Company Website:
http://www.enproindustries.com
CHARLOTTE, N.C. -- (Business Wire)
EnPro Industries, Inc. (NYSE: NPO):
|
Consolidated Financial Highlights |
(Amounts in millions except per share data and percentages) |
|
Consolidated Financial Results |
|
|
| Quarter Ended June 30 |
|
| Six Months Ended June 30 |
| | | | 2015 |
|
| 2014 |
|
| % Change | | | 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 | | | Six Months Ended June 30 |
| | | | 2015 | | | 2014 | | | % Change | | | 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 | | | Six Months Ended June 30 |
| | | | 2015 | | | 2014 | | | % Change | | | 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 adjust for FX, acquisitions and divestitures,
acquisiton 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.
- 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)
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 $1.08
a share, in 2014.
|
Sealing Products Segment |
|
|
|
| Quarter Ended |
|
| |
|
| Six months Ended |
|
| |
($ Millions) |
|
|
| 6/30/2015 |
|
| 6/30/2014 |
|
| Change |
|
| 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 |
|
|
|
| Quarter Ended |
|
| |
|
| Six months Ended |
|
| |
($ Millions) |
|
|
| 6/30/2015 |
|
| 6/30/2014 |
|
| Change |
|
| 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.
|
Power Systems Segment |
|
|
|
| Quarter Ended |
|
| |
|
| Six months Ended |
|
| |
($ Millions) |
|
|
| 6/30/2015 |
|
| 6/30/2014 |
|
| Change |
|
| 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 $5.2 million year-over-year and margins
were 13.5% compared to 8.0% in 2014. The higher margins were primarily
due to higher volume, a more favorable mix of high-margin parts and
services and improved pricing, which more than offset increased selling,
general and administrative expense.
|
Garlock Sealing Technologies |
|
|
|
| Quarter Ended |
|
| |
|
| Six months Ended |
|
| |
($ Millions) |
|
|
| 6/30/2015 |
|
| 6/30/2014 |
|
| Change |
|
| 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 inter-company 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.
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.”
“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.
|
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,
| | |
June 30,
| | |
June 30,
| | |
June 30,
|
|
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
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
|
|
| | | | | | | | | | | | |
|
|
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
| |
| | | | | | |
|
|
|
|
| |
|
| |
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
|
|
| | | | | | | | |
|
|
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.
|
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 on 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.
|
|
|
| |
|
| |
|
| |
|
| |
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
|
|
|
| |
|
| |
|
| |
|
| |
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.
|
|
|
| |
|
| |
|
| |
|
| |
|
| |
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.
|
|
|
| |
|
| |
|
| |
|
| |
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.
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.
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.
|
|
|
| |
|
| |
|
| |
|
| |
|
| |
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.
|
|
|
|
|
| |
|
| |
|
| |
|
| |
|
| | |
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.
| |
| | | | | | | |
|
|
|
|
|
| |
|
| |
|
| |
|
| |
|
| |
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.
|
|
|
|
|
|
| |
|
| |
|
| |
|
| |
|
| |
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.
|
|
|
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
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
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
2.0
| | | |
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.
|
|
|
| |
|
| |
|
| |
|
| |
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)".
View source version on businesswire.com: http://www.businesswire.com/news/home/20150730006823/en/
Contacts:
EnPro Industries, Inc.
Dan Grgurich, 704-731-1527
Director,
Investor Relations and Corporate Communications
dan.grgurich@enproindustries.com
Source: EnPro Industries Inc.
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