ChampionX (CHX) 8-K Unaudited Pro Forma Condensed Combined Financial Statements of Apergy

Exhibit 99.1

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS OF APERGY

On December 18, 2019, Ecolab Inc. (“Ecolab”), ChampionX Holding Inc., currently a wholly owned subsidiary of Ecolab (“ChampionX”), Apergy Corporation (“Apergy”) and Athena Merger Sub, Inc., a wholly owned subsidiary of Apergy (“Merger Sub”) entered into the Agreement and Plan of Merger and Reorganization (the “Merger Agreement”), and Ecolab, ChampionX and Apergy entered into the Separation and Distribution Agreement (the “Separation Agreement”). Pursuant to the transactions contemplated by the Merger Agreement and the Separation Agreement (together the “Transactions”), Apergy will combine with Ecolab’s upstream energy business (“ChampionX Business”) through a merger of Merger Sub with ChampionX. In connection with the Transactions, Ecolab will effect (1) the separation of the ChampionX Business from Ecolab’s other businesses, (2) the distribution, (a) through the exchange offer whereby Ecolab is offering to its stockholders the ability to exchange all or a portion of their shares of Ecolab common stock for shares of ChampionX common stock, (the “Exchange Offer”) which shares of ChampionX common stock will be immediately exchanged for Apergy common stock, and if the Exchange Offer is not fully subscribed, of the remaining shares of ChampionX common stock owned by Ecolab on a pro rata basis to Ecolab stockholders whose shares of Ecolab stock remain outstanding after the consummation of the Exchange Offer (“theclean-upspin-off”), or (b) if the Exchange Offer is terminated by Ecolab without the exchange of shares (but the conditions to consummation of the Transactions have otherwise been satisfied), the distribution of all shares of ChampionX common stock on a pro rata basis to Ecolab stockholders in aspin-off, and (3) immediately thereafter, the merger of Merger Sub with and into ChampionX, with ChampionX becoming a wholly owned subsidiary of Apergy (the “Merger”). Following the consummation of the Transactions, ChampionX equityholders will own, in the aggregate, approximately 62% of the issued and outstanding Apergy common stock on a fully diluted basis and Apergy equityholders will own, in the aggregate, approximately 38% of the issued and outstanding Apergy common stock on a fully diluted basis.

The following unaudited pro forma condensed combined financial statements present the combination of the historical financial information of Apergy and ChampionX adjusted to give effect to the Merger to be accounted for under the acquisition method of accounting in accordance with Accounting Standards Codification 805,Business Combinations (“ASC 805”), with Apergy being considered the accounting acquirer of ChampionX. Under the acquisition method of accounting, the purchase price is allocated to the ChampionX identifiable tangible and intangible assets acquired and liabilities assumed based on their respective fair market values with any excess purchase price allocated to goodwill. The pro forma purchase price allocation is preliminary and was based on an estimate of the fair market values of the tangible and intangible assets and liabilities related to ChampionX. Following the completion of the Transactions, Apergy expects to complete the purchase price allocation considering the appraisal of ChampionX’s assets and liabilities at the level of detail necessary to finalize the required purchase price allocation. The purchase price utilized in the allocation will be based on the closing price of Apergy’s common stock immediately prior to closing. The pro forma adjustments included herein give effect to pro forma events that are (i) directly attributable to the Transactions, (ii) factually supportable and (iii) with respect to the statements of income/(loss), expected to have a continuing impact on the combined results of operations of the combined company. The final purchase price allocation may be different than that reflected in the preliminary pro forma purchase price allocation presented herein, and this difference may be material.

The unaudited pro forma condensed combined financial statements have been prepared by Apergy using assumptions that Apergy believes provide a reasonable basis for presenting the significant effects of the Transactions and do not reflect the costs of any integration activities or benefits that may result from realization of future cost savings from operating efficiencies or synergies that may result from the Transactions.

