10-Q 1 dov-20220930.htm 10-Q dov-20220930
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from to
Commission File Number: 1-4018
dov-20220930_g1.jpg
(Exact name of registrant as specified in its charter)
Delaware53-0257888
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
  
3005 Highland Parkway 
Downers Grove, Illinois
60515
(Address of principal executive offices)(Zip Code)
(630) 541-1540
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common StockDOVNew York Stock Exchange
1.250% Notes due 2026DOV 26New York Stock Exchange
0.750% Notes due 2027DOV 27New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes   No  o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes   No  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12-b-2 of the Exchange Act    .
Large Accelerated Filer
Accelerated Filer
Emerging Growth Company
Non-Accelerated Filer
Smaller Reporting Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No  
The number of shares outstanding of the Registrant’s common stock as of October 13, 2022 was 140,353,950.



Dover Corporation
Form 10-Q
Table of Contents
Page
 
 
 
 
  
 




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,
 2022202120222021
Revenue$2,158,291 $2,018,269 $6,368,907 $5,917,846 
Cost of goods and services1,385,541 1,263,690 4,071,680 3,669,547 
Gross profit772,750 754,579 2,297,227 2,248,299 
Selling, general and administrative expenses402,339 412,553 1,270,615 1,249,593 
Operating earnings370,411 342,026 1,026,612 998,706 
Interest expense29,789 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 taxes353,033 327,519 964,092 940,113 
Provision for income taxes67,007 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:
Basic142,506 143,976 143,469 143,895 
Diluted143,257 145,440 144,413 145,220 
 

See Notes to Condensed Consolidated Financial Statements


1

DOVER CORPORATION 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(In thousands)
(Unaudited)
 Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
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 cost327 2,353 1,032 7,080 
Amortization of prior service costs included in net periodic pension cost223 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 period1,503 (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

2

DOVER CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
 September 30, 2022December 31, 2021
ASSETS
Current assets:  
Cash and cash equivalents$306,002 $385,504 
Receivables, net1,497,062 1,347,514 
Inventories, net1,407,797 1,191,095 
Prepaid and other current assets166,184 137,596 
Total current assets3,377,045 3,061,709 
Property, plant and equipment, net958,894 957,310 
Goodwill4,532,333 4,558,822 
Intangible assets, net1,313,001 1,359,522 
Other assets and deferred charges471,068 466,264 
Total assets$10,652,341 $10,403,627 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:  
Short-term borrowings$788,860 $105,702 
Accounts payable1,143,253 1,073,568 
Accrued compensation and employee benefits232,247 302,978 
Deferred revenue246,181 227,549 
Accrued insurance105,095 101,448 
Other accrued expenses321,487 347,097 
Federal and other income taxes51,631 91,999 
Total current liabilities2,888,754 2,250,341 
Long-term debt2,842,662 3,018,714 
Deferred income taxes389,133 364,117 
Noncurrent income tax payable44,313 48,385 
Other liabilities496,053 532,542 
Stockholders' equity:  
Total stockholders' equity3,991,426 4,189,528 
Total liabilities and stockholders' equity$10,652,341 $10,403,627 


See Notes to Condensed Consolidated Financial Statements

















3


DOVER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except per share data)
(Unaudited)
 
Common stock $1 par value
Additional paid-in capitalRetained earningsAccumulated other comprehensive lossTreasury stockTotal 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 awards5 (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 capitalRetained earningsAccumulated other comprehensive lossTreasury stockTotal 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 awards25 (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





















4



DOVER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except per share data)
(Unaudited)
 
Common stock $1 par value
Additional paid-in capitalRetained earningsAccumulated other comprehensive lossTreasury stockTotal 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 awards149 (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 capitalRetained earningsAccumulated other comprehensive lossTreasury stockTotal 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 awards414 (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





5

DOVER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 Nine Months Ended September 30,
 20222021
Operating Activities:  
Net earnings$801,797 $761,033 
Adjustments to reconcile net earnings to cash from operating activities:
Depreciation and amortization230,808 218,236 
Stock-based compensation expense24,657 25,053 
Reclassification of foreign currency translation losses to earnings5,915  
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 payable121,513 199,877 
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 activities467,081 788,586 
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 equipment4,215 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, net682,928  
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 period385,504 513,075 
Cash and cash equivalents at end of period$306,002 $739,144 


See Notes to Condensed Consolidated Financial Statements
6

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, 2022December 31, 2021December 31, 2020
Contract assets14,660 11,440 15,020 
Contract liabilities - current246,181 227,549 184,845 
Contract liabilities - non-current20,872 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.

7

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 equipment2,733 
Goodwill151,701 
Intangible assets84,000 
Other assets and deferred charges1,159 
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 allocatedUseful life
(in years)
Goodwill - non-deductible$151,701 na
Customer intangibles64,000 15
Patents16,000 10
Trademarks4,000 15
$235,701 

8

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,
9

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 
Inventories72,551 
Other current assets2,958 
Property, plant and equipment50,027 
Goodwill281,195 
Intangible assets234,000 
Other assets and deferred charges884 
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 allocatedUseful life
(in years)
Goodwill - tax deductible$158,894 na
Goodwill - non-deductible122,301 na
Customer intangibles173,000 15
Patents40,000 12
Trademarks21,000 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.

10

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 equipment8,640 
Goodwill164,870 
Intangible assets127,300 
Other assets and deferred charges5,057 
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 allocatedUseful life
(in years)
Goodwill - non-deductible$164,870 na
Customer intangibles99,000 15
Unpatented technologies21,800 12
Trademarks6,500 16
$292,170 


4. Inventories, net
 September 30, 2022December 31, 2021
Raw materials$781,168 $671,195 
Work in progress311,819 271,659 
Finished goods446,098 377,800 
Subtotal1,539,085 1,320,654 
Less reserves(131,288)(129,559)
Total$1,407,797 $1,191,095 

5. Property, Plant and Equipment, net
 September 30, 2022December 31, 2021
Land$60,706 $63,656 
Buildings and improvements571,851 582,314 
Machinery, equipment and other1,848,889 1,816,473 
Property, plant and equipment, gross2,481,446 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.

11

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.
20222021
Beginning Balance, December 31 of the Prior Year$40,126 $40,474 
Provision for expected credit losses, net of recoveries2,791 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 ProductsClean Energy & FuelingImaging & IdentificationPumps & Process SolutionsClimate & Sustainability TechnologiesTotal
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.

12

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, 2022December 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 
Trademarks257,029 125,754 131,275 263,367 116,633 146,734 
Patents215,500 141,621 73,879 205,910 140,327 65,583 
Unpatented technologies243,792 129,646 114,146 221,239 123,464 97,775 
Distributor relationships74,812 53,594 21,218 84,204 55,260 28,944 
Drawings and manuals24,447 24,447  27,792 27,303 489 
Other22,503 18,017 4,486 22,347 18,775 3,572 
Total2,657,166 1,440,569 1,216,597 2,654,351 1,391,538 1,262,813 
Unamortized intangible assets: