Earnings.

Qualified Defined Benefits

			Three Months Ended September 30,																								Nine Months Ended September 30,
			U.S. Plan												Non-U.S. Plans												U.S. Plan												Non-U.S. Plans
			2022						2021						2022						2021						2022						2021						2022						2021
Service cost			$	1,426					$	1,784					$	1,139					$	1,398					$	4,278					$	5,351					$	3,533					$	4,238
Interest cost			3,436						3,401						799						674						10,309						10,204						2,529						2,036
Expected return on plan assets			(7,276)						(7,245)						(1,748)						(1,793)						(21,828)						(21,735)						(5,454)						(5,412)
Amortization:
Prior service cost (credit)			27						53						(131)						(163)						82						159						(395)						(494)
Recognized actuarial loss			575						2,503						411						979						1,725						7,509						1,305						2,968
Net periodic (income) expense			$	(1,812)					$	496					$	470					$	1,095					$	(5,434)					$	1,488					$	1,518					$	3,336

Non-Qualified Supplemental Benefits

			Three Months Ended September 30,												Nine Months Ended September 30,
			2022						2021						2022						2021
Service cost			$	356					$	390					$	1,069					$	1,171
Interest cost			304						308						912						924
Amortization:
Prior service cost			372						383						1,117						1,148
Recognized actuarial gain			(504)						(418)						(1,512)						(1,254)
Net periodic expense			$	528					$	663					$	1,586					$	1,989

DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Defined Contribution Retirement Plans

The Company also offers defined contribution retirement plans which cover the majority of its U.S. employees, as well as employees in certain other countries. The related expense is recognized within selling, general and administrative expenses and cost of goods and services, depending on the functional area of the underlying employees included in the plans. The Company’s expense relating to defined contribution plans was $14,044 and $15,001 for the three months ended September 30, 2022 and 2021, respectively, and $46,301 and $46,114 for the nine months ended September 30, 2022 and 2021, respectively.

15. Other Comprehensive Earnings

Amounts reclassified from accumulated other comprehensive loss to earnings during the three and nine months ended September 30, 2022 and 2021 were as follows:

			Three Months Ended September 30,												Nine Months Ended September 30,
			2022						2021						2022						2021
Foreign currency translation:
Reclassification of foreign currency translation losses to earnings for the substantial liquidation of businesses			$	—					$	—					$	5,915					$	—
Tax benefit			—						—						—						—
Net of tax			$	—					$	—					$	5,915					$	—
Pension plans:
Amortization of actuarial losses			$	474					$	3,064					$	1,494					$	9,223
Amortization of prior service costs			271						274						813						823
Total before tax			745						3,338						2,307						10,046
Tax benefit			(195)						(771)						(605)						(2,320)
Net of tax			$	550					$	2,567					$	1,702					$	7,726
Cash flow hedges:
Net gains reclassified into earnings			$	(1,661)					$	(267)					$	(5,035)					$	(3,977)
Tax provision			371						61						1,124						900
Net of tax			$	(1,290)					$	(206)					$	(3,911)					$	(3,077)

Foreign currency translation losses were recognized in selling, general and administrative expenses within the Condensed Consolidated Statement of Earnings as a result of the substantial liquidation of certain businesses.

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

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

16. Segment Information

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

• Engineered Products segment provides a wide range of equipment, components, software, solutions and services for 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.

DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

• Imaging & Identification segment supplies precision marking and coding, packaging intelligence, product traceability, brand protection 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 can-making equipment markets.

The Company's Chief Operating Decision Maker ("CODM") uses segment earnings to evaluate segment performance and allocate resources. Segment earnings is defined as earnings before purchase accounting expenses, restructuring and other costs (benefits), loss (gain) on dispositions, corporate expenses/other, interest expense, interest income and provision for income taxes.

During the nine month period ended September 30, 2022, the segment measure of profit and loss used by the CODM was changed to segment earnings from segment earnings (EBIT), defined as earnings before corporate expenses/other, interest expense, interest income and provision for income taxes. This change in segment measure allows the CODM to better assess operating results over time and is consistent with how the CODM evaluates our businesses. Accordingly, we have updated our segment earnings for the three and nine months ended September 30, 2021 to conform to the new presentation.

DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

			Three Months Ended September 30,												Nine Months Ended September 30,
			2022						2021						2022						2021
Revenue:
Engineered Products			$	516,501					$	447,798					$	1,518,584					$	1,318,016
Clean Energy & Fueling			464,022						410,561						1,416,492						1,237,281
Imaging & Identification			282,371						292,535						830,577						870,939
Pumps & Process Solutions			433,558						438,240						1,309,880						1,261,318
Climate & Sustainability Technologies			462,671						429,425						1,295,913						1,232,008
Intersegment eliminations			(832)						(290)						(2,539)						(1,716)
Total consolidated revenue			$	2,158,291					$	2,018,269					$	6,368,907					$	5,917,846
Net earnings:
Segment earnings:
Engineered Products			$	90,145					$	67,376					$	242,946					$	215,315
Clean Energy & Fueling			90,208						80,101						262,204						253,103
Imaging & Identification			74,477						70,635						194,467						200,818
Pumps & Process Solutions			128,573						150,275						413,238						425,929
Climate & Sustainability Technologies			75,190						49,734						192,980						150,114
Total segment earnings			458,593						418,121						1,305,835						1,245,279
Purchase accounting expenses (1)			40,526						35,587						140,831						106,265
Restructuring and other costs (benefits) (2)			8,613						(3,201)						27,109						11,740
Loss on dispositions (3)			—						—						194						—
Corporate expense / other (4)			27,876						33,249						93,247						110,332
Interest expense			29,789						26,433						83,330						79,917
Interest income			(1,244)						(1,466)						(2,968)						(3,088)
Earnings before provision for income taxes			353,033						327,519						964,092						940,113
Provision for income taxes			67,007						63,763						162,295						179,080
Net earnings			$	286,026					$	263,756					$	801,797					$	761,033

(1) Purchase accounting expenses are primarily comprised of amortization of intangible assets and charges related to fair value step-ups for acquired inventory sold during the period.

