8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported):     July 30, 2015     

ENPRO INDUSTRIES, INC.

(Exact name of Registrant, as specified in its charter)

North Carolina	001-31225	01-0573945
(State or other jurisdiction	(Commission file number)	(I.R.S. Employer
of incorporation		Identification No.)

5605 Carnegie Boulevard, Suite 500

Charlotte, North Carolina 28209

(Address of principal executive offices, including zip code)

704 731-1500

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17
	CFR 240.14d-2(b))
¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17
	CFR 240.13e-4(c))

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Item 2.02    Results of Operations and Financial Condition

The information set forth in this Item 2.02 of this Current Report and in Exhibit 99.1 is intended to be “furnished” under Item 2.02 of Form 8-K. Such information shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

On July 30, 2015, we issued a press release announcing our earnings for the quarter ended June 30, 2015. A copy of such press release is included as Exhibit 99.1 hereto.

Item 9.01    Financial Statements and Exhibits

(d) Exhibit 99.1 – Press Release of EnPro Industries, Inc. dated July 30, 2015

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date:    July 30, 2015

ENPRO INDUSTRIES, INC.
By:	/s/ Robert S. McLean
	Robert S. McLean
	Vice President, General Counsel and Secretary

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EXHIBIT INDEX

Exhibit Number	Exhibit
99.1	Press Release of EnPro Industries, Inc. dated July 30, 2015

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EX-99.1

Exhibit 99.1

News Release

Investor Contact:	Dan Grgurich	EnPro Industries
	Director, Investor Relations and	5605 Carnegie Boulevard
	Corporate Communications	Charlotte, North Carolina 28209-4674
Phone:	704-731-1527	Phone: 704-731-1500
Email:	dan.grgurich@enproindustries.com	Fax: 704-731-1511
		www.enproindustries.com

EnPro Industries Reports Results for the Second Quarter and

First Six Months of 2015

Consolidated Financial Highlights

(Amounts in millions except per share data and percentages)

Consolidated Financial Results	Quarter Ended June 30,					Change	Six Months Ended June 30,
	2015			2014			2015			2014		Change
Net Sales	$	298.4		$	313.1	-5%	$	575.9		$	600.3	-4%
Segment Profit	$	31.5		$	35.1	-10%	$	53.5		$	64.2	-17%
Segment Margin	10.6%			11.2%			9.3%			10.7%
Net Income (loss)	$	(37.3	)	$	8.3		$	(38.9	)	$	9.6
Diluted EPS	$	(1.66	)	$	0.32		$	(1.68	)	$	0.38

Adjusted Consolidated Financial Results	Quarter Ended June 30,					Change	Six Months Ended June 30,
	2015			2014			2015		2014		Change
EBITDA*	$	(5.6	)	$	36.3	-115%	$	15.8	$	63.7	-75%
Adjusted EBITDA*	$	42.4		$	39.3	8%	$	70.1	$	71.5	-2%
Adjusted Net Income*	$	15.2		$	15.0	1%	$	21.0	$	24.8	-15%
Adjusted Diluted EPS*	$	0.69		$	0.64		$	0.93	$	1.08
*See attached schedules for adjustments.

Normalized Consolidated Results	Quarter Ended June 30,						Change	Six Months Ended June 30,
	2015			2014				2015			2014			Change
Normalized Net Sales**	$	300.3		$	304.9		-2%	$	581.8		$	583.3		0%
Normalized Segment Profit**	$	32.7		$	34.0		-4%	$	63.5		$	61.5		3%
Normalized Segment Profit Margin**	10.9		%	11.1		%		10.9		%	10.5		%

** Normalized data adjusted for FX, acquisitions and divestitures, acquisition expenses, restructuring and EDF loss provision as set forth in the attached schedules.

• Net sales for the second quarter of 2015 decreased by 2% from the second quarter of 2014 after adjusting for foreign exchange, acquisitions and a divestiture.

• Segment profit for the second quarter decreased by 4% after adjusting for foreign exchange translation, acquisitions and their related expenses, a divestiture, restructuring and a favorable foreign exchange impact on the EDF loss provision.

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• An after-tax goodwill and intangible asset impairment charge of $45.8 million or $2.03 per share was taken as a result of current and expected conditions in the markets served by Compressor Products International (CPI), a division in the Engineered Products segment.

• Adjusted diluted EPS increased to $0.69 in the second quarter of 2015 from $0.64 in the second quarter of 2014.

• Adjusted EBITDA was $42.4 million in the second quarter and $70.1 million for YTD 2015 compared to $39.3 million in the second quarter and $71.5 million for the first six months of 2014.

• Pro forma adjusted EBITDA† (which includes the adjusted EBITDA of deconsolidated GST) of $54.6 million was unchanged compared to the second quarter of 2014. Pro forma sales† declined to $342.7 million, or 5%, from the second quarter of 2014.

• For the first six months of 2015, pro forma sales decreased 5% to $663.0 million from the first six months of 2014. Pro forma adjusted EBITDA† of $93.5 million decreased 7% from the first six months of 2014.

† (Please refer to Pro Forma Condensed Consolidated Financial Statements attached)

CHARLOTTE, N.C., July 30, 2015 -- EnPro Industries, Inc. (NYSE: NPO) today reported consolidated sales of $298.4 million in the second quarter of 2015, a $14.7 million, or 5%, decrease from the second quarter of 2014. On a normalized basis which excludes the effect of foreign exchange and the net impact of acquisitions and a divestiture, sales declined 2%. On a normalized basis, Power Systems segment sales were 11% higher than the second quarter of 2014 but this was more than offset by sales declines of 2% in Sealing Products and 7% in the Engineered Products segment.

Segment profit margin of 10.6% in the second quarter of 2015 was down from 11.2% in the second quarter of 2014, primarily as a result of lower volumes in the Engineered Products segment, which more than offset lower material costs and modest price improvement across the company.

EnPro reported a net loss in the second quarter of 2015 of $37.3 million, or $1.66 a share, compared to net income of $8.3 million, or $0.36 a share, in the second quarter of 2014. Before selected items, including an after-tax goodwill and other intangible asset impairment charge related to the CPI business of $45.8 million, or $2.03 a share, interest due to the deconsolidated Garlock Sealing Technologies LLC (GST) subsidiary, and other items detailed in the attached financial schedules, adjusted net income was $15.2 million, or $0.69 a share. In the second quarter of 2014, adjusted net income was $15.0 million, or $0.64 a share.

Consolidated earnings before interest, income taxes, depreciation and amortization and other selected items (adjusted EBITDA) were $42.4 million in the second quarter of 2015, an 8% increase over the second quarter of 2014. The increase in adjusted EBITDA is largely attributable to a year-over-year reduction in incentive compensation accruals.

The company’s average diluted share count in the second quarter of 2015 decreased by 3.5 million shares to 22.5 million shares, down 13% from the same period a year ago. The decrease primarily reflects the net effect of the cash purchase of convertible debentures, the unwinding of the hedge related to the original issue of convertible debentures, and purchases of 1.2 million common shares in the first four months of 2015. Due to the net loss in the current quarter, the share count for the determination of diluted earnings per share does not include the potential issuance of additional shares such as those associated with stock options, restricted stock units or those related to the convertible debt options.

Six Months Results

Sales for the first six months of 2015 were $575.9 million, a 4% decrease from 2014. Excluding foreign exchange and the net impact of acquisitions and dispositions during the period, sales were nearly flat compared to the first six months of 2014, as increases in Sealing Products and Power Systems were offset by a decline in the Engineered Products segment. Adjusted EBITDA for the first six months was $70.1 million, slightly lower than in 2014 when adjusted EBITDA was $71.5 million.

Net loss for the first six months of 2015 was $38.9 million, or $1.68 a share, compared to net income of $9.6 million, or $0.38 a share, in 2014. Before selected items, including an after-tax goodwill and intangible asset impairment charge related to the CPI business of $45.8 million, or $1.98 a share, interest due to GST, a loss on the exchange and repurchase of convertible debentures and other items detailed in the attached financial schedules, adjusted net income in the first six 2015 was $21.0 million, or $0.93 a share, compared to $24.8 million, or $1.08 a share, in 2014.

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Sealing Products Segment

($ Millions)	Quarter Ended			Change	Six Months Ended
	6/30/2015		6/30/2014		6/30/2015		6/30/2014		Change
Sales	$	173.0	$175.4	-1%	$	333.9	$	330.4	1%
Segment Profit	$	21.2	$22.8	-7%	$	39.2	$	39.9	-2%
Segment Margin	12.3%		13.0%		11.7%		12.1%
Normalized Net Sales	$	164.2	$167.2	-2%	$	319.7	$	313.4	2%
Normalized Segment Profit	$	22.0	$21.7	1%	$	40.5	$	37.2	9%
Normalized Segment Margin	13.4%		13.0%		12.7%		11.9%

In the second quarter of 2015, sales in the Sealing Products segment decreased 1% from the second quarter of 2014. Acquisitions net of a divestiture contributed 4% but were offset by an unfavorable 4% impact from foreign exchange. Higher volumes in OEM truck and chemical markets were more than offset by softer demand from oil and gas, truck aftermarket, nuclear and semiconductor component markets.

The segment’s profits decreased by 7% and segment profit margins declined to 12.3% in the second quarter of 2015. On a normalized basis excluding the impact of foreign exchange, restructuring expense in 2014, acquisitions and related expenses and a divestiture, segment profits were modestly higher than in the second quarter of 2014, and segment margins expanded 40 basis points.

The segment’s sales for the first six months of 2015 were 1% higher than in 2014, and 2% higher excluding the impact of foreign exchange and the net impact of acquisitions and a divestiture. Higher revenues for truck parts were partially offset by lower sales of nuclear, semiconductor components and pipeline products. Segment profits were 2% lower year-to-date 2015 compared to 2014 largely due to the net impact of acquisitions and dispositions. On a normalized basis, excluding the impact of foreign exchange, restructuring in 2014, and the net impact of acquisitions and related expenses and a divestiture, segment profits increased 9% year over year.

Engineered Products Segment

($ Millions)	Quarter Ended				Change	Six Months Ended
	6/30/2015		6/30/2014			6/30/2015		6/30/2014		Change
Sales	$	78.5	$	95.5	-18%	$	155.7	$	187.3	-17%
Segment Profit	$	4.0	$	8.9	-55%	$	7.4	$	17.6	-58%
Segment Margin	5.1%		9.3%			4.8%		9.4%
Normalized Net Sales	$	89.2	$	95.5	-7%	$	175.8	$	187.3	-6%
Normalized Segment Profit	$	5.6	$	8.9	-37%	$	11.1	$	17.6	-37%
Normalized Segment Margin	6.3%		9.3%			6.3%		9.4%

Engineered Products sales in the second quarter of 2015 were 18% lower than the second quarter of 2014. On a normalized basis, excluding the negative impact of foreign exchange, the segment’s sales for the quarter were 7% lower than in 2014. Lower sales of bearings, particularly in the U.S. automotive, fluid power and agricultural equipment markets, accounted for almost half of the decline while continued weakness in the Canadian natural gas market and in the U.K. and Middle East for compressor parts and services also contributed to the decline.

Segment profits declined 55% for the second quarter of 2015 from the comparable period in 2014. On a normalized basis, excluding the impact of foreign exchange and restructuring charges, the decline was 37%. Lower sales volumes, as described above, were the primary drivers for the decline, and more than offset cost reduction initiatives in the segment.

For the first six months of 2015, the Engineered Products segment’s normalized sales, excluding the impact of foreign exchange, were 6% lower than the comparable period of 2014. Lower sales of bearings in the U.S. market and lower sales of reciprocating compressor parts and service in Canada, the U.K., Middle East and the U.S. markets more than offset sales increases in other European markets. Normalized segment profits, excluding foreign exchange and restructuring charges, declined 37% from the first six months of 2014 as improved pricing and the favorable impact of cost reduction initiatives were more than offset by the impact of lower sales volumes.

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Power Systems Segment

($ Millions)	Quarter Ended				Change	Six Months Ended
	6/30/2015		6/30/2014			6/30/2015		6/30/2014		Change
Sales	$	47.9	$	43.0	11%	$	88.1	$	84.1	5%
Segment Profit	$	6.3	$	3.4	85%	$	6.9	$	6.7	3%
Segment Margin	13.2%		7.9%			7.8%		8.0%
Normalized Net Sales	$	47.9	$	43.0	11%	$	88.1	$	84.1	5%
Normalized Segment Profit	$	5.1	$	3.4	50%	$	11.9	$	6.7	78%
Normalized Segment Margin	10.6%		7.9%			13.5%		8.0%

In the Power Systems segment, sales increased by $4.9 million, or 11%, from the second quarter of 2014. The increase includes $5.5 million higher percentage of completion (POC) engine revenue partially offset by lower completed contract engine revenue. Parts and service revenues were essentially level compared to last year.

Segment profits increased significantly and segment profit margins rose to 13.2% from 7.9% in the second quarter of 2014 primarily as a result of stronger margins on engine revenue, higher prices on parts, favorable material costs and a $1.2 million partial reversal of the first quarter EDF loss provision due to changes in the euro to dollar exchange rate. Partially offsetting these benefits were higher operating costs and SG&A expenses, largely pension related.

The segment’s sales in the first six months of 2015 were 5% higher than in the comparable period of 2014 primarily due to higher revenues from parts and service. Engine revenues were $2.8 million lower. Segment profits of $6.9 million included a foreign exchange related $5.0 million loss provision on a multi-year contract for engines to EDF priced in euros. Normalized segment profits, excluding this foreign exchange transaction impact, improved $5.2 million year-over-year and margins were 13.5% compared to 8.0% in 2014. The higher margins were primarily due to higher volume, a more favorable mix of high-margin parts and services and improved pricing, which more than offset increased selling, general and administrative expense.

