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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________________________
FORM 10-K
_____________________________________________________
(Mark One)
ý
A NNUAL   REPORT   PURSUANT   TO  S ECTION  13 OR  15( D ) OF   THE   SECURITIES   EXCHANGE   ACT   OF  1934
For the fiscal year ended December 31, 2015
¨
T RANSITION   REPORT   PURSUANT   TO   SECTION  13 OR  15( D ) OF   THE   SECURITIES   EXCHANGE   ACT   OF  1934
Commission File Number 001-31225
_____________________________________________________
ENPRO INDUSTRIES, INC.
(Exact name of registrant, as specified in its charter)
_____________________________________________________
North Carolina
 
01-0573945
(State or other jurisdiction of incorporation)
 
(I.R.S. employer identification no.)
 
 
 
5605 Carnegie Boulevard, Suite 500
Charlotte, North Carolina
 
28209
(Address of principal executive offices)
 
(Zip code)
(704) 731-1500
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Name of each exchange
on which registered
Common stock, $0.01 par value
 
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
 _____________________________________________________
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes   ý     No   ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes   ¨     No   ý
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   ý     No   ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.     ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
ý
 
Accelerated filer
¨
 
 
 
 
 
Non-accelerated filer
o
(Do not check if a smaller reporting company)
Smaller reporting company
¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ¨     No   ý
The aggregate market value of voting and nonvoting common stock of the registrant held by non-affiliates of the registrant as of June 30, 2015 was $1,237,418,320 . As of February 22, 2016, there were 21,945,954 shares of common stock of the registrant outstanding, which includes 195,499 shares of common stock held by a subsidiary of the registrant and accordingly are not entitled to be voted.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive proxy statement for the 2016 annual meeting of shareholders are incorporated by reference into Part III.


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TABLE OF CONTENTS
 
 
Page
 
 
 
Item 1
Item 1A
Item 1B
Item 2
Item 3
Item 4
 
 
 
 
 
Item 5
Item 6
Item 7
Item 7A
Item 8
Item 9
Item 9A
Item 9B
 
 
 
 
Item 10
Item 11
Item 12
Item 13
Item 14
 
 
 
 
Item 15
 
 
 
 
 
 
 
 
 
 


Table of Contents

ENPRO INDUSTRIES, INC.
PART I

ITEM 1.
BUSINESS
As used in this report, the terms “we,” “us,” “our,” “EnPro” and “Company” mean EnPro Industries, Inc. and its subsidiaries (unless the context indicates another meaning). The term “common stock” means the common stock of EnPro Industries, Inc., par value $0.01 per share. The terms “convertible debentures” and “debentures” mean the 3.9375% Convertible Senior Debentures due 2015 issued by the Company in October 2005. The term "senior notes" means the 5.875% Senior Notes due 2022 issued by the Company in September 2014.
Background
We are a leader in designing, developing, manufacturing, and marketing proprietary engineered industrial products. We serve a wide variety of customers in varied industries around the world. As of December 31, 2015 , we had 60 primary manufacturing facilities located in 14 countries, including the United States. We were incorporated under the laws of the State of North Carolina on January 11, 2002, as a wholly owned subsidiary of Goodrich Corporation (“Goodrich”). The incorporation was in anticipation of Goodrich’s announced distribution of its Engineered Industrial Products segment to existing Goodrich shareholders. The distribution took place on May 31, 2002 (the “Distribution”).
Our sales by geographic region in 2015 , 2014 and 2013 were as follows:
 
2015
 
2014
 
2013
 
(in millions)
United States
$
696.2

 
$
674.1

 
$
620.3

Europe
289.5

 
315.9

 
308.6

Other
218.7

 
229.3

 
215.3

Total
$
1,204.4

 
$
1,219.3

 
$
1,144.2


On June 5, 2010 (the “Petition Date”), three of our subsidiaries 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 as a result of tens of thousands of pending and expected future asbestos personal injury claims. For a discussion of the effects of these proceedings on our financial statements, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Garlock Sealing Technologies LLC and Garrison Litigation Management Group, Ltd.” and “– Contingencies, Subsidiary Bankruptcy” and “– Contingencies, Asbestos,” and Notes 19 and 20 to our Consolidated Financial Statements, included in this report. Because of the filing, the results of these subsidiaries have been deconsolidated from our results since the Petition Date. The deconsolidated entities had sales for the years ended December 31, 2015 , 2014 and 2013 as follows:
 
2015
 
2014
 
2013
 
(in millions)
United States
$
114.9

 
$
125.9

 
$
122.8

Europe
11.4

 
14.6

 
21.2

Other
91.3

 
100.1

 
100.8

Total
$
217.6

 
$
240.6

 
$
244.8


We maintain an Internet website at www.enproindustries.com. We will make this annual report, in addition to our other annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to these reports, available free of charge on our website as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission. Our Corporate Governance Guidelines and the charters for each of our Board Committees (Audit and Risk Management, Compensation and Human Resources, Executive, and Nominating and Corporate Governance committees) are also available on our website, and copies of this information are available in print to any shareholder who requests it. Information included on or linked to our website is not incorporated by reference into this annual report.


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Acquisitions and Dispositions
In July 2015, we purchased the Veyance North American air spring business (the "Air Spring Business") through the purchase of 100% of the stock of Veyance's Mexico business and of all of the assets of its U.S. business. The Air Spring Business is a manufacturer of air springs that are used in the suspension systems of commercial vehicles. Following the acquisition, it became part of EnPro's Stemco division within the Sealing Products segment. The Air Spring Business manufactures products in its facility in San Luis Potosi, Mexico with a commercial organization in the U.S., Canada and Mexico, and engineering, testing and administrative resources in Fairlawn, Ohio. The addition of the Air Spring Business significantly expands Stemco's presence and scale in the commercial vehicle suspension market.
On February 12, 2015, we acquired the stock of ATDynamics, Inc. ("ATDynamics"), a privately-held company offering innovative aerodynamic products to the commercial trucking industry. Following its acquisition, ATDynamics became part of EnPro’s Stemco division within the Sealing Products segment. ATDynamics, with operations in Texas and California, is the leading designer and manufacturer of a suite of clean technology products engineered to reduce fuel consumption in the global freight transportation industry.
We paid $ 45.5 million , net of cash acquired, in 2015 for the businesses acquired in 2015. An additional amount of approximately $6 million is expected to be paid based on the finalized and agreed-upon acquisition date balance sheet of the Air Spring Business.
In December 2014, we acquired Fabrico, Inc. ("Fabrico"), a privately-held company offering mission-critical components for the combustion and hot path sections of industrial gas and steam turbines. The business is headquartered in Oxford, Massachusetts with additional facilities in Charlton, Massachusetts and Greenville, South Carolina. The addition of Fabrico significantly expands our presence and scale in the land-based turbine seal and combustion market.
In March 2014, we acquired the remaining interest of the Stemco Crewson LLC joint venture. As a result, we own all of the ownership interests in Stemco Crewson LLC. The joint venture was formed in 2009 with joint venture partner Tramec, LLC to expand our brake product offerings to include automatic brake adjusters. The purchase of the remaining interest in the joint venture allows us to accelerate investment in new product development and commercial strategies focused on market share growth for these products.
In March 2014, we acquired the business of Strong-Tight Co. Ltd., a Taiwanese manufacturer and seller of gaskets and industrial sealing products. This acquisition adds an established Asian marketing presence and manufacturing facilities for our gasket and sealing products business.
All of the businesses acquired in 2014 are included in our Sealing Products segment. We paid $ 61.9 million in 2014, net of cash acquired, for these businesses. The acquisition of Fabrico includes a contingent consideration arrangement that requires additional consideration to be paid based on the future gross profit of Fabrico during the two-years subsequent to the acquisition. The range of undiscounted amounts we could pay under the contingent consideration agreement is between $0 and $7.0 million . The fair value of the contingent consideration recognized on the acquisition date was $1.9 million . This amount was increased to $ 2.3 million as of December 31, 2015 based on projected attainment.
In January 2013, we acquired certain assets and assumed certain liabilities of a small distributor of industrial seals in Singapore which is managed as part of the Garlock operations in the Sealing Products segment. The acquisition was paid for with $2.0 million of cash.
In December 2014, we sold substantially all of the assets and transferred certain liabilities of the GRT business unit. GRT, which was a single manufacturing facility in Paragould, Arkansas, manufactures and sells conveyor belts and sheet rubber for many applications across a diversified array of end markets. It was previously managed as part of the Garlock operations in the Sealing Products segment. The business was sold for $42.3 million, net of transaction expenses; $3.0 million of the sales proceeds being held in an escrow account for 18 months to fund indemnification payments, if any, to the buyer under the sale agreement. GRT reported net sales of $31.3 million and $30.1 million for the years ended December 31, 2014 and 2013, respectively.
Operations
We manage our business as three segments: a Sealing Products segment, an Engineered Products segment, and a Power Systems segment. Our reportable segments are managed separately based on differences in their products and services and their end-customers. For financial information with respect to our business segments, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations,” and Note 18 to our Consolidated Financial Statements. Item 7 and Note 18 contain information about sales and profits for each segment, and Note 18 contains information about each segment’s assets.

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Sealing Products Segment
Overview . Our Sealing Products segment includes three operating divisions, Garlock, Technetics and Stemco, that serve a wide variety of industries where performance and durability are vital for safety and environmental protection. Our products are used in many demanding environments, such as those characterized by high pressure, high temperature and chemical corrosion, and many of our products support critical applications with a low tolerance for failure.
The Garlock family of companies designs, manufactures and sells sealing products, including: metallic, non-metallic and composite material gaskets; dynamic seals; compression packing; hydraulic components; expansion joints; flange sealing and isolation products; pipeline casing spacers/isolators; casing end seals; modular sealing systems for sealing pipeline penetrations; and safety-related signage for pipelines.
Gasket products are used for sealing flange joints in chemical, petrochemical and pulp and paper processing facilities where high pressures, high temperatures and corrosive chemicals create the need for specialized and highly engineered sealing products. Our products are also used in sanitary markets such as food and pharma where product integrity and safety are extremely important. We sell these gasket products under the Garlock ® , Gylon ® , Blue-Gard ® , Stress-Saver ® , Edge ® , Graphonic ® , Bio-Pro ® ,and Flexseal ® brand names. These products have a long-standing reputation for performance and reliability within the industries we serve.
Dynamic elastomeric seals are used in rotating applications to contain the lubricants that protect the bearings from excessive friction and heat generation. Because these sealing products are utilized in dynamic applications, they are subject to wear. Durability, performance, and reliability are, therefore, critical requirements of our customers. These rotary seals are used in demanding applications in the steel industry, mining and pulp and paper processing under well-known brand names including KLOZURE ® and Model 64 ® .
Dynamic bearing isolator seals are used in power transmission systems to contain lubricants within bearing housings while also preventing contamination ingress. Bearing isolators provide users long-life sealing due to the non-contact seal design, and therefore are used in many OEM electric motors and gear boxes. GST LLC continues to innovate and build a patent portfolio of bearing isolator products. Its well-known brands include GUARDIAN ™ , ISO-GARD ™ , EnDuro ™ and SGi ™ .
Gar-Seal ® brand PTFE-lined butterfly valves are used to control the flow of corrosive, abrasive or toxic media in the chemical processing industry.
Compression packing is used to provide sealing in pressurized, static and dynamic applications such as pumps and valves. Major markets for compression packing products are the pulp and paper, mining, petrochemical and hydrocarbon processing industries. Branded products for these markets include EVSP™, Synthepak ® and Graph-lock ® .
Critical service flange gaskets, seals and electrical flange isolation kits are used in high-pressure wellhead equipment, flow lines, water injection lines, sour hydrocarbon process applications and crude oil and natural gas pipeline/transmission line applications. These products are sold under the brand names Pikotek ® , VCS/LineSeal ® , VCFS™, Flowlok™, PGE™, LineBacker ® , LineBacker ® 61™ NSF, GasketSeal ® and ElectroStop ® . Additional products for pipeline wall penetration sealing systems are supplied to water, construction and infrastructure industries under the Link-Seal ® and Century-Line ® brand names.
Technetics Group designs, manufactures and sells high performance metal seals; elastomeric seals; bellows and bellows assemblies; pedestals for semiconductor manufacturing; and a wide range of polytetrafluoroethylene ("PTFE") products. These products are used in a variety of industries, including electronics and semiconductor, aerospace, land-based turbines, power generation, oil and gas, food and beverage and other industries. Brands include Helicoflex ® , Belfab ® , Feltmetal ® , PlastomerTM, BioGuardianTM and Origraf ® .
Stemco designs, manufactures and sells heavy-duty truck wheel-end components and systems including: seals; hubcaps; mileage counters; bearings; locking nuts; brake products, such as brake drums, automatic brake adjusters, brake friction and shoes, hardware and brake kits; suspension components, such as steering knuckle king-pins and bushings, spring pins and bushings, other polymer bushing components, and air springs for tractor, trailer and cab suspensions; and RF-based tire pressure monitoring and inflation systems and automated mileage collection devices, as well as trailer end aerodynamic devices designed to increase fuel efficiency. Its products primarily serve the medium and heavy-duty truck market. Product brands include STEMCO®, STEMCO Kaiser®, STEMCO Duroline®, STEMCO Crewson®, STEMCO Motor Wheel®, Grit Guard®, Guardian HP®, Voyager®, Discover®, Endeavor®, Pro-Torq®, Sentinel®, Data Trac®, DataTrac®, QwikKit®, Centrifuse®, AerisTM, BAT RF®, TrailerTail®, Spring Ride® and Super Cushion®.
Garlock Sealing Technologies LLC (“GST LLC”) is one of three of our subsidiaries that filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code on the Petition Date. GST LLC is one of the businesses within our broader Garlock group. GST LLC and its subsidiaries operate five primary facilities, including facilities in Palmyra,

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New York and Houston, Texas. Because GST LLC and its subsidiaries remain wholly-owned indirect subsidiaries of ours, we have continued to include a description of their products, customers, competition, and raw materials in this segment discussion.
Customers . Our Sealing Products segment sells products to industrial agents and distributors, original equipment manufacturers (“OEMs”), engineering and construction firms and end users worldwide. Sealing products are offered to global customers, with approximately 37% of sales delivered to customers outside the United States in 2015 . Representative customers include Saudi Aramco, Motion Industries, Applied Industrial Technologies, Electricite de France, AREVA, Bayer, BASF Corporation, Chevron, General Electric Company, Georgia-Pacific Corporation, Eastman Chemical Company, Exxon Mobil Corporation, Minara Resources, Queensland Alumina, AK Steel Corporation, Volvo Corporation, Utility Trailer, Great Dane, Mack Trucks, International Truck, PACCAR, Hendrickson, Applied Materials, Carlisle Interconnect Technologies, Schlumberger, China Nuclear Power Engineering Company Ltd., and Flextronics. In 2015 , the largest customer accounted for approximately 6% of segment revenues.
Competition . Competition in the sealing markets we serve is based on proven product performance and reliability, as well as price, customer service, application expertise, technical support, delivery terms, breadth of product offering, reputation for quality, and the availability of product. Our leading brand names, including Garlock ® and Stemco ® , have been built upon long-standing reputations for reliability and durability. In addition, the breadth, performance and quality of our product offerings allow us to achieve premium pricing and have made us a preferred supplier among our agents and distributors. We believe that our record of product performance in the major markets in which this segment operates is a significant competitive advantage for us. Major competitors include A.W. Chesterton Company, Klinger Group, Teadit, Lamons, SIEM/Flexitallic, SKF USA Inc., Federal-Mogul Corporation, Meritor, Firestone, Saint-Gobain, Eaton Corporation, Parker Hannifin Corporation, and Miropro Co. Ltd.
Raw Materials and Components . Our Sealing Products segment uses PTFE resins, aramid fibers, specialty elastomers, elastomeric compounds, graphite and carbon, common and exotic metals, cold-rolled steel, leather, aluminum die castings, nitrile rubber, powdered metal components, and various fibers and resins. We believe all of these raw materials and components are readily available from various suppliers.
Engineered Products Segment
Overview . Our Engineered Products segment includes two high performance industrial products businesses: GGB and Compressor Products International (CPI).
GGB designs, manufactures and sells self-lubricating, non-rolling, metal polymer, engineered plastics, and fiber reinforced composite bearing products, as well as aluminum bushing blocks for hydraulic applications. The bearing surfaces are often made of PTFE or a mixture that includes PTFE to provide maintenance-free performance and reduced friction. GGB's bearing products typically perform as sleeve bearings or thrust washers under conditions of no lubrication, minimal lubrication or pre-lubrication. These products are used in a wide variety of markets such as the automotive, pump and compressor, construction, power generation and general industrial markets. GGB has approximately 20,000 bearing part numbers of different designs and physical dimensions. GGB is a leading and well recognized brand name and sells products under the DU ® , DP ® , DX ® , DS ®, HI-EX ® , EP™, SY™, HPMB™, and GAR-MAX™ names.
CPI designs, manufactures, sells and services components for reciprocating compressors and engines. These components, which include packing and wiper rings, piston and rider rings, compressor valve assemblies, divider block valves, compressor monitoring systems, lubrication systems and related components are utilized primarily in the refining, petrochemical, natural gas gathering, storage and transmission, and general industrial markets. Brand names for our products include Hi-Flo™, Valvealert™, Mentor™, Triple Circle™, CPI Special Polymer Alloys™, Twin Ring™, Liard™, ProFlo™, Neomag™, CVP™, XDC™, POPR™ and Protecting Compressors World Wide™.
Customers . The Engineered Products segment sells its products to a diverse customer base using a combination of direct sales and independent distribution networks worldwide, with approximately 72% of sales delivered to customers outside the United States in 2015 . GGB has customers worldwide in all major industrial sectors, and supplies products directly to customers through GGB’s own local distribution system and indirectly to the market through independent agents and distributors with their own local networks. CPI sells its products and services globally through its internal sales force, independent sales representatives, distributors, and service centers. In 2015 , the largest customer accounted for approximately 2% of segment revenues.
Competition . GGB has a number of competitors, including Kolbenschmidt Pierburg AG, Saint-Gobain’s Norglide division, and Federal-Mogul Corporation. In the markets in which GGB competes, competition is based primarily on performance of the product for specific applications, product reliability, delivery, and price. CPI competes against other component manufacturers and service providers, such as Cook Compression, Hoerbiger Corporation, Graco and numerous

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smaller component manufacturers. In the markets served by CPI, the primary competitive drivers are trusted solutions with personalized customer care, product quality, availability, engineering support, and price.
Raw Materials . GGB’s major raw material purchases include steel coil, bronze powder, bronze coil, PTFE and aluminum. GGB sources components from a number of external suppliers. CPI’s major raw material purchases include PTFE, polyetheretherketone (PEEK), compound additives, bronze, steel, and stainless steel bar stock. We believe all of these raw materials and components are readily available from various suppliers, though there are limited suppliers for certain other minor, but critical, raw materials.
Power Systems Segment
Overview . Our Power Systems segment (formerly Engine Products and Services) designs, manufactures, sells and services heavy-duty, medium-speed diesel, natural gas and dual fuel reciprocating engines. We market these products and services under the Fairbanks Morse ® brand name. Products in this segment include licensed heavy-duty, medium-speed diesel, natural gas and dual fuel reciprocating engines, in addition to our own designs. The reciprocating engines range in size from 700 to 31,970 horsepower and from five to 20 cylinders. These products are used in marine, oil and gas, and power generation markets. We have been building engines for over 115 years under the Fairbanks Morse ® brand name and we have a large installed base of engines for which we supply aftermarket parts and service. Fairbanks Morse has been a key supplier to the U.S. Navy for medium-speed diesel engines and has supplied engines to the U.S. Navy for over 70 years.
Customers . Our Power Systems segment sells its products and services to customers worldwide, including major shipyards, municipal utilities, institutional and industrial organizations, sewage treatment plants, nuclear power plants and offshore oil and gas platforms, with approximately 10% of sales delivered to customers outside the United States in 2015 . We market our products through a direct sales force of engineers in North America and through independent agents worldwide. Our representative customers include Northrop Grumman, General Dynamics, Lockheed Martin, the U.S. Navy, the U.S. Coast Guard, Toshiba America Nuclear Energy Corp., Electricite de France, EcoPetrol, and Exelon. In 2015 , the largest customer accounted for approximately 11% of segment revenues.
Competition . Major competitors for our Power Systems segment include MTU, Caterpillar Inc., and Wartsila Corporation. Price, delivery time, engineering and service support, and engine efficiency relating to fuel consumption and emissions drive competition.
Raw Materials and Components . Our Power Systems segment purchases multiple ferrous and non-ferrous castings, forgings, plate stock and bar stock for fabrication and machining into engines. In addition, we buy a considerable amount of precision-machined engine components. We believe all of these raw materials and components are readily available from various suppliers, but may be subject to long and variable lead times. In December of 2015, the foundry which was our primary supplier of castings ceased operations and a receiver was appointed to liquidate its assets. As a result, we are actively working to qualify replacement sources for certain castings. Any delays in obtaining such castings could adversely affect quarterly operating results.
Research and Development
The goal of our research and development effort is to strengthen our product portfolios for traditional markets while simultaneously creating distinctive and breakthrough products. We utilize a process to move product innovations from concept to commercialization, and to identify, analyze, develop and implement new product concepts and opportunities aimed at business growth.
We employ scientists, engineers and technicians throughout our operations to develop, design and test new and improved products. We work closely with our customers to identify issues and develop technical solutions. The majority of our research and development spending typically is directed toward the development of new sealing products for the most demanding environments, the development of truck and trailer fleet information systems, the development of bearing products and materials with increased load carrying capability and superior friction and wear characteristics, and the development of power systems to meet current and future emissions requirements while improving fuel efficiencies.
Backlog
At December 31, 2015 , we had a backlog of orders valued at $346.6 million compared with $385.9 million at December 31, 2014 . Approximately 19% of the backlog, primarily in our Power Systems segment, is expected to be filled beyond 2016. Backlog represents orders on hand we believe to be firm. However, there is no certainty the backlog orders will result in actual sales at the times or in the amounts ordered. In addition, for most of our business, backlog is not particularly predictive of future performance because of our short lead times and some seasonality.

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Quality Assurance
We believe product quality is among the most important factors in developing and maintaining strong, long-term relationships with our customers. In order to meet the exacting requirements of our customers, we maintain stringent standards of quality control. We routinely employ in-process inspection by using testing equipment as a process aid during all stages of development, design and production to ensure product quality and reliability. These include state-of-the-art CAD/CAM equipment, statistical process control systems, laser tracking devices, failure mode and effect analysis, and coordinate measuring machines. We are able to extract numerical quality control data as a statistical measurement of the quality of the parts being manufactured from our CNC machinery. In addition, we perform quality control tests on parts that we outsource. As a result, we are able to significantly reduce the number of defective parts and therefore improve efficiency, quality and reliability.
As of December 31, 2015 , 48 of our manufacturing facilities were ISO 9000, QS 9000 and/or TS 16949 certified. Twenty-one of our facilities are ISO 14001 certified. OEMs are increasingly requiring these standards in lieu of individual certification procedures and as a condition of awarding business.
Patents, Trademarks and Other Intellectual Property
We maintain a number of patents and trademarks issued by the U.S. and other countries relating to the name and design of our products and have granted licenses to some of these patents and trademarks. We routinely evaluate the need to protect new and existing products through the patent and trademark systems in the U.S. and other countries. We also have unpatented proprietary information, consisting of know-how and trade secrets relating to the design, manufacture and operation of our products and their use. We do not consider our business as a whole to be materially dependent on any particular patent, patent right, trademark, trade secret or license granted or group of related patents, patent rights, trademarks, trade secrets or licenses granted.
In general, we are the owner of the rights to the products that we manufacture and sell. However, we also license patented and other proprietary technology and processes from various companies and individuals in order to broaden our product offerings. We are dependent on the ability of these third parties to diligently protect their intellectual property rights. In several cases, the intellectual property licenses are integral to the manufacture of our products. For example, Fairbanks Morse licenses technology from MAN Diesel and its subsidiaries for certain of the four-stroke reciprocating engines it produces. The terms of the licenses vary by engine type. One set of licenses is set to expire on March 31, 2016, subject to negotiations to renew these licenses for a multi-year period. Licenses for the remaining engine types have terms, subject to potential renewal, expiring in 2018 or 2019. A loss of these licenses or a failure on the part of the licensor to protect its own intellectual property could reduce our revenues. These licenses are subject to renewal and it is possible we may not successfully renegotiate these licenses or they could be terminated for a material breach. If this were to occur, our business, financial condition, results of operations and cash flows could be adversely affected.
Employees and Labor Relations
We currently have approximately 5,400 employees worldwide in our continuing operations. Approximately 2,800 employees are located within the U.S., and approximately 2,600 employees are located outside the U.S., primarily in Europe, Canada and China. Approximately 23% of our U.S. employees are members of trade unions covered by three collective bargaining agreements with contract expiration dates from February 2017 to November 2018. Union agreements relate, among other things, to wages, hours, and conditions of employment. The wages and benefits furnished are generally comparable to industry and area practices. Our deconsolidated subsidiaries, primarily GST LLC, have about 900 additional employees worldwide.
ITEM 1A.
RISK FACTORS
In addition to the risks stated elsewhere in this annual report, set forth below are certain risk factors that we believe are material. If any of these risks occur, our business, financial condition, results of operations, cash flows and reputation could be harmed. You should also consider these risk factors when you read “forward-looking statements” elsewhere in this report. You can identify forward-looking statements by terms such as “may,” “hope,” “will,” “could,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential” or “continue,” the negative of those terms or other comparable terms. Those forward-looking statements are only predictions and can be adversely affected if any of these risks occur.

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Risks Related to Our Business
Certain of our subsidiaries filed petitions to resolve asbestos litigation.
The historical business operations of certain subsidiaries of our subsidiary, Coltec Industries Inc (“Coltec”), principally GST LLC and The Anchor Packing Company (“Anchor”), have resulted in a substantial volume of asbestos litigation in which plaintiffs have 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 products, which contained encapsulated asbestos fibers. Anchor is an inactive and insolvent indirect subsidiary of Coltec. There is no remaining insurance coverage available to Anchor and it has no assets. Our subsidiaries’ exposure to asbestos litigation and their relationships with insurance carriers has been actively managed through another Coltec subsidiary, Garrison Litigation Management Group, Ltd. (“Garrison,” collectively with GST LLC and Anchor, “GST”). On the Petition Date, GST LLC, Anchor and Garrison 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”) to address these claims. These subsidiaries have been deconsolidated from our financial statements since the Petition Date. The amount that will be necessary to fully and finally resolve the asbestos liabilities of these companies is uncertain. Several risks and uncertainties result from these filings that could have a material adverse effect on our business, financial condition, results of operations and cash flows. Those risks and uncertainties include the following:
•
possible changes in the value of the deconsolidated subsidiaries reflected in our financial statements . Our investment in GST is subject to periodic reviews for impairment. To estimate the fair value, the Company considers many factors and uses both discounted cash flow and market valuation approaches. The asbestos claims value is an important part of the value of that investment. The actual value will be determined in the Chapter 11 process, either through negotiations with claimant representatives or, absent a negotiated resolution, by the Bankruptcy Court after contested proceedings, and accordingly adverse developments with respect to the terms of the resolution of such claims may materially adversely affect the value of our investment in GST;
•
the uncertainty of the number and per claim value of pending and potential future asbestos claims. On the Petition Date, according to Garrison, there were more than 90,000 total asbestos claims pending against GST LLC, of which approximately 5,800 were claims alleging the disease mesothelioma. Based on discovery in the Chapter 11 proceedings, GST has learned that more than 1,900 of those claims were not, in fact, pending mesothelioma claims. As a result of the initiation of the Chapter 11 proceedings, the resolution of asbestos claims is subject to the jurisdiction of the Bankruptcy Court and the filing of the Chapter 11 cases automatically stayed the prosecution of pending asbestos bodily injury and wrongful death lawsuits, and initiation of new such lawsuits, against GST. An estimation trial for the purpose of estimating the number and value of allowed mesothelioma claims for plan feasibility purposes commenced on July 22, 2013 and concluded on August 22, 2013. GST, on the one hand, and the claimants’ representatives, on the other hand, proposed different approaches to estimating allowed asbestos personal injury claims against GST, and the Bankruptcy Court ruled that each could present its proposed approach. GST offered a merits-based approach that focused on its legal defenses to liability and took account of claimants’ recoveries from other sources, including trusts established in Chapter 11 cases filed by GST’s co-defendants, in estimating potential future recoveries by claimants from GST. The claimants’ representatives offered a settlement-based theory of estimation. On January 10, 2014, Bankruptcy Judge George Hodges announced his estimation decision. Citing with approval the methodology put forth by GST at trial, the judge determined that $125 million is the amount sufficient to satisfy GST's liability for present and future mesothelioma claims. The judge's liability determination is for mesothelioma claims only. The court has not yet determined amounts for GST's liability for other asbestos claims and for administrative costs that would be required to review and process claims and payments, which will increase that $125 million amount. Our recorded asbestos liability as of the Petition Date was $472.1 million. Until the second quarter of 2014, neither we nor GST endeavored to update the estimate since the Petition Date except as necessary to reflect payments of accrued fees and the disposition of cases on appeal. As a result of those necessary updates, the liability estimate as of December 31, 2013 was $466.8 million. On May 29, 2014, GST filed an amended proposed plan of reorganization and a proposed disclosure statement. That amended plan provided $275 million in total funding for (a) present and future asbestos claims against GST that have not been resolved by settlement or verdict prior to the Petition Date, and (b) administrative and litigation costs. The $275 million amount was determined based on an economic analysis of the feasibility of the proposed plan. The amended plan also provided that GST would pay in full unpaid claims that had been resolved by settlement or verdict prior to the Petition Date. GST estimates its aggregate liability for settled asbestos claims to be no more than $10 million. Given the decision of the Bankruptcy Court in January 2014 with respect to its estimate of GST’s liability for present and future mesothelioma claims at $125 million and GST’s filing of an amended plan of reorganization setting out its intention to fund a plan with total consideration of $285 million in May 2014, GST at that time believed that its ultimate expenditures to resolve all present and future asbestos claims against it would be no less than the $285 million set out in its proposed plan. Similarly, while GST believed it to be an unlikely worst case scenario, GST believes its ultimate costs to resolve all asbestos claims against it could be no more

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than the total value of GST. As a result, GST believed it appropriate to revise its liability estimate to the low end of the range between those two values and revised its estimate of its ultimate payment to resolve all present and future asbestos claims to $280.5 million. In January 2015, we announced that GST and we had reached agreement with the court-appointed legal representative of future asbestos claimants (the "Future Claimants' Representative") that includes a second amended proposed plan of reorganization. Under the second amended plan, not less than $367.5 million will be required to fund the resolution of all GST asbestos claims, $30 million of which will be funded by Coltec. The Future Claimants' Representative has agreed to support, recommend and vote in favor of the second amended plan. If approved by the Bankruptcy Court and implemented, the second amended plan will provide certainty and finality to the expenditures necessary to resolve all current and future asbestos claims against GST. As a result, GST believes the low end of the reasonably possible range of values that will be necessary for it to fund to resolve all present and future claims is $337.5 million. Accordingly, GST revised its estimate of its ultimate asbestos expenditures to $337.5 million. Of GST’s estimate of expenditures of $337.5 million, $77.5 million represents contributions required under the January 2015 second amended plan of reorganization to be made to a settlement facility to be established under the second amended plan over seven years following the consummation of the plan. In addition, the second amended plan of reorganization provides that, during the 40-year period following consummation of the second amended plan, GST would, if necessary, make supplementary annual contributions, subject to specified maximum annual amounts that decline over the period, to maintain a specified balance at specified dates of a litigation fund to be established under the plan to fund the defense and payment of claims of claimants who elect to pursue litigation under the plan rather than accept the settlement option under the plan. The maximum aggregate amount of all such contingent supplementary contributions over that period is $132 million. GST’s estimate of its ultimate asbestos expenditures of $337.5 million does not include any amount of these contingent supplementary contributions as GST believes that initial contributions to the litigation fund may likely be sufficient to fund the litigation and, accordingly, that the low end of a range of reasonably possible loss associated with these contingent supplementary contributions is $0;
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the financial viability of our subsidiaries’ insurance carriers and their reinsurance carriers, and our subsidiaries’ ability to collect on claims from them. Agreements with certain of these insurance carriers and the terms of applicable policies define specific annual amounts to be paid or limit the amount that can be recovered in any one year, and accordingly substantial insurance payments for submitted claims have been deferred and are payable in installments through 2018, and an additional $38.0 million of other insurance payments may be payable only upon the conclusion of the bankruptcy process;
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the potential for asbestos exposure to extend beyond the filed entities arising from corporate veil piercing efforts or other claims by asbestos plaintiffs. During the course of the proceedings before the Bankruptcy Court, the claimant representatives have asserted that affiliates of GST, including the Company and Coltec, should be held responsible for the asbestos liabilities of GST under various theories of derivative corporate responsibility including veil-piercing and alter ego. Claimant representatives filed a motion with the bankruptcy court asking for permission to sue us based on those theories. In a decision dated June 7, 2012, the Bankruptcy Court denied the claimant representatives’ motion without prejudice, thereby potentially allowing the representatives to re-file the motion. Under GST’s second amended plan of reorganization and pursuant to an agreement that we have reached with GST, all claims against affiliates based on GST asbestos claims, including any corporate veil piercing, alter ego or other derivative claims, are settled in exchange for the payment of $30 million by Coltec and other consideration under the plan; and
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the costs of the bankruptcy proceeding and the length of time necessary to resolve the case, either through settlement or various court proceedings. Through December 31, 2015 , GST has recorded Chapter 11 case-related fees and expenses totaling $144.1 million. We have recorded an additional $9.0 million in case-related fees and expenses incurred directly by EnPro and Coltec.
For a further discussion of the filings and the asbestos exposure of our subsidiaries, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Overview and Outlook,” “– Contingencies – Asbestos” and “– Contingencies – Subsidiary Bankruptcy,” and Notes 19 and 20 to our Consolidated Financial Statements, included in this report.
We cannot assure you that GST will be able to obtain Bankruptcy Court approval of its second amended plan of reorganization and the settlement and resolution of claims and related releases of liability embodied therein or what the final terms of such plan will be at consummation, and the time period for the resolution of the bankruptcy proceedings is not presently determinable.
On January 14, 2015, GST filed a second amended plan of reorganization that provides for (a) the resolution of present and future asbestos claims against GST, and (b) administrative and litigation costs. The 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

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gain the support of the Future Claimants’ Representative of the plan. The second amended plan of reorganization provides for the establishment of two facilities-a settlement facility (which would receive contributions of $220 million from GST and $30 million from Coltec upon consummation of the plan and additional contributions from GST aggregating $77.5 million plus interest over the seven years following consummation of the plan) and a litigation fund (which would receive $30 million from GST upon consummation of the plan) to fund the defense and payment of claims of claimants who elect to pursue litigation under the plan rather than accept the settlement option under the 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 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). GST estimates the range of its aggregate liability for the unpaid settled asbestos claims to be from $3.1 million to $16.4 million, and the second 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 second amended plan provides that, during the 40-year period following confirmation of the plan, GST would, if necessary, 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. Under the plan, EnPro would guarantee GST’s payment of the $77.5 million of deferred contributions plus accrued interest to the settlement facility and, to the extent they are required, the supplementary contributions to the litigation fund. Under the terms of the plan, EnPro would retain 100% of the equity interests of GST LLC. The plan also provides for the extinguishment of all derivative claims against us based on GST asbestos products and operations.
A hearing is scheduled to be held before the Bankruptcy Court commencing on March 10, 2016 to resolve certain motions for summary judgment filed by GST and the Current Asbestos Claimants’ Committee with regard to the second amended plan of reorganization. The motions address (i) whether compliance with Section 524(g) of the Bankruptcy Code, which includes the requirement that a plan of reorganization be approved by a vote of 75 percent of the asbestos claimants, is the exclusive means for the confirmation of a plan of reorganization that resolves current and future asbestos liability claims, (ii) whether the Future Claimants’ Representative has the authority to vote on behalf of future asbestos claimants on approval of the second amended plan, and (iii) whether asbestos claims are impaired under the second amended plan. A final determination adverse to GST on the first issue listed above or on both the second and third issues would preclude confirmation of the second amended plan.
The second amended plan has not yet been confirmed by the Bankruptcy Court (and other necessary approvals have not been obtained), and there is no certainty that the Bankruptcy Court will confirm the plan (or grant other necessary preliminary approvals) or that the conditions to effectiveness of the plan will be satisfied or waived. The failure of the plan to be confirmed and/or to be consummated could result in, among other consequences, the pursuit of an alternative form of reorganization or liquidation, which may be less favorable to GST and to us. Confirmation and consummation of the 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, decisions by the Bankruptcy Court, delays in the confirmation or effective date of a plan of reorganization due to factors beyond GST's or our control, which would result in greater costs and the impairment of value of GST, objections and other challenges to the confirmation of the plan, including appeals, and risks and uncertainties affecting GST and Coltec's ability to fund anticipated contributions under the 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. The process of confirming the plan or an alternative plan of reorganization generally mandates that certain requirements, including with respect to the adequacy of disclosure and solicitation of acceptances, must be met. Under the Bankruptcy Code, to confirm a plan of reorganization, a bankruptcy court must conclude, among other things, that (i) the plan has been proposed in good faith and not by any means forbidden by law; (ii) confirmation of the plan is not likely be followed by a liquidation or need for further financial reorganization, (iii) the value of distributions to non-accepting holders of claims within a particular class under such plan will not be less than the value of distributions such holders would receive under Chapter 7 liquidation, and (iv) each class of claims that is impaired by the plan has accepted the plan. In addition, even if all classes of impaired claims have not accepted a plan, a bankruptcy court may nevertheless confirm a plan so long as (i) at least one impaired class has accepted such plan and (ii) such plan does not discriminate unfairly and is fair and equitable with respect to each impaired class of claimants that has not accepted such plan.
GST contends that all classes of claims, including asbestos claims, are not impaired under the second amended plan because the plan provides for payment in full of the allowed amounts of all claims and does not otherwise alter the rights of holders of claims. GST further contends that, because the Bankruptcy Code provides that classes of unimpaired claims are deemed to accept a plan, the Bankruptcy Court may confirm the plan without soliciting formal acceptance of classes of creditors, including the class of present asbestos claims. If the Bankruptcy Court disagrees with GST and determines that the class of present asbestos claims is impaired under the second amended plan and if such class does not accept the plan, GST believes that the Bankruptcy Court may nevertheless confirm such plan because the Bankruptcy Court may conclude that the

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support of the Future Claimants' Representative on behalf of the class of future claimants provides an accepting impaired class and the plan does not discriminate unfairly and is fair and equitable to the class of present asbestos claimants. There can be no assurance, however, that the Bankruptcy Court will accept GST’s contentions and confirm the second amended plan or that, if the Bankruptcy Court does confirm the plan, that the Bankruptcy Court’s order doing so will be upheld on appeal. If the second amended plan is not confirmed and an alternative reorganization plan and/or settlement cannot be agreed upon, the ultimate outcome and the timing of resolution of the case would be highly uncertain. In that circumstance, there remains a possibility that the Bankruptcy Court’s liability estimate could be reversed on appeal and subsequently revised, and that GST could eventually be forced to liquidate, although we believe an eventual GST liquidation to be highly unlikely. However, we cannot assure you that GST will not have to liquidate, and that, in the event of reversal on appeal of the liability estimate, GST's assets will be sufficient to satisfy all claims against it, in which case claims that would otherwise have been resolved under GST's second amended plan may be brought against us.
Accordingly, we cannot assure you that GST will be able to obtain necessary Bankruptcy Court approval of the second amended plan or that the plan will be consummated or that the terms and conditions of any reorganization plan that may ultimately be consummated will be similar to the plan. In addition, in each asbestos-driven Chapter 11 case that has been resolved previously, the amount of the debtor’s liability has been determined as part of a consensual plan of reorganization agreed to by the debtor, its asbestos claimants and a legal representative for potential future claimants. In the absence of such a consensual arrangement, the GST asbestos claims resolution process remains uncertain and could take an undetermined time to complete and could materially adversely affect us in other ways.
Even if the second amended proposed plan of reorganization is confirmed, we may be subject to claims that were not settled or discharged in GST’s bankruptcy cases, which could have a material adverse effect on our results of operations and profitability.
We expect that substantially any GST asbestos-related claims that arose prior to the Petition Date and that might be asserted against us as an affiliate of GST will be resolved and settled during GST’s Chapter 11 proceedings. Pursuant to the second amended plan of reorganization, the provisions of the plan would constitute a good-faith resolution of any such claims by asbestos claimants against GST and against us to the extent arising from GST’s products or operations, and the entry of the order confirming the plan will constitute the Bankruptcy Court’s approval of such resolution of all such claims. Circumstances in which claims and/or other obligations against us that arose prior to the Petition Date that would otherwise be settled as part of the plan may not be discharged include instances where particular claimants are found to have received inadequate notice of the plan and/or the proposed treatment of asbestos claims embodied therein, where the claim is not derivative of the liability of GST, such as where those claims are against our subsidiaries other than GST based upon allegations of exposure to asbestos contained in their products, or where claimants have made workers' compensation claims based on allegations of exposure to asbestos during the course of their employment. Prior to the Petition Date, several thousand of those claims against Coltec were dismissed without payment. Several thousand others were pending on the Petition Date but were stayed by the Bankruptcy Court during the pendency of GST's bankruptcy proceeding but would not be discharged under the terms of GST LLC’s amended plan of reorganization. Coltec has never paid any indemnity dollars to resolve any such claim, but there can be no assurance that it will not be required to pay such a claim in the future.
Our business and some of the markets we serve are cyclical and distressed market conditions could have a material adverse effect on our business.
The markets in which we sell our products, particularly chemical companies, petroleum refineries, heavy-duty trucking, semiconductor manufacturing, capital equipment and the automotive industry, are, to varying degrees, cyclical and have historically experienced periodic downturns. Prior downturns have been characterized by diminished product demand, excess manufacturing capacity and subsequent erosion of average selling prices in these markets resulting in negative effects on our net sales, gross margins and net income. The recent recession affected our results of operations. A prolonged and severe downward cycle in our markets could have a material adverse effect on our business, financial condition, results of operations and cash flows.
We face intense competition that could have a material adverse effect on our business.
We encounter intense competition in almost all areas of our businesses. Customers for many of our products are attempting to reduce the number of vendors from which they purchase in order to reduce inventories. To remain competitive, we need to invest continuously in manufacturing, marketing, customer service and support and our distribution networks. We also need to develop new products to continue to meet the needs and desires of our customers. We may not have sufficient resources to continue to make such investments or maintain our competitive position. Additionally, some of our competitors are larger than we are and have substantially greater financial resources than we do. As a result, they may be better able to withstand the effects of periodic economic downturns. Certain of our products may also experience transformation from unique

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branded products to undifferentiated price sensitive products. This product commoditization may be accelerated by low cost foreign competition. Changes in the replacement cycle of certain of our products, including because of improved product quality or improved maintenance, may affect aftermarket demand for such products. Initiatives designed to distinguish our products through superior service, continuous improvement, innovation, customer relationships, technology, new product acquisitions, bundling with key services, long-term contracts or market focus may not be effective. Pricing and other competitive pressures could adversely affect our business, financial condition, results of operations and cash flows.
If we fail to retain the independent agents and distributors upon whom we rely to market our products, we may be unable to effectively market our products and our revenue and profitability may decline.
The marketing success of many of our businesses in the U.S. and abroad depends largely upon our independent agents’ and distributors’ sales and service expertise and relationships with customers in our markets. Many of these agents have developed strong ties to existing and potential customers because of their detailed knowledge of our products. A loss of a significant number of these agents or distributors, or of a particular agent or distributor in a key market or with key customer relationships, could significantly inhibit our ability to effectively market our products, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Increased costs for raw materials, the termination of existing supply agreements or disruptions of our supply chain could have a material adverse effect on our business.
The prices for some of the raw materials we purchase increased in 2015 . While we have been successful in passing along some or all of these higher costs, there can be no assurance we will be able to continue doing so without losing customers. Additionally, our Power Systems segment has entered into long-term contracts to manufacture and sell engines which do not allow for price adjustments to recover additional costs resulting from increases in the costs of materials and components during the contract period, and accordingly material increases in relevant costs could adversely affect the profitability of these long-term contracts and the profits of that segment. Similarly, the loss of a key supplier or the unavailability of a key raw material could adversely affect our business, financial condition, results of operations and cash flows.
Reductions in the U.S. Navy’s requirements for engines offered by Fairbanks Morse could materially adversely affect the results of our Power Systems segment and our business with the U.S. Navy and other governmental agencies is subject to government contracting risks.
Sales of new engines for use by the U.S. Navy by our Power Systems segment, which have been a significant component of that segment’s revenues, are based on the U.S. Navy’s long-term ship-building programs. Although the Power Systems segment has expanded its activities in other markets, including the sale of diesel engine generator sets for emergency back-up power at nuclear power plants in France and the establishment of an exclusive distribution arrangement with a German engine manufacturer in the power generation industry in the U.S., any decline in demand from the U.S. Navy could materially adversely affect the results of our Power Systems segment.
Our business with the U.S. Navy, and other governmental agencies, including sales to prime contractors that supply these agencies, is subject to government contracting risks. U.S. government contracts are subject to termination by the government, either for the convenience of the government or for default as a result of our failure to perform under the applicable contract. If terminated by the government as a result of our default, we could be liable for additional costs the government incurs in acquiring undelivered goods or services from another source and any other damages it suffers. In addition, if we or one of our divisions were charged with wrongdoing with respect to a U.S. government contract, the U.S. government could suspend us from bidding on or receiving awards of new government contracts pending the completion of legal proceedings. If convicted or found liable, the U.S. government could subject us to fines, penalties, repayments and treble and other damages, and/or bar us from bidding on or receiving new awards of U.S. government contracts and void any contracts found to be tainted by fraud. The U.S. government also reserves the right to debar a contractor from receiving new government contracts for fraudulent, criminal or other seriously improper conduct.
We have exposure to some contingent liabilities relating to previously owned businesses, which could have a material adverse effect on our financial condition, results of operations or cash flows in any fiscal period.
We have contingent liabilities related to previously owned businesses of our predecessors, including environmental liabilities and liabilities for certain products and other matters. In some instances we have indemnified others against those liabilities, and in other instances we have received indemnities from third parties against those liabilities.
Claims could arise relating to products or other matters related to our discontinued operations. Some of these claims could seek substantial monetary payments. For example, we could potentially be subject to the liabilities related to environmental liabilities associated with the pre-1983 operations of Crucible Steel Corporation a/k/a Crucible, Inc., the

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firearms manufactured prior to March 1990 by Colt Firearms, a former operation of Coltec, and electrical transformers manufactured prior to May 1994 by Central Moloney, another former Coltec operation. Coltec has ongoing obligations with regard to workers compensation, retiree medical and other retiree benefit matters associated with discontinued operations in connection with Coltec’s periods of ownership of those operations.
We have insurance, reserves, and funds held in trust to address some of these liabilities. However, if our insurance coverage is depleted, our reserves are not adequate, or the funds held in trust are insufficient, environmental and other liabilities relating to discontinued operations could have a material adverse effect on our financial condition, results of operations and cash flows.
We conduct a significant amount of our sales activities outside of the U.S., which subjects us to additional business risks, including foreign exchange risks, that may cause our profitability to decline.
Because we sell our products in a number of foreign countries, we are subject to risks associated with doing business internationally. In 2015 , we derived approximately 42% of our net sales from sales of our products outside of the U.S. Our international operations are, and will continue to be, subject to a number of risks, including:
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unfavorable fluctuations in foreign currency exchange rates, including long-term contracts denominated in foreign currencies;
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adverse changes in foreign tax, legal and regulatory requirements;
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difficulty in protecting intellectual property;
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trade protection measures and import or export licensing requirements;
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cultural norms and expectations that may sometimes be inconsistent with our Code of Conduct and our requirements about the manner in which our employees, agents and distributors conduct business;
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differing labor regulations;
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political and economic instability, including instabilities associated with European sovereign debt uncertainties and the future continuity of membership of the European Union; and
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acts of hostility, terror or war.
Any of these factors, individually or together, could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Our operations outside the United States require us to comply with a number of United States and international regulations. For example, our operations in countries outside the United States are subject to the Foreign Corrupt Practices Act (the “FCPA”), which prohibits United States companies or their agents and employees from providing anything of value to a foreign official for the purposes of influencing any act or decision of these individuals in their official capacity to help obtain or retain business, direct business to any person or corporate entity, or obtain any unfair advantage. Our activities in countries outside the United States create the risk of unauthorized payments or offers of payments by one of our employees or agents that could be in violation of the FCPA, even though these parties are not always subject to our control. We have internal control policies and procedures and have implemented training and compliance programs with respect to the FCPA. However, we cannot assure that our policies, procedures and programs always will protect us from reckless or criminal acts committed by our employees or agents. In the event that we believe or have reason to believe that our employees or agents have or may have violated applicable anti-corruption laws, including the FCPA, we may be required to investigate or have outside counsel investigate the relevant facts and circumstances. In addition, we are subject to and must comply with all applicable export controls and economic sanctions laws and embargoes imposed by the United States and other various governments. Changes in export control or trade sanctions laws may restrict our business practices, including cessation of business activities in sanctioned countries or with sanctioned entities, and may result in modifications to compliance programs and increase compliance costs, and violations of these laws or regulations may subject us to fines, penalties and other sanctions, such as loss of authorizations needed to conduct aspects of our international business or debarments from export privileges. Violations of the FCPA or export controls or sanctions laws and regulations may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could negatively affect our business, operating results and financial condition.
We intend to continue to pursue international growth opportunities, which could increase our exposure to risks associated with international sales and operations. As we expand our international operations, we may also encounter new risks that could adversely affect our revenues and profitability. For example, as we focus on building our international sales and distribution networks in new geographic regions, we must continue to develop relationships with qualified local agents, distributors and

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trading companies. If we are not successful in developing these relationships, we may not be able to increase sales in these regions.
Failure to properly manage these risks could adversely affect our business, financial condition, results of operations and cash flows.
If we are unable to protect our intellectual property rights and knowledge relating to our products, our business and prospects may be negatively impacted.
We believe that proprietary products and technology are important to our success. If we are unable to adequately protect our intellectual property and know-how, our business and prospects could be negatively impacted. Our efforts to protect our intellectual property through patents, trademarks, service marks, domain names, trade secrets, copyrights, confidentiality, non-compete and nondisclosure agreements and other measures may not be adequate to protect our proprietary rights. Patents issued to third parties, whether before or after the issue date of our patents, could render our intellectual property less valuable. Questions as to whether our competitors’ products infringe our intellectual property rights or whether our products infringe our competitors’ intellectual property rights may be disputed. In addition, intellectual property rights may be unavailable, limited or difficult to enforce in some jurisdictions, which could make it easier for competitors to capture market share in those jurisdictions.
Our competitors may capture market share from us by selling products that claim to mirror the capabilities of our products or technology. Without sufficient protection nationally and internationally for our intellectual property, our competitiveness worldwide could be impaired, which would negatively impact our growth and future revenue. As a result, we may be required to spend significant resources to monitor and police our intellectual property rights.
We have made and expect to continue to make acquisitions, which could involve certain risks and uncertainties.
We expect to continue to make acquisitions in the future. Acquisitions involve numerous inherent challenges, such as properly evaluating acquisition opportunities, properly evaluating risks and other diligence matters, ensuring adequate capital availability and balancing other resource constraints. There are risks and uncertainties related to acquisitions, including: difficulties integrating acquired technology, operations, personnel and financial and other systems; unrealized sales expectations from the acquired business; unrealized synergies and cost savings; unknown or underestimated liabilities; diversion of management attention from running our existing businesses and potential loss of key management employees of the acquired business. In addition, internal controls over financial reporting of acquired companies may not be up to required standards. Our integration activities may place substantial demands on our management, operational resources and financial and internal control systems. Customer dissatisfaction or performance problems with an acquired business, technology, service or product could also have a material adverse effect on our reputation and business.
Our business may be adversely affected by information technology disruptions .
Our business may be impacted by information technology disruptions, including information technology attacks. Cybersecurity attacks, in particular, are evolving and include, but are not limited to, malicious software, attempts to gain unauthorized access to data, and other electronic security breaches that could lead to disruptions in systems, unauthorized release of confidential or otherwise protected information and corruption of data (our own or that of third parties). We believe that we have adopted appropriate measures to mitigate potential risks to our systems from information technology-related disruptions. However, given the unpredictability of the timing, nature and scope of such disruptions, we could potentially be subject to production downtimes, operational delays, other detrimental impacts on our operations or ability to provide products and services to our customers, the compromising of confidential or otherwise protected information, misappropriation, destruction or corruption of data, security breaches, other manipulation or improper use of our systems or networks, financial losses from remedial actions, loss of business or potential liability, and/or damage to our reputation, any of which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Our business could be materially adversely affected by numerous other risks, including rising healthcare costs, changes in environmental laws and other unforeseen business interruptions.
Our business may be negatively impacted by numerous other risks. For example, medical and healthcare costs may continue to increase. Initiatives to address these costs, such as consumer driven health plan packages, may not successfully reduce these expenses as needed. Failure to offer competitive employee benefits may result in our inability to recruit or maintain key employees. Other risks to our business include potential changes in environmental rules or regulations, which could negatively impact our manufacturing processes. Use of certain chemicals and other substances could become restricted or such changes may otherwise require us to incur additional costs which could reduce our profitability and impair our ability to offer competitively priced products. Additional risks to our business include global or local events which could significantly

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disrupt our operations. Terrorist attacks, natural disasters, political insurgencies, pandemics and electrical grid disruptions and outages are some of the unforeseen risks that could negatively affect our business, financial condition, results of operations and cash flows.
Risks Related to Ownership of Our Common Stock
The market price and trading volume of our common stock may be volatile.
A relatively small number of shares traded in any one day could have a significant effect on the market price of our common stock. The market price of our common stock could fluctuate significantly for many reasons, including in response to the risks described in this section and elsewhere in this report or for reasons unrelated to our operations, such as reports by industry analysts, investor perceptions or negative announcements by our customers, competitors or suppliers regarding their own performance, as well as industry conditions and general financial, economic and political instability.
Because our quarterly revenues and operating results may vary significantly in future periods, our stock price may fluctuate.
Our revenue and operating results may vary significantly from quarter to quarter. A high proportion of our costs are fixed, due in part to significant selling and manufacturing costs. Small declines in revenues could disproportionately affect operating results in a quarter and the price of our common stock may fall. We may also incur charges to income to cover increases in the estimate of our subsidiaries’ future asbestos liability. Other factors that could affect quarterly operating results include, but are not limited to:
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demand for our products;
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the timing and execution of customer contracts;
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the timing of sales of our products;
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increases in manufacturing costs due to equipment or labor issues;
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changes in foreign currency exchange rates;
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changes in applicable tax rates;
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an impairment in the value of our investment in GST;
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an impairment of goodwill at one of our reporting units;
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unanticipated delays or problems in introducing new products;
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the incurrence of contractual penalties for the late delivery of long lead-time products;
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announcements by competitors of new products, services or technological innovations;
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changes in our pricing policies or the pricing policies of our competitors;
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increased expenses, whether related to sales and marketing, raw materials or supplies, product development or administration;
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major changes in the level of economic activity in major regions of the world in which we do business;
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costs related to possible future acquisitions or divestitures of technologies or businesses;
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an increase in the number or magnitude of product liability or environmental claims;
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our ability to expand our operations and the amount and timing of expenditures related to expansion of our operations, particularly outside the U.S.; and
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economic assumptions and market factors used to determine post-retirement benefits and pension liabilities.
Various provisions and laws could delay or prevent a change of control.
The anti-takeover provisions of our articles of incorporation and bylaws and provisions of North Carolina law could delay or prevent a change of control or may impede the ability of the holders of our common stock to change our management. In particular, our articles of incorporation and bylaws, among other things:
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require a supermajority shareholder vote to approve any business combination transaction with an owner of 5% or more of our shares unless the transaction is recommended by disinterested directors;

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•
limit the right of shareholders to remove directors and fill vacancies;
•
regulate how shareholders may present proposals or nominate directors for election at shareholders’ meetings; and
•
authorize our board of directors to issue preferred stock in one or more series, without shareholder approval.
Future sales of our common stock in the public market could lower the market price for our common stock.
In the future, we may sell additional shares of our common stock to raise capital. In addition, a reasonable number of shares of our common stock are reserved for issuance under our equity compensation plans, including shares to be issued upon the exercise of stock options and vesting of restricted stock or unit grants. We cannot predict the size of future issuances or the effect, if any, that they may have on the market price for our common stock. The issuance and sales of substantial amounts of common stock, or the perception that such issuances and sales may occur, could adversely affect the market price of our common stock.
Risks Related to Our Capital Structure
Our debt agreement and the indenture governing our senior notes impose limitations on our operations, which could impede our ability to respond to market conditions, address unanticipated capital investments and/or pursue business opportunities.
The agreement governing our senior secured revolving credit facility and the indenture governing the senior notes impose limitations on our operations, such as limitations on certain restricted payments, investments, incurrence or repayment of indebtedness, and maintenance of a consolidated net leverage ratio and an interest coverage financial ratio. In addition, the indenture governing our senior notes contains limitations on certain restricted payments, investments and incurrence or repayment of indebtedness. These limitations could impede our ability to respond to market conditions, address unanticipated capital investment needs and/or pursue business opportunities.
We may not have sufficient cash to fund a required repurchase the senior notes upon a change of control.
Upon a change of control, as defined under the indenture governing the senior notes and includes events that may be beyond our control, the holders of the senior notes have the right to require us to offer to purchase all of the senior notes then outstanding at a price equal to 101% of their principal amount plus accrued and unpaid interest. In order to obtain sufficient funds to pay the purchase price of the outstanding notes, we expect that we would have to refinance the senior notes. We cannot assure you that we would be able to refinance the senior notes on reasonable terms, if at all. Our failure to offer to purchase all outstanding notes or to purchase all validly tendered notes would be an event of default under the indenture governing the senior notes. Such an event of default may cause the acceleration of our other debt.

ITEM 1B.
UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2.
PROPERTIES
We are headquartered in Charlotte, North Carolina and have 60 primary manufacturing facilities in 14 countries, including the U.S. The following table outlines the location, business segment and size of our largest facilities, along with whether we own or lease each facility:

15
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Location
Segment
Owned/
Leased
Size
(Square Feet)
U.S.
 
 
 
Palmyra, New York*
Sealing Products
Owned
690,000

Berea, Kentucky
Sealing Products
Owned
240,000

Longview, Texas
Sealing Products
Owned
219,000

Rome, Georgia
Sealing Products
Leased
160,000

Chattanooga, Tennessee
Sealing Products
Owned
117,000

Thorofare, New Jersey
Engineered Products
Owned
171,000

Beloit, Wisconsin
Power Systems
Owned
433,000

Foreign
 
 
 
San Luis Potosi, Mexico
Sealing Products
Owned
387,250

Mexico City, Mexico*
Sealing Products
Owned
131,000

Neuss, Germany
Sealing Products
Leased
146,000

Saint Etienne, France
Sealing Products
Owned
108,000

Annecy, France
Engineered Products
Owned
196,000

Heilbronn, Germany
Engineered Products
Owned
127,000

Sucany, Slovakia
Engineered Products
Owned
109,000

*
These facilities are owned by GST LLC or one of its subsidiaries, which were deconsolidated from our Consolidated Financial Statements on the Petition Date.
Our manufacturing capabilities are flexible and allow us to customize the manufacturing process to increase performance and value for our customers and meet particular specifications. We also maintain numerous sales offices and warehouse facilities in strategic locations in the U.S., Canada and other countries. We believe our facilities and equipment are generally in good condition and are well maintained and able to continue to operate at present levels.
ITEM 3.
LEGAL PROCEEDINGS
Descriptions of environmental, asbestos and legal matters are included in Item 7 of this annual report under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Contingencies” and in Note 20 to our Consolidated Financial Statements, which descriptions are incorporated by reference herein.
On June 5, 2010, GST LLC, Anchor and Garrison 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”) as a result of tens of thousands of pending and expected future asbestos personal injury claims. The status of these proceedings is set forth in “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Contingencies – Subsidiary Bankruptcy – Update,” which is incorporated by reference. Other matters relevant to such proceedings are set forth in “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Contingencies – Asbestos,” which is incorporated by reference herein. The Company is also subject to certain environmental and other legal matters which are included in Note 20 to the Consolidated Financial Statements in this report, which is incorporated herein by reference.
In addition to the matters noted and discussed in those sections of this report, we are from time to time subject to, and are presently involved in, other litigation and legal proceedings arising in the ordinary course of business. We believe that the outcome of such other litigation and legal proceedings will not have a material adverse effect on our financial condition, results of operations and cash flows
We were not subject to any penalties associated with any failure to disclose “reportable transactions” under Section 6707A of the Internal Revenue Code.

BorgWarner
A subsidiary of BorgWarner Inc. (“BorgWarner”) has asserted claims against GGB France E.U.R.L. (“GGB France”) with respect to certain bearings supplied by GGB France to BorgWarner and used by BorgWarner in manufacturing hydraulic control units included in motor vehicle automatic transmission units. BorgWarner and GGB France are participating in a

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technical review before a panel of experts to determine, among other things, whether there were any defects in the bearings and whether any defect caused the damages claimed by BorgWarner, which technical review is a required predicate to the commencement of a legal proceeding for damages. On October 14, 2014, BorgWarner filed a writ of claims with the Commercial Court of Brive-la-Gaillarde in France seeking monetary damages. On December 19, 2014, BorgWarner initiated “fast track” proceedings, which is a French legal process typically used for uncontested claims. On January 30, 2015, GGB France filed a writ of response challenging BorgWarner’s attempt to use the “fast track” process and, on February 4, 2015, GGB France filed a writ of response seeking to stay the proceedings on the merits pending the completion of the technical review. On April 2, 2015, the Commercial Court at Brive-la-Gaillarde rejected BorgWarner's request for "fast track" proceedings. The final report of the expert panel is anticipated to be issued in or around the second quarter of 2016. We believe that GGB France has valid factual and legal defenses to these claims and we are vigorously defending these claims. At this point in the technical review process we are unable to estimate a reasonably possible range of loss related to these claims.
AVL
On December 17, 2014, AVL Powertrain Engineering, Inc. filed a lawsuit against Fairbanks Morse alleging damages in connection with a contract between AVL and Fairbanks Morse pursuant to which AVL conducted engine testing services for certain AVL customers at certain of Fairbanks Morse’s facilities in Beloit, Wisconsin. AVL claims that it was unable to conduct its desired level of engine testing and asserts alternative damages theories based on rescission and lost profits. A trial is scheduled to begin on April 25, 2016 in the United States District Court, Western District of Wisconsin. We are vigorously defending these claims and believe that Fairbanks Morse has valid factual and legal defenses to these claims.
Lower Passaic River Study Area of the Diamond Alkali Superfund Site
Based on our prior ownership of Crucible Steel Corporation a/k/a Crucible, Inc. (“Crucible”), we may have contingent liability relating to the Lower Passaic River Study Area of the Diamond Alkali Superfund Site in New Jersey. Crucible operated a steel mill abutting the Passaic River in Harrison, New Jersey from the 1930s until 1974, which was one of many industrial operations on the river dating back to the 1800s. Certain contingent environmental liabilities related to this site were retained by Coltec when Coltec sold a majority interest in Crucible Materials Corporation (the successor of Crucible) in 1985. The United States Environmental Protection Agency (the “EPA”) has notified Coltec that it is a potentially responsible party (“PRP”) for Superfund response actions in the lower 17 -mile stretch of the Passaic River known as the Lower Passaic River Study Area. Coltec and approximately 70 of the numerous other PRPs, known as the Cooperating Parties Group, are parties to a May 2007 Administrative Order on Consent with the EPA to perform a Remedial Investigation/Feasibility Study (“RI/FS”) of the contaminants in the Lower Passaic River Study Area. The RI/FS was completed and submitted to the EPA at the end of April 2015. The RI/FS recommends a targeted dredge and cap remedy with monitored natural recovery and adaptive management for the Lower Passaic River Study Area. The cost of such remedy is estimated to be $726 million. Previously, on April 11, 2014, the EPA released its Focused Feasibility Study (the “FFS”) with its proposed plan for remediating the lower eight miles of the Lower Passaic River Study Area. The FFS calls for bank-to-bank dredging and capping of the riverbed of that portion of the river and estimates a range of the present value of aggregate remediation costs of approximately $ 953 million to approximately $ 1.731 billion , although estimates of the costs and the timing of costs are inherently imprecise. The FFS was subject to a 90-day public comment period, which expired on August 28, 2014, and potential revision, including the adoption of a less extensive remedy, in light of comments that were received. No final allocations of responsibility have been made among the numerous PRPs that have received notices from the EPA, there are numerous identified PRPs that have not yet received PRP notices from the EPA, and there are likely many PRPs that have not yet been identified. Based on our evaluation of the site, during the fourth quarter of 2014 we accrued a liability of $3.5 million related to environmental remediation costs associated with the lower eight miles of the Lower Passaic River Study Area, which is our estimate of the low end of a range of reasonably possible costs, with no estimate within the range being a better estimate than the minimum. Our actual remediation costs could be significantly greater than the $3.5 million we accrued. With respect to the upper nine miles of the Lower Passaic River Study Area, we are unable to estimate a range of reasonably possible costs.
Onondaga Lake Superfund Site
Based on our prior ownership of Crucible, we may have contingent liability relating to the Onondaga Lake Superfund Site (the “Onondaga Site”) located near Syracuse, New York. Crucible operated a steel mill facility adjacent to Onondaga Lake from 1911 to 1983. The New York State Department of Environmental Conservation (“NYSDEC”) has notified the Company and Coltec, as well as other parties, demanding reimbursement of unquantified environmental response costs incurred by NYSDEC and the EPA at the Onondaga Site. NYSDEC and EPA have alleged that contamination from the Crucible facility contributed to the need for environmental response actions at the Onondaga Site. In addition, Honeywell International Inc. (“Honeywell”), which has undertaken certain remediation activities at the Onondaga Site under the supervision of NYSDEC and the EPA, has informed the Company that it had claims against Coltec related to investigation and remediation at the Onondaga Site. In addition, the Company has received notice from the Natural Resource Trustees for the Onondaga Lake

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Superfund Site (which are the U. S. Department of Interior, NYSDEC, and the Onondaga Nation) alleging that Coltec is considered to be a potentially responsible party for natural resource damages at the Onondaga Site. We have entered into tolling agreements with NYSDEC, the EPA and Honeywell. At this time, based on limited information we have with respect to estimated remediation costs and the respective allocation of responsibility for remediation among potentially responsible parties, we cannot estimate a reasonably possible range of loss associated with Crucible’s activities that may have affected the Onondaga Site.
A&B Mines
In addition to the Crucible environmental matters discussed above, Coltec has received a notice from the EPA asserting that Coltec is a potentially responsible party under CERCLA as the successor to a former operator in 1954 and 1955 of two uranium mines in Arizona. On October 15, 2015, Coltec received another notice from the EPA asserting that Coltec is a potentially responsible party as the successor to the former operator of six additional uranium mines in Arizona. At this time, we have limited information regarding the sites, including confirmation as to whether a predecessor of Coltec operated mines at all of the sites identified by the EPA, and any potential remediation that may be required. As such, we cannot estimate a reasonably possible range of loss associated with cleanup at these sites, however, during the year ended December 31, 2015 , we reserved $1.1 million for the minimum amount of probable loss associated with the matter, including the cost of the investigative work to be conducted at the first two sites identified by the EPA.

ITEM 4.
MINE SAFETY DISCLOSURES
Not Applicable
EXECUTIVE OFFICERS OF THE REGISTRANT

Information concerning our executive officers is set forth below:
Name
 
Age
 
Position
Stephen E. Macadam
 
55
 
President, Chief Executive Officer and Director
J. Milton Childress II
 
58
 
Senior Vice President and Chief Financial Officer
Kenneth D. Walker
 
46
 
Senior Vice President and Chief Operating Officer
Todd L. Anderson
 
46
 
President, Stemco
Steven R. Bower
 
57
 
Vice President, Controller and Chief Accounting Officer
David S. Burnett
 
49
 
Vice President, Treasury and Tax
Jon A. Cox
 
49
 
Chief Innovation and Information Officer
William A. Favenesi
 
52
 
President, CPI
Gilles Hudon
 
55
 
President, Technetics Group
Robert S. McLean
 
51
 
General Counsel, Chief Administrative Officer and Secretary
William C. O'Neal
 
40
 
Vice President, Strategy and Corporate Development
Marvin A. Riley
 
41
 
President, Fairbanks Morse
William L. Sparks
 
47
 
Vice President, Talent
Susan E. Sweeney
 
52
 
President, GGB
Eric A. Vaillancourt
 
52
 
President, Garlock
__________________

Stephen E. Macadam has served as our Chief Executive Officer and President and as a director since April 2008. Prior to accepting these positions with EnPro, Mr. Macadam served as Chief Executive Officer of BlueLinx Holdings Inc. since October 2005. Before joining BlueLinx Holdings Inc., Mr. Macadam was the President and Chief Executive Officer of Consolidated Container Company LLC since August 2001. He served previously with Georgia-Pacific Corp. where he held the position of Executive Vice President, Pulp & Paperboard from July 2000 until August 2001, and the position of Senior Vice

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President, Containerboard & Packaging from March 1998 until July 2000. Mr. Macadam held positions of increasing responsibility with McKinsey and Company, Inc. from 1988 until 1998, culminating in the role of principal in charge of McKinsey’s Charlotte, North Carolina operation. Mr. Macadam received a B.S. in mechanical engineering from the University of Kentucky, an M.S. in finance from Boston College and an M.B.A. from Harvard University, where he was a Baker Scholar.

J. Milton Childress II is currently Senior Vice President and Chief Financial Officer and has held this position since March 2015, after having previously served as Vice President, Strategic Planning and Business Development since February 2006. Mr. Childress joined the EnPro corporate staff in December 2005. He was a co-founder of and served from October 2001 through December 2005 as Managing Director of Charlotte-based McGuireWoods Capital Group. Prior to that, Mr. Childress was Senior Vice President, Planning and Development of United Dominion Industries, Inc. from December 1999 until May 2001, having previously served as Vice President. Mr. Childress held a number of positions with Ernst & Young LLP’s corporate finance consulting group prior to joining United Dominion in 1992.

Kenneth D. Walker is currently Senior Vice President and Chief Operating Officer and has held this position since November 2014. Mr. Walker served as President, Compressor Products International division, from September 2013 to November 2014 with additional responsibility as President, Engineered Products Segment of EnPro, which included both GGB and Compressor Products International. Before that, Mr. Walker was President, GGB division, after having served as Corporate Vice President, Continuous Improvement for EnPro, 2009 to 2010, Vice President and General Manager of GGB Americas from 2006 through 2009, as Vice President and General Manager of Plastomer Technologies from 2003 through 2006, and as Vice President, Sales and Marketing at Plastomer Technologies from 2001 to 2002. Prior to joining Plastomer Technologies, Mr. Walker worked in a variety of business development and general management roles at G5 Technologies and W. L. Gore & Associates.

Todd L. Anderson is currently President, Stemco division, and has held this position since April 2014, after having previously served as Vice President, Garlock Pipeline Technologies division from August 2011 to April 2014.  Mr. Anderson first joined the Stemco division in 1994 and became Stemco's Vice President, Engineering in 1999.  He then served as Vice President, Operations from 2004 to 2008 before becoming Vice President and General Manager of Stemco Kaiser in February 2008 until his move to Garlock Pipeline Technologies in August 2011.

Steven R. Bower is currently Vice President, Controller and Chief Accounting Officer and has held this position since joining the Company in October 2014. Immediately prior to joining the Company, Mr. Bower was Corporate Controller of Polymer Group, Inc. (PGI) from July 2014 through October 2014. Prior to joining PGI, Mr. Bower was Vice President, Finance and Accounting and Corporate Secretary for HITCO Carbon Composites, Inc., (a subsidiary of SGL Group), from April 2003 to February 2014. Prior to HITCO, Mr. Bower served at SGL’s global headquarters in Germany as Controller - Central Planning and Coordination, from July 2001 to April 2003; and prior to that; as Corporate Controller - North America from August 1996 to June 2001. Prior to his positions with SGL Group, Mr. Bower served Collins & Aikman Corporation and its predecessor companies from November 1989 through August 1996 in accounting, public reporting and investor relations roles. Prior to Collins & Aikman, Mr. Bower was with Price Waterhouse LLP from July 1983 through November 1989, where he departed as an Audit Manager. Mr. Bower is both a Certified Public Accountant and a Certified Management Accountant.

David S. Burnett is currently Vice President, Treasury and Tax, and Treasurer, and has held these positions since February 2012, after having previously served as Director, Tax from July 2010 to February 2012. Prior to joining EnPro, Mr. Burnett was a Director at PricewaterhouseCoopers LLP in Charlotte, North Carolina from November 2004 to July 2010, and from September 2001 to November 2004 in the Washington National Tax Services office in Washington, DC. Prior to PricewaterhouseCoopers LLP, he was a Senior Manager in Grant Thornton LLP’s Office of Federal Tax Services in Washington, D.C. Mr. Burnett is both a Certified Public Accountant and a Certified Treasury Professional.

Jon A. Cox is currently Chief Innovation and Information Officer. He was appointed to this position in February 2014. Prior to this, Mr. Cox was Division President of the Stemco division from May 2007. Mr. Cox joined the Stemco division in 1995 as its Vice President of Engineering, was promoted to global Vice President of Engineering of the Garlock division in 1999 and promoted to serve as Vice President and General Manager of Garlock’s Klozure business unit in 2004. Prior to joining Stemco, Mr. Cox’s career began with Federal-Mogul Corporation where he spent 11 years in increasing roles of responsibility in the engineering group.
    
William A. Favenesi is currently President, CPI division, and has held this position since November, 2014. Mr. Favenesi served as Vice President of Global Commercial Development at CPI from October 2013 to November 2014 and served as Vice President at Technetics from August 2011 to October 2013. From May 2005 to August 2011, he held positions of increasing responsibility in sales and marketing for Garlock Helicoflex/Garlock HPS (now Technetics Group). Prior to joining

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EnPro, he served in various international sales management roles for The Lee Company and Advanced Products Company. Mr. Favenesi began his career as an officer in the U.S. Air Force where he flew EF-111A/F-111A aircraft.

Gilles Hudon is currently President, Technetics Group division, and has held this position since August 2011. In August 2013, Mr. Hudon accepted additional responsibility as Executive Vice President, EnPro Europe. Mr. Hudon previously served as Vice-President and General Manager of Garlock’s High Performance Seals Group from August 2009 to 2011, as Vice-President and General Manager of Garlock Helicoflex from 2007 to 2009, and as Vice-President and General Manager of Garlock Canada from 2005 to 2007. Prior to joining EnPro, Mr. Hudon was President of Uniflex Technologies, a Canadian manufacturing company.

Robert S. McLean is currently Chief Administrative Officer, a position he has held since January 2016, as well as General Counsel and Secretary of EnPro, positions he has held since May 2012. Mr. McLean served as Vice President, Legal and Assistant Secretary from April 2010 to May 2012. Prior to joining EnPro, Mr. McLean was a partner at the Charlotte, North Carolina law firm of Robinson Bradshaw & Hinson P.A., which he joined in 1995, and where he chaired the firm’s corporate practice group. Prior to joining Robinson Bradshaw & Hinson, Mr. McLean worked with the Atlanta office of the King & Spalding law firm and the Charlotte office of the Smith, Helms, Mullis & Moore law firm (now part of McGuireWoods, LLP), after which he was the Assistant General Counsel and Secretary of the former Carolina Freight Corporation (now part of Arkansas Best Corporation).

William C. O’Neal is currently Vice President, Strategy and Corporate Development, and has held this position since April 2015, after having previously served as Global Vice President Strategy and Development, Technetics division from October 2014 to March 2015. Mr. O’Neal first joined EnPro in October 2008 as Director, Mergers and Acquisitions. He then served as Vice President, Finance and IT, Technetics division from January 2012 to September 2014.

Marvin A. Riley is currently President, Fairbanks Morse division, and has held this position since May 2012. Prior to that Mr. Riley served as Vice President, Manufacturing, of EnPro since December 2011. Mr. Riley served as Vice President Global Operations, GGB division, from November 2009 until November 2011 and as Vice President Operations Americas, GGB division, from July 2007 until November 2011. Prior to joining EnPro, he was an executive with General Motors Vehicle Manufacturing and held multiple positions of increasing responsibility from 1997 to 2007 within General Motors.

William L. Sparks is currently Vice President, Talent and has held this position since he joined EnPro on March 2, 2015. Mr. Sparks joined EnPro from the McColl School of Business at Queens University of Charlotte, where he served as Professor of Business and Behavioral Sciences from 2000, Associate Dean from 2013 and was also serving as the director of the graduate program in Organization Development and for Leadership Initiatives at the time of his departure. In addition, since 1999, Mr. Sparks served as a principal of Sparks & Associates, LLC, a professional services firm focused on leadership and team development, corporate creativity and innovation and change management. From 2010 to 2015 he also served as a managing partner with Peter C. Browning & Associates, LLC, a consulting firm providing services to corporate boards of directors.

Susan E. Sweeney is currently President, GGB division, and has held this position since September 2013. In 2014, she was conferred an Ed.D degree in Organizational Leadership. Dr. Sweeney served as Vice President of Global Operations GGB from November 2011 to September 2013 and served as Director of Operations, North America GGB from April 2010 to November 2011 Prior to joining EnPro, she held positions of increasing responsibility with General Motors Corp. from 1985 to 2009.

Eric A. Vaillancourt is currently President, Garlock division, and has held this position since November 2014. Mr. Vaillancourt served as President, Garlock Sealing Products from June 2012 to November 2014 and as Vice President, Sales and Marketing of the Garlock division from 2009 to 2012. Prior to joining EnPro, Mr. Vaillancourt held positions of increasing responsibility with Bluelinx Corporation from 1988 to 2009, culminating in his position as Regional Vice President North-Sales and Distribution. Mr. Vaillancourt completed Harvard Management Program in 2014.

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PART II
 
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is publicly traded on the New York Stock Exchange (“NYSE”) under the symbol “NPO.”
As of December 31, 2015, there were 3,269 holders of record of our common stock. The price range of our common stock for each quarter from January 1, 2014 through December 31, 2015 , and cash dividends declared on our common stock for these periods is listed below:
 
Low
Sale Price
 
High
Sale Price
 
Dividend
Fiscal 2015:
 
 
 
 
 
Fourth Quarter
$
38.20

 
$
52.90

 
$
0.20

Third Quarter
38.08

 
57.84

 
0.20

Second Quarter
56.87

 
69.26

 
0.20

First Quarter
58.99

 
70.23

 
0.20

Fiscal 2014:
 
 
 
 
 
Fourth Quarter
$
57.15

 
$
67.78

 
$
—

Third Quarter
60.32

 
75.08

 
—

Second Quarter
66.59

 
75.78

 
—

First Quarter
56.30

 
80.00

 
—


For a discussion of the restrictions on payment of dividends on our common stock, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Dividends.”
In October 2015, we received requests for the conversion of all of the convertible debentures then outstanding. Under the terms of the convertible debentures, holders of the convertible debentures were entitled to receive upon conversion a cash payment up to the par value of the convertible debentures being converted, plus a number of shares of our common stock determined over a 20-trading-day settlement period. On November 8, 2015 and November 18, 2015 we issued 80 shares and 19,530, respectively, of our common stock in settlement of the conversion of such convertible debentures. The issuance of such shares was exempt from registration under the Securities Act of 1933, as amended, pursuant to Section 3(a)(9) thereof.
The following table sets forth all purchases made by us or on our behalf or any “affiliated purchaser,” as defined in Rule 10b-18(a)(3) under the Exchange Act, of shares of our common stock during each month in the fourth quarter of 2015 .
 
Period
(a) Total Number
of Shares (or
Units) Purchased
 
(b) Average Price
Paid per Share
(or Unit)
 
(c) Total Number of
Shares (or Units)
Purchased as Part of
Publicly Announced
Plans or Programs
(2)
 
(d) Maximum Number
(or Approximate Dollar
Value) of Shares (or
Units) that May Yet Be
Purchased Under the
Plans or Programs
(2)
 
October 1 – October 31, 2015
—

 
—

 
—

 
—

 
November 1 – November 30, 2015
25,250

(1)
$49.43
(1)
25,250

(1)
48,752,471

(1)
December 1 – December 31, 2015
87,944

(1)(2)
$46.35
(1)(2)
86,850

(1)
44,724,773

(1)
Total
113,194

(1)(2)
$47.03
(1)(2)
112,100

(1)
44,724,773

(1)
 
(1)
On October 29, 2015, we announced that our Board of Directors had authorized the purchase, from time to time, of up to $50.0 million of our outstanding common stock. Pursuant to this authorization, we purchased 25,250 shares at an average purchase price of $49.43 per share in November 2015 and 86,850 shares at an average purchase price of $47.00 per share in December 2015. The share purchase authorization expires on October 28, 2017.
(2)
A total of 1,094 shares were transferred to a rabbi trust that we established in connection with our Deferred Compensation Plan for Non-Employee Directors, pursuant to which non-employee directors may elect to defer directors’ fees into common stock units. Coltec furnished these shares in exchange for management and other services provided by EnPro. 172 of these shares were valued at a price of $45.07, the average of the high and low trading price of our

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common stock on December 14, 2015, and 922 of these shares were valued at a price of $44.31 per share, the average of the high and low trading price of our common stock on December 31, 2015 . Accordingly, the total 1,094 shares were valued at a weighted average price of $44.43. We do not consider the transfer of shares from Coltec in this context to be pursuant to a publicly announced plan or program.

CUMULATIVE TOTAL RETURN PERFORMANCE GRAPH
Set forth below is a line graph showing the yearly change in the cumulative total shareholder return for our common stock as compared to similar returns for the Russell 2000 ® Stock Index and a group of our peers (the “Peer Group”) consisting of Actuant Corporation, Barnes Group, Inc., Clarcor, Inc., and Circor International, Inc.
Each of the returns is calculated assuming the investment of $100 in each of the securities on December 31, 2010, and reinvestment of dividends into additional shares of the respective equity securities when paid. The graph plots the respective values beginning on December 31, 2010, and continuing through December 31, 2015 . Past performance is not necessarily indicative of future performance.


ITEM 6.
SELECTED FINANCIAL DATA
The following historical consolidated financial information as of and for each of the years ended December 31, 2015 , 2014 , 2013 , 2012 and 2011 has been derived from, and should be read together with, our Consolidated Financial Statements and the related notes, for each of those years. The audited Consolidated Financial Statements and related notes as of December 31, 2015 and 2014 , and for the years ended December 31, 2015 , 2014 and 2013 , are included elsewhere in this annual report. The information presented below with respect to the last three completed fiscal years should also be read together with Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

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Year Ended December 31,
 
2015 (1)
 
2014 (1), (3)
 
2013 (1), (3)
 
2012 (1), (3)
 
2011 (2), (3)
 
(as adjusted, in millions, except per share data)
Statement of Operations Data:
 
 
 
 
 
 
 
 
 
Net sales
$
1,204.4

 
$
1,219.3

 
$
1,144.2

 
$
1,184.2

 
$
1,105.5

Net income (loss)
$
(20.9
)
 
$
22.0

 
$
27.4

 
$
41.0

 
$
44.2

Balance Sheet Data:
 
 
 
 
 
 
 
 
 
Total assets
$
1,503.5

 
$
1,602.7

 
$
1,397.0

 
$
1,357.3

 
$
1,238.5

Long-term debt (including current portion)
$
361.0

 
$
321.1

 
$
165.1

 
$
185.3

 
$
150.2

Notes payable to GST
$
283.2

 
$
271.0

 
$
259.3

 
$
248.1

 
$
237.4

Per Common Share Data – Basic:
 
 
 
 
 
 
 
 
 
Net income (loss)
$
(0.93
)
 
$
0.95

 
$
1.31

 
$
1.99

 
$
2.15

Per Common Share Data – Diluted:
 
 
 
 
 
 
 
 
 
Net income (loss)
$
(0.93
)
 
$
0.85

 
$
1.17

 
$
1.90

 
$
2.06

______________________________________________________________________________________________________

(1)
For a discussion of acquisitions and divestitures in the fiscal years ended December 31, 2015, 2014, 2013 and 2012, see Item 1. Business-Acquisitions and Dispositions.
(2)
In August 2011, we acquired certain assets and assumed certain liabilities of PI Bearing Technologies, a privately held manufacturer of bearing blocks and other bearing products used in fluid power applications, and a distributor of high performance plain bearing products used in industrial applications. The business is part of our Engineered Products segment. In July 2011, we acquired Tara Technologies, a privately-held company that offers highly engineered products and solutions to the semiconductor, aerospace, energy and medical markets. The business is part of our Sealing Products segment. In February 2011, we acquired the Mid Western group of companies, a privately-owned business primarily serving the oil and gas drilling, production and processing industries of western Canada. Mid Western services and rebuilds reciprocating compressors, designs and installs lubrication systems, and services and repairs a variety of other equipment used in the oil and gas industry. The business is part of our Engineered Products segment. In February 2011, we acquired the business of PSI, a privately-owned group of companies that manufacture products for the safe flow of fluids through pipeline transmission and distribution systems worldwide. The PSI business primarily serves the global oil and gas industry and water and wastewater infrastructure markets. The business’s products include flange sealing and flange isolation products; pipeline casing spacers/isolators; casing end seals; the original Link-Seal® modular sealing system for sealing pipeline penetrations into walls, floors, ceilings and bulkheads; hole forming products; manhole infiltration sealing systems; and safety-related signage for pipelines. The business is part of our Sealing Products Segment. In January 2011, we acquired certain assets and assumed certain liabilities of Rome Tool & Die, Inc., a leading supplier of steel brake shoes to the North American heavy-duty truck market. The business is part of our Sealing Products segment. We paid for the acquisitions completed during 2011 with $228.2 million in cash, which included $99.2 million for the purchase of PSI. Additionally, there were approximately $2.2 million of acquisition-related costs recorded during 2011.
(3) Total assets for the fiscal years ended December 31, 2014, 2013, 2012, and 2011 have been adjusted to reflect the effect of correcting an income tax provision error dating prior to 2011 on deferred income taxes as previously presented for these fiscal years. See Notes to Consolidated Financial Statements, Note 1, "Overview, Significant Accounting Policies, and Recently Issued Accounting Pronouncements" included elsewhere in this report for further information.

ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management’s discussion and analysis of certain significant factors that have affected our consolidated financial condition and operating results during the periods included in the accompanying audited Consolidated Financial Statements and the related notes. You should read the following discussion in conjunction with our audited Consolidated Financial Statements and the related notes, included elsewhere in this annual report.
Forward-Looking Statements
This report contains certain statements that are “forward-looking statements” as that term is defined under the Private Securities Litigation Reform Act of 1995 (the “Act”) and releases issued by the Securities and Exchange Commission (the “SEC”) . The words “may,” “hope,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential,” “continue,” and other expressions which are predictions of or indicate future events and

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trends and which do not relate to historical matters identify forward-looking statements. We believe that it is important to communicate our future expectations to our shareholders, and we therefore make forward-looking statements in reliance upon the safe harbor provisions of the Act. However, there may be events in the future that we are not able to accurately predict or control, and our actual results may differ materially from the expectations we describe in our forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. We advise you to read further about certain of these and other risk factors set forth in Item 1A of this annual report, entitled “Risk Factors.” We undertake no obligation to publicly update or revise any forward-looking statement, either as a result of new information, future events or otherwise. Whenever you read or hear any subsequent written or oral forward-looking statements attributed to us or any person acting on our behalf, you should keep in mind the cautionary statements contained or referred to in this section.

Overview and Outlook
Overview . We design, develop, manufacture, service and market proprietary engineered industrial products. We have 60 primary manufacturing facilities located in 14 countries, including the United States.
We manage our business as three segments: a Sealing Products segment, an Engineered Products segment, and a Power Systems segment.
Our Sealing Products segment designs, manufactures and sells sealing products, including: metallic, non-metallic and composite material gaskets; dynamic seals; compression packing; resilient metal seals; elastomeric seals; hydraulic components; expansion joints; pipeline casing spacers/isolators; casing end seals; modular sealing systems for sealing pipeline penetrations; hole forming products; manhole infiltration sealing systems; safety-related signage for pipelines; heavy-duty truck wheel-end component systems, including brake products, brake drums, suspension products and tire pressure management products; bellows and bellows assemblies; pedestals for semiconductor manufacturing; and PTFE products. These products are used in a variety of industries, including chemical and petrochemical processing, petroleum extraction and refining, pulp and paper processing, power generation, food and pharmaceutical processing, primary metal manufacturing, mining, water and waste treatment, heavy-duty trucking, aerospace, medical, filtration and semiconductor fabrication. In many of these industries, performance and durability are vital for safety and environmental protection. Many of our products are used in highly demanding applications, e.g., where extreme temperatures, extreme pressures, corrosive environments, strict tolerances, and/or worn equipment make product performance difficult.
Our Engineered Products segment includes operations that design, manufacture and sell self-lubricating, non-rolling, metal-polymer, solid polymer and filament wound bearing products, aluminum blocks for hydraulic applications and precision engineered components and lubrication systems for reciprocating compressors. These products are used in a wide range of applications, including the automotive, pharmaceutical, pulp and paper, natural gas, health, power generation, machine tools, air treatment, refining, petrochemical and general industrial markets.
Our Power Systems segment designs, manufactures, sells and services heavy-duty, medium-speed diesel, natural gas and dual fuel reciprocating engines. The United States government and the general markets for marine propulsion, power generation, and pump and compressor applications use these products and services.
The historical business operations of certain subsidiaries of our subsidiary, Coltec Industries Inc (“Coltec”), principally Garlock Sealing Technologies LLC (“GST LLC”) and The Anchor Packing Company (“Anchor”), have resulted in a substantial volume of asbestos litigation in which plaintiffs have alleged personal injury or death as a result of exposure to asbestos fibers. Information about GST LLC’s asbestos litigation is contained in this Management’s Discussion and Analysis of Financial Condition and Results of Operations in the “Asbestos” subsection of the “Contingencies” section.
On June 5, 2010 (the “Petition Date”), GST LLC, Anchor and Garrison Litigation Management Group, Ltd. (“Garrison”) 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”). GST LLC, Anchor and Garrison are sometimes referred to collectively as “GST” in this report. The filings were the initial step in a claims resolution process. GST LLC is one of the businesses in our broader Garlock group. GST LLC and its subsidiaries operate five significant manufacturing facilities, including operations in Palmyra, New York and Houston, Texas. The filings did not include EnPro Industries, Inc., or any other EnPro Industries, Inc. operating subsidiary.
GST LLC now operates in the ordinary course under court protection from asbestos claims. All pending litigation against GST is stayed during the process. We address our actions to permanently resolve GST LLC’s asbestos litigation in this Management’s Discussion and Analysis of Financial Condition and Results of Operations in the “Garlock Sealing Technologies LLC and Garrison Litigation Management Group, Ltd.” section.

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The financial results of GST and 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 ours, generally must be prospectively deconsolidated from the parent and the investment accounted for using the cost method. At deconsolidation, our investment was recorded at its estimated fair value as of June 4, 2010, resulting in a gain for reporting purposes. The cost method requires us to present our ownership interests in the net assets of GST at the Petition Date as an investment and not recognize any income or loss from GST and subsidiaries in our results of operations during the reorganization period. Our investment of $236.9 million as of December 31, 2015 and 2014 , was subject to periodic reviews for impairment. When GST emerges from the jurisdiction of the Bankruptcy Court, the subsequent accounting will be determined based upon the applicable facts and circumstances at such time, including the terms of any plan of reorganization. See Note 19 to the Consolidated Financial Statements in this Form 10-K for condensed financial information of GST and subsidiaries.
In January 2015, we announced that GST and we had reached agreement with the Future Claimants' Representative that includes a second amended plan of reorganization. The Future Claimants' Representative has agreed to support, recommend and vote in favor of the second amended plan. On January 14, 2015, GST filed the second amended plan of reorganization which 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 second amended plan of reorganization provides for the establishment of two facilities – a settlement facility (which would receive $220 million from GST and $30 million from our consolidated subsidiary, Coltec Industries Inc (“Coltec”), upon consummation of the plan and additional contributions by GST aggregating $77.5 million over the seven years following consummation of the plan) and a litigation fund (which would receive $30 million from GST upon consummation of the plan) to fund the defense and payment of claims of claimants who elect to pursue litigation under the plan rather than accept the settlement option under the 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 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 the unpaid settled asbestos claims to be from $3.1 million to $16.4 million, and the second 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 second amended plan provides that, during the 40-year period following confirmation of the plan, GST would, if necessary, 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. Under the plan, EnPro would guarantee GST’s payment of the $77.5 million of deferred contributions plus accrued interest to the settlement facility and, to the extent they are required, the supplementary contributions to the litigation fund.
The second 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 plan. Under the terms of the plan, we would retain 100% of the equity interests of GST LLC. The plan also provides for the extinguishment of all derivative claims against us based on GST asbestos products and operations. The second amended plan has not yet been confirmed by the Bankruptcy Court (and other necessary approvals have not been obtained), and there is no certainty that the Bankruptcy Court will confirm the plan (or grant other necessary preliminary approvals) or that the conditions to effectiveness of the plan will be satisfied or waived.
As a result of Coltec’s agreement to fund a contribution of $30 million to the settlement facility pursuant to the second amended plan of reorganization, we recorded a $30 million accrual for this liability in our 2014 results.
Through the first quarter of 2015, several initiatives were implemented to remove labor, facility and other costs from CPI’s cost structure and a customer-focused organizational realignment was implemented to identify price and volume opportunities to optimize sales and profitability in the weak oil and gas business environment. During the first quarter of 2015 new strategic options and opportunities to improve business performance were analyzed given the continuing weakness in demand. Additional strategic measures were planned to be implemented during the second half of 2015 and the expected benefits of these actions were taken into consideration in assessing the outlook for CPI.
However, as more time passed, the benefits of strategic measures and initiatives being implemented were no longer expected to sufficiently compensate for the financial impacts of the prolonged and significant weakness in the oil and gas markets served by CPI. Taking this into account, the forecasted results for CPI were lowered significantly at the end of May 2015 to such an extent that we thought it likely that the fair value of CPI would be less than its carrying value which

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necessitated an interim impairment test for goodwill. The interim step one analysis we performed, using a combination of discounted cash flow and market value approaches to determine the fair value of CPI consistent with our annual impairment testing, indicated that the fair value of CPI was less than the carrying value of its net assets. The required step two valuation analysis performed as of May 31, 2015 and completed in July 2015 indicated that $46.1 million of the CPI goodwill balance was impaired. Accordingly, CPI goodwill in the amount of $ 46.1 million was written-off in the second quarter of 2015. The remaining CPI goodwill balance at December 31, 2015 is $4.0 million .
On October 13, 2015, we approved a plan to restructure certain operations of our CPI unit in light of the prolonged and significant weakness in the markets served by CPI, particularly the oil and gas markets. The restructuring plan contemplates the closing or sale of operations at the Fort St. John, Grand Prairie, Lac La Biche and Calgary facilities in western Canada, as well as facilities in Brazil, Colombia, New Smyrna Beach, Florida, Rifle, Colorado and other domestic and international sites. In addition, 17 employees have been terminated at the Edmonton and Medicine Hat facilities in Alberta, Canada.
In 2015 we incurred total expense related to the restructuring plan of $3.8 million , including severance expense of $0.6 million , asset write-downs of $2.7 million , lease run-out costs of $0.1 million , and other associated costs of $0.4 million . These costs were incurred at our Engineered Products segment, and were reflected within other (operating) expense in our Consolidated Statements of Operations aside from inventory-related costs, which were reflected in cost of sales. We expect the balance of the costs, $2.7 million to $4.3 million, to be incurred in 2016.
In addition to the activities noted above, we have progressed with activities of a more limited scope at GGB, also within our Engineered Products segment. Upon completion, we estimate that the the combined impact of these actions will result in annualized cost savings in the segment of approximately $4-5 million.
Of the estimate of total expenses to be incurred in 2016, $2.5 million to $3.3 million are expected to result in future cash expenditures. We expect approximately 50-65% of the estimated expenditures to occur in fiscal year 2016, and the remaining 35-50% to occur over fiscal years 2017 to 2018.
During 2015, total U.S. Dollar equivalent revenues under a multi-year €89.2 million engine sales contract accounted for utilizing the POC method fell below the total projected U.S. Dollar costs as a result of the significant strengthening of the U.S. Dollar as compared to the Euro since the contract date of May 2014. As a result, we recorded a cumulative loss on the contract of $8.8 million through December 31, 2015. Of this loss, $6.9 million pertains to the unperformed portion of the contract as of December 31, 2015. We have not entered into any transactions to hedge the impact of future foreign exchange rate changes on this contract. An evaluation of the impact of exchange rates on the contract will be performed quarterly for the duration of the contract.
During 2015 , 2014 , and 2013 , we completed a number of acquisitions and a disposition of a business. Please refer to “Acquisitions and Dispositions” in Item 1 – Business for additional discussion regarding these transactions.
Outlook

Apart from some pockets of market growth, global industrial market conditions remain soft, and the drop in oil prices and the reduced demand in other industrial segments have resulted in lower volumes in several of our businesses. Demand levels in the aerospace, European automotive, and engine parts and service markets remain stable, and semiconductor is showing signs of strengthening. However, softer conditions in many of our other markets and the strong dollar continue to affect our results. Given these ongoing market headwinds, we continue to focus on optimizing our global footprint and reducing costs via other restructuring actions. Despite current challenging market conditions, longer term, we expect continued benefits from our strategic growth initiatives, including product innovation, recent and future strategic acquisitions and continued emphasis on improving operational efficiencies.

Our effective tax rate is directly affected by the relative proportions of revenue and income before taxes in the jurisdictions in which we operate. Based on the expected mix of domestic and foreign earnings, we anticipate our effective tax rate to remain lower than the U.S. statutory rate primarily due to a significant portion of our earnings originating in lower rate foreign jurisdictions. We also benefit from certain tax incentives such as the U.S. deduction for domestic production activities, and credits for research and development. Based on the expected mix of domestic and foreign earnings in 2016, we anticipate our annual effective tax rate for 2016 will be between 30% and 34%. Discrete tax events may cause our effective rate to fluctuate on a quarterly basis. Certain events, including, for example, acquisitions and other business changes, which are difficult to predict, may also cause our effective tax rate to fluctuate. We are subject to changing tax laws, regulations, and interpretations in multiple jurisdictions. Corporate tax reform continues to be a priority in the U.S. and other jurisdictions. Changes to the tax system in the U.S. could have significant effects, positive and negative, on our effective tax rate, and on our deferred tax assets and liabilities.

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We contributed $48.5 million to our U.S. defined benefit pension plans in 2014. This shift in contribution strategy was based in part on an increase in the PBGC variable-rate premiums, which are assessed on underfunded balances. We also reduced the number of plan participants by offering a lump sum benefit to certain terminated vested participants whose benefits aggregated less than $50,000 determined as of May 1, 2014. These de-risking actions should aid in lowering future net periodic pension cost. We did not make any contributions to our U.S. plans in 2015. We contributed $0.7 million to our foreign pension plans in 2015. Future contribution requirements, if any, depend on pension asset returns, pension valuation assumptions, plan design, and legislative actions.

We estimate annual pension expense for the full year of 2016 will be approximately $7.7 million, which would be $2.6 million more than in 2015. The expected increase in pension expense is primarily due to a decrease in our expected return on plan assets, slightly offset by a higher discount rate used in the actuarial computations. In addition, updates to the actuarially determined mortality tables resulted in higher estimated service cost. These estimates are based on current assumptions and pension expense may increase in subsequent years if discount rates decline or other changes in actuarial assumptions increase the projected benefit obligation.
In connection with our growth strategy, we will continue to evaluate acquisitions in 2016; however, the effect of such acquisitions cannot be predicted and therefore is not reflected in this outlook.
We address our outlook on our actions to permanently resolve GST LLC’s asbestos litigation in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Garlock Sealing Technologies LLC and Garrison Litigation Management Group, Ltd.” section.
Results of Operations
The following table does not include results for GST and its subsidiaries. See Note 19 to our Consolidated Financial Statements in this Form 10-K for condensed financial information for GST and subsidiaries.
 
Years Ended December 31,
 
2015
 
2014
 
2013
 
(in millions)
Sales
 
 
 
 
 
Sealing Products
$
705.6

 
$
664.3

 
$
622.9

Engineered Products
297.8

 
357.6

 
356.4

Power Systems
204.6

 
200.1

 
167.6

 
1,208.0

 
1,222.0

 
1,146.9

Intersegment sales
(3.6
)
 
(2.7
)
 
(2.7
)
Total sales
$
1,204.4

 
$
1,219.3

 
$
1,144.2

Segment Profit
 
 
 
 
 
Sealing Products
$
84.3

 
$
85.6

 
$
97.1

Engineered Products
6.4

 
26.8

 
17.6

Power Systems
27.1

 
28.5

 
14.0

Total segment profit
117.8

 
140.9

 
128.7

Corporate expenses
(28.2
)
 
(42.9
)
 
(33.3
)
Asbestos settlement
—

 
(30.0
)
 
—

Goodwill and other intangible asset impairment
(47.0
)
 
—

 
—

Interest expense, net
(52.1
)
 
(44.1
)
 
(44.3
)
Other income (expense), net
(9.1
)
 
8.7

 
(15.3
)
Income (loss) before income taxes
$
(18.6
)
 
$
32.6

 
$
35.8


Segment profit is total segment revenue reduced by operating, restructuring and other expenses identifiable with the segment. Corporate expenses include general corporate administrative costs. Expenses not directly attributable to the segments, corporate expenses, net interest expense, asbestos-related expenses, asset impairments, 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 EnPro.

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Other income (expense), net in the table above contains all items included in other (operating) expense and other income (expense), net on our Consolidated Statements of Operations for the years ending December 31, 2015 , 2014 , and 2013 with the exception of $6.1 million, $2.3 million and $6.7 million , respectively, of restructuring costs. As noted previously, restructuring costs are considered to be a part of segment profit. Additionally, other income (expense), net in the table above for the years ending December 31, 2015 , 2014 , and 2013 also includes $3.0 million, $3.1 million, and $6.6 million, respectively, of miscellaneous expenses that are either not associated with a particular segment or not considered part of administering the corporate headquarters. These expenses are included in selling, general and administrative expense on our Consolidated Statements of Operations.
2015 Compared to 2014
Sales of $1,204.4 million in 2015 decrease d 1.2% from $1,219.3 million in 2014 . The following table summarizes the impact of acquisitions and divestitures, foreign currency, and organic growth by segment:
 
Sales
 
Percent Change 2015 vs. 2014
increase/(decrease)
 
Acquisitions
 
Divestiture
 
Foreign Currency
 
Organic
 
Total
EnPro Industries, Inc.
 
8
%
 
(3
)%
 
(5
)%
 
(1
)%
 
(1
)%
Sealing Products
 
15
%
 
(5
)%
 
(3
)%
 
(1
)%
 
6
 %
Engineered Products
 
—
%
 
—
 %
 
(10
)%
 
(7
)%
 
(17
)%
Power Systems
 
—
%
 
—
 %
 
—
 %
 
2
 %
 
2
 %

Following are key points regarding changes in sales for 2015 compared to 2014 :
•
Challenging economic headwinds in many markets, particularly oil and gas
•
Unfavorable effect of foreign currency in the Sealing and Engineered Products segments
•
The acquisitions in 2015 included in the Sealing Products segment
Segment profit, management’s primary measure of how our operations perform, decrease d 16.4% to $ 117.8 million in 2015 from $ 140.9 million in 2014 . See below for a discussion of the factors driving the change in segment profit for each of our reportable segments.
Corporate expenses for 2015 decrease d by $ 14.7 million compared to 2014 . The decrease was primarily driven by lower salaries and benefits (primarily medical) ($7.1 million) and lower incentive compensation costs due to lower attainment on employee incentive programs ($5.6 million) .
Net interest expense in 2015 was $52.1 million compared to $44.1 million in 2014 . The overall increase of $ 8.0 million due to higher average indebtedness in 2015 vs. 2014 , driven mainly by the issuance of our 5.875% senior notes in September 2014 and partially offset by current year settlements of our convertible debentures.
Other income (expense), net in 2015 was $ 9.1 million of expense compared to $ 8.7 million of income in 2014 . The change was due primarily to the gain on sale of our GRT business unit in 2014 ($27.7 million), and partially offset by lower losses on the convertible debenture exchange and purchase transactions in 2015 ($2.8 million) compared to 2014 ($10.0 million).
Income tax expense in 2015 was $2.3 million , resulting in an annual effective tax rate of negative 12.3%. This is compared to $10.6 million of tax expense in 2014 , which resulted in an annual effective tax rate of 32.4%. The volatility in the tax rate is primarily the result of significant unusual items that were recorded during 2015. We released a valuation allowance in France where an entity has demonstrated sustained earnings to overcome a history of negative evidence. Although realization is not assured, management believes it is more likely than not that all of the deferred tax asset will be realized. The full $3.2 million benefit of this valuation allowance release was recorded as a discrete item in the first quarter of 2015. In the third quarter of 2015, we recorded a tax benefit of $2.4 million related to adjustments of prior accrued taxes, primarily as a result of originally using estimates that were updated in tax returns filed during the period. The largest adjustment in the third quarter, $1.5 million, related to the reversal of a previously recorded state tax liability related to the sale of our Garlock Rubber Technologies business unit. These favorable discrete items were more than offset by our inability to record tax benefits related to the largely nondeductible discrete goodwill impairment charge. In the second quarter of 2015, we recorded a discrete tax benefit of only $0.8 million on the $46.1 million goodwill impairment. Without these unusual items, our effective tax rate would have been 31.6% in 2015.

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The effective tax rates in 2015 (without the unusual items discussed above) and 2014 are lower than U.S. statutory rates primarily due to the earnings in lower rate foreign jurisdictions where a significant portion of our income is taxed. In addition, we historically have benefited from income tax incentives such as the U.S. deduction for domestic production activities ($1.0 million in 2015 and $1.6 million in 2014) and various credits for research and development ($1.4 million in 2015 and $1.3 million in 2014).
Net loss was $ 20.9 million , or $0.93 per share, in 2015 compared to net income of $22.0 million , or $0.85 per share, in 2014 . Earnings per share are expressed on a diluted basis.
Following is a discussion of operating results for each segment during the year:
Sealing Products . Sales increase d 6.2% to $705.6 million in 2015 from $664.3 million in 2014 . Excluding the benefit of acquisitions ($99.8 million), offset by the prior year divestiture of GRT ($31.3 million) and unfavorable foreign exchange ($22.6 million), sales were down 0.7% or $4.6 million. Higher revenues from truck parts, aerospace and chemical markets were partially offset by softer conditions in oil & gas, semiconductor, nuclear and general industrial markets.
Segment profit decrease d 1.5% to $84.3 million in 2015 from $85.6 million in 2014 . Excluding the effect of the prior year GRT divestiture ($5.3 million) and unfavorable foreign exchange ($1.7 million), offset by lower restructuring costs ($2.0 million) and the benefit of acquisitions ($0.9 million), segment profit increased $2.8 million or 3.4%. The increase was due largely to lower operating costs. Operating margins for the segment decreased to 11.9% in 2015 from 12.9% in 2014 .
Engineered Products . Sales decrease d 16.7% to $297.8 million in 2015 from $357.6 million in 2014 . Excluding unfavorable foreign exchange effects ($34.8 million), sales were down 7.0% or $25.0 million. Lower sales of bearings in the U.S. and lower sales of reciprocating compressor parts and related services in Canada, the U.K., Middle East and the U.S. markets more than offset sales increases in other European markets.
Segment profit decrease d 76.1% to $6.4 million in 2015 from $26.8 million in 2014 . Excluding increased restructuring costs, primarily related to the exit of certain locations at CPI ($6.3 million), and foreign exchange effects ($1.9 million), profit was down 45.9% or $12.3 million. Improved pricing and the favorable impact of cost reduction initiatives were more than offset by the impact of lower sales volumes. Operating margins for the segment decreased to 2.1% in 2015 from 7.5% in 2014 .
Power Systems . Sales increase d 2.2% to $204.6 million in 2015 from $200.1 million in 2014 primarily due to higher revenues from parts and service ($8.4 million). Engine revenues were $3.9 million lower.
Segment profit decrease d 4.9% to $27.1 million in 2015 from $28.5 million in 2014 . Segment profits included a foreign exchange related $6.9 million loss provision associated with periods beyond 2015 on a multi-year contract for engines to EDF priced in Euros. Excluding this effect, segment profit increased $5.5 million or 19.3%. The higher margins were primarily due to a more favorable mix of higher-margin engines, pricing, and a higher mix of parts and service revenues which more than offset increased selling, general and administrative expense. Operating margins for the segment decreased to 13.2% in 2015 from 14.2% in 2014 .
2014 Compared to 2013
Sales of $1,219.3 million in 2014 increased 6.6% from $1,144.2 million in 2013. The following table summarizes the impact of acquisitions and divestitures, foreign currency, and organic growth by segment:
Sales
 
Percent Change 2014 vs. 2013
increase/(decrease)
 
Acquisitions
 
Divestiture
 
Foreign Currency
 
Organic
 
Total
EnPro Industries, Inc.
 
1
%
 
—
%
 
—
 %
 
6
%
 
7
%
Sealing Products
 
1
%
 
—
%
 
—
 %
 
6
%
 
7
%
Engineered Products
 
—
%
 
—
%
 
—
 %
 
—
%
 
—
%
Power Systems
 
—
%
 
—
%
 
—
 %
 
19
%
 
19
%
Following are key points regarding changes in sales for 2014 compared to 2013:
•
Increased organic sales in the Sealing Products and Power Systems segments
•
Increased engine sales in the Power Systems segment
•
The acquisitions in 2014 included in the Sealing Products segment
Segment profit, management’s primary measure of how our operations perform, increased 9.5% to $140.9 million in 2014 from $128.7 million in 2013. Excluding the effect of favorable foreign exchange translation ($0.7 million) and lower

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restructuring costs, offset by the unfavorable effect of acquisitions due mainly to the release of an acquisition earn-out provision in 2013, total segment profit increased 6.7% or $9.0 million. Favorable volume and selected price increases generated $30.8 million. These favorable changes were partially offset by higher selling, general and administrative costs.
Corporate expenses for 2014 increased by $9.6 million compared to 2013. The increase was primarily driven by an increase in employee medical costs ($3.4 million), employee incentive compensation ($3.0 million), information technology costs ($2.1 million) and salaries/severance ($1.5 million).
On January 14, 2015, GST filed a second amended plan of reorganization that established a settlement facility which would receive $220 million from GST and $30 million from our consolidated subsidiary, Coltec, upon consummation of the plan and additional contributions from GST over the next seven years. As a result of Coltec’s agreement to fund a contribution of $30 million to the settlement facility pursuant to the second amended plan of reorganization, we recorded a $30 million charge to establish this liability in our 2014 results.
Net interest expense in 2014 was $44.1 million compared to $44.3 million in 2013. The overall decrease of $0.2 million was due to a reduction in the aggregate principal of convertible debentures outstanding following the privately negotiated exchange transactions completed in March 2014 and June 2014 and tender offer completed in September 2014 ($6.4 million) and lower interest due to lower borrowings against the senior secured revolving credit facility ($0.6 million) partially offset by interest on our 5.875% senior notes ($5.3 million) and increases in interest on the note payable to GST because of capitalized payment-in-kind interest ($1.3 million).
Other income (expense), net in 2014 was $8.7 million of income compared to $15.3 million of expense in 2013. The change was due primarily to the gain on sale of our GRT business unit in 2014 ($27.7 million), decreased legal and other fees as activity related to GST's asbestos claims resolution process slowed ($3.1 million), and lower additions to environmental reserves ($1.8 million), partially offset by losses on the convertible debenture exchange and tender offer transactions in 2014 ($10.0 million).
Income tax expense in 2014 was $10.6 million, resulting in an annual effective tax rate of 32.4%. This is compared to $8.4 million of tax expense in 2013, which resulted in an annual effective tax rate of 23.4%. The effective tax rate in 2013 reflected a discrete benefit related to the January 2013 passage of the American Taxpayer Relief Act of 2012, which retroactively extended previously expired tax provisions. As a result, the entire 2012 benefit of these expired provisions was recorded in January 2013 ($1.6 million). The effective tax rate in 2014 is lower than U.S. statutory rates primarily due to the earnings in lower rate foreign jurisdictions where a significant portion of our income is taxed. In addition, we historically have benefited from income tax incentives such as the U.S. deduction for domestic production activities ($1.6 million) and various credits for research and development ($1.3 million).
Net income was $22.0 million, or $0.85 per share, in 2014 compared to $27.4 million, or $1.17 per share, in 2013. Earnings per share are expressed on a diluted basis.
Following is a discussion of operating results for each segment during the year:
Sealing Products . Sales increased 6.6% to $664.3 million in 2014 from $622.9 million in 2013. Excluding the benefit of acquisitions ($4.8 million) and favorable foreign exchange ($1.2 million), sales were up 5.7% or $35.4 million. Higher demand in the North American heavy-duty truck market, semiconductor and aerospace markets, and the segment's China markets more than offset lower demand in oil and gas markets.
Segment profit decreased 11.8% to $85.6 million in 2014 from $97.1 million in 2013. Excluding the unfavorable effect of acquisitions ($1.9 million) due mainly to the release of the acquisition earn-out provision in 2013 and the effect of increased restructuring costs ($1.5 million), offset by the favorable effect of foreign exchange ($0.3 million), segment profit decreased $8.4 million, or 8.7%. Segment profits and profit margins declined due to costs associated with the investment in establishing Stemco's centralized distribution center ($4.8 million), increases to bad debt and inventory reserves, headcount and wage increases, and the impact of a 2013 research and development subsidy. Operating margins for the segment decreased to 12.9% in 2014 from 15.6% in 2013.
Engineered Products . Sales increased 0.3% to $357.6 million in 2014 from $356.4 million in 2013. Excluding unfavorable foreign exchange effects ($0.7 million), sales were up 0.5% or $1.9 million. Better pricing and stronger demand in the global automotive market, industrial markets in Europe, and in the European and Latin American renewable energy markets were mostly offset partially by weakness in the North American natural gas market.
Segment profit increased 52.3% to $26.8 million in 2014 from $17.6 million in 2013. Excluding the effects decreased restructuring costs ($3.8 million) and favorable foreign exchange ($0.4 million), profit was up 23.5% or $5.0 million. Profits and profit margin increased due to improved pricing, lower raw materials costs, and operational improvements. These benefits

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were partially offset by higher administrative costs and the impact of lower research and development subsidies. Operating margins for the segment increased to 7.5% in 2014 from 4.9% in 2013.
Power Systems . Sales increased 19.4% to $200.1 million in 2014 from $167.6 million in 2013 from increased engine sales ($16.3 million) primarily due to the shipment of three engines in 2014 recognized under the completed contract method and higher parts and service revenue ($16.2 million).
Segment profit increased 103.6% to $28.5 million in 2014 from $14.0 million in 2013. Excluding the effect of lower restructuring costs ($2.1 million), segment profit increased $12.4 million, or 77.0%. The increase in segment profit was primarily due to the shipment of three engines in 2014 recognized under the completed contract method, higher parts and service volumes ($6.7 million), lower procurement and production costs, lower warranty expense, and the impact of an early retirement program expense in 2013, partially offset by increased research and development spending and increased information technology costs. Operating margins for the segment increased to 14.2% in 2014 from 8.4% in 2013.
Restructuring and Other Costs
We incurred $6.6 million , $2.3 million and $6.7 million of restructuring costs during the years ended December 31, 2015 , 2014 and 2013 , respectively.
During 2015 , we conducted a number of restructuring activities throughout our operations, the most significant of which was at our CPI business. Workforce reductions announced as a result of our 2015 restructuring activities totaled 139 salaried administrative and hourly manufacturing positions, most of which had been terminated by December 31, 2015 . Please see the Overview and Outlook section of Management's Discussion and Analysis and Note 3 to our Consolidated Financial Statements for further information.
Liquidity and Capital Resources
Cash requirements for, but not limited to, working capital, capital expenditures, acquisitions, pension contributions, and debt repayments have been funded from cash balances on hand, revolver borrowings and cash generated from operations. We are proactively pursuing acquisition opportunities. It is possible our cash requirements for one or more of these acquisition opportunities could exceed our cash balance at the time of closing. Should we need additional capital, we have other resources available, which are discussed in this section under the heading of “Capital Resources.”
As of December 31, 2015 , we held $0.7 million of cash and cash equivalents in the United States and $102.7 million of cash and cash equivalents outside of the United States. If the funds held outside the United States were needed for our operations in the U.S., we have several methods to repatriate without significant tax effects, including repayment of intercompany loans or distributions of previously taxed income. Other distributions may require us to incur U.S. or foreign taxes to repatriate these funds. However, as discussed in Note 4 to our Consolidated Financial Statements, our intent is to permanently reinvest these funds outside the U.S. and our current plans do not demonstrate a need to repatriate cash to fund our U.S. operations.
Cash Flows
Operating activities provided cash in the amount of $86.5 million , $32.2 million and $69.9 million in 2015 , 2014 and 2013 , respectively. The increase in operating cash flows in 2015 versus 2014 was primarily attributable to lower pension contributions ($48.3 million), lower income taxes paid ($29.9 million), and lower segment working capital requirements ($11.7 million) offset partially by decreased segment earnings ($23.1 million) and higher interest payments ($13.5 million). The decrease in operating cash flows in 2014 versus 2013 was primarily attributable to increased pension contributions ($26.1 million) and higher income taxes paid ($30.7 million) partially offset by increased segment earnings ($12.2 million), lower interest payments ($2.2 million), and lower working capital requirements ($2.7 million).
We used $ 86.5 million , $ 74.7 million , and $ 41.5 million of cash in 2015 , 2014 and 2013 , respectively, for investing activities. In 2015, we used $45.5 million, net of cash acquired to fund acquisitions, compared to $61.9 million, net of cash acquired in 2014. Refer to “Acquisitions and Dispositions” in Part I, Item 1 – “Business” for additional discussion regarding these transactions. In 2015, we spent $41.4 million on capital expenditures. In 2014, we used $52.3 million primarily to fund capital expenditures and enterprise resource and planning system implementations and received $39.3 million of proceeds from the sale of GRT in 2014. In 2013, we spent $39.9 million on capital expenditures and $2.0 million on the acquisition of certain assets and assumption of certain liabilities of a small distributor of industrial seals.
Financing activities used $ 85.2 million in cash in 2015 , primarily for share repurchases of $85.3 million, repurchase and repayment of our convertible debentures maturing in October 2015 ($47.1 million), and dividends ($18.0 million). These

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payments were offset primarily by net borrowings on our revolving credit facility of $62.2 million. Financing activities provided $ 177.0 million in 2014 primarily from proceeds on newly issued senior notes of $297.6 million, after giving effect to cash paid of $105.6 million in a cash tender offer to purchase convertible debentures and payment of the balance outstanding under our senior secured revolving credit facility of $7.6 million. Financing activities used $ 19.5 million in 2013 and included net payments on the senior secured revolving credit facility of $27.7 million.
Capital Resources
Senior Secured Revolving Credit Facility . On August 28, 2014, we amended and restated the agreement governing our senior secured revolving credit facility (the “Credit Facility Amendment”).
The Credit Facility Amendment provides for a five-year, $300 million senior secured revolving credit facility (the “Revolving Credit Facility”). At December 31, 2015, borrowings under the Revolving Credit Facility bore interest at an annual rate of LIBOR plus 2.00% or base rate plus 1.00%, although the interest rates under the Revolving Credit Facility are subject to incremental increases and decreases based on a consolidated total leverage ratio. In addition, a commitment fee accrues with respect to the unused amount of the Revolving Credit Facility at an annual rate of 0.25%, which rate is also subject to incremental increases and decreases based on a consolidated total leverage ratio.
The Credit Facility Amendment contains certain financial covenants and required financial ratios, including:
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a maximum consolidated total net leverage ratio of not more than 4.0 to 1.0 (with total debt, for the purposes of such ratio, to exclude the intercompany notes payable to GST LLC and to be net of up to $75 million of unrestricted cash of EnPro Industries, Inc. and its domestic, consolidated subsidiaries); and
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a minimum consolidated interest coverage ratio of at least 2.5 to 1.0.
The Credit Facility Amendment contains affirmative and negative covenants (subject, in each case, to customary exceptions and qualifications), including covenants that limit our ability to, among other things:
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grant liens on our assets;
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incur additional indebtedness (including guarantees and other contingent obligations);
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make certain investments (including loans and advances);
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merge or make other fundamental changes;
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sell or otherwise dispose of property or assets;
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pay dividends and other distributions and prepay certain indebtedness;
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make changes in the nature of our business;
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enter into transactions with our affiliates;
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enter into burdensome contracts;
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make certain capital expenditures; and
•
modify or terminate documents related to certain indebtedness
We were in compliance with all covenants of the Credit Facility Amendment as of December 31, 2015 .
The borrowing availability under our Revolving Credit Facility at December 31, 2015 was $228.4 million after giving consideration to $9.4 million of outstanding letters of credit and $ 62.2 million of outstanding borrowings.
Convertible Debentures . In October 2005, we issued $172.5 million in aggregate principal amount of convertible debentures, net of an original issue discount of $61.3 million. The convertible debentures bore interest at the annual rate of 3.9375% with interest due on April 15 and October 15 of each year until maturity on October 15, 2015.
In March 2015, we purchased for cash approximately $21.3 million in aggregate principal amount of convertible debentures in a privately negotiated transaction. We paid $44.9 million to complete the transaction of which $23.3 million was allocated to the extinguishment of the liability component and the remaining $21.6 million was allocated to the reacquisition of the associated conversion option. We recognized a $2.8 million pre-tax loss on the transaction ( $1.8 million net of tax) which is included in other income (expense) in the accompanying Consolidated Statement of Operations.
In the fourth quarter of 2015, we received conversion requests representing all $2.2 million of the convertible debentures outstanding. Under the terms of the Debentures, each holder received a cash payment up to the par value of the convertible debentures being converted, plus a number of shares of our common stock, determined over a twenty ( 20 ) trading day settlement period. Accordingly, the holders received in November 2015 approximately $2.2 million in cash plus 19,610 shares of our common stock.

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Senior Notes . In September 2014, we issued $300 million aggregate principal amount of our senior notes. A portion of the net proceeds of the offering of the senior notes was used to repay outstanding borrowings under the revolving credit facility, including borrowings made to fund the purchase of the convertible debentures in 2014.
The senior notes are unsecured, unsubordinated obligations of EnPro and mature on September 15, 2022. Interest on the senior notes accrues at a rate of 5.875% per annum and is payable semi-annually in cash in arrears on March 15 and September 15 of each year, commencing March 15, 2015. The senior notes are required to be guaranteed on a senior unsecured basis by each of EnPro’s existing and future direct and indirect domestic subsidiaries that is a borrower under, or guarantees, our indebtedness under the Revolving Credit Facility or guarantees any other Capital Markets Indebtedness (as defined in the indenture governing the senior notes) of EnPro or any of the guarantors.
On or after September 15, 2017, we may, on any one or more occasions, redeem all or a part of the senior notes at specified redemption prices plus accrued and unpaid interest. In addition, we may redeem a portion of the aggregate principal amount of the senior notes before September 15, 2017 with the net cash proceeds from certain equity offerings at a specified redemption price plus accrued and unpaid interest, if any, to, but not including, the redemption date. We may also redeem some or all of the senior notes before September 15, 2017 at a redemption price of 100% of the principal amount, plus accrued and unpaid interest, if any, to, but not including, the redemption date, plus a “make whole” premium.
Each holder of the senior notes may require us to repurchase some or all of the senior notes for cash upon the occurrence of a defined “change of control” event. Our ability to redeem the senior notes prior to maturity is subject to certain conditions, including in certain cases the payment of make-whole amounts.
The indenture governing the senior notes includes covenants that restrict our ability to engage in certain activities, including incurring additional indebtedness and paying dividends, subject in each case to specified exceptions and qualifications set forth in the indenture.
Related Party Notes . Effective as of January 1, 2010, Coltec entered into a $73.4 million Amended and Restated Promissory Note due January 1, 2017 (the “Coltec Note”) in favor of GST LLC, and our subsidiary Stemco LP ("Stemco")entered into a $153.8 million Amended and Restated Promissory Note due January 1, 2017, in favor of GST LLC (the “Stemco Note”, and together with the Coltec Note, the “Notes Payable to GST”). The Notes Payable to GST amended and replaced promissory notes in the same principal amounts which were initially issued in March 2005, and which expired on January 1, 2010.
The Notes Payable to GST bear interest at 11% per annum, of which 6.5% is payable in cash and 4.5% is added to the principal amount of the Notes Payable to GST as payment-in-kind (“PIK”) interest. If GST LLC is unable to pay ordinary course operating expenses, under certain conditions, GST LLC can require Coltec and Stemco to pay in cash the accrued PIK interest necessary to meet such ordinary course operating expenses, subject to a cap of 1% of the principal balance of each of the Notes Payable to GST in any calendar month and 4.5% of the principal balance of each of the Notes Payable to GST in any year. The interest due under the Notes Payable to GST may be satisfied through offsets of amounts due under intercompany services agreements pursuant to which the Company provides certain corporate services, makes available access to group insurance coverage to GST, makes advances to third party providers related to payroll and certain benefit plans sponsored by GST, and permits employees of GST to participate in certain of the Company’s benefit plans. In 2015, 2014, and 2013, PIK interest of $12.2 million, $11.7 million, and $11.2 million, respectively, was added to the principal balance of the Notes Payable to GST, resulting in a total balance of $283.2 million at December 31, 2015.
The Coltec Note is secured by Coltec’s pledge of certain of its equity ownership in specified U.S. subsidiaries. The Stemco Note is guaranteed by Coltec and secured by Coltec’s pledge of its interest in Stemco. The Notes Payable to GST are subordinated to any obligations under the Company’s senior secured revolving credit facility.
Garlock Sealing Technologies LLC and Garrison Litigation Management Group, Ltd.
The historical business operations of GST LLC and 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, containing encapsulated asbestos fibers. Anchor is an inactive and insolvent indirect subsidiary of Coltec. The Company’s subsidiaries’ exposure to asbestos litigation and their relationships with insurance carriers have been managed through another Coltec subsidiary, Garrison.
On the Petition Date, GST LLC, Anchor and Garrison filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code in Bankruptcy Court. The filings were the initial step in a claims resolution process, which is ongoing. The goal of the process is an efficient and permanent resolution of all pending and future asbestos claims through court approval of a plan of reorganization that will establish a facility to resolve and pay all GST asbestos claims. GST is

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seeking an order confirming a plan of reorganization that provides for the establishment of such a facility and repayment of creditors in full, and a confirmation hearing is scheduled for August 2016. GST's plan is supported by the court-appointed representative of future asbestos claimants but opposed by the official committee representing current asbestos claimants.
Prior to its deconsolidation effective on the Petition Date, GST LLC and its subsidiaries operated as part of the Garlock group of companies within EnPro’s Sealing Products segment. GST LLC designs, manufactures and sells sealing products, including metallic, non-metallic and composite material gaskets, rotary seals, compression packing, resilient metal seals, elastomeric seals, hydraulic components, and expansion joints. GST LLC and its subsidiaries operate five primary manufacturing facilities, including GST LLC’s operations in Palmyra, New York and Houston, Texas.
Garrison’s principal business historically has been to manage the defense of all asbestos-related litigation affecting our subsidiaries, principally GST LLC and Anchor, arising from their sale or use of products or materials containing asbestos, and to manage, bill and collect available insurance proceeds. When it commenced business in 1996, Garrison acquired certain assets of GST LLC and assumed certain liabilities stemming from asbestos-related claims against GST LLC. Garrison is not itself a defendant in asbestos-related litigation and has no direct liability for asbestos-related claims. Rather, it has assumed GST LLC’s liability for such claims and agreed to indemnify GST LLC from liability with respect to such claims. Anchor was a distributor of products containing asbestos and was acquired by GST LLC in 1987. Anchor has been inactive and insolvent since 1993.
The financial results of GST and subsidiaries have been excluded from our consolidated results since the Petition Date. The investment in GST is presented using the cost method during the reorganization period and is subject to periodic reviews for impairment. The cost method requires us to present our ownership interests in the net assets of GST at the Petition Date as an investment and to not recognize any income or loss from GST and subsidiaries in our results of operations during the reorganization period. When GST emerges from the jurisdiction of the Bankruptcy Court, the subsequent accounting will be determined based upon the applicable circumstances and facts at such time, including the terms of any plan of reorganization. See Note 19 to our Consolidated Financial Statements for condensed financial information for GST and subsidiaries.
GST is included in our consolidated U.S. federal income tax return and certain state combined income tax returns. As the parent of these consolidated tax groups, we are liable for, and pay, income taxes owed by the entire group. We have agreed with GST to allocate group taxes to GST based on the U.S. consolidated tax return regulations and current accounting guidance. This method generally allocates current and deferred taxes to GST as if it were a separate taxpayer. As a result, we carry an income tax receivable from GST related to this allocation. At December 31, 2015, this amount was $100.6 million . This receivable is expected to be collected at a future date.
We have assessed GST LLC’s and Garrison’s liquidity position as a result of the bankruptcy filing and believe they can continue to fund their operating activities, and those of their subsidiaries, and meet their capital requirements for the foreseeable future. However, the ability of GST LLC and Garrison to continue as going concerns is dependent upon their ability to resolve their ultimate asbestos liability in the bankruptcy from their net assets, future cash flows, and available insurance proceeds, whether through the confirmation of a plan of reorganization or otherwise. As a result of the bankruptcy filing and related events, there can be no assurance the carrying values of the assets, including the carrying value of the business and the tax receivable, will be realized or that liabilities will be liquidated or settled for the amounts recorded. In addition, a plan of reorganization, or rejection thereof, could change the amounts reported in the GST LLC and Garrison financial statements and cause a material change in the carrying amount of our investment. For additional information about GST’s bankruptcy proceeding, see Notes 19 and 20 to our Consolidated Financial Statements and the sections entitled “Contingencies – Subsidiary Bankruptcy,” and “-Asbestos” in this Management’s Discussion and Analysis of Financial Condition and Results of Operation.
Dividends
On January 13, 2015, our Board of Directors adopted a policy under which it intends to declare regular quarterly cash dividends on EnPro’s common stock, with the determination of whether to declare a dividend and the amount being considered each quarter, after taking into account our cash flow, earnings, cash position, financial position and other relevant matters. In 2015, the Board declared a dividend of $0.20 per share in each quarter. Each of the agreement governing the Revolving Credit Facility and the indenture governing the senior notes includes covenants restricting the payment of dividends, but includes a basket permitting the payment of cash dividends of up to $30.0 million per year. Other baskets may be available under that the agreement governing the Revolving Credit Facility and the indenture governing the senior notes to permit the payment of dividends in excess of $30.0 million per year.
Critical Accounting Policies and Estimates
The preparation of our Consolidated Financial Statements, in accordance with accounting principles generally accepted in the United States, requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues

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and expenses, and related disclosures pertaining to contingent assets and liabilities. Note 1, “Overview, Basis of Presentation, Significant Accounting Policies and Recently Issued Accounting Guidance,” to the Consolidated Financial Statements describes the significant accounting policies used to prepare the Consolidated Financial Statements. On an ongoing basis we evaluate our estimates, including, but not limited to, those related to bad debts, inventories, intangible assets, income taxes, warranty obligations, restructuring, pensions and other postretirement benefits, and contingencies and litigation. We base our estimates on historical experience and on various other assumptions we believe to be reasonable under the circumstances. Actual results may differ from our estimates.
We believe the following accounting policies and estimates are the most critical. Some of them involve significant judgments and uncertainties and could potentially result in materially different results under different assumptions and conditions.
Revenue Recognition
For the Sealing Products and Engineered Products segments, revenue is recognized at the time title and risk of product ownership is transferred or when services are rendered, and shipping costs billed to customers are recognized as revenue and expensed in cost of goods sold since they are fixed and determinable and collection is reasonably assured.
We generally use the percentage-of-completion (“POC”) accounting method to account for our long-term contracts associated with the design, development, manufacture, or modification of complex engines under fixed price or cost plus contracts. During the third quarter of 2011, the Power Systems segment began using POC for prospective engine contracts. We made this change because, as a result of enhancements to our financial management and reporting systems, we are able to reasonably estimate the revenue, costs, and progress towards completion of engine builds. If we are not able to meet those conditions for a particular engine contract, we recognize revenues using the completed-contract method. Additionally, engines that were in production at June 30, 2011 will continue to use the completed-contract method.
Under POC, revenue is recognized based on the extent of progress towards completion of the long-term contract. We generally use the cost-to-cost measure for our long-term contracts unless we believe another method more clearly measures progress towards completion of the contract. Under the cost-to-cost measure, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the contract. Contract costs include labor, material and subcontracting costs, as well as an allocation of indirect costs. Revenues, including estimated fees or profits, are recorded as costs are incurred.
Due to the nature of the work required to be performed on many of our contracts, the estimation of total revenue and cost at completion is complex and subject to many variables. Management must make assumptions and estimates regarding labor productivity, the complexity of the work to be performed, the availability of materials, the length of time to complete the contract (to estimate increases in wages and prices for materials and related support cost allocations), performance by our subcontractors and overhead cost rates, among other variables. Based on our analysis, any quarterly adjustments to net sales, cost of sales, and the related impact to operating income are recorded as necessary in the period they become known. These adjustments may result in an increase or a decrease in operating income. Changes in estimates of net sales, cost of sales, and the related impact to operating income are recognized quarterly on a cumulative catch-up basis, which recognizes in the current period the cumulative effect of the changes on current and prior periods based on a contract's percentage of completion. A significant change in one or more of these estimates could affect the profitability of one or more of our contracts. When estimates of total costs to be incurred on a contract exceed total estimates of revenue to be earned, a provision for the entire loss on the contract is recorded in the period the loss is determined.
Pensions and Postretirement Benefits
We and certain of our subsidiaries sponsor domestic and foreign defined benefit pension and other postretirement plans. Major assumptions used in the accounting for these employee benefit plans include the discount rate, expected return on plan assets, rate of increase in employee compensation levels and assumed health care cost trend rates. Assumptions are determined based on data available to us and appropriate market indicators, and are evaluated each year as of the plans’ measurement date. A change in any of these assumptions could have a material effect on net periodic pension and postretirement benefit costs reported in the Consolidated Statements of Operations, as well as amounts recognized in the Consolidated Balance Sheets. See Note 14 to the Consolidated Financial Statements for a discussion of pension and postretirement benefits.
Income Taxes
We use the asset and liability method of accounting for income taxes. Temporary differences arising between the tax basis of an asset or liability and its carrying amount on the Consolidated Balance Sheet are used to calculate future income tax assets or liabilities. This method also requires the recognition of deferred tax benefits, such as net operating loss carryforwards. A

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valuation allowance is recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to the taxable income (losses) in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A tax benefit from an uncertain tax position is recognized only if we believe it is more likely than not that the position will be sustained on its technical merits. If the recognition threshold for the tax position is met, only the portion of the tax benefit that we believe is greater than 50 percent likely to be realized is recorded. See Note 4 to the Consolidated Financial Statements for a discussion of income taxes.
Goodwill and Other Intangible Assets
We do not amortize goodwill, but instead it is subject to annual impairment testing. The goodwill asset impairment test involves comparing the fair value of a reporting unit to its carrying amount. If the carrying amount of a reporting unit exceeds its fair value, a second step of comparing the implied fair value of the reporting unit’s goodwill to the carrying amount of that goodwill is required to measure the potential goodwill impairment loss.
To estimate the fair value of our reporting units, we use both discounted cash flow and market valuation approaches. The discounted cash flow approach uses cash flow projections to calculate the fair value of each reporting unit while the market approach relies on market multiples of similar companies. There are inherent assumptions and estimates used in developing future cash flows which require management to apply judgment to the analysis of intangible asset impairment, including projecting revenues, interest rates, our weighted average cost of capital, royalty rates and tax rates. For the market approach, we chose a group of 15 companies we believe are representative of our diversified industrial peers. We used a 70% weighting for the discounted cash flow valuation approach and a 30% weighting for the market valuation approach, reflecting our belief that the discounted cash flow valuation approach provides a better indicator of value since it reflects the specific cash flows anticipated to be generated in the future by the business.
Many of the factors used in assessing fair value are outside the control of management, and it is reasonably likely that assumptions and estimates will change in future periods. These changes could result in future impairments. For additional information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Overview and Outlook” as well as Notes 1 and 9 to the Consolidated Financial Statements.
Investment in GST
Our investment in GST is subject to periodic reviews for impairment. To estimate the fair value, we consider many factors and use both discounted cash flow and market valuation approaches. In the discounted cash flow approach, we use cash flow projections to calculate the fair value of GST. The key assumptions used for the discounted cash flow approach include expected cash flows based on internal business plans, historical and projected growth rates, discount rates, estimated asbestos claim values and insurance collection projections. The asbestos claims value will be determined in the claims resolution process, either through negotiations with claimant representatives or, absent a negotiated resolution, by the Bankruptcy Court after contested proceedings. Our estimates are based upon assumptions we believe to be reasonable, but which by their nature are uncertain and unpredictable. For the market approach, we use recent acquisition multiples for businesses of similar size to GST. We use a 70% weighting for the discounted cash flow valuation approach and a 30% weighting for the market valuation approach, reflecting our belief that the discounted cash flow valuation approach provides the best indication of value since it reflects the specific cash flows anticipated to be generated in the future by GST.
Contingencies
General
A detailed description of certain environmental, asbestos and other legal matters relating to certain of our subsidiaries is included in this section. In addition to the matters noted herein, we are from time to time subject to, and are presently involved in, other litigation and legal proceedings arising in the ordinary course of business. We believe the outcome of such other litigation and legal proceedings will not have a material adverse effect on our financial condition, results of operations and cash flows. Expense for administrative and legal proceedings are recorded when incurred.
Environmental
Our facilities and operations are subject to federal, state and local environmental and occupational health and safety requirements of the U.S. and foreign countries. We take a proactive approach in our efforts to comply with environmental, health and safety laws as they relate to our manufacturing operations and in proposing and implementing any remedial plans that may be necessary. We also regularly conduct comprehensive environmental, health and safety audits at our facilities to maintain compliance and improve operational efficiency.

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Although we believe past operations were in substantial compliance with the then applicable regulations, we or one or more of our subsidiaries is involved with various remediation activities at 14 sites where the future cost per site for us or our subsidiary is expected to exceed $100 thousand . Investigations have been completed for 10 sites and are in progress at the other 4 sites. Our costs at a majority of these sites relate to remediation projects for soil and groundwater contamination at former operating facilities that were sold or closed.
During 2013, we accrued a liability of $6.3 million related to environmental remediation costs associated with the pre-1983 site ownership and operation of the former Trent Tube facility in East Troy, Wisconsin. This amount is included in other income (expense) on the accompanying Consolidated Statements of Operations. The Trent Tube facility was operated by Crucible Materials Corporation from 1983 until its closure in 1998. Crucible Materials Corporation commenced environmental remediation activities at the site in 1999. In connection with the bankruptcy of Crucible Materials Corporation, a trust was established to fund the remediation of the site. We have reviewed the trust's assets and valued them at $750,000 for our internal purposes in 2013. During 2013, the Wisconsin Department of Natural Resources first notified us of potential liability for remediation of the site as a potentially responsible party under Wisconsin's "Spill Act" which provides that potentially responsible parties may be jointly and severally liable for site remediation. On April 1, 2015, we entered into a Consent Order with the Wisconsin Department of Natural Resources regarding remediation and, based on our evaluation of the site, believe that the amounts previously reserved are adequate to fulfill our obligations under the order.
Based on our prior ownership of Crucible Steel Corporation a/k/a Crucible, Inc. (“Crucible”), we may have additional contingent liabilities in one or more significant environmental matters. One such matter, which is included in the 14 sites referred to above, is the Lower Passaic River Study Area of the Diamond Alkali Superfund Site in New Jersey. Crucible operated a steel mill abutting the Passaic River in Harrison, New Jersey from the 1930s until 1974, which was one of many industrial operations on the river dating back to the 1800s. Certain contingent environmental liabilities related to this site were retained by Coltec when Coltec sold a majority interest in Crucible Materials Corporation (the successor of Crucible) in 1985. The United States Environmental Protection Agency (the “EPA”) has notified Coltec that it is a potentially responsible party (“PRP”) for Superfund response actions in the lower 17 -mile stretch of the Passaic River known as the Lower Passaic River Study Area. Coltec and approximately 70 of the numerous other PRPs, known as the Cooperating Parties Group, are parties to a May 2007 Administrative Order on Consent with the EPA to perform a Remedial Investigation/Feasibility Study (“RI/FS”) of the contaminants in the Lower Passaic River Study Area. The RI/FS was completed and submitted to the EPA at the end of April 2015. The RI/FS recommends a targeted dredge and cap remedy with monitored natural recovery and adaptive management for the Lower Passaic River Study Area. The cost of such remedy is estimated to be $726 million. Previously, on April 11, 2014, the EPA released its Focused Feasibility Study (the “FFS”) with its proposed plan for remediating the lower eight miles of the Lower Passaic River Study Area. The FFS calls for bank-to-bank dredging and capping of the riverbed of that portion of the river and estimates a range of the present value of aggregate remediation costs of approximately $ 953 million to approximately $ 1.731 billion , although estimates of the costs and the timing of costs are inherently imprecise. The FFS was subject to a 90-day public comment period, which expired on August 28, 2014, and potential revision, including the adoption of a less extensive remedy, in light of comments that were received. No final allocations of responsibility have been made among the numerous PRPs that have received notices from the EPA, there are numerous identified PRPs that have not yet received PRP notices from the EPA, and there are likely many PRPs that have not yet been identified. Based on our evaluation of the site, during the fourth quarter of 2014 we accrued a liability of $3.5 million related to environmental remediation costs associated with the lower eight miles of the Lower Passaic River Study Area, which is our estimate of the low end of a range of reasonably possible costs, with no estimate within the range being a better estimate than the minimum. Our actual remediation costs could be significantly greater than the $3.5 million we accrued. With respect to the upper nine miles of the Lower Passaic River Study Area, we are unable to estimate a range of reasonably possible costs.
Another such matter involves the Onondaga Lake Superfund Site (the “Onondaga Site”) located near Syracuse, New York. Crucible operated a steel mill facility adjacent to Onondaga Lake from 1911 to 1983. The New York State Department of Environmental Conservation (“NYSDEC”) has notified the Company and Coltec, as well as other parties, demanding reimbursement of unquantified environmental response costs incurred by NYSDEC and the EPA at the Onondaga Site. NYSDEC and EPA have alleged that contamination from the Crucible facility contributed to the need for environmental response actions at the Onondaga Site. In addition, Honeywell International Inc. (“Honeywell”), which has undertaken certain remediation activities at the Onondaga Site under the supervision of NYSDEC and the EPA, has informed the Company that it had claims against Coltec related to investigation and remediation at the Onondaga Site. In addition, the Company has received notice from the Natural Resource Trustees for the Onondaga Lake Superfund Site (which are the U. S. Department of Interior, NYSDEC, and the Onondaga Nation) alleging that Coltec is considered to be a potentially responsible party for natural resource damages at the Onondaga Site. We have entered into tolling agreements with NYSDEC, the EPA and Honeywell. At this time, based on limited information we have with respect to estimated remediation costs and the respective allocation of responsibility for remediation among potentially responsible parties, we cannot estimate a reasonably possible range of loss associated with Crucible’s activities that may have affected the Onondaga Site.

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Except with respect to specific Crucible environmental matters for which we have accrued a portion of the liability set forth above, including the Lower Passaic River Study Area, we are unable to estimate a reasonably possible range of loss related to any other contingent environmental liability based on our prior ownership of Crucible.
In addition to the Crucible environmental matters discussed above, Coltec has received a notice from the EPA asserting that Coltec is a potentially responsible party under CERCLA as the successor to a former operator in 1954 and 1955 of two uranium mines in Arizona. On October 15, 2015, Coltec received another notice from the EPA asserting that Coltec is a potentially responsible party as the successor to the former operator of six additional uranium mines in Arizona. At this time, we have limited information regarding the sites, including confirmation as to whether a predecessor of Coltec operated mines at all of the sites identified by the EPA, and any potential remediation that may be required. As such, we cannot estimate a reasonably possible range of loss associated with cleanup at these sites, however, during the year ended December 31, 2015 , we reserved $1.1 million for the minimum amount of probable loss associated with the matter, including the cost of the investigative work to be conducted at the first two sites identified by the EPA.
As of December 31, 2015 and 2014 , we had accrued liabilities of $16.8 million and $17.3 million , respectively, for estimated future expenditures relating to environmental contingencies. Given the uncertainties regarding the status of laws, regulations, enforcement policies, the impact of other parties potentially being liable, technology and information related to individual sites, we do not believe it is possible to develop an estimate of the range of reasonably possible environmental loss in excess of our recorded liabilities. In addition, based on our prior ownership of Crucible, we may have additional contingent liabilities in one or more significant environmental matters, which are included in the 14 sites referred to above. Except with respect to specific Crucible environmental matters for which we have accrued a portion of the liability set forth above, we are unable to estimate a reasonably possible range of loss related to these contingent liabilities. See Note 20 to the Consolidated Financial Statements for additional information regarding our environmental contingencies and see the section titled “Crucible Steel Corporation a/k/a Crucible, Inc.” in this Management’s Discussion and Analysis of Financial Condition and Results of Operation.
Colt Firearms and Central Moloney
We may have contingent liabilities related to divested businesses for which certain of our subsidiaries retained liability or are obligated under indemnity agreements. These contingent liabilities include, but are not limited to, potential product liability and associated claims related to firearms manufactured prior to March 1990 by Colt Firearms, a former operation of Coltec, and for electrical transformers manufactured prior to May 1994 by Central Moloney, another former Coltec operation. We believe that these potential contingent liabilities are not material to the Company’s financial condition, results of operation and cash flows. Coltec also has ongoing obligations, which are included in other liabilities in our Consolidated Balance Sheets, with regard to workers’ compensation, retiree medical and other retiree benefit matters that relate to Coltec’s periods of ownership of these operations.
Crucible Steel Corporation a/k/a Crucible, Inc.
Crucible, which was engaged primarily in the manufacture and distribution of high technology specialty metal products, was a wholly owned subsidiary of Coltec until 1983 when its assets and liabilities were distributed to a new Coltec subsidiary, Crucible Materials Corporation. Coltec sold a majority of the outstanding shares of Crucible Materials Corporation in 1985 and divested its remaining minority interest in 2004. Crucible Materials Corporation filed for Chapter 11 bankruptcy protection in May 2009 and is no longer conducting operations.
In conjunction with the closure of a Crucible plant in the early 1980s, Coltec was required to fund two trusts for retiree medical benefits for union employees at the plant. The first trust (the “First Benefits Trust”) pays for these retiree medical benefits on an ongoing basis. Coltec has no ownership interest in the First Benefits Trust, and thus the assets and liabilities of this First Benefits Trust are not included in our Consolidated Balance Sheets.
Because of the possibility there could be insufficient funds in the First Benefits Trust, Coltec was previously required to establish and make a contribution to a second trust (the “Back-Up Trust”). Under the terms of the First Benefits Trust agreement, the trustees retained an actuary to assess the adequacy of the assets in the Benefits Trust in 1995, 2005 and finally in 2015 and, if the actuary determined that the Benefits Trust assets were not adequate to fund the payment of future medical benefits, the Back-Up Trust would be required to contribute additional amounts to the Benefits Trust. All three reports detailed that there were adequate assets in the First Benefits Trust to fund the payment of future benefits, and as a result, the assets in the Back-up Trust reverted to Coltec in 2015. The assets of the First Benefits Trust will not revert to Coltec.
In the third quarter of 2015, we recorded income in connection with a reassessment of the potential liability related to the above-described retiree medical benefits based on the actuarial determination that there is no longer potential liability for any shortfalls in the First Benefits Trust, and, accordingly, we reduced the potential liability by $2.9 million. The effect of this adjustment is reflected in other income (expense) on the accompanying Consolidated Statements of Operations.

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We have certain ongoing obligations, which are included in other liabilities in our Consolidated Balance Sheets, including workers’ compensation, retiree medical and other retiree benefit matters, related to Coltec’s period of ownership of Crucible. Based on Coltec’s prior ownership of Crucible, we may have certain additional contingent liabilities, including liabilities in one or more significant environmental matters included in the matters discussed in “Environmental,” above. We are investigating these matters. Except with respect to those matters for which we have an accrued liability as discussed in “Environmental” above, we are unable to estimate a reasonably possible range of loss related to these contingent liabilities. See Note 20 to the Consolidated Financial Statements for information about certain liabilities relating to Coltec’s ownership of Crucible.

BorgWarner
A subsidiary of BorgWarner Inc. (“BorgWarner”) has asserted claims against GGB France E.U.R.L. (“GGB France”) with respect to certain bearings supplied by GGB France to BorgWarner and used by BorgWarner in manufacturing hydraulic control units included in motor vehicle automatic transmission units. BorgWarner and GGB France are participating in a technical review before a panel of experts to determine, among other things, whether there were any defects in the bearings and whether any defect caused the damages claimed by BorgWarner, which technical review is a required predicate to the commencement of a legal proceeding for damages. On October 14, 2014, BorgWarner filed a writ of claims with the Commercial Court of Brive-la-Gaillarde in France seeking monetary damages. On December 19, 2014, BorgWarner initiated “fast track” proceedings, which is a French legal process typically used for uncontested claims. On January 30, 2015, GGB France filed a writ of response challenging BorgWarner’s attempt to use the “fast track” process and, on February 4, 2015, GGB France filed a writ of response seeking to stay the proceedings on the merits pending the completion of the technical review. On April 2, 2015, the Commercial Court at Brive-la-Gaillarde rejected BorgWarner's request for "fast track" proceedings. The final report of the expert panel is anticipated to be issued in or around the second quarter of 2016. We believe that GGB France has valid factual and legal defenses to these claims and we are vigorously defending these claims. At this point in the technical review process we are unable to estimate a reasonably possible range of loss related to these claims.
AVL
On December 17, 2014, AVL Powertrain Engineering, Inc. filed a lawsuit against Fairbanks Morse alleging damages in connection with a contract between AVL and Fairbanks Morse pursuant to which AVL conducted engine testing services for certain AVL customers at certain of Fairbanks Morse’s facilities in Beloit, Wisconsin. AVL claims that it was unable to conduct its desired level of engine testing and asserts alternative damages theories based on rescission and lost profits. A trial is scheduled to begin on April 25, 2016 in the United States District Court, Western District of Wisconsin. We are vigorously defending these claims and believe that Fairbanks Morse has valid factual and legal defenses to these claims.
Subsidiary Bankruptcy
Three of our subsidiaries filed voluntary Chapter 11 bankruptcy petitions on the Petition Date as a result of tens of thousands of pending and estimated future asbestos personal injury claims. The filings were the initial step in a claims resolution process, which is ongoing. The goal of the process is an efficient and permanent resolution of all pending and future asbestos claims through court approval of a plan of reorganization that will establish a facility to resolve and pay all asbestos claims.
In November 2011, GST filed an initial proposed plan of reorganization with the Bankruptcy Court. GST's initial plan called for a trust to be formed, to which GST and affiliates would contribute $200 million and which would be the exclusive remedy for future asbestos personal injury claimants – those whose claims arise after confirmation of the plan. The initial proposed plan provided that each present asbestos personal injury claim (any pending claim or one that arises between the Petition Date and plan confirmation) would be assumed by reorganized GST and resolved either by settlement pursuant to a matrix contained in the proposed plan or as otherwise agreed, or by payment in full of any final judgment entered after trial in federal court. The initial proposed plan was revised and replaced by GST's first amended proposed plan of reorganization filed in May 2014.
On April 13, 2012, the Bankruptcy Court granted a motion by GST for the Bankruptcy Court to estimate the allowed amount of present and future asbestos claims against GST for mesothelioma, a rare cancer attributed to asbestos exposure, for purposes of determining the feasibility of a proposed plan of reorganization. The estimation trial began on July 22, 2013 and concluded on August 22, 2013.
On January 10, 2014, Bankruptcy Judge George Hodges announced his estimation decision in a 65-page order. Citing with approval the methodology put forth by GST at trial, the judge determined that $125 million is the amount sufficient to satisfy GST's liability for present and future mesothelioma claims. Judge Hodges adopted GST's "legal liability" approach to estimation, focused on the merits of claims, and rejected asbestos claimant representatives' approach, which focused solely on

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GST's historical settlement history. The judge's liability determination is for mesothelioma claims only. The court has not yet determined amounts for GST's liability for other asbestos claims and for administrative costs that would be required to review and process claims and payments, which will add to the amount.
In his opinion, Judge Hodges wrote, "The best evidence of Garlock's aggregate responsibility is the projection of its legal liability that takes into consideration causation, limited exposure and the contribution of exposures to other products."
The decision validates the positions that GST has been asserting for the more than four years it had been in the Chapter 11 process. Following are several important findings in the opinion:
• Garlock's products resulted in a relatively low exposure to asbestos to a limited population, and its legal responsibility for causing mesothelioma is relatively de minimis .
• Chrysotile, the asbestos fiber type used in almost all of Garlock's asbestos products, is far less toxic than other forms of asbestos. The court found reliable and persuasive Garlock's expert epidemiologist, who testified that there is no statistically significant association between low dose chrysotile exposure and mesothelioma.
• The population that was exposed to Garlock's products was necessarily exposed to far greater quantities of higher potency asbestos from the products of others.
• The estimates of Garlock's aggregate liability that are based on its historic settlement values are not reliable because those values are infected with the impropriety of some law firms and inflated by the cost of defense.
In June 2014, the Current Asbestos Claimants' Committee filed a motion with the Bankruptcy Court asking the court to re-open the estimation process for further discovery and alleging that GST misled the court in various respects during the estimation trial. On December 4, 2014, the Bankruptcy Court denied the Committee's motion to re-open.
In May 2014, GST filed its first amended proposed plan of reorganization. The first amended plan provided $275 million in total funding for (a) present and future asbestos claims against GST that have not been resolved by settlement or verdict prior to the Petition Date, and (b) administrative and litigation costs.
On January 14, 2015, we announced that GST and we had reached agreement with the Future Claimants' Representative that includes a second amended plan of reorganization. The second 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 second 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 second amended plan, which provides payments to all claimants who have a compensable disease and had meaningful contact with GST asbestos containing products. GST believes that the second amended plan is sufficient to pay all valid claims in full.
The second 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 plan and additional contributions from GST aggregating $77.5 million over the seven years following consummation of the plan) and a litigation fund (which would receive $30 million from GST upon consummation of the plan) to fund the defense and payment of claims of claimants who elect to pursue litigation under the plan rather than accept the settlement option under the 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 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 second amended plan provides that if the actual amount of claims that had been resolved by settlement or verdict prior to the Petition Date that were not paid prior to the Petition Date is less than $10.0 million, GST will contribute the difference to the settlement facility. In addition, the second amended plan provides that, during the 40-year period following confirmation of the plan, GST would, if necessary, 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 and we believe 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. Under the plan, EnPro would guarantee GST’s payment of the scheduled $77.5 million of deferred contributions plus accrued interest to the settlement facility and, to the extent they are required, the supplementary contributions to the litigation fund. Additional details of the

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second amended plan are described below in “-Contingencies - Asbestos -GST’s Second Amended Proposed Plan of Reorganization.”
The second 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 plan. Under the terms of the plan, we would retain 100% of the equity interests of GST LLC. The plan also provides for the extinguishment of all derivative claims against us based on GST asbestos products and operations.
We anticipate that payments under the plan to the settlement facility and litigation fund by GST, which will be paid primarily from GST cash balances and remaining insurance and the payment to the settlement facility by Coltec, will be deductible against U.S. taxes. We plan to seek an IRS determination to that effect.
The Current Asbestos Claimants' Committee and their law firms continue to oppose the second amended plan of reorganization.
On April 10, 2015, the Bankruptcy Court entered an order that approved the disclosure statement for the second amended plan of reorganization, established an asbestos claims bar date and approved procedures for voting and soliciting votes for the second amended plan. The Bankruptcy Court also approved the method for providing notice of the second amended plan and asbestos claims bar date to known and unknown claimants and the form and substances of the notices. Under such order, proofs of claim had to be filed on or before October 6, 2015 for all claims based on asbestos-related diseases diagnosed on or before August 1, 2014 for which lawsuits against any defendant or claims against any trusts were filed on or before August 1, 2014, or be subject to being forever barred, and claimants were required to submit ballots voting on the approval of the second amended plan by October 6, 2015. In addition, proofs of claim for claims arising after August 1, 2014 were permitted to be filed at the claimant's option. Proofs of claim for approximately 180,000 claims were filed by that date, including approximately 10,000 claims alleging mesothelioma. GST believes a large majority of the claims are without merit because GST believes that such claimants will not be able to demonstrate exposure to GST's products or any compensable disease. In addition, based on its preliminary analysis, GST believes that a significant number of the claims were resolved and paid by GST prior to the Petition Date, had been dismissed with prejudice prior to the Petition Date or are time-barred under applicable statutes of limitations, and are therefore invalid. Current claimants or their representatives who filed ballots by the October 6, 2015 voting deadline overwhelmingly voted against approval of the plan; the future claims representative voted in favor of approval of the plan. The Bankruptcy Court has scheduled the hearing on confirmation of the second amended plan of reorganization to commence on August 15, 2016.
A hearing is scheduled to be held before the Bankruptcy Court commencing on March 10, 2016 to resolve certain motions for summary judgment filed by GST and the Current Asbestos Claimants’ Committee with regard to the second amended plan of reorganization. The motions address (i) whether compliance with Section 524(g) of the Bankruptcy Code, which includes the requirement that a plan of reorganization be approved by a vote of 75 percent of the asbestos claimants, is the exclusive means for the confirmation of a plan of reorganization that resolves current and future asbestos liability claims, (ii) whether the Future Claimants’ Representative has the authority to vote on behalf of future asbestos claimants on approval of the second amended plan, and (iii) whether asbestos claims are impaired under the second amended plan. A final determination adverse to GST on the first issue listed above or on both the second and third issues would preclude confirmation of the second amended plan. A final determination favorable to GST on these issues would clear this interim obstacle to potential confirmation of the second amended plan following the hearing on the plan scheduled for August 15, 2016.
If the Bankruptcy Court confirms the second amended plan, all present and future asbestos claims against GST will be discharged and an injunction will be entered giving GST permanent protection from future asbestos litigation.
Confirmation and consummation of the plan are subject to a number of risks and uncertainties, including the actions and decisions of creditors and other third parties who have an interest in the bankruptcy proceedings, decisions of the Bankruptcy Court, delays in the confirmation or effective date of a plan of reorganization due to factors beyond GST's or our control, which would result in greater costs and the impairment of value of GST, appeals and other challenges to the plan, and risks and uncertainties affecting GST and Coltec's ability to fund anticipated contributions under the 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. Accordingly, we cannot assure you that GST will be able to obtain Bankruptcy Court approval of its second amended plan of reorganization and the settlement and resolution of claims and related releases of liability embodied therein, and the time period for the resolution of the bankruptcy proceedings is not presently determinable.
During the course of the Chapter 11 proceedings, the claimant representatives have asserted that affiliates of the filed entities, including the Company and Coltec, should be held responsible for the asbestos liabilities of the filed entities under various theories of derivative corporate responsibility including veil-piercing and alter ego. Claimant representatives filed a

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motion with the Bankruptcy Court asking for permission to sue us based on those theories. In a decision dated June 7, 2012, the Bankruptcy Court denied the claimant representatives' motion without prejudice, thereby potentially allowing the representatives to re-file the motion after the estimation trial. We believe there is no reason for the claimant representatives to re-file the motion because the judge's estimation decision leaves no doubt that GST is capable of fully funding any plan of reorganization in the case that fully satisfies such claims. Pursuant to the plan, these claims and any other derivative claims would be resolved and enjoined.
While the Future Claimants' Representative has agreed to support the second amended plan of reorganization, GST continues to seek a consensual resolution that will also be acceptable to representatives of current asbestos claimants. In January 2016, GST was invited to participate in ongoing negotiations with the Future Claimants’ Representative and the Current Asbestos Claimants’ Committee to resolve the terms of claims resolution procedures that would be an integral part of any potential consensual settlement with both the Future Claimants’ Representative and the Current Asbestos Claimants’ Committee. To permit the parties to continue to focus on negotiation of a potential consensual settlement, GST, the Future Claimants’ Representative and the Current Asbestos Claimants’ Committee agreed to postpone to March 10, 2016 the hearing originally scheduled to be held on January 6, 2016 and re-scheduled to March 1, 2016. There can be no assurance that the current or any future negotiations will result in a settlement among GST and both the Future Claimants’ Representative and the Current Asbestos Claimant’ Committee. GST recognizes that an agreed settlement with all claimants representatives would provide a path to certainty and finality through section 524(g) of the Bankruptcy Code, provide for faster and more efficient completion of the case, save significant future costs, and allow for the attainment of complete finality. However, GST believes that its current course, pursuant to its second amended plan, can also result in a successful reorganization, without support of the Current Asbestos Claimants' Committee and despite the opposition of the current asbestos claimants demonstrated overwhelmingly in the balloting on the plan.
From the Petition Date through December 31, 2015, GST has recorded Chapter 11 case-related fees and expenses totaling $144.1 million. The total includes $74.6 million for fees and expenses of GST’s counsel and experts; $56.4 million for fees and expenses of counsel and experts for the Current Asbestos Claimants Committee, and $13.1 million for the fees and expenses of the Future Claimants' Representative and his counsel and experts. GST recorded $25.6 million for those case related fees and expenses in 2015 compared to $16.5 million in 2014 and $44.6 million in 2013. EnPro has recorded an additional $9.0 million of expenses related to these Chapter 11 proceedings from the Petition Date, $1.8 million of which was recorded in 2015. The increase in case-related fees and expenses in 2015 is attributable to the court-approved notification program for GST's second amended plan of reorganization and to substantial fees and expenses of lawyers and experts incurred in connection with the preparation for the reorganization plan confirmation hearing scheduled for August 15, 2016.
See the additional information provided earlier under the heading “Garlock Sealing Technologies LLC and Garrison Litigation Management Group, Ltd.”, the discussion under the heading “Asbestos”, which follows, and Notes 19 and 20 to our Consolidated Financial Statements.
Asbestos
Background on Asbestos-Related Litigation . The historical business operations of GST LLC and 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 in products produced or sold by GST LLC or Anchor, together with products produced and sold by numerous other companies. GST LLC and Anchor manufactured and/or sold industrial sealing products that contained encapsulated asbestos fibers. Other of our subsidiaries that manufactured or sold equipment that may have at various times in the past contained asbestos-containing components have also been named in a number of asbestos lawsuits, but only GST LLC and Anchor have ever paid an asbestos claim.
Since the first asbestos-related lawsuits were filed against GST LLC in 1975, GST LLC and Anchor have processed more than 900,000 claims to conclusion, and, together with insurers, have paid over $1.4 billion in settlements and judgments and over $400 million in fees and expenses. Our subsidiaries’ exposure to asbestos litigation and their relationships with insurance carriers have been managed through Garrison.
Beginning in 2000, the top-tier asbestos defendants—companies that paid most of the plaintiffs’ damages because they produced and sold huge quantities of highly friable asbestos products—sought bankruptcy protection and stopped paying asbestos claims in the tort system. The bankruptcies of many additional producers of friable asbestos products followed. The plaintiffs could no longer pursue actions against these large defendants during the pendency of their bankruptcy proceedings, even though these defendants had historically been determined to be the largest contributors to asbestos-related injuries. Many plaintiffs pursued GST LLC in civil court actions to recover compensation formerly paid by top-tier bankrupt companies under state law principles of joint and several liability and began identifying GST LLC’s non-friable sealing products as a primary cause of their asbestos diseases, while generally denying exposure to the friable products of companies in bankruptcy. GST

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LLC believes this targeting strategy effectively shifted damages caused by top-tier defendants that produced friable asbestos products to GST LLC, thereby materially increasing GST LLC’s cost of defending and resolving claims.
Almost all of the top-tier defendants that sought bankruptcy relief in the early 2000s have now emerged, or are positioning to emerge, from bankruptcy. Their asbestos liabilities have been assumed by wealthy 524(g) trusts created in the bankruptcies with assets contributed by the emerging former defendants and their affiliates. With the emergence of these companies from bankruptcy, many plaintiffs seek compensation from the 524(g) trusts. These trusts have aggregate assets exceeding $30 billion ($36.8 billion according to a study released in September 2011 by the United States Government Accountability Office) specifically set aside to compensate individuals with asbestos diseases caused by the friable products of those defendants. We believed that as billions of dollars of 524(g) trust assets became available to claimants, defendants in the state court tort system would obtain significant reductions in their costs to defend and resolve claims. As of the Petition Date, however, the establishment of these 524(g) trusts had taken longer than anticipated and the trusts had a significant backlog of claims that accumulated while the trusts were being established. Additionally, procedures adopted for the submissions of asbestos claims in bankruptcy cases and against 524(g) trusts make it difficult for GST LLC and other tort-system co-defendants to gain access to information about claims made against bankrupt defendants or the accompanying evidence of exposure to the asbestos-containing products of such bankrupt defendants. We believe that these procedures enable claimants to “double dip” by collecting payments from remaining defendants in the tort system under joint-and-several liability principles, for injuries caused by the former top-tier defendants while also collecting substantial additional amounts from 524(g) trusts established by those former defendants to pay asbestos claims. Because of these factors, while several 524(g) trusts had begun making substantial payments to claimants prior to the Petition Date, GST LLC had not yet experienced a significant reduction in damages being sought from GST LLC.
Subsidiary Chapter 11 Filing and Its Effect . In light of GST LLC’s experience that (a) its cost of defending and resolving claims had not yet declined as anticipated although 524(g) trusts had begun making substantial payments to claimants, and (b) new mesothelioma claims filings against it in recent years had not declined at a rate similar to the rate of decline in disease incidence, GST initiated voluntary proceedings under Chapter 11 of the United States Bankruptcy Code as a means to determine and comprehensively resolve their asbestos liability. The filings were the initial step in a claims resolution process, which is ongoing.
During the pendency of the Chapter 11 proceedings, certain actions proposed to be taken by GST not in the ordinary course of business are subject to approval by the Bankruptcy Court. As a result, during the pendency of these proceedings, we do not have exclusive control over these companies. Accordingly, as required by GAAP, GST was deconsolidated beginning on the Petition Date.
As a result of the initiation of the Chapter 11 proceedings, the resolution of asbestos claims is subject to the jurisdiction of the Bankruptcy Court. The filing of the Chapter 11 cases automatically stayed the prosecution of pending asbestos bodily injury and wrongful death lawsuits, and initiation of new such lawsuits, against GST. Further, the Bankruptcy Court issued an order enjoining plaintiffs from bringing or further prosecuting asbestos products liability actions against affiliates of GST, including EnPro, Coltec and all their subsidiaries, during the pendency of the Chapter 11 proceedings, subject to further order. As a result, except as a result of the resolution of appeals from verdicts rendered prior to the Petition Date and the elimination of claims as a result of information obtained in the Chapter 11 proceedings, the numbers of asbestos claims pending against our subsidiaries have not changed since the Petition Date, and those numbers continue to be as reported in our 2009 Form 10-K and our quarterly reports for the first and second quarters of 2010. See the section entitled “Subsidiary Bankruptcy” in this Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional information and an update on the GST asbestos claims resolution process.
Pending Claims . On the Petition Date, according to Garrison's claim records, there were more than 90,000 total claims pending against GST LLC, of which approximately 5,800 were claims alleging the disease mesothelioma. Mesothelioma is a rare cancer of the protective lining of many of the body's internal organs, principally the lungs. One cause of mesothelioma is believed to be exposure to asbestos. As a result of asbestos tort reform during the 2000s, most active asbestos-related lawsuits, and a large majority of the amount of payments made by our subsidiaries in the years immediately preceding the Petition Date, have been of claims alleging mesothelioma. In total, GST LLC has paid $563.2 million to resolve a total of 15,300 mesothelioma claims, and another 5,700 mesothelioma claims have been dismissed without payment.
In order to estimate the allowed amount for mesothelioma claims against GST, the Bankruptcy Court approved a process whereby all current GST LLC mesothelioma claimants were required to respond to a questionnaire about their claims. Questionnaires were distributed to the mesothelioma claimants identified in Garrison’s claims database. Many of the 5,800 claimants (over 500) did not respond to the questionnaire at all; many others (more than 1,900) clarified that: claimants do not have mesothelioma, claimants cannot establish exposure to GST products, claims were dismissed, settled or withdrawn, claims were duplicates of other filed claims, or claims were closed or inactive. Still others responded to the questionnaire but their

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responses were deficient in some material respect. As a result of this process, less than 3,300 claimants presented questionnaires asserting mesothelioma claims against GST LLC as of the Petition Date, and many of them either did not establish exposure to GST products or had claims that are otherwise deficient.
Since the Petition Date, many asbestos-related lawsuits have been filed by claimants against other companies in state and federal courts, and many of those claimants might also have included GST LLC as a defendant but for the bankruptcy injunction.
Claims Filed in GST Chapter 11 . Proofs of claim involving approximately 180,000 claims were filed on or prior to October 6, 2015, the Claims Bar Date, in the GST Chapter 11 proceeding. All other potential claims based on asbestos-related diseases diagnosed on or before August 1, 2014 for which lawsuits against any defendant or claims against any trusts were filed on or before August 1, 2014, are subject to being forever barred by order of the Bankruptcy Court. Many of the more than 90,000 pre-petition claims are likely among the approximately 180,000 claims filed in the Chapter 11 case. Approximately 10,000 of the claims filed in the Chapter 11 case allege mesothelioma, many of the pre-petition mesothelioma claims likely among those claims.
The claims filed are being analyzed and discovery will be conducted to determine more about the filed claims. Based on its preliminary analysis, GST believes that a significant number of such claims were resolved and paid by GST prior to the Petition Date, had been dismissed with prejudice prior to the Petition Date or are time-barred under applicable statutes of limitations, and are therefore invalid.
Product Defenses . We believe that the asbestos-containing products manufactured or sold by GST could not have been a substantial contributing cause of any asbestos-related disease. The asbestos in the products was encapsulated, which means the asbestos fibers incorporated into the products during the manufacturing process were sealed in binders. The products were also nonfriable, which means they could not be crumbled by hand pressure. The U.S. Occupational Safety and Health Administration, which began generally requiring warnings on asbestos-containing products in 1972, has never required that a warning be placed on products such as GST LLC’s gaskets. Even though no warning label was required, GST LLC included one on all of its asbestos-containing products beginning in 1978. Further, gaskets such as those previously manufactured and sold by GST LLC are one of the few asbestos-containing products still permitted to be manufactured under regulations of the U.S. Environmental Protection Agency. Nevertheless, GST LLC discontinued all manufacture and distribution of asbestos-containing products in the U.S. during 2000 and worldwide in mid-2001.
Appeals . GST LLC has a record of success in trials of asbestos cases, especially before the bankruptcies of many of the historically significant asbestos defendants that manufactured raw asbestos, asbestos insulation, refractory products or other dangerous friable asbestos products. However, it has on occasion lost jury verdicts at trial. GST has consistently appealed when it has received an adverse verdict and has had success in a majority of those appeals.
GST LLC won reversals of adverse verdicts in one of three recent appellate decisions. In September 2011, the United States Court of Appeals for the Sixth Circuit overturned a $ 500,000 verdict against GST LLC that was handed down in 2009 by a Kentucky federal court jury. The federal appellate court found that GST LLC’s motion for judgment as a matter of law should have been granted because the evidence was not sufficient to support a determination of liability. The Sixth Circuit’s chief judge wrote that, “On the basis of this record, saying that exposure to Garlock gaskets was a substantial cause of [claimant’s] mesothelioma would be akin to saying that one who pours a bucket of water into the ocean has substantially contributed to the ocean’s volume.” In May 2011, a three-judge panel of the Kentucky Court of Appeals upheld GST LLC’s $700,000 share of a 2009 jury verdict, which included punitive damages, in a lung cancer case against GST LLC in Kentucky state court. This verdict, which was secured by a bond pending the appeal, was paid in June 2012. In a Kentucky appeal from a 2006 verdict against GST LLC, another Kentucky Court of Appeals panel upheld, in August 2014, GST LLC's share of the verdict and a $600,000 punitive damage award. The verdict against GST LLC totaled $874,000 . This verdict and post-judgment interest were secured by a bond in the amount of $ 1.1 million . The plaintiff in the case agreed to resolve the case, including claims for post-judgment interest, for the amount of the bond and to forgo additional accrued interest on the verdict, and GST LLC agreed to discontinue further appeals. Because we were responsible to the bonding company for the bond amount, our Coltec subsidiary purchased the verdict from the plaintiff in September 2014 for the amount of the $1.1 million bond. As a result, Coltec has a claim against GST LLC for the amount of the judgment, including post-judgment interest.
Insurance Coverage . At December 31, 2015 , we had $80.0 million of insurance coverage we believe is available to cover current and future GST asbestos claims payments and certain expense payments. GST has collected insurance payments totaling $116.6 million since the Petition Date, including $21.2 million in 2015. We consider the $80.0 million of available insurance coverage remaining to be of high quality because the insurance policies are written or guaranteed by U.S.-based carriers whose credit rating by S&P is investment grade (BBB-) or better, and whose AM Best rating is excellent (A-) or better. Of the $80.0 million , $43.9 million is allocated to claims that were paid by GST LLC prior to the initiation of the Chapter 11

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proceedings and submitted to insurance companies for reimbursement, and the remainder is allocated to pending and estimated future claims. There are specific agreements in place with carriers covering $46.2 million of the remaining available coverage. Based on those agreements and the terms of the policies in place and prior decisions concerning coverage, we believe that all of the $80.0 million of insurance proceeds will ultimately be collected, although there can be no assurance that the insurance companies will make the payments as and when due. The $80.0 million is in addition to the $21.2 million collected in 2015. Based on those agreements and policies, some of which define specific annual amounts to be paid and others of which limit the amount that can be recovered in any one year, we anticipate that $ 38.0 million will become collectible at the conclusion of GST’s Chapter 11 proceeding and, assuming the insurers pay according to the agreements and policies, that the following amounts should be collected in the years set out below regardless of when the case concludes:

2016 – 18 million
2017 – 13 million
2018 – 11 million
GST LLC has received $8.6 million of insurance recoveries from insolvent carriers since 2007, including $ 0.5 million in payments received in 2015, and may receive additional payments from insolvent carriers in the future. No anticipated insolvent carrier collections are included in the $80.0 million of anticipated collections. The insurance available to cover current and future asbestos claims is from comprehensive general liability policies that cover Coltec and certain of its other subsidiaries in addition to GST LLC for periods prior to 1985 and therefore could be subject to potential competing claims of other covered subsidiaries and their assignees.
Liability Estimate . Our recorded asbestos liability as of the Petition Date was $472.1 million . We based that recorded liability on an estimate of probable and estimable expenditures to resolve asbestos personal injury claims under generally accepted accounting principles, made with the assistance of Garrison and an estimation expert, Bates White, retained by GST LLC’s counsel. The estimate developed was an estimate of the most likely point in a broad range of potential amounts that GST LLC might pay to resolve asbestos claims (by settlement in the majority of the cases except those dismissed or tried) over the ten-year period following the date of the estimate in the state court system, plus accrued but unpaid legal fees. The estimate, which was not discounted to present value, did not reflect GST LLC’s views of its actual legal liability. GST LLC has continuously maintained that its products could not have been a substantial contributing cause of any asbestos disease. Instead, the liability estimate reflected GST LLC’s recognition that most claims would be resolved more efficiently and at a significantly lower total cost through settlements without any actual liability determination.
From the Petition Date through the first quarter of 2014, neither we nor GST endeavored to update the accrual except as necessary to reflect payments of accrued fees and the disposition of cases on appeal. In each asbestos-driven Chapter 11 case that has been resolved previously, the amount of the debtor’s liability has been determined as part of a consensual plan of reorganization agreed to by the debtor, its asbestos claimants and a legal representative for its potential future claimants. GST did not believe that there was a reliable process by which an estimate of such a consensual resolution could be made and therefore believed that there was no basis upon which it could revise the estimate last updated prior to the Petition Date.
Given the Bankruptcy Court's January 2014 decision estimating GST's liability for present and future mesothelioma claims at $ 125 million and GST's filing in May 2014 of its first amended proposed plan of reorganization setting out its intention to fund a plan with total consideration of $ 275 million , GST undertook to revise its estimate of its ultimate expenditures to resolve all present and future asbestos claims against it to be no less than the amounts required under its amended proposed plan. Similarly, while GST believed it to be an unlikely worst case scenario, GST believed its ultimate expenditures to resolve all asbestos claims against it could be no more than the total value of GST. As a result, GST believed that its ultimate asbestos expenditures would be somewhere in that range between those two values and therefore revised its estimate to the low end of the range. Accordingly, at June 30, 2014, GST revised its estimate of its ultimate expenditures to resolve all present and future asbestos claims to $280.5 million , the amount of expenditures necessary to resolve all asbestos claims under that amended plan.
In light of the filing of the second amended proposed plan of reorganization by GST on January 14, 2015, GST undertook to further revise its estimate of the ultimate costs to resolve all asbestos claims against it. Under the second amended plan, not less than $367.5 million will be required to fund the resolution of all GST asbestos claims, $30 million of which will be funded by Coltec. As a result, GST believes the low end of the range of values that will be necessary for it to fund to resolve all present and future claims is now $337.5 million. Accordingly, GST has revised its estimate of its ultimate asbestos expenditures to $337.5 million and has recorded its liability at December 31, 2015 at that amount. GST’s estimate of its ultimate asbestos expenditures of $337.5 million does not include any amount with respect to the contingent supplementary contributions to the litigation fund contemplated by the second amended plan because GST believes that initial contributions to the litigation fund may likely be sufficient to fund the litigation and, accordingly, that the low end of a range of reasonably possible loss associated with these contingent supplementary contributions is $0.

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GST's First Amended Proposed Plan of Reorganization . On May 29, 2014, GST filed its amended proposed plan of reorganization and a proposed disclosure statement for such amended plan. The plan provided $ 275 million in total funding for (a) present and future asbestos claims against GST that have not been resolved by settlement or verdict prior to the Petition Date, and (b) administrative and litigation costs. The $ 275 million was to be funded by GST ($ 245 million ) and our subsidiary, Coltec Industries Inc ($ 30 million ), through two facilities - a settlement facility and a litigation facility. Funds contained in the settlement facility and the litigation facility would have provided 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 $ 275 million amount was more than double the $ 125 million that the Bankruptcy Court found to be a reasonable and reliable measure of the amount sufficient to satisfy present and future mesothelioma claims against GST, and was determined based on an economic analysis of the feasibility of the proposed plan. This plan was superseded by GST's second amended proposed plan of reorganization, discussed below.
GST's Second Amended Proposed Plan of Reorganization . On January 14, 2015, we announced that GST and we had reached agreement with the Future Claimants' Representative that includes a second amended proposed plan of reorganization. The Future Claimants' Representative agreed to support, vote for and help GST gain confirmation of the second amended plan of reorganization in exchange for an increase in the funds available for settlements, limited revisions to the criteria and procedures for settlements and a limited funding backstop to the litigation option that the plan offers to claimants who choose not to accept the plan’s settlement option. Terms of the second amended proposed plan of reorganization, including the $30 million contribution to be made by Coltec to the settlement facility under the second amended plan and our guarantee of GST's obligations to make contributions to the settlement facility and the litigation fund under the plan after the consummation of the plan, are described above in "-Contingencies - Subsidiary Bankruptcy."
The second amended plan would establish two facilities to resolve unliquidated present and future asbestos claims – a settlement facility and a litigation fund. The settlement facility, administered by an independent trustee, will handle settlement offers under the plan. Claimants will be able to compute their offers from a matrix in the plan that contains objective criteria such as disease, age, whether the injured party left or will leave a spouse, and whether there are dependents. The amounts of the matrix values have been set based on an economic analysis and are designed to ensure that the funding provides future claimants the same recoveries as comparable current claimants.
The settlement facility will provide claimants with both an expedited review option and an individual review option. Under expedited review, a claimant can receive a quick and efficient settlement once he or she provides required evidence of a compensable disease and meaningful exposure to GST asbestos products. Under individual review, a claimant can potentially receive a significantly higher settlement offer if he or she can demonstrate certain additional factors. In order to receive a higher amount than the expedited option offers, claimants or their representatives will have to certify to the claimants’ complete exposure histories and authorize Garrison to investigate and monitor both their tort and trust claims.
Garrison, as reorganized under the plan, will receive a $30 million contribution from GST LLC to maintain and administer the litigation fund separate from the settlement facility. Garrison will manage the litigation of claims from claimants who reject settlement offers from the settlement facility and choose instead to pursue a remedy in court. A case management order will govern the way those claims can be pursued.
Claimants who choose to litigate must file their claims in the Bankruptcy Court in North Carolina. The Bankruptcy Court will oversee discovery and other pre-trial matters before referring cases to the federal district court in Charlotte for trial under the Federal Rules of Evidence. The Charlotte federal court will have discretion about where to send each case for the actual trial. The case management order will also require that claimants identify and disclose all trust claims and provide authorization for Garrison to retrieve all their trust submissions directly from trusts.
The second amended plan includes provisions referred to as the "Parent Settlement" for the resolution and extinguishment of any and all alleged derivative claims against us based on GST asbestos products and entry of an injunction permanently protecting us from the assertion of such claims. As consideration for the Parent Settlement, (a) Coltec will contribute $ 30 million of the amount proposed to be paid into the settlement facility to pay future claimants, (b) Coltec will fund Anchor’s costs of dissolution (up to $500,000), (c) EnPro will guarantee all contributions to the settlement facility and litigation fund by GST after the effective date of the second amended plan, and (d) Coltec and its affiliates will subordinate their interests in certain insurance coverage to GST’s obligations to make payments to the settlement facility and litigation fund after the effective date of the second amended plan. Those provisions are incorporated into the terms of the second amended plan only in the context of the specifics of the plan, which would result in the equity interests of GST LLC being retained by the reconsolidation of GST LLC into the Company and an injunction protecting us from future GST claims. As a result of Coltec's agreement to fund a contribution of $30 million to the settlement facility pursuant to the second amended plan of reorganization, we recorded a $ 30.0 million charge to establish this liability in our 2014 results.

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Confirmation and consummation of the second 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, decisions of the Bankruptcy Court, delays in the confirmation or effective date of a plan of reorganization due to factors beyond GST's or our control, which would result in greater costs and the impairment of value of GST, challenges to confirmation of the plan, including appeals, and risks and uncertainties affecting GST and Coltec's ability to fund anticipated contributions under the 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. Accordingly, we cannot assure you that GST will be able to obtain final approval of its second amended plan of reorganization and the settlement and resolution of claims and related releases of liability embodied therein, and the time period for the resolution of the bankruptcy proceedings is not presently determinable. See the section entitled “Subsidiary Bankruptcy” in this Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Off Balance Sheet Arrangements
Lease Agreements
We have a number of operating leases primarily for real estate, equipment and vehicles. Operating lease arrangements are generally utilized to secure the use of assets from time to time if the terms and conditions of the lease or the nature of the asset makes the lease arrangement more favorable than a purchase. As of December 31, 2015 , approximately $44.7 million of future minimum lease payments were outstanding under these agreements. See Note 20, “Commitments and Contingencies – Other Commitments,” to the Consolidated Financial Statements for additional disclosure.
Contractual Obligations
A summary of our contractual obligations and commitments at December 31, 2015 , is as follows:
 
 
Payments Due by Period (in millions)
Contractual Obligations
Total
 
Less than
1 Year
 
1-3
Years
 
3-5
Years
 
More than
5 Years
Long-term debt
$
363.0

 
$
0.1

 
$
0.3

 
$
62.5

 
$
300.1

Notes payable to GST
309.2

 
—

 
309.2

 
—

 
—

Interest on long-term debt
120.0

 
19.0

 
35.4

 
35.4

 
30.2

Interest on notes payable to GST
37.7

 
18.4

 
19.3

 
—

 
—

Operating leases
44.7

 
10.2

 
16.8

 
13.0

 
4.7

Other liabilities
23.1

 
2.7

 
6.3

 
4.9

 
9.2

Total
$
897.7

 
$
50.4

 
$
387.3

 
$
115.8

 
$
344.2


The payments for long-term debt shown in the table above reflect the contractual principal amount for the senior notes. In our Consolidated Balance Sheet, this amount is shown net of a debt discount. Additional discussion regarding the senior notes is included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations in “Liquidity and Capital Resources – Capital Resources,” and in Note 12 to the Consolidated Financial Statements. The interest on long-term debt represents the contractual interest coupon. It does not include the debt discount accretion, which also is a component of interest expense.
The notes payable to GST LLC bear interest at 11% per annum, of which 6.5% is payable in cash and 4.5% is added to the principal amount as PIK interest. If GST LLC is unable to pay ordinary course operating expenses, under certain conditions, GST LLC can require us to pay in cash the accrued PIK interest necessary to meet such ordinary course operating expenses, subject to a cap of 1% of the principal balance of each note in any calendar month and 4.5% of the principal balance of each note in any year. The interest due under the notes payable to GST LLC may be satisfied through offsets of amounts due under intercompany services agreements pursuant to which we provide certain corporate services and insurance coverages to GST LLC, makes advances to third party providers related to payroll and certain benefit plans sponsored by GST LLC, and permits employees of GST LLC to participate in certain of our benefit plans. The table above reflects $82.0 million of total PIK interest as principal payments at the due date of the notes.
Payments for other liabilities are estimates of amounts to be paid for environmental and retained liabilities of previously owned businesses included in the Consolidated Balance Sheets at December 31, 2015 . These estimated payments are based on information currently known to us. However, it is possible that these estimates will vary from actual results and it is possible that these estimates may be updated if new information becomes available in the future or if there are changes in the facts and

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circumstances related to these liabilities. Additional discussion regarding these liabilities is included earlier in this Management’s Discussion and Analysis of Financial Condition and Results of Operations in “Contingencies – Environmental, Contingencies – Colt Firearms and Central Moloney,” “Contingencies – Crucible Steel Corporation a/k/a Crucible, Inc.,” and in Note 20 to the Consolidated Financial Statements.
The table does not include obligations under our pension and postretirement benefit plans, which are included in Note 14 to the Consolidated Financial Statements.

ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to certain market risks as part of our ongoing business operations, including risks from changes in foreign currency exchange rates and interest rates that could affect our financial condition, results of operations and cash flows. We manage our exposure to these and other market risks through normal operating and financing activities and through the use of derivative financial instruments. We intend to use derivative financial instruments as risk management tools and not for speculative investment purposes.
Interest Rate Risk
We are exposed to interest rate risk as a result of our outstanding debt obligations. The table below provides information about our fixed rate debt obligations as of December 31, 2015 . The table represents principal cash flows (in millions) and related weighted average interest rates by expected (contractual) maturity dates.

 
2016
 
2017
 
2018
 
2019
 
2020
 
Thereafter
 
Total
 
Fair
Value
Fixed rate debt
$
0.1

 
$
283.4

 
$
0.1

 
$
0.1

 
$
0.1

 
$
300.1

 
$
583.9

 
$
579.8

Average interest rate
4.4
%
 
11.0
%
 
4.4
%
 
4.4
%
 
4.4
%
 
5.9
%
 
8.4
%
 
 
Additionally, we had $ 62.2 million of outstanding borrowings on our revolving credit facility as of December 31, 2015 , which has a variable interest rate. A change in interest rates on variable-rate debt affects the interest incurred and cash flows, but does not affect the net financial instrument position.
Foreign Currency Risk
We are exposed to foreign currency risks arising from normal business operations. These risks include the translation of local currency balances of our foreign subsidiaries, intercompany loans with foreign subsidiaries and transactions denominated in foreign currencies. Our objective is to control our exposure to these risks and limit the volatility in our reported earnings due to foreign currency fluctuations through our normal operating activities and, where appropriate, through foreign currency forward contracts and option contracts. The notional amount of foreign exchange contracts hedging foreign currency transactions was $4.6 million and $5.5 million as of December 31, 2015 and 2014 , respectively.
Commodity Risk
We source a wide variety of materials and components from a network of global suppliers. While such materials are typically available from numerous suppliers, commodity raw materials such as steel, engineered plastics, copper and polymers, are subject to price fluctuations, which could have a negative impact on our results. We strive to pass along such commodity price increases to customers to avoid profit margin erosion and utilize lean initiatives to further mitigate the impact of commodity raw material price fluctuations as we achieve improved efficiencies. We do not hedge commodity risk with any market risk sensitive instruments.
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ENPRO INDUSTRIES, INC.
Index to Consolidated Financial Statements


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Page

ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.

ITEM 9A.
CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. The purpose of our disclosure controls and procedures is to provide reasonable assurance that information required to be disclosed in our reports filed under the Exchange Act, including this report, is recorded, processed, summarized and reported within the time periods specified, and that such information is accumulated and communicated to our management to allow timely decisions regarding disclosure.
Management does not expect our disclosure controls and procedures or internal controls to prevent all errors and all fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with polices or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Based on the controls evaluation, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures are effective to reasonably ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified, and that management will be timely alerted to material information required to be included in our periodic reports filed with the Securities and Exchange Commission.
In addition, no change in our internal control over financial reporting has occurred during the quarter ended December 31, 2015, which has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial

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statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies and procedures may deteriorate.
We carried out an evaluation, under the supervision and with the participation of our chief executive officer and our chief financial officer, of the effectiveness of our internal control over financial reporting as of the end of the period covered by this report. However, the assessment did not include the following operations we acquired within the past year, none of which, individually or in the aggregate, would be considered significant under ICFR FAQ 3 within Item 308 of Regulation S-K of the SEC: the Veyance North American air spring business. The Veyance North American air spring business is a wholly-owned business whose total assets and total revenues represent 3% and 4%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2015. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in the Internal Control-Integrated Framework (2013 version). Based on our assessment, we have concluded, as of December 31, 2015, our internal control over financial reporting was effective based on those criteria.
The effectiveness of our internal control over financial reporting as of December 31, 2015, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears in this Annual Report on Form 10-K.
ITEM 9B.
OTHER INFORMATION
Not applicable.


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PART III
 
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information concerning our directors and officers appearing under the captions “Election of Directors,” “Legal Proceedings,” “Corporate Governance Policies and Practices,” and information under the caption “Security Ownership of Certain Beneficial Owners and Management – Section 16(a) Beneficial Ownership Reporting Compliance” in our definitive proxy statement for the 2016 annual meeting of shareholders is incorporated herein by reference.
We have adopted a written code of business conduct that applies to all of our directors, officers and employees, including our principal executive officer, principal financial officer and principal accounting officer. The Code is available on our Internet site at www.enproindustries.com . We intend to disclose on our Internet site any substantive changes to the Code and any waivers granted under the Code to the specified officers.

ITEM 11.
EXECUTIVE COMPENSATION
A description of the compensation of our executive officers is set forth under the caption “Executive Compensation” in our definitive proxy statement for the 2016 annual meeting of shareholders and is incorporated herein by reference.

ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Security ownership data appearing under the caption “Security Ownership of Certain Beneficial Owners and Management” in our definitive proxy statement for the 2016 annual meeting of shareholders is incorporated herein by reference.
The table below contains information as of December 31, 2015, with respect to our Amended and Restated 2002 Equity Compensation Plan, the only compensation plan or arrangement (other than our tax-qualified plans) under which we have options, warrants or rights to receive equity securities authorized for issuance.

Plan Category
 
Number of Securities
to be Issued Upon
Exercise of Outstanding
Options, Warrants
and Rights
 
Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights
 
Number of  Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (Excluding
Securities Reflected in
Column (a))
 
 
(a)
 
(b)
 
(c)
Equity compensation plans approved by security holders
 
 
 
734,482 (1)

 
$35.96 (2)
 
222,780

Equity compensation plans not approved by security holders
 
 
 
—

 
—

 
—

Total
 
 
 
734,482 (1)

 
$35.96 (2)
 
222,780

 
(1)
Includes shares issuable under restricted share unit awards and performance shares awarded under our Amended and Restated 2002 Equity Compensation Plan at the level paid for the 2013 – 2015 performance cycle and at the maximum levels payable for the 2014 – 2016 and 2015 – 2017 performance cycles.
(2)
The weighted average exercise price does not take into account awards of performance shares, phantom shares or restricted share units. Information with respect to these awards is incorporated by reference to the information appearing under the captions “Corporate Governance Policies and Practices – Director Compensation” and “Executive Compensation – Grants of Plan Based Awards – LTIP Awards” in our definitive proxy statement for the 2016 annual meeting of shareholders.
Information concerning the inducement restricted share awards granted in 2008 to our Chief Executive Officer outside of our Amended and Restated 2002 Equity Compensation Plan is incorporated by reference to the information appearing under the caption “Executive Compensation – Employment Agreement” in our definitive proxy statement for the 2016 annual meeting of shareholders.

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ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Information concerning the independence of our directors is set forth under the caption “Corporate Governance Policies and Practices – Director Independence” in our definitive proxy statement for the 2016 annual meeting of shareholders and is incorporated herein by reference.

ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Information appearing under the caption “Independent Registered Public Accounting Firm” in our definitive proxy statement for the 2016 annual meeting of shareholders is incorporated herein by reference.

PART IV

ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)
The following documents are filed as part of this report:

1.
Financial Statements
The financial statements filed as part of this report are listed in Part II, Item 8 of this report on the Index to Consolidated Financial Statements.

2.
Financial Statement Schedule
Schedule II – Valuation and Qualifying Accounts for the years ended December 31, 2015, 2014 and 2013 appears on page 114.
Other schedules are omitted because of the absence of conditions under which they are required or because the required information is provided in the Consolidated Financial Statements or notes thereto.

3.
  Exhibits
The exhibits to this report on Form 10-K are listed in the Exhibit Index appearing on pages 54 to 56.


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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Charlotte, North Carolina on this 26th day of February, 2016.
ENPRO INDUSTRIES, INC.
 
 
By:
/s/ Robert S. McLean
 
Robert S. McLean
 
Chief Administrative Officer, General Counsel and Secretary
 
 
By:
/s/ Steven R. Bower
 
Steven R. Bower
 
Vice President, Controller and Chief Accounting Officer
 
(Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons, or in their behalf by their duly appointed attorney-in-fact, on behalf of the registrant in the capacities and on the date indicated.
Signatures
 
Title
 
Date
 
 
 
/s/ Stephen E. Macadam
 
President and
Chief Executive Officer
(Principal Executive Officer) and Director
 
February 26, 2016
Stephen E. Macadam
 
 
 
 
 
/s/ J. Milton Childress II
 
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
 
February 26, 2016
J. Milton Childress II
 
 
 
 
 
/s/ Gordon D. Harnett
 
Chairman of the Board and Director
 
February 26, 2016
Gordon D. Harnett*
 
 
 
 
 
/s/ Thomas M. Botts
 
Director
 
February 26, 2016
Thomas M. Botts*
 
 
 
 
 
/s/ Felix M. Brueck
 
Director
 
February 26, 2016
Felix M. Brueck*
 
 
 
 
 
 
 
 
 
/s/ B. Bernard Burns, Jr.
 
Director
 
February 26, 2016
B. Bernard Burns, Jr.*
 
 
 
 
 
/s/ Diane C. Creel
 
Director
 
February 26, 2016
Diane C. Creel*
 
 
 
 
 
/s/ Kees van der Graaf
 
Director
 
February 26, 2016
Kees van der Graaf*
 
 
 
 
 
/s/ David L. Hauser
 
Director
 
February 26, 2016
David L. Hauser*
 
 
 
 
 
/s/ John Humphrey
 
Director
 
February 26, 2016
John Humphrey*
 
 
 
 

* By:
 
/s/ Robert S. McLean
 
 
Robert S. McLean, Attorney-in-Fact


53
Table of Contents

EXHIBIT INDEX
 
2.1**
Asset and Share Purchase Agreement dated as of June 22, 2015 among Veyance de Mexico, S. de R.L. de C.V., Veyance de Chihuahua, S. de R.L. de C.V., Veyance Technologies Canada, Inc. and Veyance Technologies, Inc. as the Sellers and EnPro Industries, Inc., Garlock of Canada Ltd., STEMCO Kaiser Incorporated, EnPro Luxembourg   Holding Company SarL, and Stempro Mexico Acquisition Co., S de R.L. de C.V. as the Buyers (incorporated by reference to Exhibit 2.1 to the Form 8-K filed on July 2, 2015 by EnPro Industries, Inc. (File No. 001-31225))
 
 
3.1
Restated Articles of Incorporation of EnPro Industries, Inc. (incorporated by reference to Exhibit 3.1 to the Form 10-Q for the period ended June 30, 2008 filed by EnPro Industries, Inc. (File No. 001-31225))
 
 
3.2
Amended Bylaws of EnPro Industries, Inc. (incorporated by reference to Exhibit 3.1 to the Form 8-K dated October 31, 2014 filed by EnPro Industries, Inc. (File No. 001-31225))
 
 
4.1
Form of certificate representing shares of common stock, par value $0.01 per share, of EnPro Industries, Inc. (incorporated by reference to Amendment No. 4 of the Registration Statement on Form 10 of EnPro Industries, Inc. (File No. 001-31225))
 
 
4.2
Indenture dated as of September 16, 2014 among EnPro Industries, Inc., the Guarantors party thereto and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Form 8-K filed on September 16, 2014 by EnPro Industries, Inc. (File No. 001-31225))
 
 
4.3
Indenture dated as of October 26, 2005 between EnPro Industries, Inc. and Wachovia Bank, National Association, as trustee (incorporated by reference to Exhibit 10.1 to the Form 8-K dated October 26, 2005 filed by EnPro Industries, Inc. (File No. 001-31225))
 
 
10.1
Amended and Restated Credit Agreement dated as of August 28, 2014 among EnPro Industries, Inc., Coltec Industries Inc, the Guarantors party thereto, the Lenders party thereto and Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer (incorporated by reference to Exhibit 10.1 to the Form 8-K filed on August 28, 2014 by EnPro Industries, Inc. (File No. 001-31225))
 
 
10.2
Registration Rights Agreement dated as of September 16, 2014 between EnPro Industries, Inc., Applied Surface Technology, Inc., Belfab, Inc., Best Holdings I, Inc., Coltec Industries Inc, Coltec International Services Co., Compressor Products International LLC, EnPro Associates, LLC, Garlock Pipeline Technologies, Inc., GGB LLC, GGB, Inc., Kenlee Daytona LLC, SD Friction, LLC, Stemco Holdings, Inc., STEMCO Kaiser Incorporated, Stemco LP, Stemco Products, Inc., Technetics Group Daytona, Inc., Technetics Group LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representative of the Initial Purchasers (incorporated by reference to Exhibit 10.1 to the Form 8-K filed on September 16, 2014 by EnPro Industries, Inc. (File No. 001-31225))
 
 
10.3
Form of Indemnification Agreement for directors and officers (incorporated by reference to Exhibit 10.5 to Amendment No. 3 of the Registration Statement on Form 10 of EnPro Industries, Inc. (File No. 001-31225))
 
 
10.4+*
EnPro Industries, Inc. 2002 Equity Compensation Plan (2015 Amendment and Restatement)
 
 
10.5+
EnPro Industries, Inc. Senior Executive Annual Performance Plan (2012 Amendment and Restatement) (incorporated by reference to Appendix B to the Proxy Statement on Schedule 14A dated March 20, 2012 filed by EnPro Industries, Inc. (File No. 001-31225))
 
 
10.6+*
EnPro Industries, Inc. Long-Term Incentive Plan (2015 Amendment and Restatement)
 
 
10.7+
EnPro Industries, Inc. Management Purchase Stock Deferral Plan (incorporated by reference to Exhibit 10.1 to the Form 8-K dated November 2, 2012 filed by EnPro Industries, Inc. (File No. 001-31225))
 
 
10.8+
Form of EnPro Industries, Inc. Phantom Shares Award Grant for Outside Directors (2009 Amendment and Restatement) (incorporated by reference to Exhibit 10.7 to the Form 10-K for the year ended December 31, 2012 filed by EnPro Industries, Inc. (File No. 001-31225))
 
 
10.9+
Form of EnPro Industries, Inc. Restricted Share Award Agreement (incorporated by reference to Exhibit 10.1 to the Form 8-K dated February 14, 2008 filed with EnPro Industries, Inc. (File No. 001-31225))
 
 
10.10+*
Form of EnPro Industries, Inc. Restricted Share Units Award Agreement
 
 
10.11+*
Form of EnPro Industries, Inc. Restricted Share Units Award Agreement for Management Stock Purchase Deferral Plan
 
 
10.12+*
Form of EnPro Industries, Inc. Long-Term Incentive Plan Award Agreement (Performance Shares)
 
 

54
Table of Contents

10.13+*
Form of EnPro Industries, Inc. Long-Term Incentive Plan Award Agreement (Cash)
10.14+
Form of EnPro Industries, Inc. Long-Term Incentive Plan Award Agreement (Performance Shares) (incorporated by reference to Exhibit 10.11 to the Form 10-K for the year ended December 31, 2012 filed by EnPro Industries, Inc. (File No. 001-31225))
 
 
10.15+
Form of EnPro Industries, Inc. Long-Term Incentive Plan Award Agreement (Cash) (incorporated by reference to Exhibit 10.12 to the Form 10-K for the year ended December 31, 2012 filed by EnPro Industries, Inc. (File No. 001-31225))
 
 
10.16+
EnPro Industries, Inc. Defined Benefit Restoration Plan (amended and restated effective as of January 1, 2007) (incorporated by reference to Exhibit 10.25 to the Form 10-K for the year ended December 31, 2006 filed by EnPro Industries, Inc. (File No. 001-31225))
 
 
10.17+
EnPro Industries, Inc. Deferred Compensation Plan (as amended and restated effective January 1, 2010) (incorporated by reference to Exhibit 10.16 to the Form 10-K for the year ended December 31, 2013 filed by EnPro Industries, Inc. (File No. 001-31225))
 
 
10.18+
Amendment dated December 12, 2014 to EnPro Industries, Inc. Deferred Compensation Plan (as amended and restated effective January 1, 2010) (incorporated by reference to Exhibit 10.17 to the Form 10-K for the year ended December 31, 2014 filed by EnPro Industries, Inc. (File No. 001-31225))
 
 
10.19+*
EnPro Industries, Inc. Deferred Compensation Plan for Non-Employee Directors (as amended and restated effective January 1, 2016)
 
 
10.20+
EnPro Industries, Inc. Outside Directors’ Phantom Share Plan (incorporated by reference to Exhibit 10.14 to the Form 10-K for the year ended December 31, 2002 filed by EnPro Industries, Inc. (File No. 001-31225))
10.21+
Executive Employment Agreement dated March 10, 2008 between EnPro Industries, Inc. and Stephen E. Macadam (incorporated by reference to Exhibit 10.1 to the Form 8-K dated March 10, 2008 filed by EnPro Industries, Inc., (File No. 001-31225))
 
 
10.22+
Amendment to Executive Employment Agreement dated as of August 4, 2010 between EnPro Industries, Inc. and Stephen E. Macadam incorporated by reference to Exhibit 10.1 to the Form 10-Q for the period ended September 30, 2010 filed by EnPro Industries, Inc., (File No. 001-31225))
 
 
10.23+
Management Continuity Agreement dated as of April 14, 2008 between EnPro Industries, Inc. and Stephen E. Macadam (incorporated by reference to Exhibit 10.13 to the Form 10-K for the year ended December 31, 2008 filed by EnPro Industries, Inc. (File No. 001-31225))
 
 
10.24+
Management Continuity Agreement dated as of January 30, 2006 between EnPro Industries, Inc. and J. Milton Childress II (incorporated by reference to Exhibit 10.28 to the Form 10-K for the year ended December 31, 2005 filed by EnPro Industries, Inc. (File No. 001-31225))
 
 
10.25+
Management Continuity Agreement dated as of February 7, 2012 between EnPro Industries, Inc. and David S. Burnett (incorporated by reference to Exhibit 10.1 to the Form 10-Q for the period ended March 31, 2012 filed by EnPro Industries, Inc. (File No. 001-31225))
 
 
10.26+
Management Continuity Agreement dated as of May 5, 2010 between EnPro Industries, Inc. and Robert S. McLean (incorporated by reference to Exhibit 10.1 to the Form 10-Q for the period ended June 30, 2010 filed by EnPro Industries, Inc. (File No. 001-31225))
 
 
10.27+
Management Continuity Agreement dated as of December 15, 2011 between EnPro Industries, Inc. and Marvin A. Riley (incorporated by reference to Exhibit 10.28 to the Form 10-K for the year ended December 31, 2011 filed by EnPro Industries, Inc. (File No. 001-31225))
 
 
10.28+
Management Continuity Agreement dated as of May 1, 2013 between EnPro Industries, Inc. and Eric A. Vaillancourt (incorporated by reference to Exhibit 10.2 to the Form 10-Q for the quarter ended June 30, 2013 filed by EnPro Industries, Inc. (File No. 001-31225)) (This exhibit is substantially identical to Management Continuity Agreements between EnPro Industries, Inc. and the following executives entered into on the dates indicated: Jon A. Cox, August 3, 2011; Gilles Hudon, August 3 2011; Ken Walker, August 3, 2011)
 
 
10.29+
Management Continuity Agreement dated as of February 10, 2014 between EnPro Industries, Inc. and Todd L. Anderson (incorporated by reference to Exhibit 10.1 to the Form 10-Q for the quarter ended March 31, 2014 filed by EnPro Industries, Inc. (File No. 001-31225)) (This exhibit is substantially identical to Management Continuity Agreement between EnPro Industries, Inc. and Susan E. Sweeney entered into on February 10, 2014.)

55
Table of Contents

10.30+
Management Continuity Agreement dated as of March 31, 2015 between EnPro Industries, Inc. and Steven R. Bower (incorporated by reference to Exhibit 10.2 to the Form 10-Q for the quarter ended March 31, 2015 filed by EnPro Industries, Inc. (File No. 001-31225))
 
 
10.31+
Management Continuity Agreement dated as of July 31, 2015 between EnPro Industries, Inc. and William A. Favenesi (incorporated by reference to Exhibit 10.1 to the Form 10-Q for the quarter ended September 30, 2015 filed by EnPro Industries, Inc. (File No. 001-31225)) (this exhibit is substantially identical to Management Continuity Agreements between EnPro Industries, Inc. and William L. Sparks entered into on July 31, 2015 and William C. O'Neal entered into on July 28, 2015)
 
 
10.32+
Special Exit Benefit Agreement and Release dated as of November 6, 2014 between EnPro Industries, Inc. and Dale A. Herold (incorporated by reference to Exhibit 10.1 to the Form 8-K filed on November 10, 2014 by EnPro Industries, Inc. (File No. 001-31225))
10.33+
EnPro Industries, Inc. Senior Officer Severance Plan (effective as of August 4, 2010) (incorporated by reference to Exhibit 10.34 to the Form 10-K for the year ended December 31, 2010 filed by EnPro Industries, Inc. (File No. 001-31225))
 
 
10.34+*
Summary of Executive and Director Compensation Arrangements
 
 
10.35+
Transition Agreement dated February 13, 2015 between Alexander W. Pease and EnPro Industries, Inc. (incorporated by reference to Exhibit 10.1 to the Form 10-Q for the quarter ended March 31, 2015 filed by EnPro Industries, Inc. (File No. 001-31225))
 
 
21*
List of Subsidiaries
 
 
23.1*
Consent of PricewaterhouseCoopers LLP
 
 
23.2*
Consent of Bates White, LLC
 
 
24.1*
Power of Attorney from Thomas M. Botts
 
 
24.2*
Power of Attorney from Felix M. Brueck
 
 
24.3*
Power of Attorney from B. Bernard Burns, Jr.
 
 
24.4*
Power of Attorney from Diane C. Creel
 
 
24.5*
Power of Attorney from Kees van der Graaf
 
 
24.6*
Power of Attorney from Gordon D. Harnett
 
 
24.7*
Power of Attorney from David L. Hauser
 
 
24.8*
Power of Attorney from John Humphrey
 
 
31.1*
Certification of Chief Executive Officer pursuant to Rule 13a – 14(a)/15d – 14(a)
 
 
31.2*
Certification of Chief Financial Officer pursuant to Rule 13a – 14(a)/15d – 14(a)
 
 
32*
Certification pursuant to Section 1350
 
 
101.INS*
XBRL Instance Document
101.SCH*
XBRL Taxonomy Extension Schema Document
101.CAL*
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*
XBRL Taxonomy Extension Definitions Linkbase Document
101.LAB*
XBRL Taxonomy Extension Label Linkbase Document
101.PRE*
XBRL Taxonomy Extension Presentation Linkbase Document

*
Items marked with an asterisk are filed herewith.
**
Does not include the disclosure schedules and exhibit documents identified and referenced therein. The Company agrees to furnish supplementally a copy of any such omitted schedule or exhibit to the Securities and Exchange Commission upon request.
+
Management contract or compensatory plan required to be filed under Item 15(c) of this report and Item 601 of Regulation S-K of the Securities and Exchange Commission.


56
Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors and Shareholders of EnPro Industries, Inc.:

In our opinion, the consolidated financial statements, listed in the index appearing under Item 8 of the Form 10-K, present fairly, in all material respects, the financial position of EnPro Industries, Inc. and its consolidated subsidiaries at December 31, 2015 and 2014, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2015 in conformity with accounting principles generally accepted in the United States of America.  In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 8 of the Form 10-K presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.  Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control - Integrated Framework (2013 version) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  The Company's management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Control over Financial Reporting appearing under Item 9A.  Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company's internal control over financial reporting based on our integrated audits.  We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects.  Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.  Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.  Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it classifies deferred tax assets and liabilities in 2015.
 
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.  A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
 
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As described in Management’s Report on Internal Control over Financial Reporting appear under Item 9A, management has excluded the Veyance North American air spring business from its assessment of internal control over financial reporting as of December 31, 2015 because it was acquired by the Company in a purchase business combination during 2015. We have also excluded the Veyance North American air spring business from our audit of internal control over financial reporting . The Veyance North American air spring business is a wholly-owned subsidiary whose total assets and total revenues represent 3% and 4%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2015.


/s/ PricewaterhouseCoopers LLP


Charlotte, North Carolina
February 26, 2016

57
Table of Contents

FINANCIAL INFORMATION
ENPRO INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31, 2015 , 2014 and 2013
(in millions, except per share data)
 
 
2015
 
2014
 
2013
Net sales
$
1,204.4

 
$
1,219.3

 
$
1,144.2

Cost of sales
808.9

 
802.6

 
762.9

Gross profit
395.5

 
416.7

 
381.3

Operating expenses:
 
 
 
 
 
Selling, general and administrative
302.8

 
319.5

 
285.8

Goodwill and other intangible asset impairment
47.0

 
—

 
—

Asbestos settlement
—

 
30.0

 
—

Other
8.1

 
3.8

 
9.1

Total operating expenses
357.9

 
353.3

 
294.9

Operating income
37.6

 
63.4

 
86.4

Interest expense
(52.8
)
 
(45.1
)
 
(45.1
)
Interest income
0.7

 
1.0

 
0.8

Other income (expense), net
(4.1
)
 
13.3

 
(6.3
)
Income (loss) before income taxes
(18.6
)
 
32.6

 
35.8

Income tax expense
(2.3
)
 
(10.6
)
 
(8.4
)
Net income (loss)
$
(20.9
)
 
$
22.0

 
$
27.4

Basic earnings (loss) per share
$
(0.93
)
 
$
0.95

 
$
1.31

Diluted earnings (loss) per share
$
(0.93
)
 
$
0.85

 
$
1.17





See notes to Consolidated Financial Statements.

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Table of Contents

ENPRO INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Years Ended December 31, 2015 , 2014 and 2013
(in millions)
 
 
2015
 
2014
 
2013
Net income (loss)
$
(20.9
)
 
$
22.0

 
$
27.4

Other comprehensive income (loss):
 
 
 
 
 
Foreign currency translation adjustments
(21.9
)
 
(25.6
)
 
1.0

Pension and post-retirement benefits adjustment (excluding amortization)
(3.4
)
 
(39.9
)
 
47.6

Amortization of pension and post-retirement benefits included in net income (loss)
7.1

 
2.6

 
9.7

Realized loss from settled cash flow hedges included in net income
—

 
—

 
1.0

Other comprehensive income (loss), before tax
(18.2
)
 
(62.9
)
 
59.3

Income tax benefit (expense) related to items of other comprehensive income (loss)
(1.8
)
 
14.4

 
(21.9
)
Other comprehensive income (loss), net of tax
(20.0
)
 
(48.5
)
 
37.4

Comprehensive income (loss)
$
(40.9
)
 
$
(26.5
)
 
$
64.8






See notes to Consolidated Financial Statements.

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Table of Contents

ENPRO INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2015 , 2014 and 2013
(in millions)
 
 
2015
 
2014
 
2013
OPERATING ACTIVITIES
 
 
 
 
 
Net income (loss)
$
(20.9
)
 
$
22.0

 
$
27.4

Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
 
 
Depreciation
30.3

 
29.9

 
29.6

Amortization
27.8

 
27.6

 
27.0

Loss on exchange and repurchase of convertible debentures
2.8

 
10.0

 
—

Goodwill and other intangible asset impairment
47.0

 
—

 
—

Gain on sale of business
—

 
(27.7
)
 
—

Deferred income taxes
(1.1
)
 
(3.3
)
 
1.7

Stock-based compensation
4.1

 
9.8

 
6.0

Other non-cash adjustments
3.7

 
6.0

 
4.0

Change in assets and liabilities, net of effects of acquisition and sale of businesses:
 
 
 
 
 
Accounts receivable, net
7.3

 
(14.6
)
 
(4.7
)
Inventories
(14.7
)
 
(11.4
)
 
(17.2
)
Accounts payable
3.5

 
1.3

 
2.4

Other current assets and liabilities
19.3

 
10.7

 
8.2

Other non-current assets and liabilities
(22.6
)
 
(28.1
)
 
(14.5
)
Net cash provided by operating activities
86.5

 
32.2

 
69.9

INVESTING ACTIVITIES
 
 
 
 
 
Purchases of property, plant and equipment
(36.8
)
 
(41.8
)
 
(30.7
)
Payments for capitalized internal-use software
(4.6
)
 
(10.5
)
 
(9.2
)
Proceeds from sale of business
—

 
39.3

 
—

Acquisitions, net of cash acquired
(45.5
)
 
(61.9
)
 
(2.0
)
Other
0.4

 
0.2

 
0.4

Net cash used in investing activities
(86.5
)
 
(74.7
)
 
(41.5
)
FINANCING ACTIVITIES
 
 
 
 
 
Proceeds from debt
230.8

 
641.8

 
201.4

Repayments of debt
(189.0
)
 
(400.4
)
 
(216.3
)
Debt issuance costs
—

 
(7.3
)
 
—

Repurchase of common stock
(85.3
)
 
—

 
—

Dividends paid
(18.0
)
 
—

 
—

Repurchase of convertible debentures conversion option
(21.6
)
 
(53.6
)
 
—

Other
(2.1
)
 
(3.5
)
 
(4.6
)
Net cash provided by (used in) financing activities
(85.2
)
 
177.0

 
(19.5
)
Effect of exchange rate changes on cash and cash equivalents
(5.6
)
 
(4.7
)
 
1.6

Net increase (decrease) in cash and cash equivalents
(90.8
)
 
129.8

 
10.5

Cash and cash equivalents at beginning of year
194.2

 
64.4

 
53.9

Cash and cash equivalents at end of year
$
103.4

 
$
194.2

 
$
64.4

Supplemental disclosures of cash flow information:
 
 
 
 
 
Cash paid during the year for:
 
 
 
 
 
Interest
$
36.4

 
$
22.9

 
$
25.1

Income taxes, net of refunds received
$
20.4

 
$
50.3

 
$
19.6

See notes to Consolidated Financial Statements.

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ENPRO INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
As of December 31, 2015 and 2014
(in millions, except share amounts)
 
 
2015
 
2014
ASSETS
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
103.4

 
$
194.2

Accounts receivable, less allowance for doubtful accounts of $5.4 in 2015 and of $7.0 in 2014
212.5

 
205.2

Inventories
178.4

 
159.7

Prepaid expenses and other current assets
23.6

 
44.0

Total current assets
517.9

 
603.1

Property, plant and equipment, net
211.5

 
199.3

Goodwill
195.9

 
232.4

Other intangible assets, net
190.4

 
202.8

Investment in GST
236.9

 
236.9

Deferred income taxes and income tax receivable
109.3

 
79.0

Other assets
41.6

 
49.2

Total assets
$
1,503.5

 
$
1,602.7

LIABILITIES AND EQUITY
 
 
 
Current liabilities
 
 
 
Short-term borrowings from GST
$
24.3

 
$
23.6

Notes payable to GST
12.2

 
11.7

Current maturities of long-term debt
0.1

 
22.5

Accounts payable
101.5

 
87.8

Accrued expenses
140.6

 
131.6

Total current liabilities
278.7

 
277.2

Long-term debt
360.9

 
298.6

Notes payable to GST
271.0

 
259.3

Other liabilities
133.1

 
142.8

Total liabilities
1,043.7

 
977.9

Commitments and contingencies


 

Temporary equity
—

 
1.0

Shareholders’ equity
 
 
 
Common stock – $.01 par value; 100,000,000 shares authorized; issued 22,046,647 shares at December 31, 2015 and 24,172,716 shares at December 31, 2014
0.2

 
0.2

Additional paid-in capital
372.5

 
477.3

Retained earnings
142.5

 
181.7

Accumulated other comprehensive loss
(54.1
)
 
(34.1
)
Common stock held in treasury, at cost – 196,593 shares at December 31, 2015 and 200,022 shares at December 31, 2014
(1.3
)
 
(1.3
)
Total shareholders’ equity
459.8

 
623.8

Total liabilities and equity
$
1,503.5

 
$
1,602.7


See notes to Consolidated Financial Statements.

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ENPRO INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
Years Ended December 31, 2015 , 2014 and 2013
(dollars and shares in millions)
 
 
Common Stock
 
Additional
Paid-in
Capital
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Treasury
Stock
 
Total
Shareholders’
Equity
 
Shares
 
Amount
 
Balance, December 31, 2012 as previously reported
20.7

 
$
0.2

 
$
425.4

 
$
145.9

 
$
(23.0
)
 
$
(1.4
)
 
$
547.1

Prior period adjustment - error in income tax provision
—

 
—

 
—

 
(13.6
)
 
—

 
—

 
(13.6
)
Balance, December 31, 2012 as revised
20.7

 
0.2

 
425.4

 
132.3

 
(23.0
)
 
(1.4
)
 
533.5

Net income
—

 
—

 
—

 
27.4

 
—

 
—

 
27.4

Other comprehensive income
—

 
—

 
—

 
—

 
37.4

 
—

 
37.4

Reclassification to temporary equity
—

 
—

 
(15.9
)
 
—

 
—

 
—

 
(15.9
)
Incentive plan activity
0.3

 
—

 
1.4

 
—

 
—

 
0.1

 
1.5

Balance, December 31, 2013, as revised
21.0

 
0.2

 
410.9

 
159.7

 
14.4

 
(1.3
)
 
583.9

Net income
—

 
—

 
—

 
22.0

 
—

 
—

 
22.0

Other comprehensive loss
—

 
—

 
—

 
—

 
(48.5
)
 
—

 
(48.5
)
Exchanges of Convertible Debentures
2.9

 
—

 
97.8

 
—

 
—

 
—

 
97.8

Repurchase of Convertible Debentures
—

 
—

 
(52.8
)
 
—

 
—

 
—

 
(52.8
)
Accretion of Convertible Debentures from temporary equity
—

 
—

 
14.9

 
—

 
—

 
—

 
14.9

Incentive plan activity
0.1

 
—

 
6.5

 
—

 
—

 
—

 
6.5

Balance, December 31, 2014, as revised
24.0

 
0.2

 
477.3

 
181.7

 
(34.1
)
 
(1.3
)
 
623.8

Net loss
—

 
—

 
—

 
(20.9
)
 
—

 
—

 
(20.9
)
Other comprehensive loss
—

 
—

 
—

 
—

 
(20.0
)
 
—

 
(20.0
)
Dividends paid
—

 
—

 
—

 
(18.0
)
 
—

 
—

 
(18.0
)
Repurchase of Convertible Debentures, including call option settlement
(0.9
)
 
—

 
(21.6
)
 
—

 
—

 
—

 
(21.6
)
Accretion of Convertible Debentures from temporary equity
—

 
—

 
1.0

 
—

 
—

 
—

 
1.0

Share repurchases
(1.3
)
 
—

 
(86.0
)
 
—

 
—

 
—

 
(86.0
)
Incentive plan activity
0.1

 
—

 
1.8

 
(0.3
)
 
—

 
—

 
1.5

Balance, December 31, 2015
21.9

 
$
0.2

 
$
372.5

 
$
142.5

 
$
(54.1
)
 
$
(1.3
)
 
$
459.8








See notes to Consolidated Financial Statements.

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ENPRO INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
1.
Overview, Basis of Presentation, Significant Accounting Policies and Recently Issued Accounting Guidance
Overview
EnPro Industries, Inc. (“we,” “us,” “our,” “EnPro” or the “Company”) is a leader in the design, development, manufacture and marketing of proprietary engineered industrial products that primarily include: sealing products; heavy-duty truck wheel-end component systems; self-lubricating, non-rolling bearing products; precision engineered components and lubrication systems for reciprocating compressors; and heavy-duty, medium-speed diesel, natural gas and dual fuel reciprocating engines, including parts and services.
Basis of Presentation
The Consolidated Financial Statements reflect the accounts of the Company and our majority-owned and controlled subsidiaries. All intercompany accounts and transactions between our consolidated operations have been eliminated.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the amounts of assets and liabilities and the disclosures regarding contingent assets and liabilities at period end and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Effective in the fourth quarter of 2015, we elected to early adopt amendments to authoritative guidance on the presentation of deferred taxes in the Consolidated Balance Sheet (see "Recently Issued Accounting Guidance" below) in order to simplify this presentation. Prior periods were not retrospectively adjusted.
As of December 31, 2015 and December 31, 2014 we had purchased $5.7 million and $ 2.4 million , respectively, of property, plant and equipment for which cash payments had not yet been made. This is considered a noncash investing activity.
In connection with the preparation of consolidated financial statements for the year ended December 31, 2015, we determined that we had overstated our net deferred tax assets in certain years prior to December 31, 2010.  The errors related primarily to the computation of the deferred tax assets for the pension benefit obligation and the minimum pension liability.  In accordance with SEC Staff Accounting Bulletin No. 99, “Materiality”, we assessed the materiality of the adjustments and concluded that these errors were not material to any of our previously issued financial statements. However, the aggregate amount of prior period errors would have been material to our current year consolidated statement of income. Consequently, we have corrected these errors for all prior periods presented by revising the consolidated financial statements and other financial information included herein. Since all of the prior period errors that were assessed relate to periods prior to any presented herein, corrections to the financial statements were recorded as a $ 13.6 million decrease to opening retained earnings at January 1, 2013 as reflected on the Consolidated Statement of Changes in Shareholders' Equity.  The adjustments had no impact on the Consolidated Statement of Operations, Consolidated Statement of Comprehensive Income, or Consolidated Statement of Cash Flows for the years ended December 31, 2014 or 2013. We concluded that the impact to the prior financial statements and other financial information was not material and therefore they will not be restated. However, periods not presented herein will be revised to include the effect of these errors, as applicable, as they are included in future filings.
Accordingly the company, has revised the Consolidated Balance Sheet as of December 31, 2014 from amounts previously reported as follows:

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December 31, 2014
 
 
As previously reported
 
Adjustment
 
As revised
Deferred income taxes and income tax receivable
 
$
80.3

 
$
(1.3
)
 
$
79.0

Total assets
 
$
1,604.0

 
$
(1.3
)
 
$
1,602.7

Other liabilities (1)
 
$
130.5

 
$
12.3

 
$
142.8

Total liabilities
 
$
965.6

 
$
12.3

 
$
977.9

Retained earnings
 
$
195.3

 
$
(13.6
)
 
$
181.7

Total shareholders' equity
 
$
637.4

 
$
(13.6
)
 
$
623.8

Total liabilities and equity
 
$
1,604.0

 
$
(1.3
)
 
$
1,602.7

(1) Note that Other liabilities as previously reported is the sum of the balance sheet totals for Pension liability, Asbestos settlement, and Other liabilities in our 2014 Form 10-K

In addition, we have revised our December 31, 2014 Condensed Consolidating Balance Sheet that is presented in our supplemental guarantor financial information. Refer to Note 21, "Supplemental Guarantor Financial Information" for more details about this revision.
Summary of Significant Accounting Policies
Revenue Recognition – For the Sealing Products and Engineered Products segments, revenue is recognized at the time title and risk of product ownership is transferred or when services are rendered, typically when product is shipped or delivered, depending on the terms of the sale agreement. Shipping costs billed to customers are recognized as revenue and expensed in cost of goods sold since they are fixed and determinable and collection is reasonably assured.
We generally use the percentage-of-completion (“POC”) accounting method to account for our long-term contracts associated with the design, development, manufacture, or modification of complex engines under fixed price or cost plus contracts. During the third quarter of 2011, the Power Systems segment began using POC for prospective engine contracts. We made this change because, as a result of enhancements to our financial management and reporting systems, we are able to reasonably estimate the revenue, costs, and progress towards completion of engine builds. If we are not able to meet those conditions for a particular engine contract, we recognize revenues using the completed-contract method. Additionally, engines that were in production at June 30, 2011 will continue to be accounted for using the completed-contract method.
Under POC, revenue is recognized based on the extent of progress towards completion of the long-term contract. We generally use the cost-to-cost measure for our long-term contracts unless we believe another method more clearly measures progress towards completion of the contract. Under the cost-to-cost measure, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the contract. Contract costs include labor, material and subcontracting costs, as well as an allocation of indirect costs. Revenues, including estimated fees or profits, are recorded as costs are incurred.
Due to the nature of the work required to be performed on many of our contracts, the estimation of total revenue and cost at completion is complex and subject to many variables. Management must make assumptions and estimates regarding labor productivity, the complexity of the work to be performed, the availability of materials, the length of time to complete the contract (to estimate increases in wages and prices for materials and related support cost allocations), performance by our subcontractors and overhead cost rates, among other variables. A significant change in one or more of these estimates could affect the profitability of one or more of our contracts. Based on our analysis, any quarterly adjustments to net sales, cost of sales, and the related impact to operating income are recorded as necessary in the period they become known. These adjustments may result in an increase or a decrease in operating income. Changes in estimates of net sales, cost of sales, and the related impact to operating income are recognized quarterly on a cumulative catch-up basis, which recognizes in the current period the cumulative effect of the changes on current and prior periods based on a contract's percentage of completion. When estimates of total costs to be incurred on a contract exceed total estimates of revenue to be earned, a provision for the entire loss on the contract is recorded in the period the loss is determined.
Contracts accounted for under the POC method represented revenues and margins of $67.3 million and $8.9 million , respectively, for the year ended December 31, 2015 , $57.3 million and $3.1 million , respectively, for the year ended December 31, 2014 , and $64.3 million and $9.0 million , respectively, for the year ended December 31, 2013 .
Foreign Currency Translation – The financial statements of those operations whose functional currency is a foreign currency are translated into U.S. dollars using the current rate method. Under this method, all assets and liabilities are translated

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into U.S. dollars using current exchange rates, and income statement activities are translated using average exchange rates. The foreign currency translation adjustment is included in accumulated other comprehensive loss in the Consolidated Balance Sheets. Gains and losses on foreign currency transactions are included in operating income. Foreign currency transaction gains totaled $ 1.8 million in 2015 . Foreign currency transaction losses totaled $1.0 million , and $2.3 million for 2014 , and 2013 , respectively.
Research and Development Expense – Costs related to research and development activities are expensed as incurred. We perform research and development primarily under Company-funded programs for commercial products. Net research and development expenditures in 2015 , 2014 , and 2013 were $22.5 million , $20.0 million , and $11.3 million , respectively, and are included in selling, general and administrative expenses in the Consolidated Statements of Operations.
Income Taxes – We use the asset and liability method of accounting for income taxes. Temporary differences arising between the tax basis of an asset or liability and its carrying amount on the Consolidated Balance Sheet are used to calculate future income tax assets or liabilities. This method also requires the recognition of deferred tax benefits, such as net operating loss carryforwards. A valuation allowance is recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to the taxable income (losses) in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A tax benefit from an uncertain tax position is recognized only if it is more likely than not that the position will be sustained on its technical merits. If the recognition threshold for the tax position is met, only the portion of the tax benefit that is greater than 50 percent likely to be realized is recorded.
Cash and Cash Equivalents – Cash and cash equivalents include cash on hand, demand deposits and highly liquid investments with a maturity of three months or less at the time of purchase.
Receivables – Accounts receivable are stated at the historical carrying amount net of write-offs and allowance for doubtful accounts. We establish an allowance for doubtful accounts receivable based on historical experience and any specific customer collection issues we have identified. Doubtful accounts receivable are written off when a settlement is reached for an amount less than the outstanding historical balance or when we have determined the balance will not be collected.
The balances billed but not paid by customers pursuant to retainage provisions in long-term contracts and programs are due upon completion of the contracts and acceptance by the owner. At December 31, 2015 , we had $0.6 million of retentions expected to be collected in 2016 recorded in accounts receivable and $0.9 million of retentions expected to be collected beyond 2016 recorded in other long-term assets in the Consolidated Balance Sheet. At December 31, 2014 , we had $2.5 million of current retentions and $0.5 million of long-term retentions recorded in the Consolidated Balance Sheet.
Inventories – Certain domestic inventories are valued by the last-in, first-out (“LIFO”) cost method. Inventories not valued by the LIFO method, other than inventoried costs relating to long-term contracts and programs, are valued using the first-in, first-out (“FIFO”) cost method, and are recorded at the lower of cost or market. Approximately 37% and 36% of inventories were valued by the LIFO method in 2015 and 2014 , respectively.
Inventoried costs relating to long-term contracts and programs are stated at the actual production cost incurred to date, including direct labor and factory overhead. Progress payments related to long-term contracts and programs accounted for under the completed-contract method of accounting are shown as a reduction of inventories. Initial program start-up costs and other nonrecurring costs are expensed as incurred.
Property, Plant and Equipment – Property, plant and equipment are recorded at cost. Depreciation of plant and equipment is determined on the straight-line method over the following estimated useful lives of the assets: buildings and improvements, 5 to 25 years; machinery and equipment, 3 to 10 years.
Goodwill and Other Intangible Assets – Goodwill represents the excess of the purchase price over the fair value of the net assets of acquired businesses. Goodwill is not amortized, but instead is subject to annual impairment testing conducted each year as of October 1. The goodwill asset impairment test involves comparing the fair value of a reporting unit to its carrying amount. If the carrying amount of a reporting unit exceeds its fair value, a second step of comparing the implied fair value of the reporting unit’s goodwill to the carrying amount of that goodwill is required to measure the potential goodwill impairment loss. Interim tests may be required if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.
We completed our required annual impairment tests of goodwill as of October 1, 2014 and 2013 . These assessments did not indicate any impairment of the goodwill.

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In our prior year annual impairment test of goodwill as of October 1, 2014, the estimated fair value of our Compressor Products International ("CPI") reporting unit exceeded its book value at that time. CPI is included in our Engineered Products segment.
Through the first quarter of 2015, several initiatives were implemented to remove labor, facility and other costs from CPI’s cost structure and a customer-focused organizational realignment was implemented to identify price and volume opportunities to optimize sales and profitability in the weak oil and gas business environment. During the first quarter of 2015 new strategic options and opportunities to improve business performance were analyzed given the continuing weakness in demand. Additional strategic measures were planned to be implemented during the second half of 2015 and the expected benefits of these actions were taken into consideration in assessing the outlook for CPI.
However, as more time passed, the benefits of strategic measures and initiatives being implemented were no longer expected to sufficiently compensate for the financial impacts of the prolonged and significant weakness in the oil and gas markets served by CPI. Taking this into account, the forecasted results for CPI were lowered significantly at the end of May 2015 to such an extent that we thought it likely that the fair value of CPI would be less than its carrying value which necessitated an interim impairment test for goodwill. The interim step one analysis we performed, using a combination of discounted cash flow and market value approaches to determine the fair value of CPI consistent with our annual impairment testing, indicated that the fair value of CPI was less than the carrying value of its net assets. The required step two valuation analysis performed as of May 31, 2015 and completed in July 2015 indicated that $ 46.1 million of the CPI goodwill balance was impaired. Accordingly, CPI goodwill in the amount of $ 46.1 million was written-off in the second quarter of 2015. The remaining CPI goodwill balance at December 31, 2015 is $4.0 million .
We completed our required annual impairment test of goodwill as of October 1, 2015 , which did not indicate any additional impairment of any of our goodwill.
Other intangible assets are recorded at cost, or when acquired as a part of a business combination, at estimated fair value. These assets include customer relationships, patents and other technology agreements, trademarks, licenses and non-compete agreements. Intangible assets that have definite lives are amortized using a method that reflects the pattern in which the economic benefits of the assets are consumed or the straight-line method over estimated useful lives of 2 to 20 years. Intangible assets with indefinite lives are subject to at least annual impairment testing, which compares the fair value of the intangible asset with its carrying amount using the relief from royalty method. The results of our assessments did not indicate any impairment to our indefinite-lived intangible assets for the years presented.
Investment in GST – The historical business operations of Garlock Sealing Technologies LLC (“GST LLC”) and The Anchor Packing Company (“Anchor”) have resulted in a substantial volume of asbestos litigation in which plaintiffs have 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”). Our 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 LLC, Anchor and Garrison 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”). GST’s financial results were included in our consolidated results through June 4, 2010, the day prior to the Petition Date. However, GAAP requires that 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 and its subsidiaries were with EnPro, generally must be prospectively deconsolidated from the parent and the investment accounted for using the cost method. At deconsolidation, our investment was recorded at its estimated fair value on June 4, 2010. The cost method requires us to present our ownership interests in the net assets of GST at the Petition Date as an investment and to not recognize any income or loss from GST and subsidiaries in our results of operations during the reorganization period. The investment in GST is subject to periodic reviews for impairment. When GST emerges from the jurisdiction of the Bankruptcy Court, the subsequent accounting will be determined based upon the applicable facts and circumstances at such time, including the terms of any plan of reorganization.
The ability of GST LLC and Garrison to continue as going concerns is dependent upon their ability to resolve their ultimate asbestos liability in the bankruptcy from their net assets, future cash flows, and available insurance proceeds, whether through the confirmation of a plan of reorganization or otherwise. As a result of the bankruptcy filing and related events, there can be no assurance the carrying values of the assets, including the carrying value of the business and the tax receivable, will be realized or that liabilities will be liquidated or settled for the amounts recorded. In addition, a plan of reorganization, or

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rejection thereof, could change the amounts reported in the GST LLC and Garrison financial statements and cause a material change in the carrying amount of our investment in GST.
Debt – In October 2005, we issued $172.5 million in aggregate principal amount of 3.9375% Convertible Senior Debentures (the “Convertible Debentures”). Applicable authoritative accounting guidance required that the liability component of the Convertible Debentures be recorded at its fair value as of the issuance date. This resulted in us recording debt in the amount of $111.2 million as of the issuance date with the $61.3 million offset to the debt discount being recorded in equity on a net of tax basis. The debt discount was amortized through interest expense until the maturity date of October 15, 2015, resulting in an effective interest rate of approximately 9.5% . Interest expense related to the Convertible Debentures for the years ended December 31, 2015 , 2014 and 2013 includes $0.4 million , $3.6 million and $6.8 million , respectively, of contractual interest coupon and $0.2 million , $4.2 million and $7.6 million , respectively, of debt discount amortization.
Derivative Instruments – We use derivative financial instruments to manage our exposure to various risks. The use of these financial instruments modifies the exposure with the intent of reducing our risk. We do not use financial instruments for trading purposes, nor do we use leveraged financial instruments. The counterparties to these contractual arrangements are major financial institutions. We use multiple financial institutions for derivative contracts to minimize the concentration of credit risk. The current accounting rules require derivative instruments, excluding certain contracts that are issued and held by a reporting entity that are both indexed to its own stock and classified in shareholders’ equity, be reported in the Consolidated Balance Sheets at fair value and that changes in a derivative’s fair value be recognized currently in earnings unless specific hedge accounting criteria are met.
We are exposed to foreign currency risks that arise from normal business operations. These risks include the translation of local currency balances on our foreign subsidiaries’ balance sheets, intercompany loans with foreign subsidiaries and transactions denominated in foreign currencies. We strive to control our exposure to these risks through our normal operating activities and, where appropriate, through derivative instruments. We have entered into contracts to hedge forecasted transactions occurring at various dates through June 2016 that are denominated in foreign currencies. The notional amount of foreign exchange contracts hedging foreign currency transactions was $4.6 million and $5.5 million at December 31, 2015 and 2014 , respectively.
Prior to 2013, we applied cash flow hedge accounting to certain of our foreign currency derivatives. We elected to discontinue this accounting treatment in the first quarter of 2013, consequently, all gains and losses that had been deferred in accumulated other comprehensive loss at December 31, 2012 were reclassified to income in the quarter ended March 31, 2013. See Note 16, "Accumulated Other Comprehensive Income (Loss)" for additional information. The notional amounts of all of our foreign exchange contracts were recorded at their fair market value as of December 31, 2015 with changes in market value recorded in income. The earnings impact of any foreign exchange contract that is specifically related to the purchase of inventory is recorded in cost of sales and the changes in market value of all other contracts are recorded in selling, general and administrative expense in the Consolidated Statements of Operations. The balances of derivative assets are recorded in other current assets and the balances of derivative liabilities are recorded in accrued expenses in the Consolidated Balance Sheets.
Fair Value Measurements – Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.
We utilize a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
•
Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities.
•
Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
•
Level 3: Unobservable inputs that reflect our own assumptions.
The fair value of intangible assets associated with acquisitions was determined using a discounted cash flow analysis. Projecting discounted future cash flows required us to make significant estimates regarding future revenues and expenses, projected capital expenditures, changes in working capital and the appropriate discount rate. This non-recurring fair value measurement would be classified as Level 3 due to the absence of quoted market prices or observable inputs for assets of a similar nature.
Similarly, the fair value computations for the recurring impairment analyses of goodwill, indefinite-lived intangible assets and the investment in GST would be classified as Level 3 due to the absence of quoted market prices or observable inputs. The key assumptions used for the discounted cash flow approach include expected cash flows based on internal business plans,

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projected growth rates and discount rates. Significant changes in any of those inputs could result in a significantly different fair value measurement.
Recently Issued Accounting Guidance

In January 2016, a standard was issued that amends existing guidance around classification and measurement of certain financial assets and liabilities. Changes to the current GAAP model primarily affects the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. Under the new guidance, all equity investments in unconsolidated entities (other than those accounted for using the equity method of accounting) will generally be measured at fair value through earnings. For equity investments without readily determinable fair values, the cost method is also eliminated. However, most entities will be able to elect to record equity investments without readily determinable fair values at cost, less impairment, and plus or minus subsequent adjustments for observable price changes. The standard also requires that financial assets and liabilities be disclosed separately in the notes to the financial statements based on measurement principle and form of financial asset. The amendments in this guidance are effective for financial statements issued for interim and annual periods beginning after December 15, 2017. This standard is not expected to have a significant impact on our consolidated financial statements or disclosures.

In November 2015, a standard was issued that simplifies the presentation of deferred income taxes through requiring that all deferred tax liabilities and assets be classified as noncurrent in a classified balance sheet. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by this standard. The amendments in this guidance are effective for financial statements issued for interim and annual periods beginning after December 15, 2016, with early adoption permitted for the beginning of an interim or annual period, and may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. We have elected to adopt this standard effective for the fourth quarter of 2015 on a prospective basis.

In September 2015, a standard was issued that simplifies the accounting for measurement period adjustments associated with a business combination by eliminating the requirement to restate prior period financial statements for measurement period adjustments when measurements were incomplete as of the end of the reporting period covering the business combination. The new guidance requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. It is effective for interim and annual periods beginning after December 15, 2015. This standard is not expected to have a significant impact on our consolidated financial statements or disclosures.
In July 2015, a standard was issued that simplifies the measurement of inventory by requiring certain inventory to be measured at the lower of cost or net realizable value. This will not apply to the portion of our inventory that is measured using the last-in, first-out method. The amendments in this guidance are effective for fiscal years beginning after December 15, 2016 and for interim periods therein, but early application is permitted. This standard is not expected to have a significant impact on our consolidated financial statements or disclosures.
In April 2015, a standard was issued that amends existing guidance to require the presentation of debt issuance costs in the balance sheet as a deduction from the carrying amount of the related debt liability instead of a deferred charge. It is effective for annual reporting periods beginning after December 15, 2015, but early adoption is permitted. This standard is not expected to have a significant impact on our consolidated financial statements or disclosures.
In May 2014, a comprehensive new revenue recognition standard was issued that will supersede nearly all existing revenue recognition guidance. The new guidance introduces a five-step model in which an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance also requires disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. The new standard will become effective for us beginning with the first quarter 2018. We are currently evaluating the new guidance, including possible transition alternatives, to determine the impact it will have on our consolidated financial statements.

2.
Acquisitions
In February 2015, we acquired 100% of the stock of ATDynamics, Inc. ("ATDynamics"), a privately-held company offering innovative aerodynamic products to the commercial trucking industry. ATDynamics is managed as part of our Stemco

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division within the Sealing Products segment. ATDynamics, with operations in Texas and California, is a leading designer and manufacturer of a suite of aerodynamic products engineered to reduce fuel consumption in the global freight transportation industry.
In July 2015, we purchased the Veyance North American air spring business (the "Air Spring Business") through the purchase of 100% of the stock of Veyance's Mexico business and of all of the assets of its U.S. business. The Air Spring Business is a manufacturer of air springs that are used in the suspension systems of commercial vehicles. Following the acquisition, it became part of our Stemco division within the Sealing Products segment. The Air Spring Business manufactures products in its facility in San Luis Potosi, Mexico with a commercial organization in the U.S., Canada and Mexico, and engineering, testing and administrative resources in Fairlawn, Ohio. The addition of the Air Spring Business significantly expands Stemco's presence and scale in the commercial vehicle suspension market.
We paid $ 45.5 million , net of cash acquired, in 2015 for these businesses. The acquisition of ATDynamics includes an agreement that could require us to pay additional consideration based on the future gross profit of ATDynamics during the twelve months subsequent to the acquisition. The range of undiscounted amounts we could pay under the contingent consideration agreement is between $0 and $5.0 million . The fair value of the contingent consideration recognized on the acquisition date was $0.5 million . This amount was subsequently reduced to $0 as of December 31, 2015 based on projected attainment as of the end of the year.
The following table presents the preliminary purchase price allocation of the 2015 acquisitions:
 
(in millions)
Accounts receivable
$
21.7

Inventories
10.4

Property, plant and equipment
8.6

Goodwill
12.8

Other intangible assets
14.7

Other assets
6.5

Liabilities assumed
(29.2
)
 
$
45.5

The purchase price allocations of the recently acquired businesses are subject to the completion of purchase price adjustments pursuant to the acquisition agreements. An additional amount of approximately $6 million is expected to be paid in 2016 based on the finalized and agreed-upon acquisition date balance sheet of the Air Spring Business.
In December 2014, we acquired Fabrico, Inc. ("Fabrico"), a privately-held company offering mission-critical components for the combustion and hot path sections of industrial gas and steam turbines. The business is headquartered in Oxford, Massachusetts with additional facilities in Charlton, Massachusetts and Greenville, South Carolina. The addition of Fabrico significantly expands our presence and scale in the land-based turbine seal and combustion market.
In March 2014, we acquired the remaining interest of the Stemco Crewson LLC joint venture. As a result, we own all of the ownership interests in Stemco Crewson LLC. The joint venture was formed in 2009 with joint venture partner Tramec, LLC to expand our brake product offering to include automatic brake adjusters. The purchase of the remaining interest in the joint venture allows us to accelerate investment in new product development and commercial strategies focused on market share growth for these products.
In March 2014, we acquired the business of Strong-Tight Co. Ltd., a Taiwanese manufacturer and seller of gaskets and industrial sealing products, by acquiring certain assets and assuming certain liabilities of the business. This acquisition adds an established Asian marketing presence and manufacturing facilities from which we can serve the Asian market.
All of the businesses acquired in 2014 are included in our Sealing Products segment. We paid $ 61.9 million in 2014, net of cash acquired, for these businesses. Additionally, the acquisition of Fabrico includes a contingent consideration arrangement that requires additional consideration to be paid based on the future gross profit of Fabrico during the two-years subsequent to the acquisition. The range of undiscounted amounts we could pay under the contingent consideration agreement is between $0 and $7.0 million . The fair value of the contingent consideration recognized on the acquisition date was $1.9 million which is included in other liabilities in the accompanying Consolidated Balance Sheet as of December 31, 2014. This amount was increased to $ 2.3 million as of December 31, 2015 based on projected attainment.

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In January 2013, we acquired certain assets and assumed certain liabilities of a small distributor of industrial seals in Singapore which is managed as part of the Garlock operations in the Sealing Products segment. The acquisition was paid for with $ 2.0 million of cash.
Because the assets, liabilities and results of operations for the above acquisitions are not significant to our consolidated financial position or results of operations, pro forma financial information and additional disclosures are not presented.
3.
Other Income (Expense)
Operating
We incurred $6.6 million , $2.3 million and $6.7 million of restructuring costs during the years ended December 31, 2015 , 2014 and 2013 , respectively.
During 2015 , we conducted a number of restructuring activities throughout our operations, the most significant of which was at our CPI business. In October 2015, we approved a plan to restructure certain operations of our CPI unit in light of the prolonged and significant weakness in the markets served by CPI, particularly the oil and gas markets. The restructuring plan contemplates the closing or sale of operations at the Fort St. John, Grand Prairie, Lac La Biche and Calgary facilities in western Canada, as well as facilities in Brazil, Colombia, New Smyrna Beach, Florida, Rifle, Colorado and other domestic and international sites. Workforce reductions announced as a result of our 2015 restructuring activities totaled 139 salaried administrative and hourly manufacturing positions, most of which had been terminated by December 31, 2015 .
In 2015 we incurred total expense related to the CPI restructuring plan of $3.8 million , including severance expense of $0.6 million , asset write-downs of $2.7 million , lease run-out costs of $0.1 million , and other associated costs of $0.4 million . These costs were incurred at our Engineered Products segment, and were reflected within other (operating) expense in our Consolidated Statements of Operations aside from inventory-related costs, which were reflected in cost of sales. We expect the balance of the costs, $2.7 million to $4.3 million , to be accrued in 2016.
Restructuring reserves at December 31, 2015 , as well as activity during the year, consisted of:
 
Balance  
 December 31, 
 2014
 
Provision
 
Payments
 
Balance  
 December 31, 
 2015
 
(in millions)
Personnel-related costs
$
1.1

 
$
3.0

 
$
(3.8
)
 
$
0.3

Facility relocation and closure costs
0.7

 
0.9

 
(1.6
)
 
—

 
$
1.8

 
$
3.9

 
$
(5.4
)
 
$
0.3


The above-mentioned asset write-downs at CPI did not affect the restructuring reserve liability.

Restructuring reserves at December 31, 2014 , as well as activity during the year, consisted of:
 
Balance  
 December 31, 
 2013
 
Provision
 
Payments
 
Balance  
 December 31, 
 2014
 
(in millions)
Personnel-related costs
$
2.5

 
$
1.3

 
$
(2.7
)
 
$
1.1

Facility relocation and closure costs
0.7

 
1.0

 
(1.0
)
 
0.7

 
$
3.2

 
$
2.3

 
$
(3.7
)
 
$
1.8


Restructuring reserves at December 31, 2013 , as well as activity during the year, consisted of:
 
Balance, December 31, 2012
 
Provision
 
Payments
 
Balance  
 December 31, 
 2013
 
(in millions)
Personnel-related costs
$
0.1

 
$
5.2

 
$
(2.8
)
 
$
2.5

Facility relocation and closure costs
0.8

 
1.5

 
(1.6
)
 
0.7

 
$
0.9

 
$
6.7

 
$
(4.4
)
 
$
3.2


Restructuring costs by reportable segment are as follows:

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Years Ended December 31,
 
2015
 
2014
 
2013
 
(in millions)
Sealing Products
$
0.4

 
$
2.4

 
$
0.9

Engineered Products
6.2

 
(0.1
)
 
3.7

Power Systems
—

 
—

 
2.1

 
$
6.6

 
$
2.3

 
$
6.7


Also included in other operating expense for the years ended December 31, 2015 , 2014 and 2013 was $1.8 million , $1.5 million and $2.4 million , respectively, primarily consisting of legal fees related to the bankruptcy of certain subsidiaries discussed further in Note 19, "Garlock Sealing Technologies LLC and Garrison Litigation Management Group, Ltd."
Non-Operating
In March 2015, we entered into privately negotiated transactions with certain holders of our Convertible Debentures to purchase the debentures. We recognized a $2.8 million pre-tax loss on the transaction. Refer to Note 12, “Long-Term Debt – Convertible Debentures” for additional information about the transaction.
In March 2014 and June 2014, we entered into privately negotiated transactions with certain holders of our Convertible Debentures to exchange them for shares of EnPro's common stock. Additionally, in September 2014, we completed a cash tender to purchase any and all of the remaining Convertible Debentures. These transactions resulted in a $10.0 million loss.
During 2015 , 2014 and 2013 , we recorded expense of $1.4 million , $4.4 million and $6.3 million , respectively, due to environmental reserve increases based on additional information at several specific sites of previously owned businesses. Refer to Note 20, "Commitments and Contingencies - Environmental" for additional information about our environmental liabilities.
In December 2014 we recorded a pre-tax gain of $27.7 million in connection with the sale of substantially all of the assets and transfer of certain liabilities of the GRT business unit. GRT, with a single manufacturing facility in Paragould, Arkansas, manufactures and sells conveyor belts and sheet rubber for many applications across a diversified array of end markets. It had previously been managed as part of the Garlock operations in the Sealing Products segment. The business was sold for $42.3 million , net of transaction expenses, of which $2.9 million is being held in an escrow account for 18 months to fund indemnification payments, if any, to the buyer under the agreement governing the sale. GRT reported net sales of $31.3 million and $30.1 million for the years ended December 31, 2014, and 2013, respectively. Additional disclosures are not presented since the assets, liabilities and results of operations for GRT are not significant to our consolidated financial position or results of operations.
4.
Income Taxes
Income (loss) before income taxes as shown in the Consolidated Statements of Operations consists of the following:
 
Years Ended December 31,
 
2015
 
2014
 
2013
 
(in millions)
Domestic
$
(3.0
)
 
$
(2.4
)
 
$
(4.3
)
Foreign
(15.6
)
 
35.0

 
40.1

Total
$
(18.6
)
 
$
32.6

 
$
35.8


A summary of income tax expense in the Consolidated Statements of Operations is as follows:

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Years Ended December 31,
 
2015
 
2014
 
2013
 
(in millions)
Current:
 
 
 
 
 
Federal
$
(4.0
)
 
$
1.3

 
$
(3.7
)
Foreign
9.8

 
9.7

 
10.0

State
(2.4
)
 
2.9

 
0.4

 
3.4

 
13.9

 
6.7

Deferred:
 
 
 
 
 
Federal
3.6

 
(2.6
)
 
3.3

Foreign
(6.0
)
 
(0.5
)
 
(1.5
)
State
1.3

 
(0.2
)
 
(0.1
)
 
(1.1
)
 
(3.3
)
 
1.7

Total
$
2.3

 
$
10.6

 
$
8.4

 
Income tax benefits recorded directly to additional paid-in capital consist of the following:
 
Years Ended December 31,
 
2015
 
2014
 
2013
 
(in millions)
Stock options exercised and restricted stock units vested
$
(1.8
)
 
$
(0.5
)
 
$
(3.0
)
Reacquisition of Convertible Debentures
—

 
(2.2
)
 
—

 
$
(1.8
)
 
$
(2.7
)
 
$
(3.0
)

Significant components of deferred income tax assets and liabilities at December 31, 2015 and 2014 are as follows:
 
 
2015
 
2014
 
(in millions)
Deferred income tax assets:
 
 
 
Net operating losses and tax credits
$
10.9

 
$
11.9

Accrual for post-retirement benefits other than pensions
3.2

 
4.3

Environmental reserves
6.4

 
7.0

Retained liabilities of previously owned businesses
2.4

 
3.7

Accruals and reserves
6.4

 
5.3

Pension obligations
12.6

 
16.7

Inventories
5.6

 
5.9

Asbestos settlement
11.3

 
11.9

Interest
9.4

 
9.1

Compensation and benefits
13.7

 
11.7

Gross deferred income tax assets
81.9

 
87.5

Valuation allowance
(17.6
)
 
(19.9
)
Total deferred income tax assets
64.3

 
67.6

Deferred income tax liabilities:
 
 
 
Depreciation and amortization
(44.9
)
 
(45.1
)
GST deconsolidation gain
(21.4
)
 
(21.4
)
Total deferred income tax liabilities
(66.3
)
 
(66.5
)
Net deferred tax assets (liabilities)
$
(2.0
)
 
$
1.1


We offset deferred tax assets and liabilities against one another only to the extent they relate to the same tax jurisdiction. If this condition is not satisfied, the balances are classified independently on the balance sheet. As discussed in Note 1,

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"Overview, Basis of Presentation, Significant Accounting Policies and Recently Issued Accounting Guidance," we adopted authoritative guidance that simplifies the presentation of deferred income taxes through requiring that all deferred tax liabilities and assets be classified as noncurrent in a classified balance sheet. This adoption was done on a prospective basis, and prior period presentation was not adjusted. The net deferred tax assets are reflected on the December 31, 2015 and 2014 Consolidated Balance Sheets as follows:
 
2015
 
2014
 
(in millions)
Prepaid expenses and other current assets
$
—

 
$
16.8

Deferred income taxes and income tax receivable
8.7

 
6.0

Accrued expenses
—

 
(0.2
)
Other liabilities (non-current)
(10.7
)
 
(21.5
)
Net deferred tax assets (liabilities)
$
(2.0
)
 
$
1.1


At December 31, 2015 , we had $32.4 million of foreign tax net operating loss carryforwards (tax effect of $9.5 million ) of which $12.2 million expire at various dates beginning in 2016 , and $20.2 million have an indefinite carryforward period. We also had state tax net operating loss carryforwards with a tax effect of $0.5 million which expire at various dates between 2016 through 2033 . These net operating loss carryforwards may be used to offset a portion of future taxable income and, thereby, reduce or eliminate our U.S. federal, state or foreign income taxes otherwise payable.
We determined, based on the available evidence, that it is uncertain whether future taxable income of certain of our foreign subsidiaries will be significant enough or of the correct character to recognize certain of these deferred tax assets. As a result, valuation allowances of $17.6 million and $19.9 million have been recorded as of December 31, 2015 and 2014 , respectively. Valuation allowances primarily relate to certain state and foreign net operating losses and other net deferred tax assets in jurisdictions where future taxable income is uncertain. A portion of the valuation allowance may be associated with deferred tax assets recorded in purchase accounting. In accordance with applicable accounting guidelines, any reversal of a valuation allowance that was recorded in purchase accounting reduces income tax expense.
The effective income tax rate from operations varied from the statutory federal income tax rate as follows:
 
Percent of Pretax Income
Years Ended December 31,
 
2015
 
2014
 
2013
Statutory federal income tax rate
35.0
 %
 
35.0
 %
 
35.0
 %
U.S. taxation of foreign profits, net of foreign tax credits
1.1

 
5.8

 
3.0

Research and employment tax credits
7.7

 
(4.0
)
 
(7.2
)
State and local taxes
4.1

 
5.5

 
7.5

Domestic production activities
5.5

 
(4.8
)
 
—

Nondeductible goodwill impairment
(48.6
)
 
—

 
—

Foreign tax rate differences
(10.2
)
 
(5.9
)
 
(8.5
)
Uncertain tax positions
4.3

 
(2.7
)
 
(5.5
)
Statutory changes in tax rates
1.4

 
—

 
(1.3
)
Valuation allowance
(2.1
)
 
(0.5
)
 
(6.0
)
Nondeductible expenses
(6.6
)
 
4.5

 
3.5

Other items, net
(3.9
)
 
(0.5
)
 
2.9

Effective income tax rate
(12.3
)%
 
32.4
 %
 
23.4
 %

We have not provided for the federal and foreign withholding taxes on approximately $256 million of foreign subsidiaries’ undistributed earnings as of December 31, 2015 , because such earnings are intended to be reinvested indefinitely. Upon repatriation, certain foreign countries impose withholding taxes. The amount of withholding tax that would be payable on remittance of the entire amount would be approximately $2.3 million . Although such earnings are intended to be reinvested indefinitely, any tax liability for undistributed earnings, including withholding taxes, would be negated by the availability of corresponding dividends received deductions and foreign tax credits.

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As of December 31, 2015 and 2014 , we had $1.5 million and $3.1 million , respectively, of gross unrecognized tax benefits. Of the gross unrecognized tax benefit balances as of December 31, 2015 and 2014 , $1.5 million and $3.1 million , respectively, would have an impact on our effective tax rate if ultimately recognized.
We record interest and penalties related to unrecognized tax benefits in income tax expense. In addition to the gross unrecognized tax benefits above, we had $0.1 million and $0.3 million accrued for interest and penalties at December 31, 2015 and 2014 , respectively. Income tax expense for the years ended December 31, 2015 , 2014 and 2013 , includes $0.1 million , $0.1 million and $0.1 million , respectively, for interest and penalties related to unrecognized tax benefits. The amounts listed above for accrued interest do not reflect the benefit of any tax deduction, which might be available if the interest were ultimately paid.
A reconciliation of the beginning and ending amount of the gross unrecognized tax benefits (excluding interest) is as follows:
(in millions)
2015
 
2014
 
2013
Balance at beginning of year
$
3.1

 
$
5.9

 
$
6.3

Additions based on tax positions related to the current year
0.3

 
0.4

 
1.0

Additions for tax positions of prior years
0.2

 
—

 
2.6

Reductions for tax positions of prior years
—

 
(1.5
)
 
(0.8
)
Reductions as a result of a lapse in the statute of limitations
(2.0
)
 
(0.2
)
 
(3.4
)
Reductions as a result of audit settlements
—

 
(1.0
)
 
—

Changes due to fluctuations in foreign currency
(0.1
)
 
(0.5
)
 
0.2

Balance at end of year
$
1.5

 
$
3.1

 
$
5.9


US federal income tax returns after 2011 remain open to examination. We and our subsidiaries are also subject to income tax in multiple state and foreign jurisdictions. Various foreign and state tax returns are currently under examination. The most significant of these include France and Germany. Substantially all significant state, local and foreign income tax returns for the years 2010 and forward are open to examination. We expect that some of these examinations may conclude within the next twelve months, however, the final outcomes are not yet determinable. If these examinations are concluded or effectively settled within the next twelve months, it could reduce the associated gross unrecognized tax benefits by approximately $0.3 million . In addition, another $ 0.2 million in gross unrecognized tax benefits may be recognized within the next twelve months as the applicable statute of limitations expires.

As discussed in Note 1, "Overview, Basis of Presentation, Significant Accounting Policies and Recently Issued Accounting Guidance," the Company has corrected certain prior period errors by revising the relevant prior periods during the fourth quarter of 2015. Certain prior period balances included in this Note 4, "Income Taxes" are presented as corrected.

5.
Earnings (Loss) Per Share
Basic earnings per share is computed by dividing the net income by the applicable weighted-average number of common shares outstanding for the period. Diluted earnings per share is calculated using the weighted-average number of shares of common stock as adjusted for any potentially dilutive shares as of the balance sheet date. The computation of basic and diluted earnings per share is as follows (in millions, except per share data):
 
2015
 
2014
 
2013
Numerator (basic and diluted):
 
 
 
 
 
Net income (loss)
$
(20.9
)
 
$
22.0

 
$
27.4

Denominator:
 
 
 
 
 
Weighted-average shares – basic
22.5

 
23.1

 
20.9

Share-based awards
—

 
0.1

 
0.2

Convertible debentures and related warrants
—

 
2.6

 
2.4

Weighted-average shares – diluted
22.5

 
25.8

 
23.5

Earnings (loss) per share:
 
 
 
 
 
Basic
$
(0.93
)
 
$
0.95

 
$
1.31

Diluted
$
(0.93
)
 
$
0.85

 
$
1.17



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Table of Contents

As discussed further in Note 12, "Long-Term Debt - Convertible Debentures," we previously issued Convertible Debentures. Under the terms of the Convertible Debentures, upon conversion, we settled the par amount of our obligations in cash and the remaining obligations in common shares. Pursuant to applicable accounting guidelines, we include the conversion option effect in diluted earnings per share during such periods when our average stock price exceeded the adjusted conversion price per share. As discussed further in Note 12, "Long-Term Debt - Convertible Debentures," we purchased a portion of our outstanding Convertible Debentures in a privately negotiated transaction in March 2015, and the remaining amount was converted in October 2015.

We used a portion of the net proceeds from the original sale of the Convertible Debentures to enter into call options, consisting of hedge and warrant transactions, which entitled us to purchase shares of our stock from a financial institution at $33.79 per share and entitled the financial institution to purchase shares of our stock from us at $46.78 per share. The warrant transactions had a dilutive effect during such periods that the average price per share of our common stock exceeded the $46.78 per share strike price of the warrants. During the second quarter of 2015, we completed a previously announced agreement with this financial institution to effectively accelerate and offset settlement obligations of the parties under the call options which resulted in a net-share settlement of approximately 0.9 million shares being delivered to us. These shares were immediately retired and are no longer considered outstanding.
In the year ended December 31, 2015 , there was a loss attributable to common shares. There were 0.8 million of potentially dilutive shares excluded from the calculation of diluted earnings per share during those periods since they were antidilutive.

6.
Inventories
 
As of December 31,
 
2015
 
2014
 
(in millions)
Finished products
$
110.2

 
$
101.2

Work in process
25.6

 
22.1

Raw materials and supplies
49.0

 
45.7

 
184.8

 
169.0

Reserve to reduce certain inventories to LIFO basis
(11.3
)
 
(12.8
)
Manufacturing inventories
173.5

 
156.2

Incurred costs related to long-term contracts
10.9

 
9.1

Progress payments related to long-term contracts
(6.0
)
 
(5.6
)
Net balance associated with completed-contract inventories
4.9

 
3.5

Total inventories
$
178.4

 
$
159.7

Incurred costs related to long-term contracts in the table above represent inventoried work in process and finished products related to engine contracts accounted for under the completed-contract method, where costs incurred exceed customer billings.
Refer to Note 7, “Long-Term Contracts” for additional information about incurred costs and progress payments related to long-term contracts.

7.
Long-Term Contracts

See Note 1, " Revenue Recognition " for information regarding engine contracts accounted for under the POC method.

Additional information regarding engine contracts accounted for under the POC method is as follows:

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Table of Contents

 
As of December 31,
 
2015
 
2014
 
(in millions)
Cumulative revenues recognized on uncompleted POC contracts
$
215.0

 
$
198.6

Cumulative billings on uncompleted POC contracts
198.2

 
200.0

 
$
16.8

 
$
(1.4
)

These amounts were included in the accompanying Consolidated Balance Sheets under the following captions:
 
As of December 31,
 
2015
 
2014
 
(in millions)
Accounts receivable (POC revenue recognized in excess of billings)
$
23.5

 
$
6.3

Accrued expenses (billings in excess of POC revenue recognized)
(6.7
)
 
(7.7
)
 
$
16.8

 
$
(1.4
)

Additional information regarding engine contracts accounted for under the completed-contract method is as follows:
 
As of December 31,
 
2015
 
2014
 
(in millions)
Incurred costs relating to long-term contracts
$
0.1

 
$
5.9

Progress payments related to long-term contracts
(1.0
)
 
(10.5
)
Net balance associated with completed-contract inventories
$
(0.9
)
 
$
(4.6
)

Incurred costs related to long-term contracts in the table above represent inventoried work in process and finished products related to engine contracts accounted for under the completed-contract method, where customer billings exceed costs incurred.

Progress payments related to long-term contracts in the table above are either advanced billings or milestone billings to the customer on contracts accounted for under the completed-contract method. Upon shipment of the completed engine, revenue associated with the engine is recognized, and the incurred inventoried costs and progress payments are relieved.
At December 31, 2015 and 2014 , progress payments related to long-term contracts shown above were in excess of incurred costs resulting in net liability balances. As such, the net liability balances are reflected in accrued expenses in the accompanying Consolidated Balance Sheets. Refer to Note 6, “Inventories” for additional information about incurred costs and progress payments related to long-term contracts for which the incurred costs exceeded the progress payments.
In addition to inventoried costs, we also make deposits and progress payments to certain vendors for long lead time manufactured components associated with engine projects. At December 31, 2015 and 2014 , deposits and progress payments for long lead time components totaled $1.8 million and $2.9 million . These deposits and progress payments are classified in prepaid expenses and other current assets in the accompanying Consolidated Balance Sheets.













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Table of Contents

8.
Property, Plant and Equipment
 
 
As of December 31,
 
2015
 
2014
 
(in millions)
Land
$
11.1

 
$
9.0

Buildings and improvements
100.0

 
91.6

Machinery and equipment
362.6

 
358.7

Construction in progress
30.1

 
35.0

 
503.8

 
494.3

Less accumulated depreciation
(292.3
)
 
(295.0
)
Total
$
211.5

 
$
199.3


9.
Goodwill and Other Intangible Assets
The changes in the net carrying value of goodwill by reportable segment for the years ended December 31, 2015 and 2014 are as follows:

 
Sealing
Products
 
Engineered
Products
 
Power Systems
 
Total
 
(in millions)
Goodwill as of December 31, 2013
$
153.7

 
$
59.4

 
$
7.1

 
$
220.2

Foreign currency translation
(2.7
)
 
(3.1
)
 
—

 
(5.8
)
Sale of business
(9.0
)
 
—

 
—

 
(9.0
)
Acquisitions
27.0

 
—

 
—

 
27.0

Goodwill as of December 31, 2014
169.0

 
56.3

 
7.1

 
232.4

Foreign currency translation
(2.1
)
 
(1.1
)
 
—

 
(3.2
)
Impairment
—

 
(46.1
)
 
—

 
(46.1
)
Acquisitions
12.8

 
—

 
—

 
12.8

Goodwill as of December 31, 2015
$
179.7

 
$
9.1

 
$
7.1

 
$
195.9


The goodwill balances reflected above are net of accumulated impairment losses of $27.8 million for the Sealing Products segment as of December 31, 2015 , 2014 and 2013 , $154.8 million for the Engineered Products segment as of December 31, 2015 , and $ 108.7 million of accumulated impairment losses for the Engineered Products segment as of December 31, 2014 and 2013 .


Identifiable intangible assets are as follows:

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Table of Contents

 
As of December 31, 2015
 
As of December 31, 2014
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
(in millions)
Amortized:
 
 
 
 
 
 
 
Customer relationships
$
212.5

 
$
112.0

 
$
213.6

 
$
98.2

Existing technology
63.0

 
26.9

 
53.7

 
22.7

Trademarks
35.3

 
18.4

 
33.8

 
16.7

Other
24.1

 
21.9

 
24.0

 
20.8

 
334.9

 
179.2

 
325.1

 
158.4

Indefinite-Lived:
 
 
 
 
 
 
 
Trademarks
34.7

 
—

 
36.1

 
—

Total
$
369.6

 
$
179.2

 
$
361.2

 
$
158.4


During the year ended December 31, 2015 , we determined $0.9 million of amortized trademarks associated with CPI were impaired and therefore were written off. This amount is included in goodwill and other intangible asset impairment in the accompanying Consolidated Statement of Operations for the year ended December 31, 2015 .

Additionally, in connection with the restructuring activities discussed in Note 3, "Other Income (Expense) - Operating," $1.6 million of customer relationship intangible assets associated with the exited CPI businesses were written off. This amount is included in other (operating) expense in the accompanying Consolidated Statement of Operations for the year ended December 31, 2015 .

Amortization expense for the years ended December 31, 2015 , 2014 and 2013 was $21.9 million , $23.0 million and $24.1 million , respectively.
The estimated amortization expense for those intangible assets for the next five years is as follows (in millions):
2016
$
19.9

2017
$
19.3

2018
$
18.4

2019
$
17.6

2020
$
17.1


10.
Accrued Expenses
 
As of December 31,
 
2015
 
2014
 
(in millions)
Salaries, wages and employee benefits
$
42.8

 
$
43.0

Interest
36.7

 
35.3

Customer advances
8.9

 
13.5

Income and other taxes
10.3

 
8.7

Other
41.9

 
31.1

 
$
140.6

 
$
131.6


11.
Related Party Transactions
The deconsolidation of GST from our financial results, discussed more fully in Note 1, "Summary of Significant Accounting Policies - Investment in GST" and Note 19, "Garlock Sealing Technologies LLC and Garrison Litigation Management Group, Ltd." required certain intercompany indebtedness described below to be reflected on our Consolidated Balance Sheets.

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Table of Contents

As of December 31, 2015 and 2014 , Coltec Finance Company Ltd., a wholly-owned subsidiary of Coltec, had aggregate, short-term borrowings of $24.3 million and $23.6 million , respectively, from GST’s subsidiaries in Mexico and Australia. These unsecured obligations were denominated in the currency of the lending party, and bear interest based on the applicable one-month interbank offered rate for each foreign currency involved.
Effective as of January 1, 2010, Coltec entered into an original issue amount $73.4 million Amended and Restated Promissory Note due January 1, 2017 (the “Coltec Note”) in favor of GST LLC, and our subsidiary Stemco LP entered into an original issue amount $153.8 million Amended and Restated Promissory Note due January 1, 2017, in favor of GST LLC (the “Stemco Note”, and together with the Coltec Note, the “Notes Payable to GST”). The Notes Payable to GST amended and replaced promissory notes in the same principal amounts which were initially issued in March 2005, and which expired on January 1, 2010.
The Notes Payable to GST bear interest at 11%  per annum, of which 6.5% is payable in cash and 4.5% is added to the principal amount of the Notes Payable to GST as payment-in-kind (“PIK”) interest, with interest due on January 31 of each year. In conjunction with the interest payments in 2015 and 2014 , $17.6 million and $16.9 million , respectively, was paid in cash and PIK interest of $12.2 million and $11.7 million , respectively, was added to the principal balance of the Notes Payable to GST. If GST LLC is unable to pay ordinary course operating expenses, under certain conditions, they can require Coltec and Stemco to pay in cash the accrued PIK interest necessary to meet such ordinary course operating expenses, subject to certain caps. The interest due under the Notes Payable to GST may be satisfied through offsets of amounts due under intercompany services agreements pursuant to which we provide certain corporate services, make available access to group insurance coverage to GST, make advances to third party providers related to payroll and certain benefit plans sponsored by GST, and permit employees of GST to participate in certain of our benefit plans.
The Coltec Note is secured by Coltec’s pledge of certain of its equity ownership in specified U.S. subsidiaries. The Stemco Note is guaranteed by Coltec and secured by Coltec’s pledge of its interest in Stemco. The Notes Payable to GST are subordinated to any obligations under our senior secured revolving credit facility described in Note 12, "Long-Term Debt - Revolving Credit Facility".
We regularly transact business with GST through the purchase and sale of products. We also provide services for GST including information technology, supply chain, treasury, accounting and tax administration, legal, and human resources under a support services agreement. GST is included in our consolidated U.S. federal income tax return and certain state combined income tax returns. As the parent of these consolidated tax groups, we are liable for, and pay, income taxes owed by the entire group. We have agreed with GST to allocate group taxes to GST based on the U.S. consolidated tax return regulations and current income tax accounting guidance. This method generally allocates taxes to GST as if it were a separate taxpayer. As a result, we carry an income tax receivable from GST related to this allocation.
Amounts included in our consolidated financial statements arising from transactions with GST include the following:
 
 
 
Consolidated Statements of Operations Caption
 
Years Ended December 31,
Description
 
2015
 
2014
 
2013
 
 
 
 
(in millions)
Sales to GST
 
Net sales
 
$
30.6

 
$
31.1

 
$
24.4

Purchases from GST
 
Cost of sales
 
$
20.7

 
$
24.7

 
$
26.5

Interest expense to GST
 
Interest expense
 
$
31.6

 
$
30.5

 
$
29.1


 
 
Consolidated Balance Sheets Caption
 
As of December 31,
Description
 
2015
 
2014
 
 
 
 
(in millions)
Due from GST
 
Accounts receivable
 
$
16.5

 
$
18.5

Income tax receivable from GST
 
Deferred income taxes and income tax receivable
 
$
100.6

 
$
73.0

Due from GST
 
Other assets
 
$
1.3

 
$
1.1

Due to GST
 
Accounts payable
 
$
8.0

 
$
7.5

Accrued interest to GST
 
Accrued expenses
 
$
31.2

 
$
29.8



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12.
Long-Term Debt
 
As of December 31,
 
2015
 
2014
 
(in millions)
Convertible Debentures
$
—

 
$
22.4

Senior Notes
298.0

 
297.7

Revolving debt
62.2

 
—

Other notes payable
0.8

 
1.0

 
361.0

 
321.1

Less current maturities of long-term debt
0.1

 
22.5

 
$
360.9

 
$
298.6


Convertible Debentures

In October 2005, we issued $172.5 million in aggregate principal amount of Convertible Debentures, net of an original issue discount of $61.3 million . The Convertible Debentures bore interest at the annual rate of 3.9375% , with interest due on April 15 and October 15 of each year, and matured on October 15, 2015. The Convertible Debentures were direct, unsecured and unsubordinated obligations and ranked equal in priority with all unsecured and unsubordinated indebtedness and senior in right of payment to all subordinated indebtedness.
In March 2015, we purchased for cash approximately $21.3 million in aggregate principal amount of Convertible Debentures in a privately negotiated transaction. We paid $44.9 million to complete the transaction of which $23.3 million was allocated to the extinguishment of the liability component and the remaining $21.6 million was allocated to the reacquisition of the associated conversion option. We recognized a $2.8 million pre-tax loss on the transaction ( $1.8 million net of tax) which is included in other income (expense), net in the accompanying Consolidated Statement of Operations for the year ended December 31, 2015.
In the fourth quarter of 2015, we received conversion requests representing all $2.2 million of the remaining Convertible Debentures outstanding. Under the terms of the Debentures, each holder received a cash payment up to the par value of the Convertible Debentures being converted, plus a number of shares of our common stock, determined over a twenty ( 20 ) trading day settlement period. Accordingly, these holders received in November 2015 approximately $2.2 million in cash plus approximately 19,610 shares of our common stock, subject to stock price changes during the remaining settlement period.
Senior Notes
In September 2014, we issued $300.0 million aggregate principal amount of our 5.875% Senior Notes due 2022 (the “Senior Notes”). We issued the notes net of an original issue discount of $2.4 million .
A portion of the net proceeds of the Senior Notes was used to repay outstanding borrowings under our senior secured revolving credit facility, including borrowings made to fund a purchase of the Convertible Debentures in 2014.
The Senior Notes are unsecured, unsubordinated obligations of EnPro and mature on September 15, 2022. Interest on the Senior Notes accrues at a rate of 5.875% per annum and is payable semi-annually in cash in arrears on March 15 and September 15 of each year. The debt discount is being amortized through interest expense until the maturity date resulting in an effective interest rate of 6.0% . The Senior Notes are required to be guaranteed on a senior unsecured basis by each of EnPro’s existing and future direct and indirect domestic subsidiaries that is a borrower under, or guarantees, our indebtedness under the Revolving Credit Facility or guarantees any other Capital Markets Indebtedness (as defined in the indenture governing the Senior Notes) of EnPro or any of the guarantors.
On or after September 15, 2017, we may, on any one or more occasions, redeem all or a part of the Senior Notes at specified redemption prices plus accrued and unpaid interest. In addition, we may redeem a portion of the aggregate principal amount of the Senior Notes before September 15, 2017 with the net cash proceeds from certain equity offerings at a specified redemption price plus accrued and unpaid interest, if any, to, but not including, the redemption date. We may also redeem some or all of the Senior Notes before September 15, 2017 at a redemption price of 100% of the principal amount, plus accrued and unpaid interest, if any, to, but not including, the redemption date, plus a “make whole” premium.
Each holder of the Senior Notes may require us to repurchase some or all of the Senior Notes for cash upon the occurrence of a defined “change of control” event. Our ability to redeem the Senior Notes prior to maturity is subject to certain conditions, including in certain cases the payment of make-whole amounts.

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The indenture governing the Senior Notes includes covenants that restrict our ability to engage in certain activities, including incurring additional indebtedness and paying dividends, subject in each case to specified exceptions and qualifications set forth in the indenture.
Revolving Credit Facility
On August 28, 2014, we amended and restated the agreement governing our senior secured revolving credit facility (the “Credit Facility Amendment”). The Credit Facility Amendment provides for a five year, $300.0 million senior secured revolving credit facility (the “Revolving Credit Facility”). Borrowings under the Revolving Credit Facility bear interest at an annual rate of LIBOR plus 2.00% or base rate plus 1.00% , although the interest rates under the Revolving Credit Facility are subject to incremental increases based on a consolidated total leverage ratio. In addition, a commitment fee accrues with respect to the unused amount of the Revolving Credit Facility.
EnPro and Coltec are the permitted borrowers under the Revolving Credit Facility. Each of our domestic, consolidated subsidiaries (other than GST and their respective subsidiaries, unless they elect to guarantee upon becoming consolidated subsidiaries in the future) are required to guarantee the obligations of the borrowers under the Revolving Credit Facility, and each of our existing domestic, consolidated subsidiaries (which does not include the domestic entities of GST) has entered into the Credit Facility Amendment to provide such a guarantee.
Borrowings under the Revolving Credit Facility are secured by a first priority pledge of certain of our assets. The Credit Facility Amendment contains financial covenants and required financial ratios, including a maximum consolidated total net leverage and a minimum consolidated interest coverage as defined in the agreement. The Credit Facility Amendment contains affirmative and negative covenants which are subject to customary exceptions and qualifications.
The borrowing availability under our Revolving Credit Facility at December 31, 2015 was $228.4 million after giving consideration to $9.4 million of outstanding letters of credit and $ 62.2 million of outstanding borrowings.
Scheduled Principal Payments
Future principal payments on long-term debt are as follows:
 
(in millions)
2016
$
0.1

2017
0.2

2018
0.2

2019
62.3

2020
0.1

Thereafter
300.1

 
$
363.0


The payments for long-term debt shown in the table above reflect the contractual principal amount for the Senior Notes. In the Consolidated Balance Sheets, these amounts are shown net of debt discounts aggregating $2.0 million pursuant to applicable accounting rules.

Debt Issuance Costs
During 2014, we capitalized $7.3 million of debt issuance costs in connection with the amendment to the Revolving Credit Facility and the issuance of the Senior Notes. The capitalized debt issuance costs are amortized to interest expense over the respective lives of the debt instruments.
13.
Fair Value Measurements
Assets and liabilities measured at fair value on a recurring basis are summarized as follows:
 

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Fair Value Measurements as of  
 
December 31, 2015
 
December 31, 2014
 
(in millions)
Assets
 
 
 
Cash equivalents:
 
 
 
Money market
$
—

 
$
117.7

Time deposits
24.2

 
22.8

 
24.2

 
140.5

Deferred compensation assets
5.4

 
5.6

 
$
29.6

 
$
146.1

Liabilities
 
 
 
Deferred compensation liabilities
$
6.6

 
$
7.9

 
$
6.6

 
$
7.9

Our cash equivalents and deferred compensation assets and liabilities are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices.
The carrying values of our significant financial instruments reflected in the Consolidated Balance Sheets approximate their respective fair values, except for the following:
 
December 31, 2015
 
December 31, 2014
 
Carrying
Value
 
Fair
Value
 
Carrying
Value
 
Fair
Value
 
(in millions)
Long-term debt
$
361.0

 
$
360.3

 
$
321.1

 
$
345.3

Notes payable to GST
$
283.2

 
$
281.7

 
$
271.0

 
$
278.3


The fair values for long-term debt are based on quoted market prices, but this would be considered a Level 2 computation because the market is not active. The notes payable to GST computation would be considered Level 2 since it is based on rates available to us for debt with similar terms and maturities.

14.
Pensions and Postretirement Benefits
We have non-contributory defined benefit pension plans covering eligible employees in the United States and several European countries. Salaried employees’ benefit payments are generally determined using a formula that is based on an employee’s compensation and length of service. We closed our defined benefit pension plan for new salaried employees in the United States who joined the Company after January 1, 2006, and, effective January 1, 2007, benefits were frozen for all salaried employees who were not age 40 or older as of December 31, 2006. Hourly employees’ benefit payments are generally determined using stated amounts for each year of service.
Our employees also participate in voluntary contributory retirement savings plans for salaried and hourly employees maintained by us. Under these plans, eligible employees can receive matching contributions up to the first 6% of their eligible earnings. Effective January 1, 2007, those employees whose defined benefit pension plan benefits were frozen receive an additional 2% company contribution each year. We recorded $9.2 million , $8.4 million and $7.4 million in expenses in 2015 , 2014 and 2013 , respectively, for matching contributions under these plans.
Our general funding policy for qualified defined benefit pension plans historically has been to contribute amounts that are at least sufficient to satisfy regulatory funding standards. We made no contribution to our U.S. pension plans during 2015 . During 2014 and 2013 , we contributed $48.5 million and $22.5 million , respectively, in cash to our U.S. pension plans. The 2014 contribution fully funded expected regulatory contributions for 2014. This shift in contribution strategy was precipitated by an increase in the PBGC variable-rate premiums which are assessed on underfunded balances. We anticipate there will be no required funding in 2016 to our U.S. defined benefit pension plans. Additionally, we expect to make total contributions of approximately $0.4 million in 2016 to the foreign pension plans. The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the defined benefit pension plans with accumulated benefit obligations in excess of plan assets were $283.4 million , $275.3 million and $242.5 million at December 31, 2015 , and $291.5 million , $283.8 million and $253.1 million at December 31, 2014 , respectively.

82

We amortize prior service cost and unrecognized gains and losses using the straight-line basis over the average future service life of active participants.
We provide, through non-qualified plans, supplemental pension benefits to a limited number of employees. Certain of our subsidiaries also sponsor unfunded postretirement plans that provide certain health-care and life insurance benefits to eligible employees. The health-care plans are contributory, with retiree contributions adjusted periodically, and contain other cost-sharing features, such as deductibles and coinsurance. The life insurance plans are generally noncontributory. The amounts included in “Other Benefits” in the following tables include the non-qualified plans and the other postretirement plans discussed above.
The following table sets forth the changes in projected benefit obligations and plan assets of our defined benefit pension and other non-qualified and postretirement plans as of and for the years ended December 31, 2015 and 2014 .
 
Pension Benefits
 
Other Benefits
 
2015
 
2014
 
2015
 
2014
 
(in millions)
Change in Projected Benefit Obligations
 
 
 
 
 
 
 
Projected benefit obligations at beginning of year
$
291.5

 
$
246.2

 
$
3.0

 
$
4.7

Service cost
4.9

 
5.2

 
0.1

 
0.1

Interest cost
12.0

 
11.8

 
0.2

 
0.1

Actuarial loss (gain)
(18.1
)
 
46.0

 
(0.4
)
 
(0.2
)
Amendments
—

 
—

 
0.6

 
—

Benefits paid
(9.9
)
 
(16.1
)
 
(0.1
)
 
(1.7
)
Benefit obligations assumed in business combination
5.2

 
—

 
—

 
—

Other
(2.2
)
 
(1.6
)
 
—

 
—

Projected benefit obligations at end of year
283.4

 
291.5

 
3.4

 
3.0


Change in Plan Assets
 
 
 
 
 
 
 
Fair value of plan assets at beginning of year
253.1

 
198.6

 
 
 
 
Actual return on plan assets
(3.8
)
 
22.3

 
 
 
 
Administrative expenses
(0.5
)
 
(0.6
)
 
 
 
 
Benefits paid
(9.9
)
 
(16.1
)
 
 
 
 
Company contributions
0.7

 
48.9

 
 
 
 
Plan assets acquired in business combination
2.9

 
—

 
 
 
 
Fair value of plan assets at end of year
242.5

 
253.1

 
 
 
 
Underfunded Status at End of Year
$
(40.9
)
 
$
(38.4
)
 
$
(3.4
)
 
$
(3.0
)

Amounts Recognized in the Consolidated Balance Sheets
 
 
 
 
 
 
 
Current liabilities
$
(0.2
)
 
$
(0.3
)
 
$
(0.1
)
 
$
(0.1
)
Long-term liabilities
(40.7
)
 
(38.1
)
 
(3.3
)
 
(2.9
)
 
$
(40.9
)
 
$
(38.4
)
 
$
(3.4
)
 
$
(3.0
)

Pre-tax charges recognized in accumulated other comprehensive loss as of December 31, 2015 and 2014 consist of:

83

 
Pension Benefits
 
Other Benefits
 
2015
 
2014
 
2015
 
2014
 
(in millions)
Net actuarial (gain) loss
$
77.1

 
$
80.7

 
$
(0.5
)
 
$
(0.1
)
Prior service cost
1.4

 
1.6

 
0.7

 
0.1

 
$
78.5

 
$
82.3

 
$
0.2

 
$
—


The accumulated benefit obligation for all defined benefit pension plans was $275.3 million and $283.8 million at December 31, 2015 and 2014 , respectively.

The following table sets forth the components of net periodic benefit cost and other changes in plan assets and benefit obligations recognized in other comprehensive income for our defined benefit pension and other non-qualified and postretirement plans for the years ended December 31, 2015 , 2014 and 2013 .
 
 
Pension Benefits
 
Other Benefits
 
2015
 
2014
 
2013
 
2015
 
2014
 
2013
 
(in millions)
Net Periodic Benefit Cost
 
 
 
 
 
 
 
 
 
 
 
Service cost
$
4.9

 
$
5.2

 
$
6.3

 
$
0.1

 
$
0.1

 
$
0.4

Interest cost
12.0

 
11.8

 
10.6

 
0.2

 
0.1

 
0.2

Expected return on plan assets
(18.2
)
 
(16.3
)
 
(13.2
)
 
—

 
—

 
—

Amortization of prior service cost
0.2

 
0.1

 
0.2

 
—

 
—

 
0.1

Amortization of net loss
6.9

 
2.5

 
9.4

 
—

 
—

 
—

Settlement
—

 
—

 
—

 
—

 
—

 
0.1

Deconsolidation of GST
(0.7
)
 
(0.3
)
 
(1.8
)
 
—

 
—

 
—

Net periodic benefit cost
5.1

 
3.0

 
11.5

 
0.3

 
0.2

 
0.8


Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income
 
 
 
 
 
 
 
 
 
 
 
Net loss (gain)
3.3

 
39.9

 
(46.5
)
 
(0.4
)
 
(0.2
)
 
(1.0
)
Prior service cost
—

 
0.5

 
—

 
0.6

 
—

 
—

Amortization of net loss
(6.9
)
 
(2.5
)
 
(9.4
)
 
—

 
—

 
—

Amortization of prior service cost
(0.2
)
 
(0.1
)
 
(0.2
)
 
—

 
—

 
(0.1
)
Other adjustment
(0.1
)
 
(0.3
)
 
—

 
—

 
—

 
(0.1
)
Total recognized in other comprehensive income
(3.9
)
 
37.5

 
(56.1
)
 
0.2

 
(0.2
)
 
(1.2
)
Total Recognized in Net Periodic Benefit Cost and Other Comprehensive Income
$
1.2

 
$
40.5

 
$
(44.6
)
 
$
0.5

 
$
—

 
$
(0.4
)

The estimated net loss and prior service cost for the defined benefit pension plans that will be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year are $6.8 million and $0.1 million , respectively. The estimated net loss for the other defined benefit postretirement plans that will be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $0.1 million .
 

84

 
Pension Benefits
 
Other Benefits
 
2015
 
2014
 
2013
 
2015
 
2014
 
2013
Weighted-Average Assumptions Used to Determine Benefit Obligations at December 31
 
 
 
 
 
 
 
 
 
 
 
Discount rate
4.63
%
 
4.25
%
 
5.0
%
 
4.63
%
 
4.25
%
 
5.0
%
Rate of compensation increase
3.0
%
 
3.0
%
 
3.0
%
 
4.0
%
 
4.0
%
 
N/A

Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost for Years Ended December 31
 
 
 
 
 
 
 
 
 
 
 
Discount rate
4.25
%
 
5.0
%
 
4.0
%
 
4.25
%
 
5.0
%
 
4.0
%
Expected long-term return on plan assets
7.25
%
 
8.0
%
 
8.0
%
 
—

 
—

 
—

Rate of compensation increase
3.0
%
 
3.0
%
 
3.0
%
 
4.0
%
 
4.0
%
 
4.0
%

The discount rate reflects the current rate at which the pension liabilities could be effectively settled at the end of the year. The discount rate was determined using a model, which uses a theoretical portfolio of high quality corporate bonds specifically selected to produce cash flows closely related to how we would settle our retirement obligations. This produced a discount rate of 4.63% at December 31, 2015 . As of the date of these financial statements, there are no known or anticipated changes in our discount rate assumption that will impact our pension expense in 2016 . A 25 basis point decrease (increase) in our discount rate, holding constant our expected long-term return on plan assets and other assumptions, would increase (decrease) pension expense by approximately $1.2 million per year.
The overall expected long-term rate of return on assets was determined based upon weighted-average historical returns over an extended period of time for the asset classes in which the plans invest according to EnPro's current investment policy.
We use the RP-2014 mortality table with the MP-2015 projection scale to value our domestic pension liabilities.
Assumed Health Care Cost Trend Rates at December 31
2015
 
2014
Health care cost trend rate assumed for next year
6.7
%
 
6.9
%
Rate to which the cost trend rate is assumed to decline (the ultimate rate)
5.0
%
 
5.0
%
Year that the rate reaches the ultimate trend rate
2025

 
2024


A one percentage point change in the assumed health-care cost trend rate would have an insignificant impact on net periodic benefit cost and on benefit obligations.
Plan Assets
The asset allocation for pension plans at the end of 2015 and 2014 , and the target allocation for 2016 , by asset category are as follows:
 
Target
Allocation
 
Plan Assets at December 31,
 
2016
 
2015
 
2014
Asset Category
 
 
 
 
 
Equity securities
40
%
 
39
%
 
39
%
Fixed income
60
%
 
61
%
 
61
%
 
100
%
 
100
%
 
100
%

Our investment goal is to maximize the return on assets, over the long term, by investing in equities and fixed income investments while diversifying investments within each asset class to reduce the impact of losses in individual securities. Equity investments include a mix of U.S. large capitalization equities, U.S. small capitalization equities and non-U.S. equities. Fixed income investments include a mix of treasury obligations and high-quality money market instruments. The asset allocation policy is reviewed and any significant variation from the target asset allocation mix is rebalanced periodically. The plans have no direct investments in EnPro common stock.

85

The plans invest exclusively in mutual funds whose holdings are marketable securities traded on recognized markets and, as a result, would be considered Level 1 assets. The investment portfolios of the various funds at December 31, 2015 and 2014 are summarized as follows:
 
 
2015
 
2014
 
(in millions)
Mutual funds – U.S. equity
$
63.5

 
$
66.8

Fixed income treasury and money market
146.4

 
152.5

Mutual funds – international equity
31.8

 
33.0

Cash equivalents
0.8

 
0.8

 
$
242.5

 
$
253.1


Estimated Future Benefit Payments
The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:
 
Pension
Benefits
 
Other
Benefits
 
(in millions)
2016
$
11.5

 
$
0.2

2017
12.4

 
0.2

2018
13.3

 
0.2

2019
14.2

 
0.3

2020
15.2

 
1.0

Years 2021 – 2025
87.9

 
0.9


15.
Shareholders' Equity
In 2015, we adopted a policy under which we intend to declare regular quarterly cash dividends on our common stock, as determined by our board of directors, after taking into account our cash flows, earnings, financial position and other relevant matters. In accordance with this policy, total dividend payments of $18.0 million were made during year ended December 31, 2015 . Cash dividends declared per common share were $0.80 for the year ended December 31, 2015 .
On February 24, 2016 our Board of Directors declared a cash dividend of $0.21 per share payable on March 23, 2016 to shareholders of record at the close of business on March 9, 2016
In February 2015, our board of directors authorized the repurchase of up to $80.0 million of our outstanding common shares. The repurchase plan was completed in April 2015 after purchasing 1.2 million shares at an average price of $66.76 per share.
In October 2015, our board of directors authorized the purchase of up to $50.0 million of our outstanding common shares from time to time. During the remainder of 2015, we repurchased 0.1 million additional shares for $6.0 million . Of this amount, $5.3 million had settled as of December 31, 2015 . The shares were retired upon purchase.
Subsequent to December 31, 2015 , the remaining repurchases noted above settled, and we repurchased an additional 0.2 million shares for $5.7 million .

16.
Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss) by component (after tax) are as follows:

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(in millions)
Unrealized
Translation
Adjustments
 
Pension and
Other
Postretirement
Plans
 
Gains and
Losses on
Cash Flow
Hedges
 
Total
Balance at December 31, 2012
$
41.6

 
$
(64.0
)
 
$
(0.6
)
 
$
(23.0
)
Other comprehensive income before reclassifications
1.0

 
29.7

 
—

 
30.7

Amounts reclassified from accumulated other
comprehensive income (loss)
—

 
6.1

 
0.6

 
6.7

Net current-period other comprehensive income
1.0

 
35.8

 
0.6

 
37.4

Balance at December 31, 2013
42.6

 
(28.2
)
 
—

 
14.4

Other comprehensive loss before reclassifications
(25.6
)
 
(24.5
)
 
—

 
(50.1
)
Amounts reclassified from accumulated other
comprehensive income (loss)
—

 
1.6

 
—

 
1.6

Net current-period other comprehensive loss
(25.6
)
 
(22.9
)
 
—

 
(48.5
)
Balance at December 31, 2014
17.0

 
(51.1
)
 
—

 
(34.1
)
Other comprehensive loss before reclassifications
(21.9
)
 
(1.8
)
 
—

 
(23.7
)
Amounts reclassified from accumulated other
comprehensive income (loss)
—

 
3.7

 
—

 
3.7

Net current-period other comprehensive income (loss)
(21.9
)
 
1.9

 
—

 
(20.0
)
Balance at December 31, 2015
$
(4.9
)
 
$
(49.2
)
 
$
—

 
$
(54.1
)

Reclassifications out of accumulated other comprehensive income (loss) are as follows:
Details about Accumulated Other Comprehensive Income (Loss) Components
 
Amount Reclassified from Accumulated Other Comprehensive Income (Loss)
Affected Statement of Operations Caption
 
 
Years Ended December 31,
 
 
 
2015
 
2014
 
2013
 
 
 
(in millions)
 
 
 
Amortization of pension and other postretirement plans:
 
 
 
 
 
 
 
Actuarial losses
 
$
6.9

 
$
2.5

 
$
9.4

(1)
Prior service costs
 
0.2

 
0.1

 
0.3

(1)
Total before tax
 
7.1

 
2.6

 
9.7

 
Tax benefit
 
(3.4
)
 
(1.0
)
 
(3.6
)
Income tax expense
Net of tax
 
$
3.7

 
$
1.6

 
$
6.1

 
Gains and losses on cash flow hedges:
 
 
 
 
 
 
 
Foreign exchange contracts
 
$
—

 
$
—

 
$
1.0

Cost of sales
Tax benefit
 
—

 
—

 
(0.4
)
Income tax expense
Net of tax
 
$
—

 
$
—

 
$
0.6

 

(1)
These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension cost. (See Note 14, "Pensions and Postretirement Benefits" for additional details).

17.
Equity Compensation Plan
We have an equity compensation plan (the “Plan”) that provides for the delivery of up to 5.2 million shares pursuant to various market and performance-based incentive awards. As of December 31, 2015 , there are 0.4 million shares available for future awards. Our policy is to issue new shares to satisfy share delivery obligations for awards made under the Plan.

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The Plan allows awards of restricted share units to be granted to executives and other key employees. Generally, all share units will vest in three years. Compensation expense related to the restricted share units is based upon the market price of the underlying common stock as of the date of the grant and is amortized over the applicable restriction period using the straight-line method. As of December 31, 2015 , there was $6.6 million of unrecognized compensation cost related to restricted share units expected to be recognized over a weighted-average vesting period of 1.3 years.
Under the terms of the Plan, performance share awards were granted to executives and other key employees during 2015 , 2014 and 2013 . Each grant will vest if EnPro achieves specific financial objectives at the end of each three-year performance period. Additional shares may be awarded if objectives are exceeded, but some or all shares may be forfeited if objectives are not met. Performance shares earned at the end of a performance period, if any, will be paid in actual shares of our common stock, less the number of shares equal in value to applicable withholding taxes if the employee chooses. During the performance period, a grantee receives dividend equivalents accrued (if any) in cash, and shares are forfeited if a grantee terminates employment. Compensation expense related to the performance shares is computed using the market price of the underlying common stock as of the date of the grant and the current achievement level of the specific financial objectives and is recorded using the straight-line method over the applicable performance period. As of December 31, 2015 , there was $1.7 million of unrecognized compensation cost related to nonvested performance share awards that is expected to be recognized over a weighted-average vesting period of 1.5 years.
Restricted shares, with three or four-year restriction periods from the initial grant date were issued in 2014 and 2013 to executives and other key employees. Compensation expense related to the restricted shares is based upon the market price of the underlying common stock as of the date of the grant and is amortized over the applicable restriction period using the straight-line method. As of December 31, 2015 , there was $0.1 million of unrecognized compensation cost related to restricted shares that is expected to be recognized over a weighted-average vesting period of 0.6 years.
A summary of award activity under these plans is as follows:
 
Restricted Share Units
 
Performance Shares
 
Restricted Stock
 
Shares
 
Weighted-
Average
Grant Date
Fair Value
 
Shares
 
Weighted-
Average
Grant Date
Fair  Value
 
Shares
 
Weighted-
Average
Grant Date
Fair  Value
Nonvested at December 31, 2012
302,487

 
$
29.43

 
219,202

 
$
39.52

 
40,584

 
$
37.27

Granted
99,174

 
44.97

 
169,872

 
44.63

 
11,330

 
55.09

Vested
(141,985
)
 
20.93

 
(70,381
)
 
42.30

 
(21,834
)
 
34.04

Forfeited
(24,651
)
 
41.24

 
(40,930
)
 
41.38

 
—

 
—

Achievement level adjustment
—

 
—

 
(10,985
)
 
37.65

 
—

 
—

Shares settled for cash
(18,709
)
 
47.13

 
—

 
—

 
—

 
—

Nonvested at December 31, 2013
216,316

 
41.77

 
266,778

 
41.62

 
30,080

 
46.32

Granted
127,054

 
71.83

 
102,060

 
71.83

 
—

 
—

Vested
(35,142
)
 
42.14

 
(31,091
)
 
37.65

 
(3,750
)
 
39.25

Forfeited
(19,545
)
 
57.19

 
(32,144
)
 
51.90

 
(15,000
)
 
41.47

Achievement level adjustment
—

 
—

 
(78,383
)
 
37.65

 
—

 
—

Shares settled for cash
(19,098
)
 
42.83

 
—

 
—

 
—

 
—

Nonvested at December 31, 2014
269,585

 
54.60

 
227,220

 
55.65

 
11,330

 
55.09

Granted
94,623

 
63.98

 
115,197

 
68.31

 
—

 
—

Vested
(38,457
)
 
37.67

 
(98,230
)
 
44.63

 
—

 
—

Forfeited
(34,157
)
 
59.34

 
(3,398
)
 
60.09

 
—

 
—

Achievement level adjustment
—

 
—

 
(42,387
)
 
44.63

 
—

 
—

Shares settled for cash
(27,563
)
 
37.65

 
—

 
—

 
—

 
—

Nonvested at December 31, 2015
264,031

 
$
61.74

 
198,402

 
$
67.22

 
11,330

 
$
55.09


The number of nonvested performance share awards shown in the table above represents the maximum potential shares to be issued.
Non-qualified and incentive stock options were granted in 2011 and 2008. No stock option has a term exceeding 10 years from the date of grant. All stock options were granted at not less than 100% of fair market value (as defined) on the date of

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grant. As of December 31, 2015 , there was an insignificant amount of unrecognized compensation cost related to nonvested stock options.
The following table provides certain information with respect to stock options as of December 31, 2015 :
Range of Exercise Price
Stock Options
Outstanding
 
Stock Options
Exercisable
 
Weighted
Average
Exercise Price
 
Weighted
Average
Remaining
Contractual Life
Under $40.00
91,318

 
91,318

 
$
34.55

 
2.3
Over $40.00
20,554

 
12,125

 
$
42.24

 
5.1
Total
111,872

 
103,443

 
$
35.45

 
2.6

A summary of option activity under the Plan as of December 31, 2015 , and changes during the year then ended, is presented below:
 
Share
Options
Outstanding
 
Weighted
Average
Exercise
Price
Balance at December 31, 2014
114,239

 
$
36.09

Exercised
(2,367
)
 
42.24

Balance at December 31, 2015
111,872

 
$
35.96


The year-end intrinsic value related to stock options is presented below:
 
As of and for the Years Ended December 31,
(in millions)
2015
 
2014
 
2013
Options outstanding
$
0.9

 
$
3.0

 
$
2.7

Options exercisable
$
0.9

 
$
2.7

 
$
2.3

Options exercised
$
0.1

 
$
0.4

 
$
—

We recognized the following equity-based employee compensation expenses and benefits related to our Plan activity:
 
Years Ended December 31,
(in millions)
2015
 
2014
 
2013
Compensation expense
$
4.1

 
$
9.8

 
$
6.0

Related income tax benefit
$
1.5

 
$
3.7

 
$
2.2


Each non-employee director receives an annual grant of phantom shares equal in value to $90,000 . With respect to certain phantom shares awarded in prior years, we will pay each non-employee director in cash the fair market value of the director's phantom shares upon termination of service as a member of the board of directors. The remaining phantom shares granted will be paid out in the form of one share of our common stock for each phantom share, with the value of any fractional phantom shares paid in cash. Expense recognized in the years ended December 31, 2015 , 2014 and 2013 related to these phantom share grants was $0.7 million , $0.9 million and $1.3 million , respectively. Cash payments of $0.4 million were used to settle phantom shares during 2013 . No cash payments were used to settle phantom shares in 2015 or 2014 .

18.
Business Segment Information
We aggregate our operating businesses into three reportable segments. The factors considered in determining our reportable segments are the economic similarity of the businesses, the nature of products sold or services provided, the production processes and the types of customers and distribution methods. Our reportable segments are managed separately based on these differences.

Our Sealing Products segment designs, manufactures and sells sealing products, including: metallic, non-metallic and composite material gaskets, dynamic seals, compression packing, resilient metal seals, elastomeric seals, hydraulic components, expansion joints, flange sealing and isolation products, pipeline casing spacers/isolators, casing end seals, modular sealing systems for sealing pipeline penetrations, hole forming products, manhole infiltration sealing systems, safety-related

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signage for pipelines, bellows and bellows assemblies, pedestals for semiconductor manufacturing, PTFE products, and heavy duty truck parts used in the wheel-end, braking, suspension, and tire & mileage optimization systems.
Our Engineered Products segment includes operations that design, manufacture and sell self-lubricating, non-rolling metal-polymer, solid polymer and filament wound bearing products, aluminum blocks for hydraulic applications, and precision engineered components and lubrication systems for reciprocating compressors.
Our Power Systems segment designs, manufactures, sells and services heavy-duty, medium-speed diesel, natural gas and dual fuel reciprocating engines.
Segment profit is total segment revenue reduced by operating expenses, restructuring and other costs identifiable with the segment. Corporate expenses include general corporate administrative costs. Expenses not directly attributable to the segments, corporate expenses, net interest expense, gains and 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 EnPro.
Segment operating results and other financial data for the years ended December 31, 2015 , 2014 , and 2013 were as follows:
 
Years Ended December 31,
 
2015
 
2014
 
2013
 
(in millions)
Sales
 
 
 
 
 
Sealing Products
$
705.6

 
$
664.3

 
$
622.9

Engineered Products
297.8

 
357.6

 
356.4

Power Systems
204.6

 
200.1

 
167.6

 
1,208.0

 
1,222.0

 
1,146.9

Intersegment sales
(3.6
)
 
(2.7
)
 
(2.7
)
Total sales
$
1,204.4

 
$
1,219.3

 
$
1,144.2

Segment Profit
 
 
 
 
 
Sealing Products
$
84.3

 
$
85.6

 
$
97.1

Engineered Products
6.4

 
26.8

 
17.6

Power Systems
27.1

 
28.5

 
14.0

Total segment profit
117.8

 
140.9

 
128.7

Corporate expenses
(28.2
)
 
(42.9
)
 
(33.3
)
Goodwill and other intangible asset impairment
(47.0
)
 
—

 
—

Asbestos settlement
—

 
(30.0
)
 
—

Interest expense, net
(52.1
)
 
(44.1
)
 
(44.3
)
Other income (expense), net
(9.1
)
 
8.7

 
(15.3
)
Income (loss) before income taxes
$
(18.6
)
 
$
32.6

 
$
35.8


No customer accounted for 10% or more of net sales in 2015 , 2014 or 2013 .

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Years Ended December 31,
 
2015
 
2014
 
2013
 
(in millions)
Capital Expenditures
 
 
 
 
 
Sealing Products
$
17.0

 
$
19.7

 
$
14.3

Engineered Products
14.8

 
11.8

 
14.0

Power Systems
4.9

 
10.2

 
2.4

Corporate
0.1

 
0.1

 
—

Total capital expenditures
$
36.8

 
$
41.8

 
$
30.7

 
 
 
 
 
 
Depreciation and Amortization Expense
 
 
 
 
 
Sealing Products
$
34.3

 
$
31.0

 
$
30.4

Engineered Products
19.4

 
22.5

 
22.4

Power Systems
4.1

 
3.7

 
3.6

Corporate
0.3

 
0.3

 
0.2

Total depreciation and amortization
$
58.1

 
$
57.5

 
$
56.6


Net Sales by Geographic Area
 
 
 
 
 
United States
$
696.2

 
$
674.1

 
$
620.3

Europe
289.5

 
315.9

 
308.6

Other foreign
218.7

 
229.3

 
215.3

Total
$
1,204.4

 
$
1,219.3

 
$
1,144.2


Net sales are attributed to countries based on location of the customer.
 
As of December 31,
 
2015
 
2014
 
(in millions)
Assets
 
 
 
Sealing Products
$
631.7

 
$
578.3

Engineered Products
231.5

 
308.7

Power Systems
162.2

 
145.6

Corporate
478.1

 
570.1

 
$
1,503.5

 
$
1,602.7


Long-Lived Assets
 
 
 
United States
$
135.2

 
$
130.6

France
24.6

 
27.3

Other Europe
24.2

 
28.5

Other foreign
27.5

 
12.9

Total
$
211.5

 
$
199.3


Corporate assets include all of our cash and cash equivalents, investment in GST, and long-term deferred income taxes. Long-lived assets consist of property, plant and equipment.





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19.
Garlock Sealing Technologies LLC and Garrison Litigation Management Group, Ltd.
On the Petition Date, GST LLC, Anchor and Garrison filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court (the "Bankruptcy Court"). The filings were the initial step in a claims resolution process, which is ongoing. The goal of the process is an efficient and permanent resolution of all pending and future asbestos claims through court approval of a plan of reorganization that will establish a facility to resolve and pay all GST asbestos claims. GST is seeking an order confirming a plan of reorganization that provides for the establishment of such a facility and repayment of creditors in full, and a confirmation hearing is scheduled for August 2016. GST's plan is supported by the court-appointed representative of future asbestos claimants (the "Future Claimants' Representative") but opposed by the official committee representing current asbestos claimants (the "Current Asbestos Claimants' Committee").
In November 2011, GST filed an initial proposed plan of reorganization with the Bankruptcy Court. GST's initial plan called for a trust to be formed, to which GST and affiliates would contribute $200 million and which would be the exclusive remedy for future asbestos personal injury claimants – those whose claims arise after confirmation of the plan. The initial proposed plan provided that each present asbestos personal injury claim (any pending claim or one that arises between the Petition Date and plan confirmation) would be assumed by reorganized GST and resolved either by settlement, pursuant to a matrix contained in the proposed plan or as otherwise agreed, or by payment in full of any final judgment entered after trial in federal court. The initial proposed plan was revised and replaced by GST's first amended proposed plan of reorganization filed in May 2014.
On April 13, 2012, the Bankruptcy Court granted a motion by GST for the Bankruptcy Court to estimate the allowed amount of present and future asbestos claims against GST for mesothelioma, a rare cancer attributed to asbestos exposure, for purposes of determining the feasibility of a proposed plan of reorganization. The estimation trial began on July 22, 2013 and concluded on August 22, 2013.
On January 10, 2014, Bankruptcy Judge George Hodges announced his estimation decision in a 65-page order. Citing with approval the methodology put forth by GST at trial, the judge determined that $125 million is the amount sufficient to satisfy GST's liability for present and future mesothelioma claims. Judge Hodges adopted GST's "legal liability" approach to estimation, focused on the merits of claims, and rejected asbestos claimant representatives' approach, which focused solely on GST's historical settlement history. The judge's liability determination is for mesothelioma claims only. The court has not yet determined amounts for GST's liability for other asbestos claims and for administrative costs that would be required to review and process claims and payments, which will add to the amount.
In his opinion, Judge Hodges wrote, "The best evidence of Garlock's aggregate responsibility is the projection of its legal liability that takes into consideration causation, limited exposure and the contribution of exposures to other products."
The decision validates the positions that GST has been asserting for the more than four years it had been in the Chapter 11 process. Following are several important findings in the opinion:
•
Garlock's products resulted in a relatively low exposure to asbestos to a limited population, and its legal responsibility for causing mesothelioma is relatively de minimis .
•
Chrysotile, the asbestos fiber type used in almost all of Garlock's asbestos products, is far less toxic than other forms of asbestos. The court found reliable and persuasive Garlock's expert epidemiologist, who testified that there is no statistically significant association between low dose chrysotile exposure and mesothelioma.
•
The population that was exposed to Garlock's products was necessarily exposed to far greater quantities of higher potency asbestos from the products of others.
•
The estimates of Garlock's aggregate liability that are based on its historic settlement values are not reliable because those values are infected with the impropriety of some law firms and inflated by the cost of defense.
In June 2014, the Current Asbestos Claimants' Committee filed filed a motion with the Bankruptcy Court asking the court to re-open the estimation process for further discovery and alleging that GST misled the court in various respects during the estimation trial. On December 4, 2014, the Bankruptcy Court denied the Committee's motion to re-open.
In May 2014, GST filed its first amended proposed plan of reorganization. The first amended plan provided $275 million in total funding for (a) present and future asbestos claims against GST that have not been resolved by settlement or verdict prior to the Petition Date, and (b) administrative and litigation costs.

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On January 14, 2015, we announced that GST and we had reached agreement with the Future Claimants' Representative that includes a second amended plan of reorganization. The second 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 second 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 second amended plan, which provides payments to all claimants who have a compensable disease and had meaningful contact with GST asbestos containing products. GST believes that the second amended plan is sufficient to pay all valid claims in full.
The second 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 plan and additional contributions from GST aggregating $77.5 million over the seven years following consummation of the plan) and a litigation fund (which would receive $30 million from GST upon consummation of the plan) to fund the defense and payment of claims of claimants who elect to pursue litigation under the plan rather than accept the settlement option under the 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 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 second amended plan provides that if the actual amount of claims that had been resolved by settlement or verdict prior to the Petition Date that were not paid prior to the Petition Date is less than $10.0 million GST will contribute the difference to the settlement facility. In addition, the second amended plan provides that, during the 40 -year period following confirmation of the plan, GST would, if necessary, 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, and we, believe 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 . Under the plan, EnPro would guarantee GST’s payment of the scheduled $77.5 million of deferred contributions plus accrued interest to the settlement facility and, to the extent they are required, the supplementary contributions to the litigation fund. Additional details of the second amended plan are described below in Note 20, “Commitments and Contingencies - Asbestos - GST’s Second Amended Proposed Plan of Reorganization.”
The second 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 plan. Under the terms of the plan, we would retain 100% of the equity interests of GST LLC. The plan also provides for the extinguishment of all derivative claims against us based on GST asbestos products and operations.
We anticipate that payments under the plan to the settlement facility and litigation fund by GST, which will be paid primarily from GST cash balances and remaining insurance and the payment to the settlement facility by Coltec, will be deductible against U.S. taxes. We plan to seek an IRS determination to that effect.
The Current Asbestos Claimants' Committee and their law firms continue to oppose the second amended plan of reorganization.
On April 10, 2015, the Bankruptcy Court entered an order that approved the disclosure statement for the second amended plan of reorganization, established an asbestos claims bar date and approved procedures for voting and soliciting votes for the second amended plan. The Bankruptcy Court also approved the method for providing notice of the second amended plan and asbestos claims bar date to known and unknown claimants and the form and substances of the notices. Under such order, proofs of claim had to be filed on or before October 6, 2015 for all claims based on asbestos-related diseases diagnosed on or before August 1, 2014 for which lawsuits against any defendant or claims against any trusts were filed on or before August 1, 2014, or be subject to being forever barred, and claimants were required to submit ballots voting on the approval of the second amended plan by October 6, 2015. In addition, proofs of claim for claims arising after August 1, 2014 were permitted to be filed at the claimant's option. Proofs of claim for approximately 180,000 claims were filed by that date, including approximately 10,000 claims alleging mesothelioma. GST believes a large majority of the claims are without merit because GST believes that such claimants will not be able to demonstrate exposure to GST's products or any compensable disease. In addition, based on its preliminary analysis, GST believes that a significant number of the claims were resolved and paid by GST prior to the Petition Date, had been dismissed with prejudice prior to the Petition Date or are time-barred under applicable statutes of limitations, and are therefore invalid. Current claimants or their representatives who filed ballots by the October 6, 2015 voting deadline overwhelmingly voted against approval of the plan; the future claims representative voted in favor of approval of the plan. The

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Bankruptcy Court has scheduled the hearing on confirmation of the second amended plan of reorganization to commence on August 15, 2016.
A hearing is scheduled to be held before the Bankruptcy Court commencing on March 10, 2016 to resolve certain motions for summary judgment filed by GST and the Current Asbestos Claimants’ Committee with regard to the second amended plan of reorganization. The motions address (i) whether compliance with Section 524(g) of the Bankruptcy Code, which includes the requirement that a plan of reorganization be approved by a vote of 75 percent of the asbestos claimants, is the exclusive means for the confirmation of a plan of reorganization that resolves current and future asbestos liability claims, (ii) whether the Future Claimants’ Representative has the authority to vote on behalf of future asbestos claimants on approval of the second amended plan, and (iii) whether asbestos claims are impaired under the second amended plan. A final determination adverse to GST on the first issue listed above or on both the second and third issues would preclude confirmation of the second amended plan. A final determination favorable to GST on these issues would clear this interim obstacle to potential confirmation of the second amended plan following the hearing on the plan scheduled for August 15, 2016.
If the Bankruptcy Court confirms the second amended plan, all present and future asbestos claims against GST will be discharged and an injunction will be entered giving GST permanent protection from future asbestos litigation.
Confirmation and consummation of the plan are subject to a number of risks and uncertainties, including the actions and decisions of creditors and other third parties who have an interest in the bankruptcy proceedings, decisions of the Bankruptcy Court, delays in the confirmation or effective date of a plan of reorganization due to factors beyond GST's or our control, which would result in greater costs and the impairment of value of GST, appeals and other challenges to the plan, and risks and uncertainties affecting GST and Coltec's ability to fund anticipated contributions under the 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. Accordingly, we cannot assure you that GST will be able to obtain Bankruptcy Court approval of its second amended plan of reorganization and the settlement and resolution of claims and related releases of liability embodied therein, and the time period for the resolution of the bankruptcy proceedings is not presently determinable.
GST continues to seek a consensual resolution that will also be acceptable to representatives of current claimants, recognizing that an agreed settlement would provide the best path to certainty and finality through section 524(g) of the Bankruptcy Code, provide for faster and more efficient completion of the case, save significant future costs, and allow for the attainment of complete finality. In January 2016, GST was invited to participate in ongoing negotiations with the Future Claimants’ Representative and the Current Asbestos Claimants’ Committee to resolve the terms of claims resolution procedures that would be an integral part of any potential consensual settlement with both the Future Claimants’ Representative and the Current Asbestos Claimants’ Committee. To permit the parties to continue to focus on negotiation of a potential consensual settlement, GST, the Future Claimants’ Representative and the Current Asbestos Claimants’ Committee agreed to postpone to March 10, 2016 the hearing originally scheduled to be held on January 6, 2016 and re-scheduled to March 1, 2016. There can be no assurance that the current or any future negotiations will result in a settlement among GST and both the Future Claimants’ Representative and the Current Asbestos Claimant’ Committee. However, GST believes that its current course, pursuant to its second amended plan, can also result in a successful reorganization, without support of the Current Asbestos Claimants' Committee and despite the opposition of the current asbestos claimants demonstrated overwhelmingly in the balloting on the plan.
Financial Results
Condensed combined financial information for GST is set forth below, presented on a historical cost basis.







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GST
(Debtor-in-Possession)
Condensed Combined Statements of Operations
Years Ended December 31, 2015 , 2014 and 2013
(in millions)
 
2015
 
2014
 
2013
Net sales
$
217.6

 
$
240.6

 
$
244.8

Cost of sales
137.1

 
146.5

 
145.3

Gross profit
80.5

 
94.1

 
99.5

Operating expenses:
 
 
 
 
 
Selling, general and administrative
43.5

 
47.5

 
41.7

Asbestos-related
0.6

 
(127.2
)
 
2.3

Other
0.3

 
1.6

 
0.5

Total operating expenses
44.4

 
(78.1
)
 
44.5

Operating income
36.1

 
172.2

 
55.0

Interest income, net
32.1

 
31.0

 
29.7

Income before reorganization expenses and income taxes
68.2

 
203.2

 
84.7

Reorganization expenses
(25.6
)
 
(16.5
)
 
(44.6
)
Income before income taxes
42.6

 
186.7

 
40.1

Income tax expense
(16.2
)
 
(72.9
)
 
(18.7
)
Net income
$
26.4

 
$
113.8

 
$
21.4

Comprehensive income
$
17.0

 
$
101.9

 
$
20.8



GST
(Debtor-in-Possession)
Condensed Combined Statements of Cash Flows
Years Ended December 31, 2015 , 2014 and 2013
(in millions)
 
2015
 
2014
 
2013
Net cash flows from operating activities
$
57.7

 
$
63.0

 
$
48.2

Investing activities
 
 
 
 
 
Purchases of property, plant and equipment
(5.3
)
 
(7.0
)
 
(8.7
)
Net payments from loans to affiliates
(5.2
)
 
(3.4
)
 
(12.8
)
Net purchases of held-to-maturity securities
(36.7
)
 
(28.3
)
 
(25.0
)
Other
(0.7
)
 
1.3

 
(0.2
)
Net cash used in investing activities
(47.9
)
 
(37.4
)
 
(46.7
)
Effect of exchange rate changes on cash and cash equivalents
(3.9
)
 
(2.4
)
 
(2.3
)
Net increase (decrease) in cash and cash equivalents
5.9

 
23.2

 
(0.8
)
Cash and cash equivalents at beginning of year
66.0

 
42.8

 
43.6

Cash and cash equivalents at end of year
$
71.9

 
$
66.0

 
$
42.8










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GST
(Debtor-in-Possession)
Condensed Combined Balance Sheets
As of December 31, 2015 and 2014
(in millions)
 
2015
 
2014
Assets :
 
 
 
Current assets
$
406.1

 
$
370.9

Asbestos insurance receivable
62.0

 
80.7

Deferred income taxes
105.6

 
85.6

Notes receivable from affiliate
271.0

 
259.3

Other assets
67.8

 
73.5

Total assets
$
912.5

 
$
870.0

Liabilities and Shareholder’s Equity :
 
 
 
Current liabilities
$
40.5

 
$
42.7

Other liabilities
114.4

 
86.6

Liabilities subject to compromise (A)
339.1

 
339.1

Total liabilities
494.0

 
468.4

Shareholder’s equity
418.5

 
401.6

Total liabilities and shareholder’s equity
$
912.5

 
$
870.0

 
(A)
Liabilities subject to compromise include pre-petition unsecured claims which may be resolved at amounts different from those recorded in the condensed combined balance sheets. Liabilities subject to compromise consist principally of asbestos-related claims. GST has undertaken to project the number and ultimate cost of all present and future bodily injury claims expected to be asserted, based on actuarial principles, and to measure probable and estimable liabilities under generally accepted accounting principles. GST has accrued $ 337.5 million as of December 31, 2015 for asbestos related claims. The accrual consists of total funding consisting of (a) $ 327.5 million for present and future asbestos claims against GST that have not been resolved by settlement prior to the Petition Date plus litigation and administrative expenses, and (b) $10.0 million for claims resolved by enforceable settlement and were not paid prior to the Petition Date and contributions by GST to the settlement facility under the second amended plan to the extent such claims are less than $10.0 million . See Note 20, “Commitments and Contingencies – Asbestos.” 

20.
Commitments and Contingencies
General
A description of environmental, asbestos and other legal matters relating to certain of our subsidiaries is included in this section. In addition to the matters noted herein, we are from time to time subject to, and are presently involved in, other litigation and legal proceedings arising in the ordinary course of business. We believe the outcome of such other litigation and legal proceedings will not have a material adverse effect on our financial condition, results of operations and cash flows. Expenses for administrative and legal proceedings are recorded when incurred.
Environmental
Our facilities and operations are subject to federal, state and local environmental and occupational health and safety requirements of the U.S. and foreign countries. We take a proactive approach in our efforts to comply with environmental, health and safety laws as they relate to our manufacturing operations and in proposing and implementing any remedial plans that may be necessary. We also regularly conduct comprehensive environmental, health and safety audits at our facilities to maintain compliance and improve operational efficiency.
Although we believe past operations were in substantial compliance with the then applicable regulations, we or one or more of our subsidiaries are involved with various remediation activities at 14 sites where the future cost per site for us or our subsidiary is expected to exceed $100,000 . Investigations have been completed for 10 sites and are in progress at the other 4 sites. Our costs at a majority of these sites relate to remediation projects for soil and groundwater contamination at former operating facilities that were sold or closed.

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Our policy is to accrue environmental investigation and remediation costs when it is probable that a liability has been incurred and the amount can be reasonably estimated. The measurement of the liability is based on an evaluation of currently available facts with respect to each individual situation and takes into consideration factors such as existing technology, presently enacted laws and regulations and prior experience in remediation of contaminated sites. Liabilities are established for all sites based on these factors. As assessments and remediation progress at individual sites, these liabilities are reviewed periodically and adjusted to reflect additional technical data and legal information. As of December 31, 2015 and 2014 , we had accrued liabilities of $ 16.8 million and $ 17.3 million , respectively, for estimated future expenditures relating to environmental contingencies. These amounts have been recorded on an undiscounted basis in the Consolidated Balance Sheets. Given the uncertainties regarding the status of laws, regulations, enforcement policies, the impact of other parties potentially being liable, technology and information related to individual sites, we do not believe it is possible to develop an estimate of the range of reasonably possible environmental loss in excess of our recorded liabilities.
During 2013, we accrued a liability of $ 6.3 million related to environmental remediation costs associated with the pre-1983 site ownership and operation of the former Trent Tube facility in East Troy, Wisconsin. The Trent Tube facility was operated by Crucible Materials Corporation from 1983 until its closure in 1998. Crucible Materials Corporation commenced environmental remediation activities at the site in 1999. In connection with the bankruptcy of Crucible Materials Corporation, a trust was established to fund the remediation of the site. We have reviewed the trust's assets and valued them at $ 750,000 for our internal purposes in 2013. During 2013, the Wisconsin Department of Natural Resources first notified us of potential liability for remediation of the site as a potentially responsible party under Wisconsin's “Spill Act” which provides that potentially responsible parties may be jointly and severally liable for site remediation. On April 1, 2015, we entered into a Consent Order with the Wisconsin Department of Natural Resources regarding remediation and, based on our evaluation of the site, believe that the amounts previously reserved are adequate to fulfill our obligations under the order.
Except as described below, we believe that our accruals for specific environmental liabilities are adequate for those liabilities based on currently available information. Actual costs to be incurred in future periods may vary from estimates because of the inherent uncertainties in evaluating environmental exposures due to unknown and changing conditions, changing government regulations and legal standards regarding liability.
Based on our prior ownership of Crucible Steel Corporation a/k/a Crucible, Inc. (“Crucible”), we may have additional contingent liabilities in one or more significant environmental matters. One such matter, which is included in the 14 sites referred to above, is the Lower Passaic River Study Area of the Diamond Alkali Superfund Site in New Jersey. Crucible operated a steel mill abutting the Passaic River in Harrison, New Jersey from the 1930s until 1974, which was one of many industrial operations on the river dating back to the 1800s. Certain contingent environmental liabilities related to this site were retained by Coltec when Coltec sold a majority interest in Crucible Materials Corporation (the successor of Crucible) in 1985. The United States Environmental Protection Agency (the “EPA”) has notified Coltec that it is a potentially responsible party (“PRP”) for Superfund response actions in the lower 17 -mile stretch of the Passaic River known as the Lower Passaic River Study Area. Coltec and approximately 70 of the numerous other PRPs, known as the Cooperating Parties Group, are parties to a May 2007 Administrative Order on Consent with the EPA to perform a Remedial Investigation/Feasibility Study (“RI/FS”) of the contaminants in the Lower Passaic River Study Area. The RI/FS was completed and submitted to the EPA at the end of April 2015. The RI/FS recommends a targeted dredge and cap remedy with monitored natural recovery and adaptive management for the Lower Passaic River Study Area. The cost of such remedy is estimated to be $726 million . Previously, on April 11, 2014, the EPA released its Focused Feasibility Study (the “FFS”) with its proposed plan for remediating the lower eight miles of the Lower Passaic River Study Area. The FFS calls for bank-to-bank dredging and capping of the riverbed of that portion of the river and estimates a range of the present value of aggregate remediation costs of approximately $ 953 million to approximately $ 1.731 billion , although estimates of the costs and the timing of costs are inherently imprecise. The FFS was subject to a 90 -day public comment period, which expired on August 28, 2014, and potential revision, including the adoption of a less extensive remedy, in light of comments that were received. No final allocations of responsibility have been made among the numerous PRPs that have received notices from the EPA, there are numerous identified PRPs that have not yet received PRP notices from the EPA, and there are likely many PRPs that have not yet been identified. Based on our evaluation of the site, during the fourth quarter of 2014 we accrued a liability of $3.5 million related to environmental remediation costs associated with the lower eight miles of the Lower Passaic River Study Area, which is our estimate of the low end of a range of reasonably possible costs, with no estimate within the range being a better estimate than the minimum. Our actual remediation costs could be significantly greater than the $3.5 million we accrued. With respect to the upper nine miles of the Lower Passaic River Study Area, we are unable to estimate a range of reasonably possible costs.
Another such matter involves the Onondaga Lake Superfund Site (the “Onondaga Site”) located near Syracuse, New York. Crucible operated a steel mill facility adjacent to Onondaga Lake from 1911 to 1983. The New York State Department of Environmental Conservation (“NYSDEC”) has notified the Company and Coltec, as well as other parties, demanding reimbursement of unquantified environmental response costs incurred by NYSDEC and the EPA at the Onondaga Site. NYSDEC and EPA have alleged that contamination from the Crucible facility contributed to the need for environmental

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response actions at the Onondaga Site. In addition, Honeywell International Inc. (“Honeywell”), which has undertaken certain remediation activities at the Onondaga Site under the supervision of NYSDEC and the EPA, has informed the Company that it had claims against Coltec related to investigation and remediation at the Onondaga Site. In addition, the Company has received notice from the Natural Resource Trustees for the Onondaga Lake Superfund Site (which are the U. S. Department of Interior, NYSDEC, and the Onondaga Nation) alleging that Coltec is considered to be a potentially responsible party for natural resource damages at the Onondaga Site. We have entered into tolling agreements with NYSDEC, the EPA and Honeywell. At this time, based on limited information we have with respect to estimated remediation costs and the respective allocation of responsibility for remediation among potentially responsible parties, we cannot estimate a reasonably possible range of loss associated with Crucible’s activities that may have affected the Onondaga Site.
Except with respect to specific Crucible environmental matters for which we have accrued a portion of the liability set forth above, including the Lower Passaic River Study Area, we are unable to estimate a reasonably possible range of loss related to any other contingent environmental liability based on our prior ownership of Crucible.
See the section entitled “Crucible Steel Corporation a/k/a Crucible, Inc.” in this footnote for additional information.
In addition to the Crucible environmental matters discussed above, Coltec has received a notice from the EPA asserting that Coltec is a potentially responsible party under CERCLA as the successor to a former operator in 1954 and 1955 of two uranium mines in Arizona. On October 15, 2015, Coltec received another notice from the EPA asserting that Coltec is a potentially responsible party as the successor to the former operator of six additional uranium mines in Arizona. At this time, we have limited information regarding the sites, including confirmation as to whether a predecessor of Coltec operated mines at all of the sites identified by the EPA, and any potential remediation that may be required. As such, we cannot estimate a reasonably possible range of loss associated with cleanup at these sites, however, during the year ended December 31, 2015 , we reserved $1.1 million for the minimum amount of probable loss associated with the matter, including the cost of the investigative work to be conducted at the first two sites identified by the EPA.
Colt Firearms and Central Moloney
We may have contingent liabilities related to divested businesses for which certain of our subsidiaries retained liability or are obligated under indemnity agreements. These contingent liabilities include, but are not limited to, potential product liability and associated claims related to firearms manufactured prior to March 1990 by Colt Firearms, a former operation of Coltec, and for electrical transformers manufactured prior to May 1994 by Central Moloney, another former Coltec operation. We believe that these potential contingent liabilities are not material to our financial condition, results of operation and cash flows. Coltec also has ongoing obligations, which are included in other liabilities in our Consolidated Balance Sheets, with regard to workers’ compensation, retiree medical and other retiree benefit matters that relate to Coltec’s periods of ownership of these operations.
Crucible Steel Corporation a/k/a Crucible, Inc.
Crucible, which was engaged primarily in the manufacture and distribution of high technology specialty metal products, was a wholly owned subsidiary of Coltec until 1983 when its assets and liabilities were distributed to a new Coltec subsidiary, Crucible Materials Corporation. Coltec sold a majority of the outstanding shares of Crucible Materials Corporation in 1985 and divested its remaining minority interest in 2004. Crucible Materials Corporation filed for Chapter 11 bankruptcy protection in May 2009.
In conjunction with the closure of a Crucible plant in the early 1980s, Coltec was required to fund two trusts for retiree medical benefits for union employees at the plant. The first trust (the “ First Benefits Trust”) pays for these retiree medical benefits on an ongoing basis. Coltec has no ownership interest in the First Benefits Trust, and thus the assets and liabilities of this First Benefits Trust are not included in our Consolidated Balance Sheets.
Because of the possibility there could be insufficient funds in the First Benefits Trust, Coltec was previously required to establish and make a contribution to a second trust (the “Back-Up Trust”).  Under the terms of the First Benefits Trust agreement, the trustees retained an actuary to assess the adequacy of the assets in the Benefits Trust in 1995, 2005 and finally in 2015 and, if the actuary determined that the Benefits Trust assets were not adequate to fund the payment of future medical benefits, the Back-Up Trust would be required to contribute additional amounts to the Benefits Trust. All three reports detailed that there were adequate assets in the First Benefits Trust to fund the payment of future benefits, and as a result, the assets in the Back-up Trust reverted to Coltec in 2015. The assets of the First Benefits Trust will not revert to Coltec.
In the third quarter of 2015, we recorded income in connection with a reassessment of the potential liability related to the above-described retiree medical benefits based on the actuarial determination that there is no longer potential liability for any

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shortfalls in the First Benefits Trust, and, accordingly, we reduced the potential liability by $ 2.9 million . The effect of this adjustment is reflected in other nonoperating income (expense) on the accompanying Consolidated Statements of Operations.
We have certain ongoing obligations, which are included in other liabilities in our Consolidated Balance Sheets, including workers’ compensation, retiree medical and other retiree benefit matters, in addition to those mentioned previously related to Coltec’s period of ownership of Crucible. Based on Coltec’s prior ownership of Crucible, we may have certain additional contingent liabilities, including liabilities in one or more significant environmental matters included in the matters discussed in “Environmental” above. We are investigating these matters. Except with respect to those matters for which we have an accrued liability as discussed in "Environmental" above, we are unable to estimate a reasonably possible range of loss related to these contingent liabilities.
Warranties
We provide warranties on many of our products. The specific terms and conditions of these warranties vary depending on the product and the market in which the product is sold. We record a liability based upon estimates of the costs we may incur under our warranties after a review of historical warranty experience and information about specific warranty claims. Adjustments are made to the liability as claims data and historical experience necessitate.
Changes in the carrying amount of the product warranty liability for the years ended December 31, 2015 and 2014 are as follows:
 
2015
 
2014
 
(in millions)
Balance at beginning of year
$
3.5

 
$
3.8

Charges to expense
3.3

 
2.9

Settlements made
(2.0
)
 
(3.2
)
Balance at end of year
$
4.8

 
$
3.5


BorgWarner
A subsidiary of BorgWarner Inc. (“BorgWarner”) has asserted claims against GGB France E.U.R.L. (“GGB France”) with respect to certain bearings supplied by GGB France to BorgWarner and used by BorgWarner in manufacturing hydraulic control units included in motor vehicle automatic transmission units. BorgWarner and GGB France are participating in a technical review before a panel of experts to determine, among other things, whether there were any defects in the bearings and whether any defect caused the damages claimed by BorgWarner, which technical review is a required predicate to the commencement of a legal proceeding for damages. On October 14, 2014, BorgWarner filed a writ of claims with the Commercial Court of Brive-la-Gaillarde in France seeking monetary damages. On December 19, 2014, BorgWarner initiated “fast track” proceedings, which is a French legal process typically used for uncontested claims. On January 30, 2015, GGB France filed a writ of response challenging BorgWarner’s attempt to use the “fast track” process and, on February 4, 2015, GGB France filed a writ of response seeking to stay the proceedings on the merits pending the completion of the technical review. On April 2, 2015, the Commercial Court at Brive-la-Gaillarde rejected BorgWarner's request for "fast track" proceedings. The final report of the expert panel is anticipated to be issued in or around the second quarter of 2016. We believe that GGB France has valid factual and legal defenses to these claims and we are vigorously defending these claims. At this point in the technical review process we are unable to estimate a reasonably possible range of loss related to these claims.
AVL
On December 17, 2014, AVL Powertrain Engineering, Inc. filed a lawsuit against Fairbanks Morse alleging damages in connection with a contract between AVL and Fairbanks Morse pursuant to which AVL conducted engine testing services for certain AVL customers at certain of Fairbanks Morse’s facilities in Beloit, Wisconsin. AVL claims that it was unable to conduct its desired level of engine testing and asserts alternative damages theories based on rescission and lost profits. A trial is scheduled to begin on April 25, 2016 in the United States District Court, Western District of Wisconsin. We are vigorously defending these claims and believe that Fairbanks Morse has valid factual and legal defenses to these claims.
Asbestos
Background on Asbestos-Related Litigation . The historical business operations of GST LLC and 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 in products produced or sold by GST LLC or Anchor, together with products produced and sold by numerous other companies. GST LLC and Anchor manufactured and/or sold industrial sealing products that contained encapsulated asbestos

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fibers. Other of our subsidiaries that manufactured or sold equipment that may have at various times in the past contained asbestos-containing components have also been named in a number of asbestos lawsuits, but only GST LLC and Anchor have ever paid an asbestos claim.
Since the first asbestos-related lawsuits were filed against GST LLC in 1975, GST LLC and Anchor have processed more than 900,000 claims to conclusion, and, together with insurers, have paid over $1.4 billion in settlements and judgments and over $400 million in fees and expenses. Our subsidiaries’ exposure to asbestos litigation and their relationships with insurance carriers have been managed through Garrison.
Subsidiary Chapter 11 Filing and Effect . On the Petition Date, GST LLC, Garrison and Anchor filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code. The filings were the initial step in a claims resolution process, which is ongoing. See Note 19, "Garlock Sealing Technologies LLC and Garrison Litigation Management Group, Ltd." for additional information about this process and its impact on us.
During the pendency of the Chapter 11 proceedings, certain actions proposed to be taken by GST not in the ordinary course of business are subject to approval by the Bankruptcy Court. As a result, during the pendency of these proceedings, we do not have exclusive control over these companies. Accordingly, as required by GAAP, GST was deconsolidated beginning on the Petition Date.
As a result of the initiation of the Chapter 11 proceedings, the resolution of asbestos claims is subject to the jurisdiction of the Bankruptcy Court. The filing of the Chapter 11 cases automatically stayed the prosecution of pending asbestos bodily injury and wrongful death lawsuits, and initiation of new such lawsuits, against GST. Further, the Bankruptcy Court issued an order enjoining plaintiffs from bringing or further prosecuting asbestos products liability actions against affiliates of GST, including EnPro, Coltec and all their subsidiaries, during the pendency of the Chapter 11 proceedings, subject to further order. As a result, except as a result of the resolution of appeals from verdicts rendered prior to the Petition Date and the elimination of claims as a result of information obtained in the Chapter 11 proceedings, the numbers of asbestos claims pending against our subsidiaries have not changed since the Petition Date, and those numbers continue to be as reported in our 2009 Form 10-K and our quarterly reports for the first and second quarters of 2010.
Pending Claims . On the Petition Date, according to Garrison's claim records, there were more than 90,000 total claims pending against GST LLC, of which approximately 5,800 were claims alleging the disease mesothelioma. Mesothelioma is a rare cancer of the protective lining of many of the body’s internal organs, principally the lungs. One cause of mesothelioma is believed to be exposure to asbestos. As a result of asbestos tort reform during the 2000s, most active asbestos-related lawsuits, and a large majority of the amount of payments made by our subsidiaries in the years immediately preceding the Petition Date, have been of claims alleging mesothelioma. In total, GST LLC has paid $ 563.2 million to resolve a total of 15,300 mesothelioma claims, and another 5,700 mesothelioma claims have been dismissed without payment.
In order to estimate the allowed amount for mesothelioma claims against GST, the Bankruptcy Court approved a process whereby all current GST LLC mesothelioma claimants were required to respond to a questionnaire about their claims. Questionnaires were distributed to the mesothelioma claimants identified in Garrison’s claims database. Many of the 5,800 claimants (over 500 ) did not respond to the questionnaire at all; many others (more than 1,900 ) clarified that: claimants do not have mesothelioma, claimants cannot establish exposure to GST products, claims were dismissed, settled or withdrawn, claims were duplicates of other filed claims, or claims were closed or inactive. Still others responded to the questionnaire but their responses were deficient in some material respect. As a result of this process, less than 3,300 claimants presented questionnaires asserting mesothelioma claims against GST LLC as of the Petition Date and many of them either did not establish exposure to GST products or had claims that are otherwise deficient.
Since the Petition Date, many asbestos-related lawsuits have been filed by claimants against other companies in state and federal courts, and many of those claimants might also have included GST LLC as a defendant but for the bankruptcy injunction.
Claims Filed in GST Chapter 11 . Proofs of claim involving approximately 180,000 claims were filed on or prior to October 6, 2015, the Claims Bar Date, in the GST Chapter 11 proceeding. All other potential claims based on asbestos-related diseases diagnosed on or before August 1, 2014 for which lawsuits against any defendant or claims against any trusts were filed on or before August 1, 2014, are subject to being forever barred by order of the Bankruptcy Court. Many of the more than 90,000 pre-petition claims are likely among the approximately 180,000 claims filed in the Chapter 11 case. Approximately 10,000 of the claims filed in the Chapter 11 case allege mesothelioma, many of the pre-petition mesothelioma claims likely among those claims.
The claims filed are being analyzed and discovery will be conducted to determine more about the filed claims. Based on its preliminary analysis, GST believes that a significant number of such claims were resolved and paid by GST prior to the

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Petition Date, had been dismissed with prejudice prior to the Petition Date or are time-barred under applicable statutes of limitations, and are therefore invalid.
Product Defenses . We believe that the asbestos-containing products manufactured or sold by GST could not have been a substantial contributing cause of any asbestos-related disease. The asbestos in the products was encapsulated, which means the asbestos fibers incorporated into the products during the manufacturing process were sealed in binders. The products were also nonfriable, which means they could not be crumbled by hand pressure. The U.S. Occupational Safety and Health Administration, which began generally requiring warnings on asbestos-containing products in 1972, has never required that a warning be placed on products such as GST LLC’s gaskets. Even though no warning label was required, GST LLC included one on all of its asbestos-containing products beginning in 1978. Further, gaskets such as those previously manufactured and sold by GST LLC are one of the few asbestos-containing products still permitted to be manufactured under regulations of the U.S. Environmental Protection Agency. Nevertheless, GST LLC discontinued all manufacture and distribution of asbestos-containing products in the U.S. during 2000 and worldwide in mid-2001.
Appeals . GST LLC has a record of success in trials of asbestos cases, especially before the bankruptcies of many of the historically significant asbestos defendants that manufactured raw asbestos, asbestos insulation, refractory products or other dangerous friable asbestos products. However, it has on occasion lost jury verdicts at trial. GST has consistently appealed when it has received an adverse verdict and has had success in a majority of those appeals.
GST LLC won reversals of adverse verdicts in one of three recent appellate decisions. In September 2011, the United States Court of Appeals for the Sixth Circuit overturned a $ 500,000 verdict against GST LLC that was handed down in 2009 by a Kentucky federal court jury. The federal appellate court found that GST LLC’s motion for judgment as a matter of law should have been granted because the evidence was not sufficient to support a determination of liability. The Sixth Circuit’s chief judge wrote that, “On the basis of this record, saying that exposure to Garlock gaskets was a substantial cause of [claimant’s] mesothelioma would be akin to saying that one who pours a bucket of water into the ocean has substantially contributed to the ocean’s volume.” In May 2011, a three-judge panel of the Kentucky Court of Appeals upheld GST LLC’s $700,000 share of a 2009 jury verdict, which included punitive damages, in a lung cancer case against GST LLC in Kentucky state court. This verdict, which was secured by a bond pending the appeal, was paid in June 2012. In a Kentucky appeal from a 2006 verdict against GST LLC, another Kentucky Court of Appeals panel upheld, in August 2014, GST LLC's share of the verdict and a $600,000 punitive damage award. The verdict against GST LLC totaled $874,000 . This verdict and post-judgment interest were secured by a bond in the amount of $ 1.1 million . The plaintiff in the case agreed to resolve the case, including claims for post-judgment interest, for the amount of the bond and to forgo additional accrued interest on the verdict, and GST LLC agreed to discontinue further appeals. Because we were responsible to the bonding company for the bond amount, our Coltec subsidiary purchased the verdict from the plaintiff in September 2014 for the amount of the $1.1 million bond. As a result, Coltec has a claim against GST LLC for the amount of the judgment, including post-judgment interest.
Insurance Coverage . At December 31, 2015 , we had $80.0 million of insurance coverage we believe is available to cover current and future GST asbestos claims payments and certain expense payments. GST has collected insurance payments totaling $116.6 million since the Petition Date, including $ 21.2 million in 2015. We consider the $80.0 million of available insurance coverage remaining to be of high quality because the insurance policies are written or guaranteed by U.S.-based carriers whose credit rating by S&P is investment grade (BBB-) or better, and whose AM Best rating is excellent (A-) or better. Of the $80.0 million , $43.9 million is allocated to claims that were paid by GST LLC prior to the initiation of the Chapter 11 proceedings and submitted to insurance companies for reimbursement, and the remainder is allocated to pending and estimated future claims. There are specific agreements in place with carriers covering $46.2 million of the remaining available coverage. Based on those agreements and the terms of the policies in place and prior decisions concerning coverage, we believe that all of the $80.0 million of insurance proceeds will ultimately be collected, although there can be no assurance that the insurance companies will make the payments as and when due. The $80.0 million is in addition to the $ 21.2 million collected in 2015. Based on those agreements and policies, some of which define specific annual amounts to be paid and others of which limit the amount that can be recovered in any one year, we anticipate that $ 38.0 million will become collectible at the conclusion of GST’s Chapter 11 proceeding and, assuming the insurers pay according to the agreements and policies, that the following amounts should be collected in the years set out below regardless of when the case concludes:

2016 – $18 million
2017 – $13 million
2018 – $11 million
GST LLC has received $8.6 million of insurance recoveries from insolvent carriers since 2007, including $ 0.5 million in payments received in 2015, and may receive additional payments from insolvent carriers in the future. No anticipated insolvent carrier collections are included in the $80.0 million of anticipated collections. The insurance available to cover current and future asbestos claims is from comprehensive general liability policies that cover Coltec and certain of its other subsidiaries in

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addition to GST LLC for periods prior to 1985 and therefore could be subject to potential competing claims of other covered subsidiaries and their assignees.
Liability Estimate . Our recorded asbestos liability as of the Petition Date was $472.1 million . We based that recorded liability on an estimate of probable and estimable expenditures to resolve asbestos personal injury claims under generally accepted accounting principles, made with the assistance of Garrison and an estimation expert, Bates White, retained by GST LLC’s counsel. The estimate developed was an estimate of the most likely point in a broad range of potential amounts that GST LLC might pay to resolve asbestos claims (by settlement in the majority of the cases except those dismissed or tried) over the ten-year period following the date of the estimate in the state court system, plus accrued but unpaid legal fees. The estimate, which was not discounted to present value, did not reflect GST LLC’s views of its actual legal liability. GST LLC has continuously maintained that its products could not have been a substantial contributing cause of any asbestos disease. Instead, the liability estimate reflected GST LLC’s recognition that most claims would be resolved more efficiently and at a significantly lower total cost through settlements without any actual liability determination.
From the Petition Date through the first quarter of 2014, neither we nor GST endeavored to update the accrual except as necessary to reflect payments of accrued fees and the disposition of cases on appeal. In each asbestos-driven Chapter 11 case that has been resolved previously, the amount of the debtor’s liability has been determined as part of a consensual plan of reorganization agreed to by the debtor, its asbestos claimants and a legal representative for its potential future claimants. GST did not believe that there was a reliable process by which an estimate of such a consensual resolution could be made and therefore believed that there was no basis upon which it could revise the estimate last updated prior to the Petition Date.
Given the Bankruptcy Court's January 2014 decision estimating GST's liability for present and future mesothelioma claims at $ 125 million and GST's filing in May 2014 of its first amended proposed plan of reorganization setting out its intention to fund a plan with total consideration of $ 275 million , GST undertook to revise its estimate of its ultimate expenditures to resolve all present and future asbestos claims against it to be no less than the amounts required under its amended proposed plan. Similarly, while GST believes it to be an unlikely worst case scenario, GST believed its ultimate expenditures to resolve all asbestos claims against it could be no more than the total value of GST. As a result, GST believed that its ultimate asbestos expenditures would be somewhere in that range between those two values and therefore revised its estimate to the low end of the range. Accordingly, at June 30, 2014, GST revised its estimate of its ultimate expenditures to resolve all present and future asbestos claims to $280.5 million , the amount of expenditures to resolve all asbestos claims under that amended plan.
In light of the filing of the second amended proposed plan of reorganization by GST on January 14, 2015, GST undertook to further revise its estimate of ultimate costs to resolve all asbestos claims against it. Under the second amended plan, not less than $367.5 million will be required to fund the resolution of all GST asbestos claims, $30 million of which will be funded by Coltec. As a result, GST believes the low end of the range of values that will be necessary for it to fund to resolve all present and future claims is now $337.5 million . Accordingly, GST has revised its estimate of its ultimate asbestos expenditures to $337.5 million and has recorded its liability at December 31, 2015 at that amount. GST’s estimate of its ultimate asbestos expenditures of $337.5 million does not include any amount with respect to the contingent supplementary contributions to the litigation fund contemplated by the second amended plan because GST believes that initial contributions to the litigation fund may likely be sufficient to fund the litigation and, accordingly, that the low end of a range of reasonably possible loss associated with these contingent supplementary contributions is $0 .
GST's First Amended Proposed Plan of Reorganization . On May 29, 2014, GST filed its amended proposed plan of reorganization and a proposed disclosure statement for such amended plan. The plan provided $ 275 million in total funding for (a) present and future asbestos claims against GST that have not been resolved by settlement or verdict prior to the Petition Date, and (b) administrative and litigation costs. The $ 275 million was to be funded by GST ($ 245 million ) and our subsidiary, Coltec Industries Inc ($ 30 million ), through two facilities - a settlement facility and a litigation facility. Funds contained in the settlement facility and the litigation facility would have provided 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 $ 275 million amount was more than double the $ 125 million that the Bankruptcy Court found to be a reasonable and reliable measure of the amount sufficient to satisfy present and future mesothelioma claims against GST, and was determined based on an economic analysis of the feasibility of the proposed plan. This plan was superseded by GST's second amended proposed plan of reorganization, discussed below.
GST's Second Amended Proposed Plan of Reorganization . On January 14, 2015, we announced that GST and we had reached agreement with the Future Claimants' Representative that includes a second amended proposed plan of reorganization. The Future Claimants' Representative agreed to support, vote for and help GST gain confirmation of the second amended plan of reorganization in exchange for an increase in the funds available for settlements, limited revisions to the criteria and procedures for settlements and a limited funding backstop to the litigation option that the plan offers to claimants who choose

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not to accept the plan’s settlement option. Terms of the second amended proposed plan of reorganization, including the $30 million contribution to be made by Coltec to the settlement facility under the second amended plan and our guarantee of GST's obligations to make contributions to the settlement facility and the litigation fund under the plan after the consummation of the plan, are described above in Note 19, "Garlock Sealing Technologies LLC and Garrison Litigation Management Group, Ltd."
The second amended plan would establish two facilities to resolve unliquidated present and future asbestos claims – a settlement facility and a litigation fund. The settlement facility, administered by an independent trustee, will handle settlement offers under the plan. Claimants will be able to compute their offers from a matrix in the plan that contains objective criteria such as disease, age, whether the injured party left or will leave a spouse, and whether there are dependents. The amounts of the matrix values have been set based on an economic analysis and are designed to ensure that the funding provides future claimants the same recoveries as comparable current claimants.
The settlement facility will provide claimants with both an expedited review option and an individual review option. Under expedited review, a claimant can receive a quick and efficient settlement once he or she provides required evidence of a compensable disease and meaningful exposure to GST asbestos products. Under individual review, a claimant can potentially receive a significantly higher settlement offer if he or she can demonstrate certain additional factors. In order to receive a higher amount than the expedited option offers, claimants or their representatives will have to certify to the claimants’ complete exposure histories and authorize Garrison to investigate and monitor both their tort and trust claims.
Garrison, as reorganized under the plan, will receive a $30 million contribution from GST LLC to maintain and administer the litigation fund separate from the settlement facility. Garrison will manage the litigation of claims from claimants who reject settlement offers from the settlement facility and choose instead to pursue a remedy in court. A case management order will govern the way those claims can be pursued.
Claimants who choose to litigate must file their claims in the Bankruptcy Court in North Carolina. The Bankruptcy Court will oversee discovery and other pre-trial matters before referring cases to the federal district court in Charlotte for trial under the Federal Rules of Evidence. The Charlotte federal court will have discretion about where to send each case for the actual trial. The case management order will also require that claimants identify and disclose all trust claims and provide authorization for Garrison to retrieve all their trust submissions directly from trusts.
The second amended plan includes provisions referred to as the "Parent Settlement" for the resolution and extinguishment of any and all alleged derivative claims against us based on GST asbestos products and entry of an injunction permanently protecting us from the assertion of such claims. As consideration for the Parent Settlement, (a) Coltec will contribute $30 million of the amount proposed to be paid into the settlement facility to pay future claimants, (b) Coltec will fund Anchor’s costs of dissolution (up to $500,000 ), (c) EnPro will guarantee all contributions to the settlement facility and litigation fund by GST after the effective date of the second amended plan, and (d) Coltec and its affiliates will subordinate their interests in certain insurance coverage to GST’s obligations to make payments to the settlement facility and litigation fund after the effective date of the second amended plan. Those provisions are incorporated into the terms of the second amended plan only in the context of the specifics of the plan, which would result in the equity interests of GST LLC being retained by the reconsolidation of GST LLC into the Company and an injunction protecting us from future GST claims. As a result of Coltec’s agreement to fund a contribution of $30 million to the settlement facility pursuant to the second amended plan of reorganization, we recorded a $ 30.0 million charge to establish this liability in our 2014 results.
Confirmation and consummation of the second 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, decisions of the Bankruptcy Court, delays in the confirmation or effective date of a plan of reorganization due to factors beyond GST's or our control, which would result in greater costs and the impairment of value of GST, challenges to confirmation of the plan, including appeals, and risks and uncertainties affecting GST and Coltec's ability to fund anticipated contributions under the 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. Accordingly, we cannot assure you that GST will be able to obtain final approval of its second amended plan of reorganization and the settlement and resolution of claims and related releases of liability embodied therein, and the time period for the resolution of the bankruptcy proceedings is not presently determinable.
Other Commitments
We have a number of operating leases primarily for real estate, equipment and vehicles. Operating lease arrangements are generally utilized to secure the use of assets if the terms and conditions of the lease or the nature of the asset makes the lease arrangement more favorable than a purchase. Future minimum lease payments by year and in the aggregate, under noncancelable operating leases with initial or remaining noncancelable lease terms in excess of one year, consisted of the following at December 31, 2015 (in millions):

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2016
$
10.2

2017
9.0

2018
7.8

2019
6.7

2020
6.3

Thereafter
4.7

Total minimum payments
$
44.7


Net rent expense was $14.3 million , $13.2 million and $15.0 million for the years ended December 31, 2015 , 2014 and 2013 , respectively.

21.
Supplemental Guarantor Financial Information
In September 2014, we completed the offering of our Senior Notes. The Senior Notes are fully and unconditionally guaranteed on an unsecured, unsubordinated, joint and several basis by our existing and future 100% owned direct and indirect domestic subsidiaries, which does not include GST and the domestic subsidiaries of GST, that are each guarantors of our Revolving Credit Facility (collectively, the “Guarantor Subsidiaries”).  Our subsidiaries organized outside of the United States, (collectively, the “Non-Guarantor Subsidiaries”) do not guarantee the Senior Notes. A Guarantor Subsidiary's guarantee is subject to release in certain circumstances, including (i) the sale, disposition, exchange or other transfer (including through merger, consolidation, amalgamation or otherwise) of the capital stock of the subsidiary made in a manner not in violation of the indenture governing the Senior Notes; (ii) the designation of the subsidiary as an “Unrestricted Subsidiary” under the indenture governing the Senior Notes; (iii) the legal defeasance or covenant defeasance of the Senior Notes in accordance with the terms of the indenture; or (iv) the subsidiary ceasing to be a subsidiary of the Company as a result of any foreclosure of any pledge or security interest securing our Revolving Credit Facility or other exercise of remedies in respect thereof.
The following tables present condensed consolidating financial information for EnPro Industries, Inc. (the "Parent"), the Guarantor Subsidiaries on a combined basis, the Non-Guarantor Subsidiaries on a combined basis and the eliminations necessary to arrive at our consolidated results. The consolidating financial information reflects our investments in subsidiaries using the equity method of accounting. These tables are not intended to present our results of operations, cash flows or financial condition for any purpose other than to comply with the specific requirements for subsidiary guarantor reporting.

We have revised our December 31, 2014 Condensed Consolidating Balance Sheet that was presented in our Supplemental Guarantor Financial Information footnote in the SEC Form 10-K for the year ended December 31, 2014 and the SEC Forms 10-Q for the periods ending September 30, 2015, June 30, 2015, and March 31, 2015.  The impact on the Parent's previously issued financial information is a decrease of $ 13.6 million to Investment in subsidiaries and Total shareholders' equity. The impact the Guarantor Subsidiaries' previously issued financial information, as well as the Consolidated column is (i) a $ 12.3 million increase to Other liabilities, (ii) a $ 1.3 million decrease to Other assets, and (iii) a $ 13.6 million decrease to Total shareholders' equity. The presentation of the Non-Guarantor Subsidiaries did not change. The adjustments had no impact on the Condensed Consolidating Statement of Operations, Condensed Consolidating Statement of Comprehensive Income or Condensed Consolidating Statement of Cash Flows for the year ended December 31, 2014. Refer to Note 1, "Overview, Basis of Presentation, Significant Accounting Policies and Recently Issued Accounting Guidance" for more information about this revision.





