EX-99.2 7 d585845dex992.htm EX-99.2 EX-99.2

Exhibit 99.2

Dover Corporation

Unaudited Pro Forma Consolidated Financial Information

On May 9, 2018 (the “Distribution Date”) at 12:01 a.m. ET, Dover Corporation (“Dover”) completed the previously announced distribution (the “Distribution”) of 100% of the outstanding common stock of Apergy Corporation (“Apergy”), to Dover shareholders as of 5:00 p.m. ET on April 30, 2018 (the “Record Date”).

The following unaudited pro forma consolidated statements of earnings of Dover for the three months ended March 31, 2018 and for each of the years ended December 31, 2017, 2016, and 2015 give effect to the Distribution and related transactions as if they occurred on January 1, 2015. The following unaudited pro forma consolidated balance sheet of Dover as of March 31, 2018 gives effect to the Distribution and related transactions as if they occurred on March 31, 2018.

The statements are presented based on information currently available and are intended for informational purposes only and do not purport to represent what Dover’s results of operations and financial position actually would have been had the Distribution and related transactions occurred on the dates indicated, or to project Dover’s financial performance for any future period. Beginning with Dover’s quarterly report for second quarter of 2018, Apergy’s historical financial results for periods prior to the Distribution will be reflected in Dover’s consolidated financial statements within discontinued operations.

The information in the Apergy Separation column in the unaudited pro forma consolidated financial statements of earnings was derived from Dover’s unaudited interim condensed consolidated financial statements for the three months ended March 31, 2018 and Dover’s audited financial statements for the years ended December 31, 2017, 2016, and 2015. The information in the Apergy Separation column in the unaudited pro forma consolidated balance sheet was derived from Dover’s unaudited interim condensed consolidated financial statements as of March 31, 2018. Certain amounts have been reclassified to conform to Dover’s presentation.

The Pro Forma Adjustments column in the unaudited pro forma consolidated statements reflects pro forma adjustments which are described in the accompanying notes.

These unaudited pro forma consolidated financial statements should be read in conjunction with the related notes to these financial statements and with Dover’s historical consolidated financial statements and the related notes included in Dover’s previous filings with the Securities and Exchange Commission (the “SEC”), specifically the Form 10-Q for the three months ended March 31, 2018, the Form 10-Ks for the years ended December 31, 2017, 2016 and 2015 and Apergy’s Form 10-12B filed with the SEC on March 26, 2018, as amended.


DOVER CORPORATION

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS

THREE MONTHS ENDED MARCH 31, 2018

(In thousands, except per share amounts)

 

     Dover
Historical
    Apergy
Separation
    Pro Forma
Adjustments
    Notes     Pro Forma
Dover
Continuing
Operations
 

Revenue

   $ 1,921,579     $ (283,922   $ 9       (A   $ 1,637,666  

Cost of goods and services

     1,212,638       (177,804     9       (A     1,034,843  
  

 

 

   

 

 

   

 

 

     

 

 

 

Gross profit

     708,941       (106,118     —           602,823  

Selling, general and administrative expenses

     514,149       (71,599     (7,527     (B     435,023  
  

 

 

   

 

 

   

 

 

     

 

 

 

Operating earnings

     194,792       (34,519     7,527         167,800  

Interest expense

     35,807       (167     —           35,640  

Interest income

     (2,058     1       —           (2,057

Other expense (income), net

     286       (2,616     2,294       (C     (36
  

 

 

   

 

 

   

 

 

     

 

 

 

Earnings before provision for income taxes

     160,757       (31,737     5,233         134,253  

Provision for income taxes

     29,322       (7,039     2,558       (D     24,841  
  

 

 

   

 

 

   

 

 

     

 

 

 

Net earnings from continuing operations

   $ 131,435     $ (24,698   $ 2,675       $ 109,412  
  

 

 

   

 

 

   

 

 

     

 

 

 

Basic earnings per common share:

          

Earnings per share from continuing operations

   $ 0.85           $ 0.71  

Weighted average shares outstanding

     154,520             154,520  

Diluted earnings per common share:

          

Earnings per share from continuing operations

   $ 0.84           $ 0.70  

Weighted average shares outstanding

     157,090             157,090  


DOVER CORPORATION

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS

YEAR ENDED DECEMBER 31, 2017

(In thousands, except per share amounts)

 

     Dover
Historical
    Apergy
Separation
    Pro Forma
Adjustments
    Notes     Pro Forma
Dover
Continuing
Operations
 

Revenue

   $ 7,830,436     $ (1,009,591   $ 22       (A   $ 6,820,867  

Cost of goods and services

     4,940,059       (648,243     22       (A     4,291,838  
  

 

 

   

 

 

   

 

 

     

 

 

 

Gross profit

     2,890,377       (361,348     —           2,529,029  

Selling, general and administrative expenses

     1,975,932       (262,398     41       (B     1,713,575  
  

 

 

   

 

 

   

 

 

     

 

 

 

Operating earnings

     914,445       (98,950     (41       815,454  

Interest expense

     145,208       (260     —           144,948  

Interest income

     (8,502     11       —           (8,491

Gain on sale of businesses

     (203,138     —         —           (203,138

Other expense, net

     7,034       (10,511     9,824       (C     6,347  
  

 

