8-K Tables-9-30-14



	Quarters Ended						Nine Months Ended
	September 30, 2014			September 30, 2013			September 30, 2014			September 30, 2013
Net sales	$	302.6		$	276.0		$	902.9		$	868.7
Cost of sales	196.4			183.9			592.1			573.2
Gross profit	106.2			92.1			310.8			295.5
Operating expenses:
Selling, general and administrative	77.4			71.4			239.8			219.6
Other	1.2			2.4			1.9			6.1
Total operating expenses	78.6			73.8			241.7			225.7
Operating income	27.6			18.3			69.1			69.8
Interest expense	(10.8		)	(11.3		)	(32.3		)	(33.7		)
Interest income	0.3			0.2			0.8			0.6
Other expense	(4.0		)	—			(10.7		)	(6.3		)
Income before income taxes	13.1			7.2			26.9			30.4
Income tax expense	(4.5		)	(1.6		)	(8.7		)	(8.2		)
Net income	$	8.6		$	5.6		18.2			$	22.2
Basic earnings per share	$	0.36		$	0.27		$	0.80		$	1.06
Average common shares outstanding (millions)	24.0			20.9			22.7			20.9
Diluted earnings per share	$	0.33		$	0.23		$	0.71		$	0.96
Average common shares outstanding (millions)	26.1			24.3			25.7			23.2



	2014			2013
Operating activities
Net income	$	18.2		$	22.2
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation	22.2			22.3
Amortization	20.8			20.4
Accretion of debt discount	3.9			5.6
Loss on exchange of debt	10.0			—
Deferred income taxes	(22.4		)	(5.8		)
Stock-based compensation	7.8			(1.2		)
Other non-cash adjustments	0.9			(2.0		)
Change in assets and liabilities, net of effects of acquisitions of businesses:
Accounts receivable, net	(27.2		)	(15.3		)
Inventories	(9.8		)	(5.8		)
Accounts payable	(2.8		)	(8.4		)
Other current assets and liabilities	10.4			11.9
Other non-current assets and liabilities	(41.9		)	(5.8		)
Net cash provided by (used in) operating activities	(9.9		)	38.1
Investing activities
Purchases of property, plant and equipment	(20.4		)	(21.9		)
Payments for capitalized internal-use software	(7.1		)	(6.4		)
Acquisitions, net of cash acquired	(4.3		)	(2.0		)
Other	0.1			0.3
Net cash used in investing activities	(31.7		)	(30.0		)
Financing activities
Net proceeds from short-term borrowings	1.9			10.8
Proceeds from debt	637.0			143.9
Repayments of debt	(399.0		)	(143.9		)
Debt issuance costs	(5.2		)	—
Repurchase of convertible debentures conversion option	(53.6		)	—
Other	(4.2		)	2.0
Net cash provided by financing activities	176.9			12.8
Effect of exchange rate changes on cash and cash equivalents	(1.3		)	0.3
Net increase in cash and cash equivalents	134.0			21.2
Cash and cash equivalents at beginning of period	64.4			53.9
Cash and cash equivalents at end of period	$	198.4		$	75.1
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	22.3		$	21.2
Income taxes	$	31.1		$	14.0



	September 30,			December 31,
	2014			2013
Current assets
Cash and cash equivalents	$	198.4		$	64.4
Accounts receivable	218.3			193.1
Inventories	158.2			149.1
Other current assets	61.1			50.1
Total current assets	636.0			456.7
Property, plant and equipment	180.3			187.5
Goodwill	217.8			220.2
Other intangible assets	185.8			200.1
Investment in GST	236.9			236.9
Other assets	125.9			96.9
Total assets	$	1,582.7		$	1,398.3
Current liabilities
Short-term borrowings from GST	$	24.1		$	22.0
Notes payable to GST	11.7			11.2
Current maturities of long-term debt	22.3			156.6
Accounts payable	84.3			86.8
Accrued expenses	134.6			140.8
Total current liabilities	277.0			417.4
Long-term debt	298.5			8.5
Notes payable to GST	259.3			248.1
Pension liability	9.1			47.4
Other liabilities	69.1			63.5
Total liabilities	913.0			784.9
Temporary equity	1.3			15.9
Shareholders' equity
Common stock	0.2			0.2
Additional paid-in capital	474.4			410.9
Retained earnings	191.5			173.3
Accumulated other comprehensive income	3.6			14.4
Common stock held in treasury, at cost	(1.3		)	(1.3		)
Total shareholders' equity	668.4			597.5
Total liabilities and equity	$	1,582.7		$	1,398.3