(2) Restructuring and other costs relate to actions taken for employee reductions, facility consolidations and site closures, product line exits, and other asset charges. Restructuring and other costs consist of the following:

			Three Months Ended September 30,												Nine Months Ended September 30,
			2022						2021						2022						2021
Restructuring			$	7,315					$	4,790					$	19,781					$	20,661
Other costs (benefits), net			1,298						(7,991)						7,328						(8,921)
Restructuring and other costs (benefits)			$	8,613					$	(3,201)					$	27,109					$	11,740

(3) Loss on dispositions includes working capital adjustments related to dispositions.

(4) Certain expenses are maintained at the corporate level and not allocated to the segments. These expenses include executive and functional compensation costs, non-service pension costs, non-operating insurance expenses, shared business services overhead costs, deal-related expenses and various administrative expenses relating to the corporate headquarters.

DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

			Three Months Ended September 30,												Nine Months Ended September 30,
Revenue by geography			2022						2021						2022						2021
United States			$	1,252,369					$	1,108,513					$	3,656,930					$	3,235,542
Europe			426,007						452,066						1,331,835						1,356,435
Asia			246,750						222,366						705,252						650,481
Other Americas			166,045						166,230						467,365						468,298
Other			67,120						69,094						207,525						207,090
Total			$	2,158,291					$	2,018,269					$	6,368,907					$	5,917,846

17. 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.

On August 31, 2022, the Company entered into a $500,000 accelerated share repurchase agreement (the “ASR Agreement”) with Bank of America N.A. (“Bank of America”) to repurchase its shares in an accelerated share repurchase program (the “ASR Program”). The ASR Program is classified as equity, initially recorded at fair value with no subsequent remeasurement. The Company conducted the ASR Program under the November 2020 share repurchase authorization. The Company funded the ASR Program with proceeds from commercial paper.

Under the terms of the ASR Agreement, the Company paid Bank of America $500,000 on September 1, 2022 and on that date received initial deliveries of 3,201,025 shares, representing a substantial majority of the shares expected to be retired over the course of the ASR Agreement. The total number of shares ultimately repurchased under the ASR Agreement will be based on the daily volume-weighted average share price of Dover's common stock during the calculation period of the ASR Program, less a discount. The ASR Program is scheduled to be completed in the fourth quarter of 2022, subject to postponement or acceleration under the terms of the ASR Agreement. The impact of these shares that will be received at the completion of the ASR Program is anti-dilutive and therefore excluded from the calculation of diluted earnings per share. The actual number of shares repurchased will be determined at the completion of the ASR Program.

Under the November 2020 share repurchase authorization, exclusive of the ASR Program, in the three months ended September 30, 2022 and 2021, there were no share repurchases. In the nine months ended September 30, 2022, the Company repurchased 641,428 shares of common stock at a total cost of $85,000, or $132.52 per share. In the nine months ended September 30, 2021, the Company repurchased 182,951 shares of common stock at a total cost of $21,637, or $118.27 per share.

As of September 30, 2022, 15,974,596 shares remain authorized for repurchase under the November 2020 share repurchase authorization.

DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

18. Earnings per Share

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

			Three Months Ended September 30,												Nine Months Ended September 30,
			2022						2021						2022						2021
Net earnings			$	286,026					$	263,756					$	801,797					$	761,033
Basic earnings per common share:
Net earnings			$	2.01					$	1.83					$	5.59					$	5.29
Weighted average shares outstanding			142,506,000						143,976,000						143,469,000						143,895,000
Diluted earnings per common share:
Net earnings			$	2.00					$	1.81					$	5.55					$	5.24
Weighted average shares outstanding			143,257,000						145,440,000						144,413,000						145,220,000

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

			Three Months Ended September 30,												Nine Months Ended September 30,
			2022						2021						2022						2021
Weighted average shares outstanding - Basic			142,506,000						143,976,000						143,469,000						143,895,000
Dilutive effect of assumed exercise of SARs and vesting of performance shares and RSUs			751,000						1,464,000						944,000						1,325,000
Weighted average shares outstanding - Diluted			143,257,000						145,440,000						144,413,000						145,220,000

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

The weighted average number of anti-dilutive potential common shares excluded from the calculation above were approximately 19,000 and 1,000 for the three months ended September 30, 2022 and 2021, respectively, and 28,000 and 57,000 for the nine months ended September 30, 2022 and 2021, respectively.

19. Recent Accounting Pronouncements

Recently Adopted Accounting Standard

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. The Company early adopted the guidance during the first quarter of 2022. Prior to adoption, the acquirer recognized such contract assets and contract liabilities at fair value on the acquisition date. The adoption did not have a material impact on the Company's Condensed Consolidated Financial Statements.

Recently Issued Accounting Standard

In September 2022, the FASB issued ASU 2022-04 Liabilities-Supplier Finance Programs (Topic 405-50): Disclosure of Supplier Finance Program Obligations. The amendments in this update require a buyer in a supplier finance program to disclose information about the program's nature, activity during the period, changes from period to period, and potential magnitude. The guidance will become effective January 1, 2023 and early adoption is permitted. Management is evaluating the timing and impact of adopting this ASU on the Company's Condensed Consolidated Financial Statements.

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