 

   

 

 

   

 

 

     

 

 

 

Earnings before provision for income taxes

     973,843       (88,190     (9,865       875,788  

Provision for income taxes

     162,178       22,448       (2,232     (D     182,394  
  

 

 

   

 

 

   

 

 

     

 

 

 

Net earnings from continuing operations

   $ 811,665     $ (110,638   $ (7,633     $ 693,394  
  

 

 

   

 

 

   

 

 

     

 

 

 

Basic earnings per common share:

          

Earnings per share from continuing operations

   $ 5.21           $ 4.45  

Weighted average shares outstanding

     155,685             155,685  

Diluted earnings per common share:

          

Earnings per share from continuing operations

   $ 5.15           $ 4.40  

Weighted average shares outstanding

     157,744             157,744  


DOVER CORPORATION

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS

YEAR ENDED DECEMBER 31, 2016

(In thousands, except per share amounts)

 

     Dover
Historical
    Apergy
Separation
    Pro Forma
Adjustments
    Notes     Pro Forma
Dover
Continuing
Operations
 

Revenue

   $ 6,794,342     $ (751,337   $ 211       (A   $ 6,043,216  

Cost of goods and services

     4,322,373       (510,842     4,125       (A     3,815,656  
  

 

 

   

 

 

   

 

 

     

 

 

 

Gross profit

     2,471,969       (240,495     (3,914       2,227,560  

Selling, general and administrative expenses

     1,757,523       (250,576     14,062       (B     1,521,009  
  

 

 

   

 

 

   

 

 

     

 

 

 

Operating earnings

     714,446       10,081       (17,976       706,551  

Interest expense

     136,401       (432     —           135,969  

Interest income

     (6,759     7       —           (6,752

Gain on sale of businesses

     (96,598     —         —           (96,598

Other income, net

     (7,930     (10,179     7,410       (C     (10,699
  

 

 

   

 

 

   

 

 

     

 

 

 

Earnings before provision for income taxes

     689,332       20,685       (25,386       684,631  

Provision for income taxes

     180,440       8,043       (5,967     (D     182,516  
  

 

 

   

 

 

   

 

 

     

 

 

 

Net earnings from continuing operations

   $ 508,892     $ 12,642     $ (19,419     $ 502,115  
  

 

 

   

 

 

   

 

 

     

 

 

 

Basic earnings per common share:

          

Earnings per share from continuing operations

   $ 3.28           $ 3.23  

Weighted average shares outstanding

     155,231             155,231  

Diluted earnings per common share:

          

Earnings per share from continuing operations

   $ 3.25           $ 3.21  

Weighted average shares outstanding

     156,636             156,636  


DOVER CORPORATION

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS

YEAR ENDED DECEMBER 31, 2015

(In thousands, except per share amounts)

 

     Dover
Historical
    Apergy
Separation
    Pro Forma
Adjustments
    Notes     Pro Forma
Dover
Continuing
Operations
 

Revenue

   $ 6,956,311     $ (1,076,680   $ 211       (A   $ 5,879,842  

Cost of goods and services

     4,388,167       (693,702     3,645       (A     3,698,110  
  

 

 

   

 

 

   

 

 

     

 

 

 

Gross profit

     2,568,144       (382,978     (3,434       2,181,732  

Selling, general and administrative expenses

     1,647,382       (294,062     16,746       (B     1,370,066  
  

 

 

   

 

 

   

 

 

     

 

 

 

Operating earnings

     920,762       (88,916     (20,180       811,666  

Interest expense

     131,676       (510     —           131,166  

Interest income

     (4,419     7       —           (4,412

Other income, net

     (7,105     (12,584     10,347       (C     (9,342
  

 

 

   

 

 

   

 

 

     

 

 

 

Earnings before provision for income taxes and discontinued operations

     800,610       (75,829     (30,527       694,254  

Provision for income taxes

     204,729       (24,131     (11,567     (D     169,031  
  

 

 

   

 

 

   

 

 

     

 

 

 

Net earnings from continuing operations

   $ 595,881     $ (51,698   $ (18,960     $ 525,223  
  

 

 

   

 

 

   

 

 

     

 

 

 

Basic earnings per common share:

          

Earnings per share from continuing operations

   $ 3.78           $ 3.33  

Weighted average shares outstanding

     157,619             157,619  

Diluted earnings per common share:

          

Earnings per share from continuing operations

   $ 3.74           $ 3.30  

Weighted average shares outstanding

     159,172             159,172  


DOVER CORPORATION

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET

AS OF MARCH 31, 2018

(In thousands, except share and per share amounts)

 

     Dover
Historical
     Apergy
Separation
    Pro Forma
Adjustments
    Notes      Pro Forma
Dover
Continuing
Operations
 
Assets  

Current assets:

            

Cash and cash equivalents

   $ 367,222      $ (17,122   $ 696,809       (E)      $ 1,046,909  

Receivables, net

     1,414,941        (227,434     19,779       (F)        1,207,286  

Inventories, net

     972,893        (210,941     —            761,952  

Prepaid and other current assets

     196,943        (16,494     53,484       (G)        233,933  
  

 