Reconciliation of Segment Profit to Net Income
	Quarters Ended						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
Segment profit	$	38.6		$	29.4		$	102.8		$	104.0
Corporate expenses	(10.1		)	(7.6		)	(30.9		)	(25.2		)
Interest expense, net	(10.5		)	(11.1		)	(31.5		)	(33.1		)
Other expense, net	(4.9		)	(3.5		)	(13.5		)	(15.3		)
Income before income taxes	13.1			7.2			26.9			30.4
Income tax expense	(4.5		)	(1.6		)	(8.7		)	(8.2		)
Net income	$	8.6		$	5.6		$	18.2		$	22.2

Segment profit is total segment revenue reduced by operating expenses and restructuring and other costs identifiable with the segment. Corporate expenses include general corporate administrative costs. Expenses not directly attributable to the segments, corporate expenses, net interest expense, gains/losses related to the sale of assets and income taxes are not included in the computation of segment profit. The accounting policies of the reportable segments are the same as those for the Company.



	Quarters Ended September 30,
	2014						2013
	$			Per share			$			Per share
Income before selected items	$	17.6		$	0.75		$	13.0		$	0.59
Adjustments (net of tax):
Restructuring costs	(0.3		)	(0.01		)	(0.8		)	(0.03		)
Loss on exchange of debt	(2.5		)	(0.10		)	—			—
Interest expense and royalties with GST	(4.9		)	(0.19		)	(5.1		)	(0.21		)
Other	(0.4		)	(0.02		)	(0.8		)	(0.03		)
Tax accrual adjustments	(0.9		)	(0.03		)	(0.7		)	(0.03		)
Impact of shares deliverable under outstanding convertible debenture hedge	N/A			(0.07		)	N/A			(0.06		)
Impact	(9.0		)	(0.42		)	(7.4		)	(0.36		)
Net income	$	8.6		$	0.33		$	5.6		$	0.23



	Nine Months Ended September 30,
	2014						2013
	$			Per share			$			Per share
Income before selected items	$	42.4		$	1.83		$	45.0		$	2.09
Adjustments (net of tax):
Restructuring costs	(0.7		)	(0.02		)	(2.6		)	(0.11		)
Loss on exchange of debt	(6.2		)	(0.24		)	—			—
Environmental reserve adjustment	(0.4		)	(0.02		)	(4.0		)	(0.17		)
Interest expense and royalties with GST	(14.6		)	(0.57		)	(14.8		)	(0.64		)
Other	(0.5		)	(0.02		)	(1.2		)	(0.05		)
Tax accrual adjustments	(1.8		)	(0.06		)	(0.2		)	(0.01		)
Impact of shares deliverable under outstanding convertible debenture hedge	N/A			(0.19		)	N/A			(0.15		)
Impact	(24.2		)	(1.12		)	(22.8		)	(1.13		)
Net income	$	18.2		$	0.71		$	22.2		$	0.96

Management of the Company believes that it would be helpful to the readers of the financial statements to understand the impact of certain selected items on the Company's reported net income and earnings per share, including items that may recur from time to time. This presentation enables readers to better compare EnPro Industries, Inc. to other diversified industrial manufacturing companies that do not incur the sporadic impact of restructuring activities or other selected items. Management acknowledges that there are many items that impact a company's reported results and this list is not intended to present all items that may have impacted these results.

The amounts above, which may be considered non-GAAP financial measures, are shown on an after-tax basis and have been calculated by applying the Company's tax rate to the pre-tax amount. The interest expense with GST is included in interest expense, and the restructuring costs, loss on exchange of debt, environmental reserve adjustment and other are included as part of other operating expense and other expense. Per share amounts were calculated by dividing by the weighted-average shares of diluted common stock outstanding during the periods. The impact of shares deliverable under outstanding convertible debenture hedge represents the per share effect of the call options purchased to reduce the potential dilution to our common shareholders from the conversion of our convertible debentures. For accounting purposes, the call options are excluded from the GAAP diluted earnings per share computation because they are antidilutive. They will mature and the corresponding value will be realized in October 2015.



	Quarters Ended						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
Earnings before interest, income taxes, depreciation,
amortization, and other selected items (adjusted EBITDA)*	$	43.0		$	36.0		$	114.5		$	120.6
Adjustments to arrive at earnings before interest, income taxes, depreciation and amortization (EBITDA):
Restructuring costs	(0.5		)	(1.3		)	(1.1		)	(4.2		)
Environmental reserve adjustment	—			—			(0.7		)	(6.3		)
Loss on debt exchange	(4.0		)	—			(10.0		)	—
Other	(0.8		)	(2.1		)	(1.3		)	(3.9		)
EBITDA	37.7			32.6			101.4			106.2
Adjustments to arrive at net income:
Interest expense, net	(10.5		)	(11.1		)	(31.5		)	(33.1		)
Income tax expense	(4.5		)	(1.6		)	(8.7		)	(8.2		)
Depreciation and amortization expense	(14.1		)	(14.3		)	(43.0		)	(42.7		)
Net income	$	8.6		$	5.6		$	18.2		$	22.2

The historical business operations of Garlock Sealing Technologies LLC (“GST LLC”) and The Anchor Packing Company (“Anchor”) resulted in a substantial volume of asbestos litigation in which plaintiffs alleged personal injury or death as a result of exposure to asbestos fibers. Those subsidiaries manufactured and/or sold industrial sealing products, predominately gaskets and packing, that contained encapsulated asbestos fibers. Anchor is an inactive and insolvent indirect subsidiary of Coltec Industries Inc (“Coltec”). EnPro’s subsidiaries’ exposure to asbestos litigation and their relationships with insurance carriers have been managed through another Coltec subsidiary, Garrison Litigation Management Group, Ltd. (“Garrison”). GST LLC, Anchor and Garrison are collectively referred to as “GST.”

On June 5, 2010 (the “Petition Date”), GST filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the Western District of North Carolina in Charlotte (the “Bankruptcy Court”). The filings were the initial step in an asbestos claims resolution process, which is ongoing. The filings did not include EnPro Industries, Inc., or any other EnPro Industries, Inc. operating subsidiary.

The financial results of GST and its subsidiaries are included in our consolidated results through June 4, 2010, the day prior to the Petition Date. However, U.S. generally accepted accounting principles require an entity that files for protection under the U.S. Bankruptcy Code, whether solvent or insolvent, whose financial statements were previously consolidated with those of its parent, as GST’s and its subsidiaries’ were with EnPro’s, generally must be prospectively deconsolidated from the parent and the investment accounted for using the cost method. Accordingly, the financial results of GST and its subsidiaries are not included in EnPro’s consolidated results after June 4, 2010.

On May 29, 2014, GST LLC filed an amended proposed plan of reorganization (the “Amended Plan”) with the Bankruptcy Court that provides $275 million in total funding for (a) present and future asbestos claims against GST that have not been resolved by settlement or verdict prior to the Petition Date, and (b) administrative and litigation costs. The $275 million is to be funded by GST ($245 million) and Coltec ($30 million), through two facilities-a settlement facility (which would receive $245 million) and a litigation facility (which would receive $30 million). Funds contained in the settlement facility and the litigation facility would provide the exclusive remedies for current and future GST asbestos claimants other than claimants whose claims had been resolved by settlement or verdict prior to the Petition Date and were not paid prior to the Petition Date in full. With respect to claims resolved by verdict, such payment will be made only to the extent the verdict becomes final. The amount of such claims resolved by verdict is $1.5 million. GST estimates the range of its aggregate liability for such unpaid settled asbestos claims to be from $3.1 million to $16.4 million. The Amended Plan incorporates the Bankruptcy Court’s determination in January 2014 that $125 million is sufficient to satisfy GST’s aggregate liability for present and future mesothelioma claims. Under the terms of the Amended Plan, EnPro will retain 100% of the equity interests of GST LLC.

If the Amended Plan is confirmed by the Bankruptcy Court and is consummated, GST will be re-consolidated with EnPro’s results for financial reporting purposes. The Amended Plan is subject to confirmation by the Bankruptcy Court and EnPro cannot assure you that GST will be able to obtain necessary Bankruptcy Court approval of the Amended Plan, including the settlement of asbestos claims and related releases of claims against us included therein, and that the Amended Plan will be consummated.

Confirmation and consummation of the Amended Plan are subject to a number of risks and uncertainties, including the actions and decisions of creditors and other third parties that have an interest in the bankruptcy proceedings, delays in the confirmation or effective date of the Amended Plan due to factors beyond GST's or EnPro’s control, which would result in greater costs and the impairment of value of GST, appeals and other challenges to the Amended Plan and risks and uncertainties affecting GST and Coltec's ability to fund anticipated contributions under the Amended Plan as a result of adverse changes in their results of operations, financial condition and capital resources, including as a result of economic factors beyond their control.

In light of the risks and uncertainties, including those noted above, the confirmation and consummation of the Amended Plan is not currently probable under Regulation S-X of the SEC and therefore, the reconsolidation of GST LLC with EnPro’s results for financial reporting purposes on the basis of confirmation and consummation of the Amended Plan is not currently probable. Accordingly, pro forma financial statements are not required by the SEC and the following pro forma condensed consolidated financial information may not include all information required to be included in pro forma financial statements prepared in accordance with Regulation S-X of the SEC. EnPro is providing the unaudited pro forma condensed consolidated financial information which assumes the confirmation and consummation of the Amended Plan for illustrative purposes only in light of specific requests for such pro forma information by investors.

The unaudited pro forma condensed consolidated financial information presented below has been prepared to illustrate the effects of the reconsolidation of GST and its subsidiaries with EnPro assuming the confirmation and consummation of the Amended Plan and is based upon the historical balance sheet of EnPro as of September 30, 2014, the estimated fair value of assets and liabilities of GST as of September 30, 2014 and the historical results of GST operations after consideration of the adjustments to the fair value of assets and liabilities. The unaudited pro forma condensed consolidated balance sheet as of September 30, 2014 gives effect to the reconsolidation as if it occurred on September 30, 2014. The unaudited pro forma condensed consolidated statements of operations for the quarters and nine months ended September 30, 2014 and 2013 give effect to the reconsolidation as if it had occurred on January 1, 2013.

Under generally accepted accounting principles, the reconsolidation of GST requires that the tangible and intangible assets and liabilities of GST be reflected at their estimated fair values. The preliminary fair value amounts used in the unaudited pro forma condensed consolidated financial information reflects management’s best estimates of fair value. Upon completion of detailed valuation studies and the final determination of fair value, EnPro may make additional adjustments to the fair value allocation, which may differ significantly from the valuations set forth in the unaudited pro forma condensed consolidated financial information.

The unaudited pro forma condensed consolidated statements of operations are based on estimates and assumptions, which have been made solely for the purposes of developing such pro forma information. The unaudited pro forma condensed consolidated statements of operations also include certain adjustments such as increased depreciation and amortization expense on tangible and intangible assets, increased interest expense on the debt incurred to complete the reconsolidation as well as the tax impacts related to these adjustments. The pro forma adjustments are based upon available information and certain assumptions that EnPro believes are reasonable.

The unaudited pro forma condensed consolidated financial information has been presented for information purposes only and is not necessarily indicative of what the consolidated company’s financial position or results of operations actually would have been had the reconsolidation been completed as of the dates indicated, nor is it necessarily indicative of the future operating results or financial position of the consolidated company. Therefore, the actual amounts recorded at the date the reconsolidation occurs may differ from the information presented herein.



													Pro Forma
							Pro Forma			Pro Forma			Adjustments
	EnPro			GST			Adjustments			Consolidated			Reference
Net sales	$	302.6		$	61.1		$	(14.8	)	$	348.9		(1)
Cost of sales	196.4			37.4			(14.6		)	219.2			(1), (2)
Gross profit	106.2			23.7			(0.2		)	129.7
Operating expenses:
Selling, general and administrative	77.4			12.5			3.0			92.9			(3)
Other	1.2			0.7			(0.7		)	1.2			(4)
Total operating expenses	78.6			13.2			2.3			94.1
Operating income	27.6			10.5			(2.5		)	35.6
Interest expense	(10.8		)	(0.1		)	7.7			(3.2		)	(5)
Interest income	0.3			7.7			(7.7		)	0.3			(5)
Other expense	(4.0		)	(4.4		)	4.4			(4.0		)	(4)
Income before income taxes	13.1			13.7			1.9			28.7
Income tax expense	(4.5		)	(4.8		)	(0.7		)	(10.0		)	(6)
Net income	$	8.6		$	8.9		1.2			$	18.7
Basic earnings per share	$	0.36		N/A			N/A			$	0.78
Average common shares outstanding (millions)	24.0									24.0
Diluted earnings per share	$	0.33		N/A			N/A			$	0.72
Average common shares outstanding (millions)	26.1									26.1



(1	)	Eliminate intercompany sales of $14.8 million.
(2	)	Reflects the increase in depreciation expense of $0.2 million due to adjusting property, plant and equipment to fair value. The total fair value adjustment to property, plant and equipment was $19.8 million of which $14.6 million related to depreciable buildings and improvements and machinery and equipment that have a net estimated remaining economic life of 14.1 years.
(3	)	Reflects the increase in amortization expense as a result of the estimated fair value adjustment due to the creation of the finite-lived intangible assets. The estimated useful life of the finite-lived intangible assets is 15 years.
(4	)	Eliminate asbestos-related expenses which would cease upon confirmation and consummation of the Amended Plan.
(5	)	Eliminate intercompany interest.
(6	)	For purposes of the consolidated pro forma financial information, the estimated effective tax rate of 36% has been used for all periods presented to calculate the tax effect associated with the pro forma adjustments.



													Pro Forma
							Pro Forma			Pro Forma			Adjustments
	EnPro			GST			Adjustments			Consolidated			Reference
Net sales	$	276.0		$	59.0		$	(11.7	)	$	323.3		(1)
Cost of sales	183.9			33.3			(11.5		)	205.7			(1), (2)
Gross profit	92.1			25.7			(0.2		)	117.6
Operating expenses:
Selling, general and administrative	71.4			9.9			3.0			84.3			(3)
Other	2.4			0.6			(1.7		)	1.3			(4)
Total operating expenses	73.8			10.5			1.3			85.6
Operating income	18.3			15.2			(1.5		)	32.0
Interest expense	(11.3		)	(0.1		)	7.4			(4.0		)	(5)
Interest income	0.2			7.5			(7.4		)	0.3			(5)
Other expense	—			(15.4		)	15.4			—			(4)
Income before income taxes	7.2			7.2			13.9			28.3
Income tax expense	(1.6		)	(2.0		)	(5.0		)	(8.6		)	(6)
Net income	$	5.6		$	5.2		8.9			$	19.7
Basic earnings per share	$	0.27		N/A			N/A			$	0.94
Average common shares outstanding (millions)	20.9									20.9
Diluted earnings per share	$	0.23		N/A			N/A			$	0.81
Average common shares outstanding (millions)	24.3									24.3



(1	)	Eliminate intercompany sales of $11.7 million.
(2	)	Reflects the increase in depreciation expense of $0.2 million due to adjusting property, plant and equipment to fair value. The total fair value adjustment to property, plant and equipment was $19.8 million of which $14.6 million related to depreciable buildings and improvements and machinery and equipment that have a net estimated remaining economic life of 14.1 years.
(3	)	Reflects the increase in amortization expense as a result of the estimated fair value adjustment due to the creation of the finite-lived intangible assets. The estimated useful life of the finite-lived intangible assets is 15 years.
(4	)	Eliminate asbestos-related expenses which would cease upon confirmation and consummation of the Amended Plan.
(5	)	Eliminate intercompany interest.
(6	)	For purposes of the consolidated pro forma financial information, the estimated effective tax rate of 36% has been used for all periods presented to calculate the tax effect associated with the pro forma adjustments.



													Pro Forma
							Pro Forma			Pro Forma			Adjustments
	EnPro			GST			Adjustments			Consolidated			Reference
Net sales	$	902.9		$	183.1		$	(42.8	)	$	1,043.2		(1)
Cost of sales	592.1			110.6			(42.1		)	660.6			(1), (2)
Gross profit	310.8			72.5			(0.7		)	382.6
Operating expenses:
Selling, general and administrative	239.8			35.2			8.8			283.8			(3)
Other	1.9			(184.8		)	185.2			2.3			(4)
Total operating expenses	241.7			(149.6		)	194.0			286.1
Operating income	69.1			222.1			(194.7		)	96.5
Interest expense	(32.3		)	(0.1		)	22.8			(9.6		)	(5)
Interest income	0.8			23.0			(22.8		)	1.0			(5)
Other expense	(10.7		)	(12.3		)	12.3			(10.7		)	(4)
Income before income taxes	26.9			232.7			(182.4		)	77.2
Income tax expense	(8.7		)	(82.5		)	65.7			(25.5		)	(6)
Net income	$	18.2		$	150.2		(116.7		)	$	51.7
Basic earnings per share	$	0.80		N/A			N/A			$	2.28
Average common shares outstanding (millions)	22.7									22.7
Diluted earnings per share	$	0.71		N/A			N/A			$	2.01
Average common shares outstanding (millions)	25.7									25.7



(1	)	Eliminate intercompany sales of $42.8 million.
(2	)	Reflects the increase in depreciation expense of $0.7 million due to adjusting property, plant and equipment to fair value. The total fair value adjustment to property, plant and equipment was $19.8 million of which $14.6 million related to depreciable buildings and improvements and machinery and equipment that have a net estimated remaining economic life of 14.1 years.
(3	)	Reflects the increase in amortization expense as a result of the estimated fair value adjustment due to the creation of the finite-lived intangible assets. The estimated useful life of the finite-lived intangible assets is 15 years.
(4	)	Eliminate asbestos-related expenses which would cease upon confirmation and consummation of the Amended Plan.
(5	)	Eliminate intercompany interest.
(6	)	For purposes of the consolidated pro forma financial information, the estimated effective tax rate of 36% has been used for all periods presented to calculate the tax effect associated with the pro forma adjustments.



													Pro Forma
							Pro Forma			Pro Forma			Adjustments
	EnPro			GST			Adjustments			Consolidated			Reference
Net sales	$	868.7		$	187.6		$	(38.0	)	$	1,018.3		(1)
Cost of sales	573.2			110.8			(37.3		)	646.7			(1), (2)
Gross profit	295.5			76.8			(0.7		)	371.6
Operating expenses:
Selling, general and administrative	219.6			30.3			8.8			258.7			(3)
Other	6.1			2.3			(3.7		)	4.7			(4)
Total operating expenses	225.7			32.6			5.1			263.4
Operating income	69.8			44.2			(5.8		)	108.2
Interest expense	(33.7		)	(0.1		)	21.8			(12.0		)	(5)
Interest income	0.6			22.0			(21.8		)	0.8			(5)
Other expense	(6.3		)	(38.2		)	38.2			(6.3		)	(4)
Income before income taxes	30.4			27.9			32.4			90.7
Income tax expense	(8.2		)	(8.4		)	(11.7		)	(28.3		)	(6)
Net income	$	22.2		$	19.5		20.7			$	62.4
Basic earnings per share	$	1.06		N/A			N/A			$	2.99
Average common shares outstanding (millions)	20.9									20.9
Diluted earnings per share	$	0.96		N/A			N/A			$	2.69
Average common shares outstanding (millions)	23.2									23.2



(1	)	Eliminate intercompany sales of $38.0 million.
(2	)	Reflects the increase in depreciation expense of $0.7 million due to adjusting property, plant and equipment to fair value. The total fair value adjustment to property, plant and equipment was $19.8 million of which $14.6 million related to depreciable buildings and improvements and machinery and equipment that have a net estimated remaining economic life of 14.1 years.
(3	)	Reflects the increase in amortization expense as a result of the estimated fair value adjustment due to the creation of the finite-lived intangible assets. The estimated useful life of the finite-lived intangible assets is 15 years.
(4	)	Eliminate asbestos-related expenses which would cease upon confirmation and consummation of the Amended Plan.
(5	)	Eliminate intercompany interest.
(6	)	For purposes of the consolidated pro forma financial information, the estimated effective tax rate of 36% has been used for all periods presented to calculate the tax effect associated with the pro forma adjustments.



										Pro Forma
					Pro Forma			Pro Forma		Adjustments
	EnPro		GST		Adjustments			Consolidated		Reference
Current assets
Cash and investments	$	198.4	$	223.1	$	(279.6	)	$	141.9	(2)
Accounts receivable	218.3		35.2		(23.7		)	229.8		(4)
Inventories	158.2		19.4		5.6			183.2		(1)
Notes receivable from EnPro	—		35.8		(35.8		)	—		(3)
Other current assets	61.1		49.8		(22.3		)	88.6		(4)
Total current assets	636.0		363.3		(355.8		)	643.5
Property, plant and equipment	180.3		45.3		19.8			245.4		(1)
Goodwill	217.8		18.7		(18.7		)	217.8		(1)
Other intangible assets	185.8		5.0		241.8			432.6		(1)
Investment in GST	236.9		—		(236.9		)	—		(6)
Notes receivable from EnPro	—		259.3		(259.3		)	—		(3)
Asbestos insurance receivable	—		80.7		(3.1		)	77.6		(1)
Deferred income taxes and income taxes receivable	67.0		124.8		(158.4		)	33.4		(5), (7)
Other assets	58.9		8.2		(1.1		)	66.0		(4)
Total assets	$	1,582.7	$	905.3	$	(771.7	)	$	1,716.3
Current liabilities
Short-term borrowings from GST	$	24.1	$	—	$	(24.1	)	$	—	(3)
Notes payable to GST	11.7		—		(11.7		)	—		(3)
Current maturities of long-term debt	22.3		—		—			22.3
Accounts payable	84.3		29.2		(23.7		)	89.8		(4)
Accrued expenses	131.0		14.8		(22.3		)	123.5		(4)
Deferred income taxes and income taxes payable	3.6		61.4		—			65.0
Total current liabilities	277.0		105.4		(81.8		)	300.6
Long-term debt	298.5		—		—			298.5
Notes payable to GST	259.3		—		(259.3		)	—		(3)
Asbestos liability	—		279.6		(279.6		)	—		(2)
Deferred income taxes and income taxes payable	26.3		67.1		9.6			103.0		(5), (7)
Other liabilities	51.9		4.6		(1.1		)	55.4		(4)
Total liabilities	913.0		456.7		(612.2		)	757.5
Temporary equity	1.3		—		—			1.3
Shareholders' equity	668.4		448.6		(159.5		)	957.5		(8)
Total liabilities and equity	$	1,582.7	$	905.3	$	(771.7	)	$	1,716.3



(1	)	Upon reconsolidation, the assets and liabilities of GST will need to be recognized at fair value. Inventory is valued at net realizable value which required a $5.6 million adjustment to the carrying value. We reflected a $19.8 million fair adjustment to property, plant and equipment. We eliminated GST's pre-existing goodwill and other identifiable intangible assets of $18.7 million and $5.0 million, respectively. We identified finite-lived intangible assets with an estimated fair value of $181.5 million. In addition, we identified $65.3 million of indefinite-lived intangible assets. The asbestos insurance receivable was discounted to its present value resulting in a $3.1 million adjustment. The carrying value of all other assets and liabilities approximated fair value.
(2	)	We determined that the establishment of the settlement facility and litigation facility contemplated by the Amended Plan and payments of claims resolved by settlement or verdict prior to the Petition Date that were not paid prior to the Petition Date would be funded by cash on hand.
(3	)	Eliminate intercompany notes receivable/payable.
(4	)	Eliminate intercompany trade receivables/payables, intercompany interest receivable/payable and other intercompany receivables/payables.
(5	)	Eliminate $66.3 million of intercompany income taxes payable.
(6	)	Eliminate the investment in GST which is carried at historical cost.
(7	)	The elimination of the deferred tax liability on the investment in GST and the deferred tax asset on the asbestos liability as well as the establishment of a deferred tax asset on the trust liability and a deferred tax liability on the step-up in fair value of assets resulted in a net decrease in long-term tax assets of $92.1 million and a net increase in long-term tax liabilities of $75.9 million.
(8	)	The entries above resulted in reflecting a $457.1 million pre-tax gain upon reconsolidation ($289.1 million after tax).