Garlock Sealing Technologies

($ Millions)	Quarter Ended				Change	Six Months Ended
	6/30/2015		6/30/2014			6/30/2015		6/30/2014		Change
Net Sales*	$	57.0	$	63.0	-10%	$	111.2	$	122.0	-9%
Third Party Sales	$	51.5	$	57.0		$	100.5	$	109.8
Operating Income	$	10.4	$	200.2	-95%	$	20.2	$	211.6	-90%
Operating Income Margin	18.2%		317.8%			18.2%		173.4%
*Includes intercompany sales

Sales at the deconsolidated operations of GST and its subsidiaries (collectively “GST”) in the second quarter of 2015 decreased by 10% compared to the second quarter of 2014. Excluding the negative effect of foreign exchange, the decline was 6%. Market conditions were soft in North America and Australia in most process industries including steel processing, metals mining, and downstream oil and gas. Refineries have continued to delay their maintenance work although there was an uptick in activity around the gulf coast. Operating income was down 95% from the second quarter of 2014, primarily due to the lower volume and a less-profitable mix, and the impact of $186.6 million income reflected in the second quarter of 2014 related to a reduction in the asbestos liability accrual on GST’s balance sheet made in June, 2014 to reflect GST’s amended plan of reorganization. There were no liability adjustments made in the second quarter of 2015. Excluding changes in GST’s asbestos liability accrual, GST’s operating income was down 24% from the second quarter of 2014.

GST’s sales in the first six months of 2015 were 9% lower (5% lower excluding foreign exchange) than 2014 reflecting lower demand in North America and from foreign affiliates. Operating income declined as a result of unfavorable volume and mix and the impact of $186.6 million income reflected in the second quarter of 2014 related to a reduction in the asbestos liability accrual on GST’s balance sheet described above. Excluding changes in GST’s asbestos liability accrual, GST’s operating income was down 19% from the first six months of 2014.

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The results of GST and certain subsidiaries were deconsolidated effective June 5, 2010, when GST filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy code. These filings were the initial step in a process to reach a permanent resolution of all of GST’s current and future asbestos claims. Tables attached to this press release illustrate, on a pro-forma basis, condensed consolidated financial results for the second quarter and six months of 2015 and 2014 as if GST were reconsolidated with EnPro based on confirmation and consummation of GST’s second amended proposed plan of reorganization filed on January 14, 2015. The narrative preceding those tables includes an important discussion of the risks and uncertainties applicable to confirmation and consummation of the second amended plan of reorganization. Due to these risks and uncertainties, while management believes the plan of reorganization can be confirmed, management does not yet deem reconsolidation to be probable under Regulation S-X of the Securities and Exchange Commission (SEC). Therefore, pro forma financial statements are not required by the SEC. We are providing the pro forma financial information in this release as supplemental information in response to requests from investors for this information.

Corporate Expenses

Corporate expenses decreased $7.3 million to $3.4 million in the second quarter of 2015 compared to the second quarter of 2014. The decrease was primarily driven by incentive compensation accrual reductions. For the first six months of 2015, corporate expenses declined $7.6 million to $13.2 million for the same reason.

Goodwill and Other Intangible Asset Impairment

Due to the continuing deterioration in the oil and gas markets in which our CPI reporting unit operates, we concluded that events had occurred and circumstances had changed that required us to recognize a goodwill impairment charge ($46.1 million pre-tax) and an impairment of the amortized trademarks carried by CPI ($0.9 million pre-tax). Together these impairment charges totaled $45.8 million on an after-tax basis.

Cash Flows

EnPro’s cash balance stood at $77.5 million at June 30, 2015 compared to $64.9 million at the end of the second quarter in 2014. Operating activities used $2.4 million of cash in the first six months of 2015 compared to $13.8 million in the same period last year. The decrease in cash used was due to lower pension contributions of approximately $10 million and lower income taxes paid of approximately $6 million, partially offset by higher interest payments of approximately $7 million.

Investing activities used $49.0 million and $23.2 million of cash during the first six months of 2015 and 2014, respectively, primarily to fund acquisitions, capital expenditures and enterprise resource and planning system implementations.

Financing activities used $65.9 million in cash in the first six months of 2015, primarily from $44.9 million spent to repurchase the majority of our outstanding convertible debentures, $80.0 million spent to repurchase 1.2 million shares of our outstanding common stock and the payment of $9.4 million of dividends. These activities were funded by cash on hand and additional borrowings of $68.3 million from our revolving credit facility. Financing activities in the first six months of 2014 provided cash of $36.4 million, primarily consisting of net borrowings under our revolving credit facility.

GST’s cash and investment balance was $259.8 million at June 30, 2015 compared to $216.2 million at the end of the second quarter last year. The increase included the collection of $20.2 million of asbestos-related insurance proceeds since June 30, 2014.

Outlook

“Market conditions are mixed as we head into the second half of the year” said Steve Macadam, president and chief executive officer. “We have sound bookings in the nuclear, petrochemical, OEM truck parts and strong bookings and backlog in Power Systems. However, we still face headwinds as economic volatility outside of North America and sluggish oil and gas markets result in lower demand levels in a few of our businesses. In addition, the weaker euro and other foreign currencies continue to affect our results. In view of these conditions and our first half results, we are adjusting our full year consolidated net sales guidance for 2015 to a range of $1.20 to $1.25 billion and our consolidated segment profit guidance for 2015 to a range of $116 to $125 million. The revised guidance assumes exchange rates at the levels in effect at the end of the second quarter and does not include new restructuring charges for plans that are under consideration for the second half of the year. The revised guidance includes the year-to-date impact of the EDF loss provision, restructuring charges, acquisition-related expenses, and the projected impact of the recently acquired air springs business, none of which were included in the guidance provided in March. On a comparable basis, adjusting the March guidance for these items, the revised segment profit range is 6%-8% below the adjusted March segment profit guidance.

For deconsolidated GST, we expect 2015 net sales of $210 to $220 million and operating income of $36 to $39 million.”

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“Despite current challenging market conditions, longer term, we expect continued benefits from our strategic growth initiatives including growth from recent and future strategic acquisitions and continued emphasis on improving operational efficiencies,” he added.

Conference Call and Webcast Information

EnPro will hold a conference call tomorrow, July 31, at 10:00 a.m. Eastern Time to discuss second quarter 2015 results. Investors who wish to participate in the call should dial 1-800-851-4704 approximately 10 minutes before the call begins and provide conference id number 83298869. A live audio webcast of the call and accompanying slide presentation will be accessible from the company’s website, http://www.enproindustries.com. To access the presentation, log on to the webcast by clicking the link on the company’s home page.

Deconsolidation and Pro Forma Results of Garlock Sealing Technologies LLC

Results for the second quarters of 2015 and 2014 reflect the deconsolidation of Garlock Sealing Technologies LLC (GST) and its subsidiaries, effective June 5, 2010, when GST filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code to begin a process in pursuit of an efficient and permanent resolution to all current and future asbestos claims against it. Deconsolidation is required by generally accepted accounting principles. To aid in comparisons of year-over-year data, the company has attached a schedule to this press release showing key operating measures for both EnPro and GST on a pro forma basis.

Tables attached to this press release illustrate, on a pro-forma basis, condensed consolidated financial results for the second quarters of 2015 and 2014 as if GST were reconsolidated with EnPro based on confirmation and consummation of GST’s second amended proposed plan of reorganization. The narrative preceding those tables includes an important discussion of the risks and uncertainties applicable to confirmation and consummation of the second amended plan of reorganization. Due to these risks and uncertainties, while management believes the plan of reorganization can be confirmed, management does not yet deem reconsolidation to be probable under Regulation S-X of the Securities and Exchange Commission (SEC). Therefore, pro forma financial statements are not required by the SEC. We are providing the pro forma financial information in this release as supplemental information in response to requests from investors for this information.

Non-GAAP Financial Information

This press release contains financial measures that have not been prepared in accordance with GAAP. They include income before asbestos-related expenses and other selected items, EBITDA-A, EBITDA and related per share amounts. Tables showing the effect of these non-GAAP financial measures for second quarters of 2015 and 2014 are attached to the release.

Forward-Looking Statements

Statements in this press release that express a belief, expectation or intention, as well as those that are not historical fact, are forward-looking statements under the Private Securities Litigation Reform Act of 1995. They involve a number of risks and uncertainties that may cause actual events and results to differ materially from such forward-looking statements. These risks and uncertainties include, but are not limited to: general economic conditions in the markets served by our businesses, some of which are cyclical and experience periodic downturns; prices and availability of raw materials; and the amount of any payments required to satisfy contingent liabilities related to discontinued operations of our predecessors, including liabilities for certain products, environmental matters, guaranteed debt payments, employee benefit obligations and other matters. In addition, adverse developments could arise in regard to voluntary petitions filed by certain of our subsidiaries in U.S. Bankruptcy Court to establish a trust that would resolve all current and future asbestos claims. Our filings with the Securities and Exchange Commission, including the Form 10-K for the year ended December 31, 2014 and Form 10-Q for the quarter ended March 31, 2015, describe these and other risks and uncertainties in more detail. We do not undertake to update any forward-looking statement made in this press release to reflect any change in management's expectations or any change in the assumptions or circumstances on which such statements are based.

About EnPro Industries

EnPro Industries, Inc. is a leader in sealing products, metal polymer and filament wound bearings, components and service for reciprocating compressors, diesel and dual-fuel engines and other engineered products for use in critical applications by industries worldwide. For more information about EnPro, visit the company’s website at http://www.enproindustries.com.

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EX-99.1

EnPro Industries, Inc.

Consolidated Statements of Operations (Unaudited)

For the Quarters and Six Months Ended June 30, 2015 and 2014

(Stated in Millions of Dollars, Except Per Share Data)

	Quarters Ended						Six Months Ended
	June 30, 2015			June 30, 2014			June 30, 2015			June 30, 2014
Net sales	$	298.4		$	313.1		$	575.9		$	600.3
Cost of sales	197.1			205.0			384.8			395.7
Gross profit	101.3			108.1			191.1			204.6
Operating expenses:
Selling, general and administrative	74.1			83.5			151.4			162.4
Goodwill and other intangible asset impairment	47.0			—			47.0			—
Other	0.5			0.5			1.6			0.7
Total operating expenses	121.6			84.0			200.0			163.1
Operating income (loss)	(20.3		)	24.1			(8.9		)	41.5
Interest expense	(13.1		)	(10.4		)	(26.1		)	(21.5		)
Interest income	0.2			0.3			0.3			0.5
Other expense	(0.2		)	(2.5		)	(4.3		)	(6.7		)
Income (loss) before income taxes	(33.4		)	11.5			(39.0		)	13.8
Income tax benefit (expense)	(3.9		)	(3.2		)	0.1			(4.2		)
Net income (loss)	$	(37.3	)	$	8.3		(38.9		)	$	9.6
Basic earnings (loss) per share	$	(1.66	)	$	0.36		$	(1.68	)	$	0.43
Average common shares outstanding (millions)	22.5			22.9			23.1			22.1
Diluted earnings (loss) per share	$	(1.66	)	$	0.32		$	(1.68	)	$	0.38
Average common shares outstanding (millions)	22.5			26.0			23.1			25.6

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EnPro Industries, Inc.

Consolidated Statements of Cash Flows (Unaudited)

For the Six Months Ended June 30, 2015 and 2014

(Stated in Millions of Dollars)

	2015			2014
Operating activities
Net income (loss)	$	(38.9	)	$	9.6
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation	14.8			14.9
Amortization	14.1			14.0
Loss on exchange and repurchase of convertible debentures	2.8			6.0
Goodwill and other intangible asset impairment	47.0			—
Deferred income taxes	(5.6		)	(13.3		)
Stock-based compensation	1.4			4.9
Other non-cash adjustments	0.8			2.6
Change in assets and liabilities, net of effects of acquisitions of businesses:
Accounts receivable, net	(5.1		)	(40.5		)
Inventories	(12.2		)	(13.3		)
Accounts payable	(5.7		)	6.0
Other current assets and liabilities	(10.9		)	(0.6		)
Other non-current assets and liabilities	(4.9		)	(4.1		)
Net cash used in operating activities	(2.4		)	(13.8		)
Investing activities
Purchases of property, plant and equipment	(16.2		)	(14.2		)
Payments for capitalized internal-use software	(2.3		)	(4.8		)
Acquisitions, net of cash acquired	(30.6		)	(4.3		)
Other	0.1			0.1
Net cash used in investing activities	(49.0		)	(23.2		)
Financing activities
Net proceeds from short-term borrowings	2.3			—
Proceeds from debt	110.9			128.0
Repayments of debt	(66.0		)	(87.0		)
Repurchase of common stock	(80.0		)	—
Dividends paid	(9.4		)	—
Repurchase of convertible debentures conversion option	(21.6		)	—
Other	(2.1		)	(4.6		)
Net cash provided by (used in) financing activities	(65.9		)	36.4
Effect of exchange rate changes on cash and cash equivalents	0.6			1.1
Net increase (decrease) in cash and cash equivalents	(116.7		)	0.5
Cash and cash equivalents at beginning of period	194.2			64.4
Cash and cash equivalents at end of period	$	77.5		$	64.9
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	27.6		$	21.1
Income taxes	$	11.4		$	17.5

8

EnPro Industries, Inc.

Consolidated Balance Sheets (Unaudited)

As of June 30, 2015 and December 31, 2014

(Stated in Millions of Dollars)

	June 30,			December 31,
	2015			2014
Current assets
Cash and cash equivalents	$	77.5		$	194.2
Accounts receivable	212.2			205.2
Inventories	170.5			159.7
Other current assets	41.0			44.0
Total current assets	501.2			603.1
Property, plant and equipment	202.2			199.3
Goodwill	192.8			232.4
Other intangible assets	205.0			202.8
Investment in GST	236.9			236.9
Deferred income taxes and income tax receivable	100.3			80.3
Other assets	44.9			49.2
Total assets	$	1,483.3		$	1,604.0
Current liabilities
Short-term borrowings from GST	$	24.9		$	23.6
Notes payable to GST	12.2			11.7
Current maturities of long-term debt	2.3			22.5
Accounts payable	87.5			87.8
Accrued expenses	109.1			131.6
Total current liabilities	236.0			277.2
Long-term debt	367.0			298.6
Notes payable to GST	271.0			259.3
Other liabilities	128.8			130.5
Total liabilities	1,002.8			965.6
Temporary equity	—			1.0
Shareholders' equity
Common stock	0.2			0.2
Additional paid-in capital	376.8			477.3
Retained earnings	147.0			195.3
Accumulated other comprehensive loss	(42.2		)	(34.1		)
Common stock held in treasury, at cost	(1.3		)	(1.3		)
Total shareholders' equity	480.5			637.4
Total liabilities and equity	$	1,483.3		$	1,604.0

9

EnPro Industries, Inc.

Segment Information (Unaudited)

For the Quarters and Six Months Ended June 30, 2015 and 2014

(Stated in Millions of Dollars)

Sales
	Quarters Ended						Six Months Ended
	June 30,						June 30,
	2015			2014			2015			2014
Sealing Products	$	173.0		$	175.4		$	333.9		$	330.4
Engineered Products	78.5			95.5			155.7			187.3
Power Systems	47.9			43.0			88.1			84.1
	299.4			313.9			577.7			601.8
Less intersegment sales	(1.0		)	(0.8		)	(1.8		)	(1.5		)
	$	298.4		$	313.1		$	575.9		$	600.3

Segment Profit
	Quarters Ended				Six Months Ended
	June 30,				June 30,
	2015		2014		2015		2014
Sealing Products	$	21.2	$	22.8	$	39.2	$	39.9
Engineered Products	4.0		8.9		7.4		17.6
Power Systems	6.3		3.4		6.9		6.7
	$	31.5	$	35.1	$	53.5	$	64.2

Segment Margin
	Quarters Ended				Six Months Ended
	June 30,				June 30,
	2015		2014		2015		2014
Sealing Products	12.3%		13.0	%	11.7	%	12.1	%
Engineered Products	5.1%		9.3	%	4.8	%	9.4	%
Power Systems	13.2	%	7.9	%	7.8	%	8.0	%
	10.6%		11.2	%	9.3	%	10.7	%

Reconciliation of Segment Profit to Net Income (Loss)
	Quarters Ended						Six Months Ended
	June 30,						June 30,
	2015			2014			2015			2014
Segment profit	$	31.5		$	35.1		$	53.5		$	64.2
Corporate expenses	(3.4		)	(10.7		)	(13.2		)	(20.8		)
Goodwill and other intangible asset impairment	(47.0		)	—			(47.0		)	—
Interest expense, net	(12.9		)	(10.1		)	(25.8		)	(21.0		)
Other expense, net	(1.6		)	(2.8		)	(6.5		)	(8.6		)
Income (loss) before income taxes	(33.4		)	11.5			(39.0		)	13.8
Income tax benefit (expense)	(3.9		)	(3.2		)	0.1			(4.2		)
Net income (loss)	$	(37.3	)	$	8.3		$	(38.9	)	$	9.6

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, impairment charges, 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.

10

EnPro Industries, Inc.

Reconciliation of Adjusted Net Income to Net Income (Loss) (Unaudited)

For the Quarters and Six Months Ended June 30, 2015 and 2014

(Stated in Millions of Dollars, Except Per Share Data)

	Quarters Ended June 30,
	2015						2014
	$			Per share			$			Per share
Adjusted net income	$	15.2		$	0.69		$	15.0		$	0.64
Adjustments (net of tax):
Restructuring costs	(0.3		)	(0.01		)	(0.3		)	(0.01		)
Loss on exchange and repurchase of convertible debentures	—			—			(1.5		)	(0.05		)
Goodwill and other intangible asset impairment	(45.8		)	(2.03		)	—			—
Interest expense and royalties with GST	(5.1		)	(0.23		)	(4.9		)	(0.19		)
Other	(0.2		)	(0.01		)	—			—
Tax accrual adjustments	(1.1		)	(0.05		)	—			—
Impact of shares deliverable under outstanding convertible debenture hedge	N/A			(0.02		)	N/A			(0.07		)
Impact	(52.5		)	(2.35		)	(6.7		)	(0.32		)
Net income (loss)	$	(37.3	)	$	(1.66	)	$	8.3		$	0.32

	Six Months Ended June 30,
	2015						2014
	$			Per share			$			Per share
Adjusted net income	$	21.0		$	0.93		$	24.8		$	1.08
Adjustments (net of tax):
Restructuring costs	(0.9		)	(0.04		)	(0.4		)	(0.01		)
Loss on exchange and repurchase of convertible debentures	(1.8		)	(0.07		)	(3.8		)	(0.15		)
Goodwill and other intangible asset impairment	(45.8		)	(1.98		)	—			—
Fair value adjustment to acquisition date inventory	(0.6		)	(0.02		)	—			—
Interest expense and royalties with GST	(10.1		)	(0.44		)	(9.7		)	(0.38		)
Other	(1.1		)	(0.05		)	(0.4		)	(0.02		)
Tax accrual adjustments	0.4			0.02			(0.9		)	(0.03		)
Impact of shares deliverable under outstanding convertible debenture hedge	N/A			(0.03		)	N/A			(0.11		)
Impact	(59.9		)	(2.61		)	(15.2		)	(0.70		)
Net income (loss)	$	(38.9	)	$	(1.68	)	$	9.6		$	0.38

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, the fair value adjustment to acquisition date inventory is included in cost of sales and the restructuring costs, loss exchange and repurchase of convertible debentures, 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, during the periods they were outstanding, the call options were excluded from the GAAP diluted earnings per share computation because they were antidilutive. They were settled and the corresponding value was realized in the second quarter of 2015.

11

EnPro Industries, Inc.

Reconciliation of EBITDA to Segment Profit (Unaudited)

For the Quarters and Six Months Ended June 30, 2015 and 2014

(Stated in Millions of Dollars)

	Quarter Ended June 30, 2015
	Sealing			Engineered			Power			Total
	Products			Products			Systems			Segments
Earnings before interest, income taxes, depreciation
and amortization (EBITDA)	$	29.8		$	9.2		$	7.4		$	46.4
Deduct depreciation and amortization expense	(8.6		)	(5.2		)	(1.1		)	(14.9		)
Segment profit	$	21.2		$	4.0		$	6.3		$	31.5
EBITDA margin	17.2		%	11.7		%	15.4		%	15.5		%

	Quarter Ended June 30, 2014
	Sealing			Engineered			Power			Total
	Products			Products			Systems			Segments
Earnings before interest, income taxes, depreciation
and amortization (EBITDA)	$	30.6		$	14.8		$	4.3		$	49.7
Deduct depreciation and amortization expense	(7.8		)	(5.9		)	(0.9		)	(14.6		)
Segment profit	$	22.8		$	8.9		$	3.4		$	35.1
EBITDA margin	17.4		%	15.5		%	10.0		%	15.9		%

	Six Months Ended June 30, 2015
	Sealing			Engineered			Power			Total
	Products			Products			Systems			Segments
Earnings before interest, income taxes, depreciation
and amortization (EBITDA)	$	56.3		$	17.2		$	8.9		$	82.4
Deduct depreciation and amortization expense	(17.1		)	(9.8		)	(2.0		)	(28.9		)
Segment profit	$	39.2		$	7.4		$	6.9		$	53.5
EBITDA margin	16.9		%	11.0		%	10.1		%	14.3		%

	Six Months Ended June 30, 2014
	Sealing			Engineered			Power			Total
	Products			Products			Systems			Segments
Earnings before interest, income taxes, depreciation
and amortization (EBITDA)	$	55.3		$	29.1		$	8.5		$	92.9
Deduct depreciation and amortization expense	(15.4		)	(11.5		)	(1.8		)	(28.7		)
Segment profit	$	39.9		$	17.6		$	6.7		$	64.2
EBITDA margin	16.7		%	15.5		%	10.1		%	15.5		%

For a reconciliation of segment profit to net income, please refer to the Segment Information (Unaudited) schedule.

12

EnPro Industries, Inc.

Reconciliation of Adjusted EBITDA to Net Income (Loss) (Unaudited)

For the Quarters and Six Months Ended June 30, 2015 and 2014

(Stated in Millions of Dollars)

	Quarters Ended						Six Months Ended
	June 30,						June 30,
	2015			2014			2015			2014
Earnings before interest, income taxes, depreciation,
amortization, and other selected items (adjusted EBITDA)*	$	42.4		$	39.3		$	70.1		$	71.5
Adjustments to arrive at earnings before interest, income
taxes, depreciation and amortization (EBITDA):
Restructuring costs	(0.4		)	(0.5		)	(1.4		)	(0.6		)
Loss on exchange and repurchase of convertible debentures	—			(2.4		)	(2.8		)	(6.0		)
Goodwill and other intangible asset impairment	(47.0		)	—			(47.0		)	—
Fair value adjustment to acquisition date inventory	—			—			(1.0		)	—
Other	(0.6		)	(0.1		)	(2.1		)	(1.2		)
EBITDA	(5.6		)	36.3			15.8			63.7
Adjustments to arrive at net income:
Interest expense, net	(12.9		)	$	(10.1	)	$	(25.8	)	$	(21.0	)
Income tax benefit (expense)	(3.9		)	$	(3.2	)	$	0.1		$	(4.2	)
Depreciation and amortization expense	(14.9		)	$	(14.7	)	$	(29.0	)	$	(28.9	)
Net income (loss)	$	(37.3	)	$	8.3		$	(38.9	)	$	9.6

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

13

EnPro Industries, Inc.

Reconciliation of Normalized Net Sales to Net Sales (Unaudited)

For the Quarters and Six Months Ended June 30, 2015 and 2014

(Stated in Millions of Dollars)

	Quarter Ended June 30, 2015
	Sealing			Engineered			Power		Intersegment			Total
	Products			Products			Systems		Sales			Segments
Normalized net sales	$	164.2		$	89.2		$	47.9	$	(1.0	)	$	300.3
Adjustments:
Foreign exchange translation	(6.7		)	(10.7		)	—		—			(17.4		)
Acquisitions	15.5			—			—		—			15.5
Net sales	$	173.0		$	78.5		$	47.9	$	(1.0	)	$	298.4

	Quarter Ended June 30, 2014
	Sealing		Engineered		Power		Intersegment			Total
	Products		Products		Systems		Sales			Segments
Normalized net sales	$	167.2	$	95.5	$	43.0	$	(0.8	)	$	304.9
Adjustments:
Divestitures	8.2		—		—		—			8.2
Net sales	$	175.4	$	95.5	$	43.0	$	(0.8	)	$	313.1

	Six Months Ended June 30, 2015
	Sealing			Engineered			Power		Intersegment			Total
	Products			Products			Systems		Sales			Segments
Normalized net sales	$	319.7		$	175.8		$	88.1	$	(1.8	)	$	581.8
Adjustments:
Foreign exchange translation	(12.8		)	(20.1		)	—		—			(32.9		)
Acquisitions	27.0			—			—		—			27.0
Net sales	$	333.9		$	155.7		$	88.1	$	(1.8	)	$	575.9

	Six Months Ended June 30, 2014
	Sealing		Engineered		Power		Intersegment			Total
	Products		Products		Systems		Sales			Segments
Normalized net sales	$	313.4	$	187.3	$	84.1	$	(1.5	)	$	583.3
Adjustments:
Divestitures	17.0		—		—		—			17.0
Net sales	$	330.4	$	187.3	$	84.1	$	(1.5	)	$	600.3

For a reconciliation of segment net sales to net sales, please refer to the Segment Information (Unaudited) schedule.

14

EnPro Industries, Inc.

Reconciliation of Normalized Segment Profit to Segment Profit (Unaudited)

For the Quarters and Six Months Ended June 30, 2015 and 2014

(Stated in Millions of Dollars)

	Quarter Ended June 30, 2015
	Sealing			Engineered			Power		Total
	Products			Products			Systems		Segments
Normalized segment profit	$	22.0		$	5.6		$	5.1	$	32.7
Adjustments:
Foreign exchange translation	(0.5		)	(1.1		)	—		(1.6		)
Acquisitions	(0.4		)	—			—		(0.4		)
Restructuring	0.1			(0.5		)	—		(0.4		)
EDF contract	—			$	—		1.2		1.2
Segment profit	$	21.2		$	4.0		$	6.3	$	31.5

	Quarter Ended June 30, 2014
	Sealing			Engineered		Power		Total
	Products			Products		Systems		Segments
Normalized segment profit	$	21.7		$	8.9	$	3.4	$	34.0
Adjustments:
Divestitures	1.5			—		—		1.5
Restructuring	(0.4		)	$	—	—		(0.4		)
Segment profit	$	22.8		$	8.9	$	3.4	$	35.1

	Six Months Ended June 30, 2015
	Sealing			Engineered			Power			Total
	Products			Products			Systems			Segments
Normalized segment profit	$	40.5		$	11.1		$	11.9		$	63.5
Adjustments:
Foreign exchange translation	(1.0		)	(2.2		)	—			(3.2		)
Acquisitions	(0.4		)	—			—			(0.4		)
Restructuring	0.1			(1.5		)	—			(1.4		)
EDF contract	—			$	—		(5.0		)	(5.0		)
Segment profit	$	39.2		$	7.4		$	6.9		$	53.5

	Six Months Ended June 30, 2014
	Sealing			Engineered		Power		Total
	Products			Products		Systems		Segments
Normalized segment profit	$	37.2		$	17.6	$	6.7	$	61.5
Adjustments:
Divestitures	3.3			—		—		3.3
Restructuring	(0.6		)	$	—	—		(0.6		)
Segment profit	$	39.9		$	17.6	$	6.7	$	64.2

For a reconciliation of segment profit to net income, please refer to the Segment Information (Unaudited) schedule.

15

Unaudited Pro Forma Information Reflecting the Reconsolidation of Garlock Sealing Technologies

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 January 14, 2015, EnPro announced that GST and it had reached agreement with the court-appointed legal representative of future asbestos claimants (the "Future Claimants' Representative") that includes a second amended plan of reorganization (the “Amended Plan”). The Amended Plan was filed with the Bankruptcy Court on January 14, 2015 and supersedes the prior plans filed by GST. If approved by the Bankruptcy Court and implemented, the Amended Plan will provide certainty and finality to the expenditures necessary to resolve all current and future asbestos claims against GST and against its Garrison and Anchor Packing subsidiaries. The Future Claimants' Representative has agreed to support, recommend and vote in favor of the Amended Plan, which provides payments to all claimants who have a compensable disease and had meaningful contact with GST asbestos containing products.

The Amended Plan provides for (a) the treatment of 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 Amended Plan provides for the establishment of two facilities-a settlement facility (which would receive $220 million from GST and $30 million from Coltec, upon consummation of the Amended Plan and additional contributions by GST aggregating $77.5 million over the seven years following consummation of the Amended Plan) and a litigation fund (which would receive $30 million from GST upon consummation of the Amended Plan) to fund the defense and payment of claims of claimants who elect to pursue litigation under the Amended Plan rather than accept the settlement option under the Amended Plan. Funds contained in the settlement facility and the litigation fund 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. The Amended Plan provides that GST will pay in full claims that had been resolved by settlement or verdict prior to the Petition Date that were not paid prior to the Petition Date (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 $2.5 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, and the Amended Plan provides that if the actual amount is less than $10.0 million GST will contribute the difference to the settlement facility. In addition, the Amended Plan provides that, during the 40-year period following confirmation of the Amended Plan, GST would make supplementary annual contributions, subject to specified maximum annual amounts that decline over the period, to maintain a specified balance at specified dates of the litigation fund. The maximum aggregate amount of all such contingent supplementary contributions over that period is $132 million. GST believes that initial contributions to the litigation fund may likely be sufficient to permit the balance of that facility to exceed the specified thresholds over the 40-year period and, accordingly, that the low end of a range of reasonably possible loss associated with these contingent supplementary contributions is $0.

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; however, it also provides additional funds to provide full payment for non-mesothelioma claims and to gain the support of the Future Claimants’ Representative of the Amended Plan. Under the terms of the Amended Plan, EnPro will retain 100% of the equity interests of GST LLC.

16

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, we believe the confirmation and consummation of the Amended Plan is confirmable as presented to the bankruptcy court butis 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 June 30, 2015, the estimated fair value of assets and liabilities of GST as of June 30, 2015 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 June 30, 2015 gives effect to the reconsolidation as if it occurred on June 30, 2015. The unaudited pro forma condensed consolidated statements of operations for the quarters ended June 30, 2015 and 2014 give effect to the reconsolidation as if it had occurred on January 1, 2014.

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.

17

EnPro Industries, Inc.

Pro Forma Condensed Consolidated Statements of Operations (Unaudited)

For the Quarter Ended June 30, 2015

(Stated in Millions of Dollars, Except Per Share Data)

													Pro Forma
							Pro Forma			Pro Forma			Adjustments
	EnPro			GST			Adjustments			Consolidated			Reference
Net sales	$	298.4		$	57.0		$	(12.7	)	$	342.7		(1)
Cost of sales	197.1			34.6			(12.5		)	219.2			(1), (2)
Gross profit	101.3			22.4			(0.2		)	123.5
Operating expenses:
Selling, general and administrative	74.1			11.7			2.9			88.7			(3)
Other	47.5			0.3			(0.4		)	47.4			(4)
Total operating expenses	121.6			12.0			2.5			136.1
Operating income (loss)	(20.3		)	10.4			(2.7		)	(12.6		)
Interest expense	(13.1		)	(0.2		)	7.9			(5.4		)	(5)
Interest income	0.2			8.2			(7.9		)	0.5			(5)
Other expense	(0.2		)	(8.2		)	8.2			(0.2		)	(4)
Income (loss) before income taxes	(33.4		)	10.2			5.5			(17.7		)
Income tax expense	(3.9		)	(2.7		)	(2.0		)	(8.6		)	(6)
Net income (loss)	$	(37.3	)	$	7.5		3.5			$	(26.3	)
Basic loss per share	$	(1.66	)	N/A			N/A			$	(1.17	)
Average common shares outstanding (millions)	22.5									22.5
Diluted loss per share	$	(1.66	)	N/A			N/A			$	(1.17	)
Average common shares outstanding (millions)	22.5									22.5

(1	)	Eliminate intercompany sales of $12.7 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 Second 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.

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EnPro Industries, Inc.

Pro Forma Condensed Consolidated Statements of Operations (Unaudited)

For the Six Months Ended June 30, 2015

(Stated in Millions of Dollars, Except Per Share Data)

													Pro Forma
							Pro Forma			Pro Forma			Adjustments
	EnPro			GST			Adjustments			Consolidated			Reference
Net sales	$	575.9		$	111.2		$	(24.1	)	$	663.0		(1)
Cost of sales	384.8			68.4			(23.6		)	429.6			(1), (2)
Gross profit	191.1			42.8			(0.5		)	233.4
Operating expenses:
Selling, general and administrative	151.4			22.4			5.8			179.6			(3)
Other	48.6			0.2			(0.3		)	48.5			(4)
Total operating expenses	200.0			22.6			5.5			228.1
Operating income (loss)	(8.9		)	20.2			(6.0		)	5.3
Interest expense	(26.1		)	(0.3		)	15.7			(10.7		)	(5)
Interest income	0.3			16.3			(15.7		)	0.9			(5)
Other expense	(4.3		)	(11.7		)	11.7			(4.3		)	(4)
Income (loss) before income taxes	(39.0		)	24.5			5.7			(8.8		)
Income tax benefit (expense)	0.1			(7.5		)	(2.1		)	(9.5		)	(6)
Net income (loss)	$	(38.9	)	$	17.0		3.6			$	(18.3	)
Basic loss per share	$	(1.68	)	N/A			N/A			$	(0.79	)
Average common shares outstanding (millions)	23.1									23.1
Diluted loss per share	$	(1.68	)	N/A			N/A			$	(0.79	)
Average common shares outstanding (millions)	23.1									23.1

(1	)	Eliminate intercompany sales of $24.1 million.
(2	)	Reflects the increase in depreciation expense of $0.5 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 Second 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.

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EnPro Industries, Inc.

Pro Forma Condensed Consolidated Statements of Operations (Unaudited)

For the Quarter Ended June 30, 2014

(Stated in Millions of Dollars, Except Per Share Data)

													Pro Forma
							Pro Forma			Pro Forma			Adjustments
	EnPro			GST			Adjustments			Consolidated			Reference
Net sales	$	313.1		$	63.0		$	(14.9	)	$	361.2		(1)
Cost of sales	205.0			37.3			(14.7		)	227.6			(1), (2)
Gross profit	108.1			25.7			(0.2		)	133.6
Operating expenses:
Selling, general and administrative	83.5			11.8			2.9			98.2			(3)
Other	0.5			(186.3		)	186.3			0.5			(4)
Total operating expenses	84.0			(174.5		)	189.2			98.7
Operating income	24.1			200.2			(189.4		)	34.9
Interest expense	(10.4		)	—			7.6			(2.8		)	(5)
Interest income	0.3			7.7			(7.6		)	0.4			(5)
Other expense	(2.5		)	(5.0		)	5.0			(2.5		)	(4)
Income before income taxes	11.5			202.9			(184.4		)	30.0
Income tax expense	(3.2		)	(72.1		)	66.3			(9.0		)	(6)
Net income	$	8.3		$	130.8		(118.1		)	$	21.0
Basic earnings per share	$	0.36		N/A			N/A			$	0.92
Average common shares outstanding (millions)	22.9									22.9
Diluted earnings per share	$	0.32		N/A			N/A			$	0.81
Average common shares outstanding (millions)	26.0									26.0

(1	)	Eliminate intercompany sales of $14.9 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 Second 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.

20

EnPro Industries, Inc.