The unaudited pro forma condensed combined balance sheet combines the historical condensed consolidated balance sheet of Apergy and the historical combined balance sheet of ChampionX, as adjusted for the Separation Agreement, as of March 31, 2020, giving effect to the Transactions as if they had occurred on March 31, 2020. The unaudited pro forma condensed combined statements of income/(loss) combine the historical condensed consolidated statement of loss of Apergy and the historical combined statement of loss of ChampionX for the three months ended March 31, 2020 and the historical consolidated statement of income of Apergy and the historical combined statement of income of ChampionX for the year ended December 31, 2019, giving effect to the Transactions as if they had occurred on January 1, 2019. The unaudited pro forma condensed combined financial statements should be read in conjunction with:

• the accompanying notes to the unaudited pro forma condensed combined financial statements;

• the unaudited condensed consolidated financial statements of Apergy as of and for the three months ended March 31, 2020 and related notes, which are included in Apergy’s Quarterly Report on Form10-Q for the quarter ended March 31, 2020; and

• the audited consolidated financial statements of Apergy as of and for the year ended December 31, 2019 and related notes, which are included in Apergy’s Annual Report on Form10-K for the year ended December 31, 2019; and

• the unaudited interim combined financial statements of ChampionX as of and for the three months ended March 31, 2020 and related notes, which were attached as an exhibit to Ecolab’s Current Report on Form8-K furnished on May 18, 2020; and

• the audited combined financial statements of ChampionX as of and for the year ended December 31, 2019 and related notes, which are included in Apergy’s Registration Statement on FormS-4 (FileNo. 333-236379), as amended and supplemented, which was declared effective by the SEC on April 30, 2020.

The unaudited pro forma condensed combined financial statements do not purport to represent what the actual consolidated results of operations or financial position of the combined company would have been had the Transactions occurred on the dates assumed, nor are they necessarily indicative of future consolidated results of operations or financial position of the combined company on a standalone basis.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF MARCH 31, 2020

	Historical Apergy			Pro Forma ChampionX Adjusted (Note 3)			Pro Forma Merger Adjustments (Note 5)				Pro Forma Combined
Assets
Cash and cash equivalents	$	53,636		$	45,000		$	—			$	98,636
Receivables, net of allowances		218,903			479,228			—				698,131
Inventories, net		206,948			408,496			11,504		5A		626,948
Prepaid expenses and other current assets		25,016			49,977			—				74,993
Total current assets		504,503			982,701			11,504				1,498,708
Property, plant and equipment, net		235,114			741,699			(61,500	)	5B		915,313
Goodwill		291,718			1,516,732			(1,414,242	)	5C		394,208
Intangible assets, net		183,926			715,691			(455,691	)	5D		443,926
Othernon-current assets		29,981			172,520			—				202,501
Total assets	$	1,245,242		$	4,129,343		$	(1,919,929	)		$	3,454,656
Liabilities and Equity
Accounts payable		118,791			224,034			—				342,825
Accrued compensation and employee benefits		30,770			32,973			—				63,743
Accrued expenses and other current liabilities		49,191			129,940			49,553		5E		228,684
Total current liabilities		198,752			386,947			49,553				635,252
Long-term debt		559,532			537,000			—				1,096,532
Deferred income taxes		55,059			198,748			(115,225	)	5F		138,582
Other long-term liabilities		39,605			97,483			—				137,088
Total liabilities		852,948			1,220,178			(65,672	)			2,007,454
Stockholders’ equity:
Common stock		775			—			1,276		5G		2,051
Capital in excess of par value of common stock		971,235			—			1,102,481		5G		2,073,716
Retained earnings		(528,253	)		—			(49,553	)	5H		(577,806	)
Net parent investment		—			3,271,577			(3,271,577	)	5G		—
Accumulated other comprehensive loss		(54,990	)		(363,116	)		363,116		5G		(54,990	)
Total stockholders’ equity		388,767			2,908,461			(1,854,257	)			1,442,971
Noncontrolling interest		3,527			704			—				4,231
Total equity		392,294			2,909,165			(1,854,257	)			1,447,202
Total liabilities and equity	$	1,245,242		$	4,129,343		$	(1,919,929	)		$	3,454,656

See accompanying notes to the unaudited pro forma condensed combined financial statements.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME/(LOSS)

FOR THE THREE MONTHS ENDED MARCH 31, 2020

(in thousands, except per share data)	Historical Apergy			Pro Forma ChampionX Adjusted (Note 3)			Pro Forma Merger Adjustments (Note 5)				Pro Forma Combined
Product revenue	$	230,882		$	505,100		$	—			$	735,982
Other revenue		30,552			54,160			—				84,712
Total revenues		261,434			559,260			—				820,694
Cost of goods and services		179,095			426,647			(1,608	)	5B		580,956
								(23,178	)	5I
Gross profit		82,339			132,613			24,786				239,738
Selling, general and administrative expense		78,143			95,434			(11,124	)	5J		162,453
Goodwill impairment		616,271			147,800			—				764,071
Long-lived asset impairment		40,980			—			—				40,980
Interest expense, net		9,039			4,125			—				13,164
Special charges, net		—			5,596			—				5,596
Other income, net		(1,633	)		(3,291	)		—				(4,924	)
Income/(loss) before income taxes		(660,461	)		(117,051	)		35,910				(741,602	)
Provision for (benefit from) income taxes		(27,006	)		10,369			8,182		5K		(8,455	)
Net income/(loss)		(633,455	)		(127,420	)		27,728				(733,147	)
Net income attributable to noncontrolling interests		273			2,454			—				2,727
Net income/(loss) attributable to stockholders	$	(633,728	)	$	(129,874	)	$	27,728			$	(735,874	)
Loss per share attributable to stockholders:
Basic	$	(8.18	)		N/A			N/A			$	(3.59	)
Diluted	$	(8.18	)		N/A			N/A			$	(3.59	)
Weighted-average shares outstanding:
Basic		77,477			N/A			127,602		5L		205,079
Diluted		77,477			N/A			127,602		5L		205,079

See accompanying notes to the unaudited pro forma condensed combined financial statements.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

FOR THE YEAR ENDED DECEMBER 31, 2019

(in thousands, except per share data)	Historical Apergy		Pro Forma ChampionX Adjusted (Note 3)			Pro Forma Merger Adjustments (Note 5)				Pro Forma Combined
Product revenue	$	1,000,630	$	2,096,636		$	—			$	3,097,266
Other revenue		130,621		228,467			—				359,088
Total revenue		1,131,251		2,325,103			—				3,456,354
Cost of goods and services		754,147		1,787,761			(6,433	)	5B		2,441,609
							(93,866	)	5I
Gross profit		377,104		537,342			100,299				1,014,745
Selling, general and administrative expense		276,014		388,640			(9,323	)	5J		655,331
Interest expense, net		39,301		16,600			—				55,901
Special (gains) and charges, net		—		(3,923	)		—				(3,923	)
Other (income) expense, net		2,603		(15,950	)		—				(13,347	)
Income before income taxes		59,186		151,975			109,622				320,783
Provision for income taxes		6,226		27,871			24,978		5K		59,075
Net income		52,960		124,104			84,644				261,708
Net income attributable to noncontrolling interest		796		7,420			—				8,216
Net income attributable to stockholders	$	52,164	$	116,684			84,644			$	253,492
Earnings per share attributable to stockholders:
Basic	$	0.67		N/A			N/A			$	1.24
Diluted	$	0.67		N/A			N/A			$	1.24
Weighted-average shares outstanding:
Basic		77,427		N/A			127,602		5L		205,029
Diluted		77,624		N/A			127,602		5L		205,226

See accompanying notes to the unaudited pro forma condensed combined financial statements.

NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS OF APERGY

NOTE 1—DESCRIPTION OF THE TRANSACTIONS

On December 18, 2019, Ecolab, ChampionX, Apergy and Merger Sub entered into the Merger Agreement, and Ecolab, ChampionX and Apergy entered into the Separation Agreement, pursuant to which Apergy will combine with Ecolab’s ChampionX Business. In connection with the Transactions, Ecolab will effect (1) the separation of the ChampionX Business from Ecolab’s other businesses, (2) the distribution, through (a) the Exchange Offer, and if the Exchange Offer is not fully subscribed, theclean-upspin-off, or (b) if the Exchange Offer is terminated by Ecolab without the exchange of shares (but the conditions to consummation of the Transactions have otherwise been satisfied), the distribution of all shares of ChampionX common stock on a pro rata basis to Ecolab stockholders in aspin-off, and (3) immediately thereafter, the merger of Merger Sub with and into ChampionX, with ChampionX becoming a wholly owned subsidiary of Apergy. Following the consummation of the Transactions, ChampionX equityholders will own, in the aggregate, approximately 62% of the issued and outstanding Apergy common stock on a fully diluted basis and the Apergy equityholders will own, in the aggregate, approximately 38% of the issued and outstanding Apergy common stock on a fully diluted basis.

Acquisition-related transaction costs, such as investment banker, advisory, legal, valuation and other professional fees are not included as a component of consideration transferred but are expensed as incurred. During the three months ended March 31, 2020 and the year ended December 31, 2019, transaction costs incurred by Apergy were $11.1 million and $9.3 million, respectively. Additionally, the unaudited pro forma condensed combined balance sheet reflects a total of approximately $49.6 million of anticipated acquisition-related transaction costs to be incurred by Apergy, as an increase of accrued expenses and other liabilities with a corresponding decrease in retained earnings. The unaudited pro forma condensed combined balance sheet does not include an adjustment for ChampionX’s anticipated separation related expenses as these are incurred and paid by Ecolab. No tax effect was recorded for these costs as their deductibility has not been assessed. These costs are not presented in the unaudited pro forma condensed combined statements of operations because they will not have a continuing impact on the consolidated results of Apergy.

NOTE 2—BASIS OF PRESENTATION

The accompanying unaudited pro forma condensed combined financial statements of Apergy were prepared in accordance with Article 11 of RegulationS-X and present the pro forma statements of income/(loss) and pro forma balance sheet of the combined company based on the historical financial statements of Apergy and ChampionX, after giving effect to the Transactions and other transaction-related adjustments. The historical financial statements of Apergy and ChampionX have been adjusted in the accompanying pro forma financial statements to give effect to pro forma events that are (i) directly attributable to the Transactions, (ii) factually supportable and (iii) with respect to the statements of income/(loss), expected to have a continuing impact on the combined results of operations of the combined company.

The unaudited pro forma condensed combined balance sheet combines the historical consolidated balance sheet of Apergy and the historical combined balance sheet of ChampionX, as adjusted for the Separation Agreement, as of March 31, 2020, giving effect to the Transactions as if they had occurred on March 31, 2020.

The unaudited pro forma condensed combined statements of income/(loss) combine the historical consolidated statements of loss of Apergy and the historical combined statements of loss of ChampionX for the three months ended March 31, 2020, and the historical consolidated statements of income of Apergy and the historical combined statements of income of ChampionX for the year ended December 31, 2019, giving effect to the Transactions as if they had occurred at January 1, 2019.

The Merger will be accounted for as a business combination under ASC 805, with Apergy treated as the “acquirer” and ChampionX treated as the “acquired” company for accounting purposes.

NOTE 3—PRO FORMA CHAMPIONX ADJUSTMENTS

The following tables detail the historical combined financial statements of ChampionX, the pro forma adjustments related to the Separation Agreement, and reclassifications to conform to Apergy’s financial statement presentation.

UNAUDITED PRO FORMA CHAMPIONX ADJUSTED BALANCE SHEET

AS OF MARCH 31, 2020

(in thousands)	Historical ChampionX			Transferred and Terminated Businesses				Other Transaction Adjustments				Pro Forma ChampionX Adjusted
Assets
Cash and cash equivalents	$	109,711		$	—			$	(64,711	)	B	$	45,000
Receivables, net of allowances		479,228			—				—				479,228
Inventories, net		408,496			—				—				408,496
Prepaid expenses and other current assets		55,302			(5,325	)	A		—				49,977
Total current assets		1,052,737			(5,325	)			(64,711	)			982,701
Property, plant and equipment, net		741,699			—				—				741,699
Goodwill		1,516,732			—				—				1,516,732
Intangible assets, net		715,691			—				—				715,691
Othernon-current assets		172,520			—				—				172,520
Total assets	$	4,199,379		$	—			$	(64,711	)		$	4,129,343
Liabilities and Equity
Accounts payable		224,034			—				—				224,034
Accrued compensation and employee benefits		32,973			—				—				32,973
Accrued expenses and other current liabilities		129,940			—				—				129,940
Total current liabilities		386,947			—				—				386,947
Long-term debt		467			—				536,533		C		537,000
Deferred income taxes		198,748			—				—				198,748
Other long-term liabilities		97,483			—				—				97,483
Total liabilities		683,645			—				536,533				1,220,178
Stockholders’ equity:
Common stock		—			—				—				—
Capital in excess of par value of common stock		—			—				—				—
Retained earnings		—			—				—				—
Net Parent investment		3,878,146			(5,325	)	A		(601,244	)	D		3,271,577
Accumulated other comprehensive loss		(363,116	)		—				—				(363,116	)
Total stockholders’ equity		3,515,030			(5,325	)			(601,244	)			2,908,461
Noncontrolling interest		704			—				—				704
Total equity		3,515,734			(5,325	)			(601,244	)			2,909,165
Total liabilities and equity	$	4,199,379		$	(5,325	)		$	(64,711	)		$	4,129,343

UNAUDITED PRO FORMA CHAMPIONX ADJUSTED STATEMENT OF INCOME/(LOSS)

FOR THE THREE MONTHS ENDED MARCH 31, 2020

(in thousands)	Historical ChampionX			Transferred and Terminated Businesses				Other Transaction Adjustments				Pro Forma ChampionX			Reclassification Adjustments (Note 4)				Pro Forma ChampionX Adjusted
Product revenue	$	504,313		$	787		A	$	—			$	505,100		$	—			$	505,100
Other revenue		54,748			(588	)	A		—				54,160			—				54,160
Total revenues		559,061			199				—				559,260			—				559,260
Cost of goods and services		398,381			279		A		—				398,660			27,987		G		426,647
Gross profit		160,680			(80	)			—				160,600			(27,987	)			132,613
Selling, general and administrative expense		123,044			(123	)	A		—				122,921			(27,487	)	H		95,434
Goodwill impairment		—			—				—				—			147,800		I		147,800
Long-lived asset impairment		—			—				—				—			—				—
Interest (income) expense, net		(250	)		—				4,375		E		4,125			—				4,125
Special charges, net		153,896			—				—				153,896			(148,300	)	J		5,596
Other income, net		(3,291	)		—				—				(3,291	)		—				(3,291	)
Income/(loss) before income taxes		(112,719	)		43				(4,375	)			(117,051	)		—				(117,051	)
Provision for income taxes		11,370			(4	)	A		(997	)	F		10,369			—				10,369
Net income/(loss)		(124,089	)		47				(3,378	)			(127,420	)		—				(127,420	)
Net income attributable to noncontrolling interests		2,440			14		A		—				2,454			—				2,454
Net income/(loss) attributable to stockholders	$	(126,529	)	$	33			$	(3,378	)		$	(129,874	)	$	—			$	(129,874	)

UNAUDITED PRO FORMA CHAMPIONX ADJUSTED STATEMENT OF INCOME

FOR THE YEAR ENDED DECEMBER 31, 2019

(in thousands)	Historical ChampionX			Transferred and Terminated Business				Other Transaction Adjustments				Pro Forma ChampionX			Reclassification Adjustments (Note 4)				Pro Forma ChampionX Adjusted
Product revenue	$	2,096,717		$	(81	)	A	$	—			$	2,096,636		$	—			$	2,096,636
Other revenue		235,290			(6,823	)	A		—				228,467			—				228,467
Total revenue		2,332,007			(6,904	)			—				2,325,103			—				2,325,103
Cost of goods and services		1,682,941			(8,245	)	A		—				1,674,696			113,065		K		1,787,761
Gross profit		649,066			1,341				—				650,407			(113,065	)			537,342
Selling, general and administrative expense		487,081			(1,359	)	A		—				485,722			(97,082	)	L		388,640
Interest (income) expense, net		(900	)		—				17,500		E		16,600			—				16,600
Special (gains) and charges, net		6,559			5,501		A		—				12,060			(15,983	)	M		(3,923	)
Other (income) expense, net		(15,950	)		—				—				(15,950	)		—				(15,950	)
Income before income taxes		172,276			(2,801	)			(17,500	)			151,975			—				151,975
Provision for income taxes		31,181			678		A		(3,988	)	F		27,871			—				27,871
Net income		141,095			(3,479	)			(13,512	)			124,104			—				124,104
Net income attributable to noncontrolling interest		7,701			(281	)	A		—				7,420			—				7,420
																			��
Net income attributable to stockholders	$	133,394		$	(3,198	)		$	(13,512	)		$	116,684		$	—			$	116,684

Transferred and Terminated Businesses

(A) In contemplation of the Transactions, certain of Ecolab’s businesses will be transferred to ChampionX and certain ChampionX businesses will be transferred to Ecolab. In addition, in connection with the Transactions, a joint venture (“JV”) in Russia was terminated during the three months ended March 31, 2020. These adjustments reflect the transfers and JV termination.

Other Transaction Adjustments

(B) Represents the distribution of excess cash to Ecolab based on the terms of the Separation Agreement. ChampionX is expected to have a cash balance of $45 million upon Separation.

(C) Represents the issuance of new debt by ChampionX as part of the Separation Agreement with an estimated average annual interest rate of 3.26%, based on LIBOR plus 2.5%. The interest rate under the ChampionX commitment letter is subject to change, and the actual terms of the ChampionX credit agreement, including the interest rate thereunder, will not be determined until the execution thereof and the issuance of the new debt thereunder.

(D) Represents adjustments to equity as a result of Other Transaction Adjustments, as discussed above.

(E) Represents the interest expense on the issuance of new debt by ChampionX. A 0.125% change in the assumed interest rate of the new debt would increase or decrease the interest expense by $0.2 million and $0.7 million for the three months ended March 31, 2020 and the year ended December 31, 2019, respectively.

(F) Represents the income tax impact of the ChampionX Other Transaction Adjustments, using estimated blended statutory tax rates of the combined company, of approximately 22.8% for the three months ended March 31, 2020 and for the year ended December 31, 2019. The effective tax rate of the combined company could be significantly different from what is presented in these pro forma financial statements for a variety of reasons, including post-Merger activities.

NOTE 4—RECLASSIFICATION ADJUSTMENTS

Certain items within the ChampionX historical combined statements of income/(loss) have been reclassified to conform to Apergy’s financial statement presentation.

The unaudited pro forma ChampionX adjusted statement of loss for the three months ended March 31, 2020 includes the following adjustments:

(G) Reflects the reclassification of amortization expense related to the amortization of intangible assets from Selling, general and administrative expense to Cost of goods and services ($28.0 million).

(H) Reflects the reclassification of amortization expense related to the amortization of intangible assets from Selling, general and administrative expense to Cost of goods and services ($28.0 million), referred to in (G) above, partially offset by the reclassification of restructuring charges from Special (gains) and charges, net to Selling, general and administrative expense ($0.5 million).

(I) Reflects the reclassification of goodwill impairment from Special (gains) and charges, net to Goodwill impairment.

(J) Reflects the reclassification of goodwill impairment from Special (gains) and charges, net to Goodwill impairment ($147.8 million), referred to in (I) above, and the reclassification of restructuring charges from Special (gains) and charges, net to Selling, general and administrative expense, referred to in (H) above ($0.5 million).

The unaudited pro forma ChampionX adjusted statement of income for the year ended December 31, 2019 includes the following adjustments:

(K) Reflects the reclassification of amortization expense related to the amortization of intangible assets from Selling, general and administrative expense to Cost of goods and services ($113.3 million), partially offset with the reclassification of environmental expenses from Cost of goods and services to Selling, general and administrative expense ($0.2 million).

(L) Reflects the reclassification of amortization expense related to the amortization of intangible assets from Selling, general and administrative expense to Cost of goods and services ($113.3 million), referred to in (K) above, partially offset by both the reclassification of restructuring charges from Special (gains) and charges, net to Selling, general and administrative expenses ($16.0 million) and the reclassification of environmental expenses from Cost of goods and services to Selling, general and administrative expense ($0.2 million), referred to in (K) above.

(M) Reflects the reclassification of restructuring charges from Special (gains) and charges, net to Selling, general and administrative expense, referred to in (L) above.

NOTE 5—PRELIMINARY PURCHASE ACCOUNTING ADJUSTMENTS

The purchase price will be computed using the value of Apergy’s share price as of closing. Therefore, the estimated purchase price will fluctuate with the market price of Apergy’s common stock until closing. As a result, the final purchase price could differ significantly from the current estimate, which could materially impact the purchase price allocation. Any increase or decrease in the fair values of the net assets as compared with the unaudited pro forma condensed combined financial statements may change the amount of the total purchase consideration allocation to assets and liabilities and may impact the combined company’s statements of income/(loss) due to adjustments in depreciation and/or amortization of the adjusted assets or liabilities.

The pro forma purchase price allocation is preliminary and was based on an estimate of the fair market values of the tangible and intangible assets acquired and liabilities assumed related to ChampionX. Following the completion of the Transactions, additional information will be made available to Apergy to allow for the completion of the purchase price allocation considering the appraisal of ChampionX’s assets and liabilities at the level of detail necessary to finalize the required purchase price allocation.

Market capitalizations across the oil and gas industry have declined significantly since December 2019 due to the decline in commodity prices and the related imbalance of supply and demand due to the coronavirus(COVID-19). This imbalance has led to significantly depressed market capitalizations across the oil and gas industry. Continued decline in commodity prices could negatively affect the estimated Merger consideration transferred to the point where the Merger consideration no longer exceeds the fair value assigned to the assets acquired and liabilities assumed, resulting in a bargain purchase gain.

Apergy’s stock price declined 72% from $30.67 per share on December 18, 2019, the last trading day prior to announcement of the Merger, to $8.65 per share on May 14, 2020.

The following table summarizes the components of the estimated Merger consideration reflected in the unaudited pro forma condensed combined financial statements (in thousands, except per share amount):

Total Apergy shares issued as Merger consideration		127,602
Apergy share price on May 14, 2020	$	8.65
Total Merger consideration transferred by Apergy	$	1,103,757

Apergy assessed multiple scenarios considering the current market volatility. Continued market volatility would impact the amount of the goodwill or bargain purchase gain, as the value of the Merger consideration and the fair value of the net identifiable assets acquired will continue to fluctuate. Based upon current valuation assumptions, a 35% increase in Apergy’s share price will result in a total consideration of $1,490.1 million and corresponding goodwill of approximately $488.8 million. Likewise, based on current valuation assumptions, a 35% decrease in Apergy’s share price will result in consideration of $717.4 million and a $283.8 million bargain purchase gain.

The preliminary estimated purchase price is allocated as follows (in thousands):

Total current assets	$	994,205
Property and equipment, net		680,199
Intangible assets		260,000
Other assets		172,520
Total assets acquired		2,106,924
Total current liabilities		386,947
Long-term debt, net of current maturities		537,000
Deferred tax liabilities		83,523
Other liabilities		97,483
Total liabilities assumed		1,104,953
Net identifiable assets acquired		1,001,971
Noncontrolling interests		(704	)
Goodwill		102,490
Total net assets to be acquired	$	1,103,757

(5A) Represents an adjustment of $11.5 million to the carrying value of ChampionX’s inventory from its recorded net book value to its preliminary estimated fair value of $420.0 million. The estimated fair valuestep-up is expected to be recognized to Cost of goods and services within one year of the acquisition, and as such there is no pro forma adjustment within the unaudited pro forma condensed combined statements of income/(loss).

(5B) The following table summarizes the estimated fair values of ChampionX’s identifiable fixed assets (in thousands) and their estimated useful lives.

	Carrying value		Preliminary fair value		Fair value adjustment			Estimated weighted average life (years)		Step-down depreciation expense for the year ended March 31, 2020			Step-down depreciation expense for the year ended December 31, 2019
Land	$	55,000	$	55,000	$	—			N/A	$	—		$	—
Machinery and equipment		305,000		290,000		(15,000	)		5		(750	)		(3,000	)
Buildings and leasehold improvements		287,000		248,500		(38,500	)		18.25		(527	)		(2,110	)
Merchandising and customer equipment		14,000		12,000		(2,000	)		5		(100	)		(400	)
Capitalized software		9,000		3,000		(6,000	)		6.5		(231	)		(923	)
Construction in progress		72,000		72,000		—			N/A		—			—
Total property, plant and equipment	$	742,000	$	680,500	$	(61,500	)			$	(1,608	)	$	(6,433	)

(5C) Represents a net decrease in goodwill of $1,414.2 million, as compared to the unaudited pro forma ChampionX adjusted balance sheet. Goodwill resulting from the Merger represents the excess of estimated Merger consideration over the preliminary fair value of the underlying tangible and identifiable intangible assets acquired and liabilities assumed. The estimated goodwill to be recognized is attributable primarily to expected synergies, expanded market opportunities and other benefits that Apergy believes will result from combining its operations with the operations of ChampionX. The goodwill created in the Merger is not expected to be deductible for tax purposes and is subject to material revision as the purchase price allocation is completed.

(5D) Represents the net preliminary fair value decrease of identifiable intangible assets recognized by Apergy attributable to the Merger.

The estimated intangible assets attributable to the Merger comprise the following (in thousands):

	Estimated weighted average life (years)		Preliminary fair value
Trademark/tradenames		11	$	45,000
Customer relationships		15		185,000
Technology (patented/unpatented)		10		30,000
Total			$	260,000

(5E) Adjustments to recognize estimated transaction-related costs to be incurred by Apergy as part of the Transactions.

(5F) Represents estimated adjustments to deferred tax assets and liabilities as a result of the Merger. The actual deferred tax assets and liabilities may differ materially based on changes resulting from finalizing the allocation of purchase price and valuing the assets acquired and liabilities assumed for the ChampionX Business, changes to the valuation allowance on the combined business, and tax basis step ups resulting from separation transactions which are not reasonably estimable for the purposes of these pro forma financial statements.

The estimate was determined by multiplying the increase or decrease in the fair value of the respective asset or liability over historical book value (excluding goodwill) by a blended statutory tax rate estimate of approximately 22.8%. This rate is subject to change when Apergy performs a complete tax analysis post-Transactions.

(5G) Represents adjustments to equity for the following (in thousands):

Adjustment to common stock for par value of consideration transferred	$	1,276
Adjustment to capital in excess of par value of common stock for consideration transferred		1,102,481
Adjustment to eliminate ChampionX net Parent investment		(3,271,577	)
Adjustment to eliminate ChampionX accumulated other comprehensive loss		363,116

(5H) Represents the estimated transaction-related costs of $49.6 million to be incurred by Apergy, as part of the Transactions.

(5I) Represents an adjustment for the removal of historical amortization expense offset by new amortization expense, on a straight-line basis, within Cost of goods and services based on the fair value of the definite-lived intangible assets and the respective assigned estimated useful life for the three months ended March 31, 2020 and the year ended December 31, 2019.

(in thousands)	Preliminary fair value		Estimated weighted average life (years)		For the three months ended March 31, 2020			For the year ended December 31, 2019
Trademark/tradenames	$	45,000		11	$	1,023		$	4,091
Customer relationships		185,000		15		3,083			12,333
Technology (patented/unpatented)		30,000		10		750			3,000
Total acquired intangible assets	$	260,000				4,856			19,424
Less: historical ChampionX amortization						28,034			113,290
Pro forma adjustments					$	(23,178	)	$	(93,866	)

(5J) Represents the removal of transaction-related costs of $11.1 million and $9.3 million incurred by Apergy during the three months ended March 31, 2020 and year ended December 31, 2019, respectively.

(5K) Represents an adjustment to record an income tax provision for the preliminary purchase accounting adjustments determined using blended statutory tax rate of 22.8%.

(5L) Represents an adjustment to the basic and diluted weighted average common shares outstanding to reflect the anticipated issuance of 127.6 million shares of Apergy to ChampionX equityholders.