	Quarters Ended						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
Pro forma earnings before interest, income taxes,
depreciation, amortization and other selected
items (adjusted EBITDA)	$	55.6		$	52.4		$	155.8		$	169.5
Adjustments:
Interest expense, net	(2.9		)	(3.7		)	(8.6		)	(11.2		)
Income tax expense	(10.0		)	(8.6		)	(25.5		)	(28.3		)
Depreciation and amortization expense	(19.0		)	(19.0		)	(57.2		)	(56.6		)
Restructuring costs	(0.6		)	(1.4		)	(1.7		)	(4.7		)
Environmental reserve adjustment	—			—			(0.7		)	(6.3		)
Loss on debt exchange	(4.0		)	—			(10.0		)	—
Other	(0.4		)	—			(0.4		)	—
Impact	(36.9		)	(32.7		)	(104.1		)	(107.1		)
Pro forma net income	$	18.7		$	19.7		$	51.7		$	62.4

The foregoing tables provides a reconciliation of pro forma net income set forth in the accompanying unaudited pro forma condensed consolidated statements of operations reflecting reconsolidation of GST to pro forma income before interest, income taxes, depreciation, amortization and other selected items (adjusted EBITDA). The methodology for reconciliation is the same as presented on the table titled "Reconciliation of Adjusted EBITDA to Net Income (Unaudited)."



Sales
	Quarters Ended						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
Sealing Products	$	168.9		$	157.9		$	499.3		$	470.4
Engineered Products	88.1			84.1			275.4			271.0
Power Systems	46.5			34.9			130.6			129.3
	303.5			276.9			905.3			870.7
Less intersegment sales	(0.9		)	(0.9		)	(2.4		)	(2.0		)
	$	302.6		$	276.0		$	902.9		$	868.7



	Quarter Ended September 30, 2013
	Sealing			Engineered			Power			Total
	Products			Products			Systems			Segments
Earnings before interest, income taxes, depreciation
and amortization (EBITDA)	$	31.6		$	8.7		$	3.3		$	43.6
Deduct depreciation and amortization expense	(7.4		)	(5.8		)	(1.0		)	(14.2		)
Segment profit	$	24.2		$	2.9		$	2.3		$	29.4
EBITDA margin	20.0		%	10.3		%	9.5		%	15.8		%



	Nine Months Ended September 30, 2014
	Sealing			Engineered			Power			Total
	Products			Products			Systems			Segments
Earnings before interest, income taxes, depreciation
and amortization (EBITDA)	$	86.0		$	40.7		$	18.9		$	145.6
Deduct depreciation and amortization expense	(23.1		)	(17.1		)	(2.6		)	(42.8		)
Segment profit	$	62.9		$	23.6		$	16.3		$	102.8
EBITDA margin	17.2		%	14.8		%	14.5		%	16.1		%



	Nine Months Ended September 30, 2013
	Sealing			Engineered			Power			Total
	Products			Products			Systems			Segments
Earnings before interest, income taxes, depreciation
and amortization (EBITDA)	$	95.9		$	34.3		$	16.3		$	146.5
Deduct depreciation and amortization expense	(22.7		)	(17.0		)	(2.8		)	(42.5		)
Segment profit	$	73.2		$	17.3		$	13.5		$	104.0
EBITDA margin	20.4		%	12.7		%	12.6		%	16.9		%



Segment Margin
	Quarters Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013		2014		2013
Sealing Products	13.6%		15.3	%	12.6	%	15.6	%
Engineered Products	6.8%		3.4	%	8.6	%	6.4	%
Power Systems	20.6	%	6.6	%	12.5	%	10.4	%
	12.8%		10.7	%	11.4	%	12.0	%



	Quarter Ended September 30, 2014
	Sealing			Engineered			Power			Total
	Products			Products			Systems			Segments
Earnings before interest, income taxes, depreciation
and amortization (EBITDA)	$	30.7		$	11.6		$	10.4		$	52.7
Deduct depreciation and amortization expense	(7.7		)	(5.6		)	(0.8		)	(14.1		)
Segment profit	$	23.0		$	6.0		$	9.6		$	38.6
EBITDA margin	18.2		%	13.2		%	22.4		%	17.4		%



*	Adjusted EBITDA as presented also represents the amount defined as "EBITDA" under the indenture governing the Company's 5.875% senior notes due 2022.