Pro Forma Condensed Consolidated Statements of Operations (Unaudited)

For the Six Months Ended June 30, 2014

(Stated in Millions of Dollars, Except Per Share Data)

													Pro Forma
							Pro Forma			Pro Forma			Adjustments
	EnPro			GST			Adjustments			Consolidated			Reference
Net sales	$	600.3		$	122.0		$	(28.0	)	$	694.3		(1)
Cost of sales	395.7			73.2			(27.5		)	441.4			(1), (2)
Gross profit	204.6			48.8			(0.5		)	252.9
Operating expenses:
Selling, general and administrative	162.4			22.7			5.8			190.9			(3)
Other	0.7			(185.5		)	185.9			1.1			(4)
Total operating expenses	163.1			(162.8		)	191.7			192.0
Operating income	41.5			211.6			(192.2		)	60.9
Interest expense	(21.5		)	—			15.1			(6.4		)	(5)
Interest income	0.5			15.3			(15.1		)	0.7			(5)
Other expense	(6.7		)	(7.9		)	7.9			(6.7		)	(4)
Income before income taxes	13.8			219.0			(184.3		)	48.5
Income tax expense	(4.2		)	(77.7		)	66.3			(15.6		)	(6)
Net income	$	9.6		$	141.3		(118.0		)	$	32.9
Basic earnings per share	$	0.43		N/A			N/A			$	1.49
Average common shares outstanding (millions)	22.1									22.1
Diluted earnings per share	$	0.38		N/A			N/A			$	1.29
Average common shares outstanding (millions)	25.6									25.6

(1	)	Eliminate intercompany sales of $28.0 million.
(2	)	Reflects the increase in depreciation expense of $0.5 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 Second 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.

21

EnPro Industries, Inc.

Pro Forma Condensed Consolidated Balance Sheets (Unaudited)

As of June 30, 2015

(Stated in Millions of Dollars)

					Second								Pro Forma
					Amended			Pro Forma			Pro Forma		Adjustments
	EnPro		GST		Plan Impact (1)			Adjustments			Consolidated		Reference
Current assets
Cash and investments	$	77.5	$	259.8	$	(193.4	)	$	—		$	143.9
Accounts receivable	212.2		31.8		—			(19.1		)	224.9		(4)
Inventories	170.5		18.2		—			5.6			194.3		(2)
Notes receivable from EnPro	—		37.1		—			(37.1		)	—		(3)
Other current assets	41.0		39.0		—			(15.4		)	64.6		(4)
Total current assets	501.2		385.9		(193.4		)	(66.0		)	627.7
Property, plant and equipment	202.2		42.6		—			19.8			264.6		(2)
Goodwill	192.8		18.4		—			(18.4		)	192.8		(2)
Other intangible assets	205.0		4.6		—			242.2			451.8		(2)
Investment in GST	236.9		—		—			(236.9		)	—		(6)
Notes receivable from EnPro	—		271.0		—			(271.0		)	—		(3)
Asbestos insurance receivable	—		62.7		(4.2		)	—			58.5
Deferred income taxes and income taxes receivable	100.3		90.7		(101.8		)	(83.3		)	5.9		(5)
Other assets	44.9		5.9		—			(1.1		)	49.7		(4)
Total assets	$	1,483.3	$	881.8	$	(299.4	)	$	(414.7	)	$	1,651.0
Current liabilities
Short-term borrowings from GST	$	24.9	$	—	$	—		$	(24.9	)	$	—	(3)
Notes payable to GST	12.2		—		—			(12.2		)	—		(3)
Current maturities of long-term debt	2.3		—		—			—			2.3
Accounts payable	87.5		21.8		—			(19.1		)	90.2		(4)
Accrued expenses	107.4		9.1		—			(15.4		)	101.1		(4)
Deferred income taxes and income taxes payable	1.7		0.3		—			—			2
Total current liabilities	236.0		31.2		—			(71.6		)	195.6
Long-term debt	367.0		—		—			—			367.0
Notes payable to GST	271.0		—		—			(271.0		)	—		(3)
Asbestos liability	30.0		339.1		(295.2		)	—			73.9
Deferred income taxes and income taxes payable	11.0		84.4		(1.6		)	(6.7		)	87.1		(5), (7)
Other liabilities	87.8		12.6		—			(1.1		)	99.3		(4)
Total liabilities	1,002.8		467.3		(296.8		)	(350.4		)	822.9
Shareholders' equity	480.5		414.5		(2.6		)	(64.3		)	828.1		(8)
Total liabilities and equity	$	1,483.3	$	881.8	$	(299.4	)	$	(414.7	)	$	1,651.0

(1	)	We determined that the establishment of the settlement facility and litigation facility contemplated by the Second Amended Plan, payments of claims resolved by settlement or verdict prior to the Petition Date that were not paid prior to the Petition Date and other liabilities subject to compromise would be funded by cash on hand. The existing deferred tax asset on the asbestos liability was eliminated and a new deferred tax asset on the remaining trust liability payments was established. The asbestos insurance receivable, remaining payments required under the settlement facility and the related tax effects were discounted to their present value using a 6% discount rate. We have not reflected any amounts for the contingent funding under the litigation guarantee as we feel these will be largely unnecessary. The maximum after-tax net present value of these payments over 40 years would be $31 million.
(2	)	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 value adjustment to property, plant and equipment. We eliminated GST's pre-existing goodwill and other identifiable intangible assets of $18.4 million and $4.6 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 carrying value of all other assets and liabilities approximated fair value.
(3	)	Eliminate intercompany notes receivable/payable.
(4	)	Eliminate intercompany trade receivables/payables, intercompany interest receivable/payable and other intercompany receivables/payables.
(5	)	Eliminate $83.3 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 establish a deferred tax liability on the step-up in fair value of assets resulted in a net increase in long-term tax liabilities of $76.6 million.
(8	)	The entries above resulted in reflecting a $347.6 million after-tax gain upon reconsolidation.

22

EnPro Industries, Inc.

Reconciliation of Pro Forma Adjusted EBITDA to Pro Forma Net Income (Unaudited)

For the Quarters and Six Months Ended June 30, 2015 and 2014

(Stated in Millions of Dollars)

	Quarters Ended						Six Months Ended
	June 30,						June 30,
	2015			2014			2015			2014
Pro forma earnings before interest, income taxes,
depreciation, amortization and other selected
items (pro forma adjusted EBITDA):	$	54.6		$	54.6		$	93.5		$	100.2
Adjustments to arrive at pro forma earnings before interest,
income taxes, depreciation and amortization (pro forma
EBITDA):
Restructuring costs	(0.4		)	(0.5		)	(1.5		)	(1.1		)
Loss on exchange and repurchase of convertible debentures	—			(2.4		)	(2.8		)	(6.0		)
Goodwill and other intangible asset impairment	(47.0		)	—			(47.0		)	—
Fair value adjustment to acquisition date inventory	—			—			(1.0		)	—
Other	(0.3		)	(0.1		)	(1.6		)	(0.7		)
Pro forma EBITDA	6.9			51.6			39.6			92.4
Adjustments to arrive at pro forma net income:
Interest expense, net	(4.9		)	(2.4		)	(9.8		)	(5.7		)
Income tax expense	(8.6		)	(9.0		)	(9.5		)	(15.6		)
Depreciation and amortization expense	(19.7		)	(19.2		)	(38.6		)	(38.2		)
Pro forma net income	$	(26.3	)	$	21.0		$	(18.3	)	$	32.9

The foregoing table 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 earnings 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)."

23