Garlock Sealing Technologies LLC and Garrison Litigation Management Group, Ltd. (Tables)

6 Months Ended

Jun. 30, 2015

Schedule of Condensed Combined Statements of Operations

Condensed combined financial information for GST is set forth below, presented on a historical cost basis.

GST

(Debtor-in-Possession)

Condensed Combined Statements of Operations (Unaudited)

(in millions)



	Quarters Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Net sales	$	57.0		$	63.0		$	111.2		$	122.0
Cost of sales	34.6			37.3			68.4			73.2
Gross profit	22.4			25.7			42.8			48.8
Operating expenses:
Selling, general and administrative	11.7			11.8			22.4			22.7
Asbestos-related	0.3			(186.3		)	0.1			(186.0		)
Other	—			—			0.1			0.5
Total operating expenses	12.0			(174.5		)	22.6			(162.8		)
Operating income	10.4			200.2			20.2			211.6
Interest income, net	8.0			7.7			16.0			15.3
Income before reorganization expenses and income taxes	18.4			207.9			36.2			226.9
Reorganization expenses	(8.2		)	(5.0		)	(11.7		)	(7.9		)
Income before income taxes	10.2			202.9			24.5			219.0
Income tax expense	(2.7		)	(72.1		)	(7.5		)	(77.7		)
Net income	$	7.5		$	130.8		$	17.0		$	141.3
Comprehensive income	$	6.5		$	132.3		$	13.0		$	142.7

Schedule of Condensed Combined Statements of Cash Flows

GST

(Debtor-in-Possession)

Condensed Combined Statements of Cash Flows (Unaudited)

Six Months Ended June 30, 2015 and 2014

(in millions)



	2015			2014
Net cash provided by operating activities	$	36.4		$	42.1
Investing activities
Purchases of property, plant and equipment	(2.0		)	(3.9		)
Net payments on loans to affiliates	(2.3		)	—
Net purchase of held-to-maturity securities	(29.8		)	—
Other	—			(0.4		)
Net cash used in investing activities	(34.1		)	(4.3		)
Effect of exchange rate changes on cash and cash equivalents	(1.6		)	0.6
Net increase in cash and cash equivalents	0.7			38.4
Cash and cash equivalents at beginning of period	66.0			42.8
Cash and cash equivalents at end of period	$	66.7		$	81.2

Schedule of Condensed Combined Balance Sheets

GST

(Debtor-in-Possession)

Condensed Combined Balance Sheets (Unaudited)

(in millions)



	June 30, 2015		December 31, 2014
Assets:
Current assets	$	385.9	$	370.9
Asbestos insurance receivable	62.7		80.7
Deferred income taxes	90.7		85.6
Notes receivable from affiliate	271.0		259.3
Other assets	71.5		73.5
Total assets	$	881.8	$	870.0
Liabilities and Shareholder’s Equity:
Current liabilities	$	31.2	$	42.7
Other liabilities	97.0		86.6
Liabilities subject to compromise (A)	339.1		339.1
Total liabilities	467.3		468.4
Shareholder’s equity	414.5		401.6
Total liabilities and shareholder’s equity	$	881.8	$	870.0

(A) Liabilities subject to compromise include pre-petition unsecured claims which may be resolved at amounts different from those recorded in the condensed combined balance sheets. Liabilities subject to compromise consist principally of asbestos-related claims. GST has undertaken to project the number and ultimate cost of all present and future bodily injury claims expected to be asserted, based on actuarial principles, and to measure probable and estimable liabilities under generally accepted accounting principles. GST has accrued $337.5 million as of June 30, 2015 for asbestos related claims. The accrual consists of total funding consisting of (a) $327.5 million for present and future asbestos claims against GST that have not been resolved by settlement prior to the Petition Date plus litigation and administrative expenses, and (b) $10.0 million for claims resolved by enforceable settlement and were not paid prior to the Petition Date and contributions by GST to the settlement facility under the revised plan to the extent such claims are less than $10.0 million. See Note 16, “Commitments and Contingencies – Asbestos.”