 

    

 

 

   

 

 

      

 

 

 

Total current assets

     2,951,999        (471,991     770,072          3,250,080  
  

 

 

    

 

 

   

 

 

      

 

 

 

Property, plant and equipment, net

     1,030,645        (220,723     —            809,922  

Goodwill

     4,682,939        (910,402     9,537       (H)        3,782,074  

Intangible assets, net

     1,609,728        (324,776     10,978       (I)        1,295,930  

Other assets and deferred charges

     267,729        (3,584     673       (J)(G)        264,818  
  

 

 

    

 

 

   

 

 

      

 

 

 

Total assets

   $ 10,543,040      $ (1,931,476   $ 791,260        $ 9,402,824  
  

 

 

    

 

 

   

 

 

      

 

 

 
Liabilities and Stockholders’ Equity     

Current liabilities:

            

Notes payable and current maturities of long-term debt

   $ 426,251      $ —       $ —          $ 426,251  

Accounts payable

     997,704        (108,045     1,343       (F)        891,002  

Accrued compensation and employee benefits

     201,436        (24,162     —            177,274  

Accrued insurance

     103,580        (4,121     —            99,459  

Other accrued expenses

     326,662        (22,649     33,039       (K)        337,052  

Federal and other income taxes

     24,955        —         (6,408     (G)        18,547  
  

 

 

    

 

 

   

 

 

      

 

 

 

Total current liabilities

     2,080,588        (158,977     27,974          1,949,585  
  

 

 

    

 

 

   

 

 

      

 

 

 

Long-term debt

     3,032,003        —         —            3,032,003  

Deferred income taxes

     438,016        (92,916     941       (G)        346,041  

Noncurrent income tax payable

     98,954        —         —            98,954  

Other liabilities

     447,857        (16,771     (8,252     (J)        422,834  

Stockholders’ equity:

            

Total stockholders’ equity

     4,445,622        (1,662,812     770,597       (L)        3,553,407  
  

 

 

    

 

 

   

 

 

      

 

 

 

Total liabilities and stockholders’ equity

   $ 10,543,040      $ (1,931,476   $ 791,260        $ 9,402,824  
  

 

 

    

 

 

   

 

 

      

 

 

 


DOVER CORPORATION

Notes to Unaudited Pro Forma Consolidated Financial Statements

 

(A) Represents sales transactions, and related costs of goods and services, between Dover and Apergy that were previously eliminated in consolidation. The pro forma adjustments to cost of sales for the years ended December 31, 2016 and 2015 also include the impact of removing certain amounts that were included in the Apergy stand-alone historical combined financial statements but were not included in Dover’s historical consolidated financial statements.

 

(B) Represents adjustments to include corporate overhead costs that were previously allocated to Apergy each period that will remain with Dover continuing operations. Also represents adjustments to remove one-time spin costs incurred by Dover and reflected in its historical results for the three months ended March 31, 2018 and the year ended December 31, 2017 as they are not expected to have an ongoing impact to Dover’s continuing operations. Dover expects to incur and pay total one-time costs associated with the separation from Apergy, including legal and advisory costs, of approximately $60 million.

 

(C) Represents an adjustment primarily to add back intercompany royalty expense included in Apergy’s stand-alone historical combined financial statements. This royalty expense was eliminated in Dover’s historical consolidated financial statements and will not have on ongoing impact to Dover’s continuing operations.

 

(D) Represents the pro forma tax adjustments.

 

(E) Represents the payment of $700.0 million from Apergy to Dover in connection with the Distribution from proceeds of third-party debt incurred by Apergy on the date of Distribution. Also represents adjustment to reflect Apergy’s expected cash balance on the date of Distribution and to reflect payments to be made by Dover immediately prior to the Distribution for certain tax liabilities as a result of the separation of Apergy from Dover.

 

(F) Represents adjustments for assets and liabilities directly attributable to Apergy, including the receivable from Apergy for certain taxes imposed on Dover arising out of the separation and related transactions that Apergy will be responsible for under the Tax Matters Agreement between Apergy and Dover.

 

(G) Represents the tax impact of the separation of Apergy from Dover.

 

(H) Represents an adjustment to add back a portion of the goodwill reflected in Apergy’s stand-alone historical combined financial statements that remains with Dover as a result of the relative fair value allocation triggered by the separation of Apergy.

 

(I) Represents the add back of Apergy’s net intangible assets related to intellectual property and patents which were recorded in Apergy’s stand-alone historical combined financial statements. These net intangible assets were not included in Dover’s historical consolidated financial statements and will not have on ongoing impact to Dover’s continuing operations.

 

(J) Represents assets and liabilities assumed by Apergy upon the separation related to certain retirement benefits.

 

(K) Represents an adjustment to reflect additional accruals related to the one-time costs associated with the separation from Apergy, including legal and advisory costs.

 

(L) Stockholders’ equity was adjusted for the pro forma adjustments specified in Notes (E), (F), (G), (H), (I), (J) and (K).