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ENPRO INDUSTRIES, INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
Year Ended December 31, 2015
(in millions)

 
 
 
Guarantor
 
Non-guarantor
 
 
 
 
 
Parent
 
Subsidiaries
 
Subsidiaries
 
Eliminations
 
Consolidated
Net sales
$
—

 
$
837.8

 
$
428.1

 
$
(61.5
)
 
$
1,204.4

Cost of sales
—

 
591.6

 
278.8

 
(61.5
)
 
808.9

Gross profit
—

 
246.2

 
149.3

 
—

 
395.5

Operating expenses:
 
 
 
 
 
 
 
 
 
Selling, general and administrative
27.6

 
157.1

 
118.1

 
—

 
302.8

Goodwill and other intangible asset impairment
—

 
5.6

 
41.4

 
—

 
47.0

Other
1.8

 
1.2

 
5.1

 
—

 
8.1

Total operating expenses
29.4

 
163.9

 
164.6

 
—

 
357.9

Operating income (loss)
(29.4
)
 
82.3

 
(15.3
)
 
—

 
37.6

Interest expense, net
(13.1
)
 
(38.8
)
 
(0.2
)
 
—

 
(52.1
)
Other expense, net
(2.8
)
 
(1.3
)
 
—

 
—

 
(4.1
)
Income (loss) before income taxes
(45.3
)
 
42.2

 
(15.5
)
 
—

 
(18.6
)
Income tax benefit (expense)
12.1

 
(9.5
)
 
(4.9
)
 
—

 
(2.3
)
Income (loss) before equity in earnings of subsidiaries
(33.2
)
 
32.7

 
(20.4
)
 
—

 
(20.9
)
Equity in earnings of subsidiaries, net of tax
12.3

 
(20.4
)
 
—

 
8.1

 
—

Net income (loss)
$
(20.9
)
 
$
12.3

 
$
(20.4
)
 
$
8.1

 
$
(20.9
)



ENPRO INDUSTRIES, INC.
CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
Year Ended December 31, 2015
(in millions)

 
 
 
Guarantor
 
Non-guarantor
 
 
 
 
 
Parent
 
Subsidiaries
 
Subsidiaries
 
Eliminations
 
Consolidated
Net income
$
(20.9
)
 
$
12.3

 
$
(20.4
)
 
$
8.1

 
$
(20.9
)
Other comprehensive income (loss):
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustments
(21.9
)
 
(21.9
)
 
(21.9
)
 
43.8

 
(21.9
)
Pension and post-retirement benefits adjustment (excluding amortization)
(3.4
)
 
(3.6
)
 
0.5

 
3.1

 
(3.4
)
Amortization of pension and post-retirement benefits included in net income
7.1

 
7.1

 
0.2

 
(7.3
)
 
7.1

Other comprehensive loss, before tax
(18.2
)
 
(18.4
)
 
(21.2
)
 
39.6

 
(18.2
)
Income tax expense related to items of other comprehensive loss
(1.8
)
 
(1.7
)
 
(0.2
)
 
1.9

 
(1.8
)
Other comprehensive loss, net of tax
(20.0
)
 
(20.1
)
 
(21.4
)
 
41.5

 
(20.0
)
Comprehensive loss
$
(40.9
)
 
$
(7.8
)
 
$
(41.8
)
 
$
49.6

 
$
(40.9
)

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ENPRO INDUSTRIES, INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
Year Ended December 31, 2014
(in millions)

 
 
 
Guarantor
 
Non-guarantor
 
 
 
 
 
Parent
 
Subsidiaries
 
Subsidiaries
 
Eliminations
 
Consolidated
Net sales
$
—

 
$
801.4

 
$
456.3

 
$
(38.4
)
 
$
1,219.3

Cost of sales
—

 
555.5

 
285.5

 
(38.4
)
 
802.6

Gross profit
—

 
245.9

 
170.8

 
—

 
416.7

Operating expenses:
 
 
 
 
 
 
 
 
 
Selling, general and administrative
41.1

 
144.5

 
133.9

 
—

 
319.5

Asbestos settlement
—

 
30.0

 
—

 
—

 
30.0

Other
0.8

 
1.2

 
1.8

 
—

 
3.8

Total operating expenses
41.9

 
175.7

 
135.7

 
—

 
353.3

Operating income (loss)
(41.9
)
 
70.2

 
35.1

 
—

 
63.4

Interest income (expense), net
6.6

 
(50.6
)
 
(0.1
)
 
—

 
(44.1
)
Other income (expense)
(10.0
)
 
23.3

 
—

 
—

 
13.3

Income (loss) before income taxes
(45.3
)
 
42.9

 
35.0

 
—

 
32.6

Income tax benefit (expense)
15.3

 
(16.6
)
 
(9.3
)
 
—

 
(10.6
)
Income (loss) before equity in earnings of subsidiaries
(30.0
)
 
26.3

 
25.7

 
—

 
22.0

Equity in earnings of subsidiaries, net of tax
52.0

 
25.7

 
—

 
(77.7
)
 
—

Net income
$
22.0

 
$
52.0

 
$
25.7

 
$
(77.7
)
 
$
22.0




ENPRO INDUSTRIES, INC.
CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
Year Ended December 31, 2014
(in millions)

 
 
 
Guarantor
 
Non-guarantor
 
 
 
 
 
Parent
 
Subsidiaries
 
Subsidiaries
 
Eliminations
 
Consolidated
Net income
$
22.0

 
$
52.0

 
$
25.7

 
$
(77.7
)
 
$
22.0

Other comprehensive income (loss):
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustments
(25.6
)
 
(25.6
)
 
(25.6
)
 
51.2

 
(25.6
)
Pension and post-retirement benefits adjustment (excluding amortization)
(39.9
)
 
(39.9
)
 
(2.4
)
 
42.3

 
(39.9
)
Amortization of pension and post-retirement benefits included in net income
2.6

 
2.6

 
0.1

 
(2.7
)
 
2.6

Other comprehensive loss, before tax
(62.9
)
 
(62.9
)
 
(27.9
)
 
90.8

 
(62.9
)
Income tax benefit related to items of other comprehensive income
14.4

 
14.3

 
0.8

 
(15.1
)
 
14.4

Other comprehensive loss, net of tax
(48.5
)
 
(48.6
)
 
(27.1
)
 
75.7

 
(48.5
)
Comprehensive income
$
(26.5
)
 
$
3.4

 
$
(1.4
)
 
$
(2.0
)
 
$
(26.5
)


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ENPRO INDUSTRIES, INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
Year Ended December 31, 2013
(in millions)
 
 
 
Guarantor
 
Non-guarantor
 
 
 
 
 
Parent
 
Subsidiaries
 
Subsidiaries
 
Eliminations
 
Consolidated
Net sales
$
—

 
$
739.2

 
$
436.7

 
$
(31.7
)
 
$
1,144.2

Cost of sales
—

 
517.5

 
277.1

 
(31.7
)
 
762.9

Gross profit
—

 
221.7

 
159.6

 
—

 
381.3

Operating expenses:
 
 
 
 
 
 
 
 
 
Selling, general and administrative
31.5

 
136.4

 
117.9

 
—

 
285.8

Other
—

 
6.6

 
2.5

 
—

 
9.1

Total operating expenses
31.5

 
143.0

 
120.4

 
—

 
294.9

Operating income (loss)
(31.5
)
 
78.7

 
39.2

 
—

 
86.4

Interest income (expense), net
5.8

 
(49.2
)
 
(0.9
)
 
—

 
(44.3
)
Other expense
—

 
(6.3
)
 
—

 
—

 
(6.3
)
Income (loss) before income taxes
(25.7
)
 
23.2

 
38.3

 
—

 
35.8

Income tax benefit (expense)
7.5

 
(7.5
)
 
(8.4
)
 
—

 
(8.4
)
Income (loss) before equity in earnings of subsidiaries
(18.2
)
 
15.7

 
29.9

 
—

 
27.4

Equity in earnings of subsidiaries, net of tax
45.6

 
29.9

 
—

 
(75.5
)
 
—

Net income
$
27.4

 
$
45.6

 
$
29.9

 
$
(75.5
)
 
$
27.4



ENPRO INDUSTRIES, INC.
CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
Year Ended December 31, 2013
(in millions)
 
 
 
Guarantor
 
Non-guarantor
 
 
 
 
 
Parent
 
Subsidiaries
 
Subsidiaries
 
Eliminations
 
Consolidated
Net income
$
27.4

 
$
45.6

 
$
29.9

 
$
(75.5
)
 
$
27.4

Other comprehensive income (loss):
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustments
1.0

 
1.0

 
9.5

 
(10.5
)
 
1.0

Pension and post-retirement benefits adjustment (excluding amortization)
47.6

 
46.9

 
1.3

 
(48.2
)
 
47.6

Amortization of pension and post-retirement benefits included in net income
9.7

 
9.7

 
—

 
(9.7
)
 
9.7

Realized income from settled cash flow hedges included in net income
1.0

 
1.0

 
—

 
(1.0
)
 
1.0

Other comprehensive income, before tax
59.3

 
58.6

 
10.8

 
(69.4
)
 
59.3

Income tax expense related to items of other comprehensive income
(21.9
)
 
(21.6
)
 
(0.5
)
 
22.1

 
(21.9
)
Other comprehensive income, net of tax
37.4

 
37.0

 
10.3

 
(47.3
)
 
37.4

Comprehensive income
$
64.8

 
$
82.6

 
$
40.2

 
$
(122.8
)
 
$
64.8



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ENPRO INDUSTRIES, INC.
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Year Ended December 31, 2015
(in millions)
 
 
 
Guarantor
 
Non-guarantor
 
 
 
 
 
Parent
 
Subsidiaries
 
Subsidiaries
 
Eliminations
 
Consolidated
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
$
(25.6
)
 
$
77.5

 
$
35.1

 
$
(0.5
)
 
$
86.5

INVESTING ACTIVITIES
 
 
 
 
 
 
 
 
 
Purchases of property, plant and equipment
—

 
(23.0
)
 
(13.8
)
 
—

 
(36.8
)
Payments for capitalized internal-use software
—

 
(4.6
)
 
—

 
—

 
(4.6
)
Acquisitions, net of cash acquired
—

 
(42.4
)
 
(3.1
)
 
—

 
(45.5
)
Other
—

 
0.1

 
0.3

 
—

 
0.4

Net cash used in investing activities
—

 
(69.9
)
 
(16.6
)
 
—

 
(86.5
)
FINANCING ACTIVITIES
 
 
 
 
 
 
 
 
 
Net payments between subsidiaries
178.1

 
(183.9
)
 
5.8

 
—

 
—

Intercompany dividends
—

 
—

 
(0.5
)
 
0.5

 
—

Proceeds from debt
—

 
225.0

 
5.8

 
—

 
230.8

Repayments of debt
(25.5
)
 
(162.9
)
 
(0.6
)
 
—

 
(189.0
)
Repurchase of common stock
(85.3
)
 
—

 
—

 
—

 
(85.3
)
Dividends paid
(18.0
)
 
—

 
—

 
—

 
(18.0
)
Repurchase of convertible debentures conversion option
(21.6
)
 
—

 
—

 
—

 
(21.6
)
Other
(2.1
)
 
—

 
—

 
—

 
(2.1
)
Net cash provided by (used in) financing activities
25.6

 
(121.8
)
 
10.5

 
0.5

 
(85.2
)
Effect of exchange rate changes on cash and cash equivalents
—

 
—

 
(5.6
)
 
—

 
(5.6
)
Net increase (decrease) in cash and cash equivalents
—

 
(114.2
)
 
23.4

 
—

 
(90.8
)
Cash and cash equivalents at beginning of year
—

 
114.9

 
79.3

 
—

 
194.2

Cash and cash equivalents at end of year
$
—

 
$
0.7

 
$
102.7

 
$
—

 
$
103.4



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ENPRO INDUSTRIES, INC.
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Year Ended December 31, 2014
(in millions)
 
 
 
Guarantor
 
Non-guarantor
 
 
 
 
 
Parent
 
Subsidiaries
 
Subsidiaries
 
Eliminations
 
Consolidated
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
$
(25.6
)
 
$
20.3

 
$
38.7

 
$
(1.2
)
 
$
32.2

INVESTING ACTIVITIES
 
 
 
 
 
 
 
 
 
Purchases of property, plant and equipment
(0.1
)
 
(30.0
)
 
(11.7
)
 
—

 
(41.8
)
Payments for capitalized internal-use software
(0.1
)
 
(5.4
)
 
(5.0
)
 
—

 
(10.5
)
Proceeds from sale of business
—

 
39.3

 
—

 
—

 
39.3

Acquisitions, net of cash acquired
—

 
(59.5
)
 
(2.4
)
 
—

 
(61.9
)
Other
—

 
—

 
0.2

 
—

 
0.2

Net cash used in investing activities
(0.2
)
 
(55.6
)
 
(18.9
)
 
—

 
(74.7
)
FINANCING ACTIVITIES
 
 
 
 
 
 
 
 
 
Net payments between subsidiaries
(157.3
)
 
159.7

 
(2.4
)
 
—

 
—

Intercompany dividends
—

 
—

 
(1.2
)
 
1.2

 
—

Proceeds from debt
297.6

 
339.4

 
4.8

 
—

 
641.8

Repayments of debt
(52.0
)
 
(347.0
)
 
(1.4
)
 
—

 
(400.4
)
Debt issuance costs
(5.4
)
 
(1.9
)
 
—

 
—

 
(7.3
)
Repurchase of convertible debentures conversion option
(53.6
)
 
—

 
—

 
—

 
(53.6
)
Other
(3.5
)
 
—

 
—

 
—

 
(3.5
)
Net cash provided by (used in) financing activities
25.8

 
150.2

 
(0.2
)
 
1.2

 
177.0

Effect of exchange rate changes on cash and cash equivalents
—

 
—

 
(4.7
)
 
—

 
(4.7
)
Net increase in cash and cash equivalents
—

 
114.9

 
14.9

 
—

 
129.8

Cash and cash equivalents at beginning of year
—

 
—

 
64.4

 
—

 
64.4

Cash and cash equivalents at end of year
$
—

 
$
114.9

 
$
79.3

 
$
—

 
$
194.2












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ENPRO INDUSTRIES, INC.
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
Year Ended December 31, 2013
(in millions)
 
 
 
Guarantor
 
Non-guarantor
 
 
 
 
 
Parent
 
Subsidiaries
 
Subsidiaries
 
Eliminations
 
Consolidated
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
$
(17.8
)
 
$
61.5

 
$
29.4

 
$
(3.2
)
 
$
69.9

INVESTING ACTIVITIES
 
 
 
 
 
 
 
 
 
Purchases of property, plant and equipment
—

 
(15.4
)
 
(15.3
)
 
—

 
(30.7
)
Payments for capitalized internal-use software
—

 
(6.5
)
 
(2.7
)
 
—

 
(9.2
)
Acquisitions, net of cash acquired
—

 
—

 
(2.0
)
 
—

 
(2.0
)
Other
—

 
0.1

 
0.3

 
—

 
0.4

Net cash used in investing activities
—

 
(21.8
)
 
(19.7
)
 
—

 
(41.5
)
FINANCING ACTIVITIES
 
 
 
 
 
 
 
 
 
Net payments between subsidiaries
22.4

 
(13.1
)
 
(9.3
)
 
—

 
—

Intercompany dividends
—

 
—

 
(3.2
)
 
3.2

 
—

Proceeds from debt
—

 
187.7

 
13.7

 
—

 
201.4

Repayments of debt
—

 
(214.3
)
 
(2.0
)
 
—

 
(216.3
)
Other
(4.6
)
 
—

 
—

 
—

 
(4.6
)
Net cash provided by (used in) financing activities
17.8

 
(39.7
)
 
(0.8
)
 
3.2

 
(19.5
)
Effect of exchange rate changes on cash and cash equivalents
—

 
—

 
1.6

 
—

 
1.6

Net increase in cash and cash equivalents
—

 
—

 
10.5

 
—

 
10.5

Cash and cash equivalents at beginning of year
—

 
—

 
53.9

 
—

 
53.9

Cash and cash equivalents at end of year
$
—

 
$
—

 
$
64.4

 
$
—

 
$
64.4












110
Table of Contents

ENPRO INDUSTRIES, INC.
CONDENSED CONSOLIDATING BALANCE SHEETS
December 31, 2015
(in millions)
 
 
 
Guarantor
 
Non-guarantor
 
 
 
 
 
Parent
 
Subsidiaries
 
Subsidiaries
 
Eliminations
 
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
Current assets
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
—

 
$
0.7

 
$
102.7

 
$
—

 
$
103.4

Accounts receivable, net
0.1

 
153.2

 
59.2

 
—

 
212.5

Intercompany receivables
—

 
8.1

 
11.7

 
(19.8
)
 
—

Inventories
—

 
126.4

 
52.0

 
—

 
178.4

Prepaid expenses and other current assets
13.6

 
11.2

 
9.9

 
(11.1
)
 
23.6

Total current assets
13.7

 
299.6

 
235.5

 
(30.9
)
 
517.9

Property, plant and equipment, net
0.1

 
135.1

 
76.3

 
—

 
211.5

Goodwill
—

 
167.6

 
28.3

 
—

 
195.9

Other intangible assets, net
—

 
162.6

 
27.8

 
—

 
190.4

Investment in GST
—

 
236.9

 
—

 
—

 
236.9

Intercompany receivables
65.8

 
12.7

 
1.4

 
(79.9
)
 
—

Investment in subsidiaries
693.0

 
241.8

 
—

 
(934.8
)
 
—

Other assets
19.5

 
122.0

 
19.3

 
(9.9
)
 
150.9

Total assets
$
792.1

 
$
1,378.3

 
$
388.6

 
$
(1,055.5
)
 
$
1,503.5

LIABILITIES AND EQUITY
 
 
 
 
 
 
 
 
 
Current liabilities
 
 
 
 
 
 
 
 
 
Short-term borrowings from GST
$
—

 
$
—

 
$
24.3

 
$
—

 
$
24.3

Notes payable to GST
—

 
12.2

 
—

 
—

 
12.2

Current maturities of long-term debt
—

 
0.1

 
—

 
—

 
0.1

Accounts payable
2.3

 
59.3

 
39.9

 
—

 
101.5

Intercompany payables
—

 
11.7

 
8.1

 
(19.8
)
 
—

Accrued expenses
17.7

 
89.6

 
44.4

 
(11.1
)
 
140.6

Total current liabilities
20.0

 
172.9

 
116.7

 
(30.9
)
 
278.7

Long-term debt
298.0

 
62.9

 
—

 
—

 
360.9

Notes payable to GST
—

 
271.0

 
—

 
—

 
271.0

Intercompany payables
4.2

 
66.1

 
9.6

 
(79.9
)
 
—

Other liabilities
10.1

 
112.4

 
20.5

 
(9.9
)
 
133.1

Total liabilities
332.3

 
685.3

 
146.8

 
(120.7
)
 
1,043.7

Shareholders’ equity
459.8

 
693.0

 
241.8

 
(934.8
)
 
459.8

Total liabilities and equity
$
792.1

 
$
1,378.3

 
$
388.6

 
$
(1,055.5
)
 
$
1,503.5




111
Table of Contents

ENPRO INDUSTRIES, INC.
CONDENSED CONSOLIDATING BALANCE SHEETS
As of December 31, 2014
(in millions)
 
 
 
Guarantor
 
Non-guarantor
 
 
 
 
 
Parent
 
Subsidiaries
 
Subsidiaries
 
Eliminations
 
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
Current assets
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
—

 
$
114.9

 
$
79.3

 
$
—

 
$
194.2

Accounts receivable, net
—

 
139.1

 
66.1

 
—

 
205.2

Intercompany receivables
—

 
6.3

 
2.1

 
(8.4
)
 
—

Inventories
—

 
103.6

 
56.1

 
—

 
159.7

Prepaid expenses and other current assets
28.7

 
23.4

 
10.0

 
(18.1
)
 
44.0

Total current assets
28.7

 
387.3

 
213.6

 
(26.5
)
 
603.1

Property, plant and equipment, net
0.2

 
130.3

 
68.8

 
—

 
199.3

Goodwill
—

 
159.4

 
73.0

 
—

 
232.4

Other intangible assets
—

 
166.5

 
36.3

 
—

 
202.8

Investment in GST
—

 
236.9

 
—

 
—

 
236.9

Intercompany receivables
240.5

 
6.1

 
3.6

 
(250.2
)
 
—

Investment in subsidiaries
685.6

 
285.6

 
—

 
(971.2
)
 
—

Other assets
17.7

 
96.7

 
20.7

 
(6.9
)
 
128.2

Total assets
$
972.7

 
$
1,468.8

 
$
416.0

 
$
(1,254.8
)
 
$
1,602.7

LIABILITIES AND EQUITY
 
 
 
 
 
 
 
 
 
Current liabilities
 
 
 
 
 
 
 
 
 
Short-term borrowings from GST
$
—

 
$
—

 
$
23.6

 
$
—

 
$
23.6

Notes payable to GST
—

 
11.7

 
—

 
—

 
11.7

Current maturities of long-term debt
22.4

 
0.1

 
—

 
—

 
22.5

Accounts payable
0.5

 
55.2

 
32.1

 
—

 
87.8

Intercompany payables
—

 
2.1

 
6.3

 
(8.4
)
 
—

Accrued expenses
12.3

 
100.1

 
37.3

 
(18.1
)
 
131.6

Total current liabilities
35.2

 
169.2

 
99.3

 
(26.5
)
 
277.2

Long-term debt
297.7

 
0.7

 
0.2

 
—

 
298.6

Notes payable to GST
—

 
259.3

 
—

 
—

 
259.3

Intercompany payables
0.8

 
243.4

 
6.0

 
(250.2
)
 
—

Other liabilities
14.2

 
110.6

 
24.9

 
(6.9
)
 
142.8

Total liabilities
347.9

 
783.2

 
130.4

 
(283.6
)
 
977.9

Temporary equity
1.0

 
—

 
—

 
—

 
1.0

Shareholders’ equity
623.8

 
685.6

 
285.6

 
(971.2
)
 
623.8

Total liabilities and equity
$
972.7

 
$
1,468.8

 
$
416.0

 
$
(1,254.8
)
 
$
1,602.7



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Table of Contents


22.
Subsequent Events

See Note 19 “Garlock Sealing Technologies LLC and Garrison Litigation Management Group Ltd.” regarding our unconsolidated subsidiary GST joining negotiations in January 2016 to seek a potential consensual settlement with both the Current Asbestos Claimants’ Committee and Future Claimants’ Representative to resolve asbestos claims. In order to permit these parties to continue to focus on negotiation of a potential consensual settlement, these parties agreed to a postponement to March 10, 2016 of a Bankruptcy Court hearing that had been scheduled to commence on March 1, 2016.
On February 24, 2016 our Board of Directors declared a cash dividend of $0.21 per share payable on March 23, 2016 to shareholders of record at the close of business on March 9, 2016

23.
Selected Quarterly Financial Data (Unaudited)
 
First Quarter
 
Second Quarter
 
Third Quarter
 
Fourth Quarter
(in millions, except per share data)
2015
 
2014
 
2015
 
2014
 
2015
 
2014
 
2015
 
2014
Net sales
$
277.5

 
$
287.2

 
$
298.4

 
$
313.1

 
$
306.6

 
$
302.6

 
$
321.9

 
$
316.4

Gross profit
$
89.8

 
$
96.5

 
$
101.3

 
$
108.1

 
$
101.4

 
$
106.2

 
$
103.0

 
$
105.9

Net income (loss)
$
(1.6
)
 
$
1.3

 
$
(37.3
)
 
$
8.3

 
$
11.4

 
$
8.6

 
$
6.6

 
$
3.8

Basic earnings (loss) per share
$
(0.07
)
 
$
0.06

 
$
(1.66
)
 
$
0.36

 
$
0.52

 
$
0.36

 
$
0.30

 
$
0.16

Diluted earnings (loss) per share
$
(0.07
)
 
$
0.05

 
$
(1.66
)
 
$
0.32

 
$
0.51

 
$
0.33

 
$
0.30

 
$
0.15



113
Table of Contents

SCHEDULE II
Valuation and Qualifying Accounts
For the Years Ended December 31, 2015 , 2014 and 2013
(in millions)
Allowance for Doubtful Accounts
 
 
Balance,
Beginning
of Year
 
Charge (credit)
to Expense
 
Write-off of
Receivables
 
Other (1)
 
Balance,
End of Year
2015
$
7.0

 
$
(0.2
)
 
$
(1.4
)
 
$
—

 
$
5.4

2014
$
6.0

 
$
2.5

 
$
(1.1
)
 
$
(0.4
)
 
$
7.0

2013
$
5.7

 
$
1.7

 
$
(1.4
)
 
$
—

 
$
6.0

 
(1)
Consists primarily of the effect of changes in currency rates.
Deferred Income Tax Valuation Allowance
 
 
Balance,
Beginning
of Year
 
Charge (credit)
to Expense
 
Expiration of
Net Operating
Losses
 
Other (2)
 
Balance,
End of Year
2015
$
19.9

 
$
0.4

 
$
(0.1
)
 
$
(2.6
)
 
$
17.6

2014
$
17.6

 
$
2.3

 
$
(0.4
)
 
$
0.4

 
$
19.9

2013
$
17.7

 
$
(1.8
)
 
$
(0.1
)
 
$
1.8

 
$
17.6

 
(2)
Consists primarily of the effects of changes in currency rates and statutory changes in tax rates.


114


Exhibit 10.4
ENPRO INDUSTRIES, INC.                
2002 EQUITY COMPENSATION PLAN
(2015 AMENDMENT AND RESTATEMENT)

1.  Purpose.   The purpose of this Plan is to promote the interests of the shareholders by providing stock-based incentives to selected employees and members of the Board of Directors (the “Board”) of EnPro Industries, Inc. (the “Company”) and of any subsidiary corporation of which more than 50% of the voting stock is owned, directly or indirectly, by the Company (“Company Subsidiary”) to align their interests with shareholders and to motivate them to put forth maximum efforts toward the continued growth, profitability and success of the Company. In furtherance of this objective, stock options, performance shares, restricted shares, phantom shares, stock appreciation rights, common stock of the Company (“Common Stock”), and/or other incentive awards may be granted to selected employees (including members of the Board who are employees and/or officers) in accordance with the provisions of this Plan.

This Plan, as amended and restated in 2005, also provides for certain awards to members of the Board who are not employees or former employees of the Company or its subsidiaries within five years after their termination of employment (“Outside Directors”). The awards to Outside Directors are only in the form of phantom shares to be settled in shares of Common Stock. The awards of phantom shares to Outside Directors under this Plan replace awards that would have otherwise been granted under the EnPro Industries, Inc. Outside Directors’ Phantom Shares Plan (the “Phantom Shares Plan”). After the effective date of the 2005 amendment and restatement of this Plan, no further awards were made under the Phantom Shares Plan (although any outstanding awards under the Phantom Shares Plan continue to be administered and paid in accordance with, and subject to, the terms and conditions of the Phantom Shares Plan).

This amendment and restatement of the Plan is subject to the approval of the shareholders of the Company, and shall be effective as of the date on which it is approved by the shareholders of the Company.

2.  Administration.   This Plan is to be administered by the Compensation and Human Resources Committee or any successor committee (the “Committee”) of the Board. The Committee shall consist of at least three members who shall qualify as “independent directors,” as that term is defined under the listing standards of any national securities exchange or securities market on which the Common Stock is then listed or traded.

3.  Authority of the Committee.   The Committee shall have full power and authority, subject to and consistent with the provisions of this Plan, to construe, interpret and administer this Plan. All decisions, actions or interpretations of the Committee shall be final, conclusive and binding on all parties. The Committee shall have full and final authority, in each case subject to and consistent with the provisions of the Plan, to select eligible persons to participate in this Plan; to grant awards; to determine the type and number of awards, the dates on which awards may be exercised and on which the risk of forfeiture or deferral period relating to awards shall lapse or terminate, the acceleration of any such dates, the expiration date of any award, whether, to what extent, and under what circumstances an award may be settled, or the exercise price of an award may be paid, in cash, Common Stock, other awards, or other property, and other terms and conditions of, and all other matters relating to, awards; to prescribe documents evidencing or setting terms of awards (such award documents need not be identical for each participant), amendments thereto, and rules and regulations for the administration of this Plan and amendments thereto (including outstanding awards); to construe and interpret the Plan and award




documents and correct defects, supply omissions or reconcile inconsistencies therein; and to make all other decisions and determinations as the Committee may deem necessary or advisable for the administration of the Plan.

4.  Delegation.   The express grant of any specific power to the Committee, and the taking of any action by the Committee, shall not be construed as limiting any power or authority of the Committee. The Committee may act through subcommittees, including for purposes of perfecting exemptions under Rule 16b-3 or qualifying Awards under Code Section 162(m) as performance-based compensation, in which case the subcommittee shall be subject to and have authority under the charter applicable to the Committee, and the acts of the subcommittee shall be deemed to be acts of the Committee hereunder. The Committee may delegate to the Chief Executive Officer and to other senior officers of the Company the authority to make awards under this Plan with respect to not more than ten percent of the shares authorized under this Plan, pursuant to such conditions and limitations as the Committee may establish, except that only the Committee or a subcommittee comprised solely of two or more “Non-Employee Directors” in accordance with Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) may make awards to participants who are subject to Section 16 of the Exchange Act.

5.  Shares Available For This Plan.   Subject to adjustments made pursuant to Section 21 hereof, the maximum number of shares of Common Stock that shall be available for delivery pursuant to the provisions of this Plan shall be equal to 5,225,000 shares of Common Stock. For purposes of calculating the number of shares of Common Stock available for delivery under this Plan, (i) the grant of a Performance Share Award (as defined in Section 10) or other unit or phantom share award shall be deemed to be equal to the maximum number of shares of Common Stock that may be issued under the award and (ii) where the value of an award is variable on the date it is granted, the value shall be deemed to be the maximum limitation of the award. Awards payable solely in cash will not reduce the number of shares of Common Stock available for awards granted under this Plan. Shares that are potentially deliverable under an award under the Plan that are canceled, expired, forfeited, settled in cash or otherwise terminated without a delivery of such shares to the participant will not be counted as delivered under the Plan and shall be available for awards under this Plan. Shares that have been issued in connection with an award under this Plan that is canceled, forfeited, or settled in cash such that those shares are returned to the Company shall be available for awards under this Plan. Shares that are issued or issuable under this Plan that are withheld from an award or separately surrendered by the participant in payment of any exercise price or taxes relating to such an Award shall be deemed to constitute shares delivered to the Participant and will not be available for future awards under this Plan. With respect to SARs (as defined in Section 13), all of the shares of Common Stock for which the SAR is exercised (that is, shares actually issued pursuant to a SAR, as well as shares that represent payment of the exercise price) will cease to be available for future awards under this Plan.

6.  Limitation On Awards.   Subject to adjustments made pursuant to Section 21 hereof, (a) no individual employee may receive awards under this Plan with respect to more than 500,000 shares in any calendar year, and (b) the maximum number of shares of Common Stock that may be issued pursuant to options designated as Incentive Stock Options (as defined in Section 9) shall be 1,000,000 shares.

7.  Term.   No awards may be granted under this Plan after February 10, 2019.

8.  Eligibility.   Awards under this Plan may be made to any salaried, full-time employee of the Company or any Company Subsidiary, and to Outside Directors, as provided in Section 15. Except as provided in Section 15, directors who are not full-time employees are not eligible to participate in this Plan.


2


9.  Stock Options.   The Committee may, in its discretion, from time to time grant to eligible employees options to purchase Common Stock, at a price not less than 100% of the fair market value of the Common Stock on the date of grant (the “option price”), subject to the conditions set forth in this Plan. The Committee, at the time of granting to any employee an option to purchase shares under this Plan, shall fix the terms and conditions upon which such option may be exercised, and may designate options as incentive stock options (“Incentive Stock Options”) pursuant to Section 422 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”) or any other statutory stock option that may be permitted under the Internal Revenue Code from time to time, provided, however that (i) the date on which such options shall expire, if not exercised, may not be later than ten years after the date of grant of the option, (ii) the terms and conditions of Incentive Stock Options must be in accordance with the qualification requirements of the Internal Revenue Code and (iii) the provisions of any other statutory stock option permitted under the Internal Revenue Code must be consistent with applicable Internal Revenue Code requirements.

Within the foregoing limitations, the Committee shall have the authority in its discretion to specify all other terms and conditions relating to stock options, including but not limited to provisions for the exercise of options in installments, the time limits during which options may be exercised, and in lieu of payment in cash, the exercise in whole or in part of options by tendering Common Stock owned by the employee, valued at the fair market value on the date of exercise or other acceptable forms of consideration equal in value to the option price. The Committee may, in its discretion, issue rules or conditions with respect to utilization of Common Stock for all or part of the option price, including limitations on the pyramiding of shares.

10.  Performance Share Awards.   The Committee may make awards (“Performance Share Awards”) in Common Stock or phantom shares subject to conditions established by the Committee that may include attainment of specific Performance Objectives (as defined below). Performance Share Awards may include the awarding of additional shares upon attainment of the specified Performance Objectives. Any Performance Share Award which is conditioned upon attainment of specific Performance Objectives shall have a minimum performance period of one year, except in the case of death or disability and except as otherwise provided pursuant to Section 29.

11.  Performance Objectives.   Performance objectives that may be used under this Plan include total sales, sales growth (with or excluding acquisitions), revenue-based measures for particular products, product lines or product groups, net income (before or after asbestos charges and/or other selected items), earnings per share of Common Stock (before or after asbestos and/or other selected items), pretax income (before or after asbestos charges and/or other selected items), consolidated operating income (pre or post-tax and before or after asbestos charges and/or other selected items), segment operating income (pre or post-tax and before or after asbestos charges and/or other selected items), earnings before interest and taxes (before or after asbestos charges and/or other selected items), earnings before interest, taxes, depreciation and amortization (before or after asbestos charges and/or other selected items), free cash flow (pre or post-tax and before or after asbestos charges and/or other selected items), asbestos-related cash outflows (or changes in asbestos-related cash outflow), new asbestos commitments (or changes in new asbestos commitments), return on equity, assets, investment, invested capital, capital, total or net capital employed, or sales (pre or post-tax and before or after asbestos charges and/or other selected items), cash flow return on investment, total shareholder return, Common Stock price increases, total business return (before or after asbestos charges and/or other selected items), economic value added or similar “after cost of capital” measures, return on sales or margin rate, in total or for a particular product, product line or product group, working capital (or any of its components or related metrics), working capital improvement, market share, measures of customer satisfaction (including survey results or other

3


measures of satisfaction), safety (determined by reference to recordable or lost time rates, first aids, near misses or a combination of two or more such measures or other measures), measures of operating efficiency such as productivity, cost of non-conformance, cost of quality, on time delivery and efficiency ratio and strategic objectives with specifically identified areas of emphasis such as cost reduction, acquisition assimilation synergies, acquisitions or organization restructuring.

The performance objectives established by the Committee are intended to satisfy the “objective compensation formula” requirements of Treasury Regulations Section 1.162-27(e)(2). To the degree consistent with Section 162(m) of the Internal Revenue Code, or any successor section thereto (the “Code”), the Committee may adjust, modify or amend the above criteria, either in establishing any performance objective or in determining the extent to which any performance objective has been achieved. In particular, the Committee shall have the authority to make equitable adjustments in the criteria where necessary (i) in response to changes in applicable laws or regulations, (ii) to account for items of gain, loss, or expense that are related to the disposal (or acquisition) of a business or change in accounting principles that was not anticipated at the time an award was made, (iii) to account for adjustments in expense due to re-measurement of pension benefits, (iv) to remove the effect of charges for asbestos, (v) to account for restructurings, discontinued operations, and any other items deemed by the Committee to be non-recurring in nature or otherwise not reflective of operating performance that were not anticipated at the time an award was made, and (vi) to reflect other unusual, non-recurring, or unexpected items similar in nature to the foregoing as determined in good faith by the Committee consistent with the principles set forth in section 162(m) of the Code and the regulations thereunder. Such adjustments may be made with respect to the performance of any subsidiary, division, or operating unit, as applicable, shall be made in a consistent manner from year to year, and shall be made in accordance with the objectives of the Plan and the requirements of Section 162(m) of the Code.

12.  Restricted Shares.   The Committee may make awards in Common Stock subject to conditions, if any, established by the Committee which may include continued service with the Company or its subsidiaries (“Restricted Share Awards”). Any Restricted Share Award which is conditioned upon continued employment shall be conditioned upon continued employment for a minimum period of three years following the award, except in the case of death, disability or retirement and except as otherwise provided pursuant to Section 29.

13.  Stock Appreciation Rights.   The Committee may, in its discretion, from time to time grant to eligible employees stock appreciation rights (“SARs”). A SAR shall confer on the participant to whom it is granted the right to receive, upon exercise thereof, the excess of (i) the fair market value of one share of Common Stock on the date of exercise over (ii) the grant price of the SAR as determined by the Committee. In no event shall the grant price be less than the fair market value of a share of Common Stock on the date of grant. The Committee, at the time of granting to any employee a SAR, shall fix the terms and conditions upon which such SAR may be exercised, provided, however that (i) the date on which such SAR shall expire, if not exercised, may not be later than ten years after the date of the grant of the SAR, (ii) each SAR may be settled only in Common Stock, and (iii) no such terms and conditions may cause this Plan or the SAR to fail to meet the requirements of Internal Revenue Code § 409A(a)(2), (3) or (4) or to violate § 409A(b).

14.  Other Awards.   The Committee may make awards to employees authorized under this Plan in units or phantom shares, the value of which is based, in whole or in part, on the value of Common Stock, in lieu of making such awards in Common Stock (“Other Awards”). The Committee may provide for Other Awards to be paid in cash, in Common Stock, or in a combination of both cash and Common Stock, and may establish such other terms and conditions as in its discretion it deems appropriate, provided that no

4


such terms and conditions may cause this Plan or any Other Award to fail to meet the requirements of Internal Revenue Code § 409A(a)(2), (3) or (4) or to violate § 409A(b).

15.  Awards of Phantom Shares to Outside Directors .

(a)  Awards .   The Committee shall make a one-time grant of phantom shares, in an amount determined by the Committee, to each Outside Director upon his or her initial election to the Board. Thereafter, the Committee will make an annual grant of phantom shares to each Outside Director, in an amount and on terms determined by the Committee. In addition, from time to time, the Committee may, in its discretion, make grants of phantom shares to Outside Directors.

(b)  Dividend Equivalents on Awards .   Dividend equivalents will be accrued on all phantom shares granted under this Section 15. Upon the payment date of each dividend declared on the Company’s Common Stock, that number of additional phantom shares will be credited to each Outside Director’s award which has an equivalent fair market value to the aggregate amount of dividends which would be paid if the number of the Outside Director’s phantom shares were actual shares of the Common Stock. Dividend equivalents shall be vested at the time the dividend is paid.

(c)  Vesting .   Phantom shares granted under this Section 15 shall be fully vested upon granting.

(d)  Payment .   Upon termination of service of an Outside Director as a member of the Board (the “termination date”), the Company shall pay to the Outside Director all Phantom Shares credited to the Outside Director on the termination date in the form of one share of Common Stock for each whole phantom share, with cash for any fractional phantom share based on the fair market value of the Common Stock on the applicable date. The shares of Common Stock shall be paid and delivered as soon as administratively practicable after the termination date.

16.  Deferred Awards.   The Committee may permit recipients of awards to elect to defer receipt of such awards, either in cash or in Common Stock, under such terms and conditions that the Committee may prescribe; provided, however, that the Committee may permit recipients to elect to defer receipt of awards hereunder only to the extent that such deferral would not cause this Plan or such awards to fail to meet the requirements of Code Section 409A(a)(2), (3) or (4), to the extent applicable. The Committee may authorize the Company to establish various trusts or make other arrangements, in each case located in the United States, with respect to any deferred awards, provided that no such trust or arrangement may provide for assets to become restricted to the provision of deferred awards in connection with a change in the financial health of the Company or any of its subsidiaries.

17.  Fair Market Value.   For all purposes of this Plan the fair market value of a share of Common Stock shall be the closing selling price of Common Stock on the relevant date (as of 4:00 P.M. New York, New York Time) as reported on the New York Stock Exchange — Composite Transactions listing (or similar report), or, if no sale was made on such date, then on the next preceding day on which such a sale was made. Fair market value relating to the exercise price or base price of any Non-409A Award (as hereinafter defined) shall conform to requirements under Code § 409A.

18.  Exchange and Buy Out; Repricing.   The Company may at any time offer to exchange or buy out any previously granted award for a payment in cash, shares of Common Stock, other awards or property based on such terms and conditions as the Company shall determine and communicate at the time that such offer is made. Notwithstanding anything in this Plan to the contrary, without the approval of the shareholders, the Committee shall not amend or replace previously granted stock options or SARs in a

5


transaction that constitutes a repricing. For this purpose, the term “repricing” shall mean any of the following or any other action that has the same effect: (i) lowering the exercise price of an option or SAR after it is granted, (ii) buying-out an outstanding option or SAR at a time when its exercise price exceeds the fair market value of the underlying stock for cash or shares, or (iii) any other action that is treated as a repricing under generally accepted accounting principles, or (iv) canceling an option or SAR at a time when its exercise price exceeds the fair market value of the underlying Common Stock in exchange for another option, SAR, Restricted Stock Award or other equity of the Company, unless the cancellation and exchange occurs in connection with a merger, acquisition, spin-off, or similar corporate transaction.

19.  Termination Of Employment.   The Committee may make such provisions as it, in its sole discretion, may deem appropriate with respect to the effect, if any, the termination of employment will have on any grants or awards under this Plan; provided, however, that no such provisions may cause this Plan or any grants or awards hereunder to fail to meet the requirements of Internal Revenue Code § 409A(a)(2), (3) or (4) or to violate § 409A(b), to the extent applicable.

20.  Assignability.   Options and other awards granted under this Plan shall not be transferable by the grantee other than by will or the laws of descent and distribution or by such other means as the Committee may approve from time to time.

21.  Adjustments to Reflect Capital Changes .

(a) In the event of any corporate event or transaction (including, but not limited to, a change in the Common Stock or the capitalization of the Company), such as any merger, consolidation, reorganization, recapitalization, separation, partial or complete liquidation, stock dividend, stock split, reverse stock split, split up, spin off, or other distribution of stock or property of the Company, a combination or exchange of Common Stock, dividend in kind, or other like change in capital structure, number of outstanding shares of Common Stock, distribution (other than normal cash dividends) to shareholders of the Company, or any similar corporate event or transaction, the Committee or the Board, in order to prevent dilution or enlargement of participants’ rights under the Plan, shall make equitable and appropriate adjustments and substitutions, as applicable, to or of the number and kind of shares subject to outstanding awards, the purchase price for such shares, the number and kind of shares available for future issuance under the Plan, and other determinations applicable to outstanding awards. The Committee shall have the power and sole discretion to determine the amount of the adjustment to be made in each case.

(b) In addition, in the event that the Company is a party to a merger, reorganization, consolidation, share exchange, transfer of assets or other transaction having similar effect involving the Company, outstanding awards shall be subject to the agreement governing the transaction. Such agreement may provide, without limitation, for the continuation of outstanding awards by the Company (if the Company is a surviving corporation), for their assumption by the surviving corporation or its parent or subsidiary, for the substitution by the surviving corporation or its parent or subsidiary of its own awards for such outstanding awards, for accelerated vesting and accelerated expiration, or for settlement in cash or cash equivalents.

22.  Committee’s Determination.   The Committee’s determinations under this Plan including without limitation, determinations of the employees to receive awards or grants, the form, amount and timing of such awards or grants, the terms and provisions of such awards or grants and the agreements evidencing same, and the establishment of Performance Objectives need not be uniform and may be made by the Committee selectively among employees who receive, or are eligible to receive awards or grants under

6


this Plan whether or not such employees are similarly situated. The Committee may, with the consent of the participant, modify any determination it previously made.

23.  Leave Of Absence Or Other Change In Employment Status.   The Committee shall be entitled to determine whether any leave of absence taken by an employee or other change in employment status, such as a change from full time employment to a consulting relationship, shall constitute a termination of employment within the meaning of this Plan and shall further be entitled to make such rules, regulations and determinations as it deems appropriate under this Plan in respect of any such leave of absence or other change in employment status relative to any grant or award. Notwithstanding the foregoing, no such determination, rule or regulation by the Committee may cause this Plan or any grant or award hereunder to fail to meet the requirements of Internal Revenue Code § 409A(a)(2), (3) or (4) or to violate § 409A(b), to the extent applicable.

24.  Withholding Taxes.   The Committee or its designee shall have the right to determine the amount of any Federal, state or local required withholding tax, and may require that any such required withholding tax be satisfied by withholding shares of Common Stock or other amounts which would otherwise be payable under this Plan.

25.  Retention Of Shares.   If shares of Common Stock are awarded subject to attainment of Performance Objectives, continued service with the Company or other conditions, the shares may be registered in the employees’ names when initially awarded, but possession of certificates for the shares shall be retained by the Secretary of the Company for the benefit of the employees, or shares may be registered in book entry form only, in both cases subject to the terms of this Plan and the conditions of the particular awards.

26.  Dividends And Voting.   Subject to Section 15(b), the Committee may permit each participant to receive or accrue dividends and other distributions made with respect to awards (other than Performance Share Awards) under this Plan under such terms and conditions as in its discretion it deems appropriate, provided that such receipt or accrual does not cause this Plan or any award hereunder to fail to meet the requirements of Internal Revenue Code § 409A(a)(2), (3) or (4), to the extent applicable. With respect to shares actually issued, the Committee under such terms and conditions as in its discretion it deems appropriate, may permit the participant to vote or execute proxies with respect to such registered shares.

27.  Forfeiture Of Awards.   Any awards or parts thereof made under this Plan which are subject to Performance Objectives or other conditions which are not satisfied, shall be forfeited.

28.  Continued Employment.   Nothing in this Plan or in any agreement entered into pursuant to this Plan shall confer upon any employee the right to continue in the employment of the Company or affect any right which the Company may have to terminate the employment of such employee.

29.  Change In Control.   For purposes of this Plan, a “Change in Control” shall mean:

(i) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act), of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then outstanding shares of Common Stock (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that the following acquisitions shall not constitute a Change in Control: (A) any acquisition directly from the Company (other than by exercise of a conversion privilege), (B) any acquisition by the Company or any of its subsidiaries,

7


(C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries, or (D) any acquisition by any company with respect to which, following such acquisition, more than 70% of, respectively, the then outstanding shares of common stock of such company and the combined voting power of the then outstanding voting securities of such company entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such acquisition in substantially the same proportions as their ownership, solely in their capacity as shareholders of the Company, immediately prior to such acquisition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be; or

(ii) individuals who, as of the Effective Date, constitute the Board (the “Incumbent Board”), cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest; or

(iii) consummation of a reorganization, merger or consolidation, in each case, with respect to which all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such reorganization, merger or consolidation, do not, following such reorganization, merger or consolidation, beneficially own, directly or indirectly, solely in their capacity as shareholders of the Company, more than 70% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the company resulting from such reorganization, merger or consolidation in substantially the same proportions as their ownership, immediately prior to such reorganization, merger or consolidation of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be; or

(iv) consummation of (A) a complete liquidation or dissolution of the Company or (B) a sale or other disposition of all or substantially all of the assets of the Company, other than to a company, with respect to which following such sale or other disposition, more than 70% of, respectively, the then outstanding shares of common stock of such company and the combined voting power of the then outstanding voting securities of such company to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities, solely in their capacity as shareholders of the Company, who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be.

30.  Effect Of Change In Control.   In the event of a Change in Control, (a) options (other than options awarded after December 2, 2015) that are not then exercisable shall become immediately exercisable, and, notwithstanding any other provisions of this Plan or any award agreement, shall remain exercisable for no less than the shorter of (i) two years or (ii) the remainder of the full term of the option and (b) with respect to other awards under this Plan the Committee may make such provision as it deems appropriate

8


in its discretion, provided that no such provision may cause this Plan or any award hereunder to fail to meet the requirements of Internal Revenue Code § 409A(a)(2), (3) or (4) or to violate § 409A(b), to the extent applicable.

31.  Compliance With Laws And Regulations.   Notwithstanding any other provisions of this Plan, the issuance or delivery of any shares may be postponed for such period as may be required to comply with any applicable requirements of any national securities exchange or any requirements under any other law or regulation applicable to the issuance or delivery of such shares, and the Company shall not be obligated to issue or deliver any such shares if the issuance or delivery thereof shall constitute a violation of any provision of any law or any regulation of any governmental authority, whether foreign or domestic, or any national securities exchange.

32.  Certain Limitation on Awards to Ensure Compliance with Internal Revenue Code § 409A . Notwithstanding any other Plan provision, the terms of any 409A Award and any Non-409A Award, including any authority of the Committee and rights of the participant with respect to the award, shall be limited to those terms permitted under Code § 409A, and any terms not permitted under Code § 409A shall be automatically modified and limited to the extent necessary to conform with Code § 409A. For this purpose, other provisions of the Plan notwithstanding, the Committee shall have no authority to accelerate distributions relating to 409A Awards in excess of the authority permitted under Code § 409A, and any distribution subject to Code § 409A(a)(2)(A)(i) (separation from service) to a “key employee” as defined under Code § 409A(a)(2)(B)(i), shall not occur earlier than the earliest time permitted under Code Section § 409A(a)(2)(B)(i). In the case of a 409A Award, a transaction shall constitute a “Change in Control” as defined in Section 29 only if such transaction would also constitute a ‘change of control’ under Code § 409A.

For purposes of this Plan, “409A Awards” means awards that constitute a deferral of compensation under Code § 409A and regulations thereunder. “Non-409A Awards” means awards other than 409A awards. For purposes of this Plan, options, SARs and Restricted Share Awards are intended to be Non-409A Awards.

33.  Amendment.   The Board may alter or amend this Plan, in whole or in part, from time to time, or terminate this Plan at any time; provided, however, that no such action shall adversely affect any rights or obligations with respect to awards previously made under this Plan unless the action is taken in order to comply with applicable law, stock exchange rules or accounting rules; and, provided, further, that no amendment which has the effect of increasing the number of shares subject to this Plan (other than as permitted in Section 21) shall be made without the approval of the Company’s shareholders.

34.  Governing Law.   The validity, construction and effect of the Plan, any rules and regulations relating to the Plan and any award document shall be determined in accordance with the laws of the State of North Carolina, without giving effect to principles of conflicts of laws, and applicable provisions of federal law.

35.  Severability.   If any provision of this Plan or the application thereof to any person or circumstance shall be invalid or unenforceable to any extent, the remainder of this Plan and the application of such provision to other persons or circumstances shall not be affected thereby and shall be enforced to the greatest extent permitted by law.

(As approved by the Company’s shareholders on April 30, 2014, and amended by the Company’s Board of Directors on December 2, 2015)

9

ENPRO INDUSTRIES, INC.              Exhibit 10.6     
LONG-TERM INCENTIVE PLAN
(2015 AMENDMENT AND RESTATEMENT)
PURPOSE
The EnPro Industries, Inc. Long-Term Incentive Plan (the “Plan”) was established effective as of January 1, 2003 (the “Effective Date”) to provide long-term incentive compensation to key employees who are in a position to influence the performance of EnPro Industries, Inc. (the “Company”), and thereby enhance shareholder value over time. The Plan provides a significant additional financial opportunity and complements other parts of the Company’s total compensation program for key employees.
ELIGIBILITY AND PERFORMANCE PERIODS
The Committee (as defined in the “Plan Administration” section of the Plan) will determine which employees of the Company are eligible to participate in the Plan from time to time. Participants will be selected within 90 days after the beginning of each multi-year performance cycle (“Performance Period”). Each Performance Period will be of two or more years duration as determined by the Committee and will commence on January 1 of the first year of the Performance Period. A new Performance Period will commence each year unless the Committee determines otherwise.
TARGET AWARDS
At the time a Participant is selected for participation in the Plan for a Performance Period, the Committee will assign the Participant a Target LTIP Award to be earned if the Company’s target performance levels are met for the Performance Period (the “Target LTIP Award”). The Target LTIP Award may be expressed as a dollar amount, a number of Performance Shares under the Company’s Equity Compensation Plan, or a combination of a dollar amount and a number of Performance Shares. Any portion of the Target LTIP Award made in the form of Performance Shares will be evidenced by a Performance Shares award agreement consistent with the provisions of the Equity Compensation Plan.
MAXIMUM AND THRESHOLD AWARDS
At the time a Participant is selected for participation in the Plan for a Performance Period, the Participant will be assigned maximum and threshold award levels, expressed as a percentage of the Target LTIP Award. Maximum award level represents the maximum percentage of the Target LTIP Award that may be paid to a Participant for a Performance Period based on performance above target performance levels. Threshold award level represents the minimum percentage of the Target LTIP Award that may be paid to a Participant for a Performance Period based on performance below target performance levels. Performance below the threshold performance award level will earn no incentive payments.
Under no circumstances will any Participant earn an award for a Performance Period expressed in dollars exceeding $2,500,000. In addition, any award of Performance Shares hereunder shall be subject to the individual award limit applicable under the Equity Compensation Plan.
PERFORMANCE MEASURES
The Committee may use any quantitative or qualitative performance measure or measures that it determines to use to measure the level of performance of the Company or any individual participant during a Performance Period.
Performance measures that may be used under the Plan include, but are not limited to, the following, which shall be considered “qualifying performance measures” and which may be used individually, alternatively, or in any combination, applied to the Company as a whole or to a division or business unit or related company, and measured either annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to a previous year’s results or to a designated comparison group, in each case as specified by the Committee in the award. Each performance measure may be determined on a pre-tax or after tax basis, as specified by the Committee at the time of the award:



Revenue-related measures:
•
Total sales
•
Sales growth
•
Sales growth excluding acquisitions
•
Other specific revenue-based measures for particular products, product lines or product groups
Income-based measures:
•
Net income
•
Earnings per share
•
EPS before or after asbestos and/or other selected items
•
Net income before or after asbestos charges and/or other selected items
•
Pretax income before or after asbestos charges and/or other selected items
•
Consolidated operating income before or after asbestos charges and/or other selected items
•
Pretax consolidated operating income before or after asbestos charges and/or other selected items
•
Segment operating income before or after asbestos charges and/or other selected items
•
Pretax segment operating income before or after asbestos charges and/or other selected items
•
Earnings before interest and taxes (EBIT) before or after asbestos charges and/or other selected items
•
EBITDA before or after asbestos charges and/or other selected items
Cash flow-based measures:
•
Free cash flow before or after asbestos charges and/or other selected items
•
Pretax free cash flow before or after asbestos charges and/or other selected items
•
Asbestos-related cash outflow (or changes in asbestos-related cash outflow)
•
Pretax asbestos-related cash outflow (or pretax changes in asbestos-related cash outflow)
•
New asbestos commitments (or changes in new asbestos commitments)
Return-based measures:
•
Return on equity, assets, investment, invested capital, capital, total or net capital employed, or sales, before or after asbestos charges and/or other selected items
•
Pretax return on equity, assets, investment, invested capital, capital, total or net capital employed, or sales, before or after asbestos charges and/or other selected items
•
Total shareholder return
•
Share price increase
 
•
Total business return before or after asbestos charges and/or selected items
•
Economic value added or similar “after cost of capital” measures
•
Return on sales or margin rate, in total or for a particular product, product line or product group
•
Cash flow return on investment
Other measures:
•
Working capital (or any of its components or related metrics, e.g. DSO, DSI, DWC, working capital to sales ratio)
•
Working capital improvement



•
Market share
•
Measures of customer satisfaction (including survey results or other measures of satisfaction)
•
Safety (determined by reference to recordable or lost time rates, first aids, near misses or a combination of two or more such measures or other measures)
•
Measures of operating efficiency, e.g. productivity, cost of non-conformance or cost of quality, on time delivery, efficiency ratio (controllable expenses divided by operating income or other efficiency metric)
•
Strategic objectives with specifically identified areas of emphasis, e.g. cost reduction, acquisition assimilation synergies, acquisitions, organization restructuring
PERFORMANCE GOALS
•
The Committee will designate, within 90 days of the beginning of each Performance Period:
•
The performance measures and calculation methods to be used for the Performance Period;
•
A schedule for each performance measure relating achievement levels for the performance measure to incentive award levels as a percentage of Participants’ Target LTIP Awards; and
•
The relative weightings of the performance measures for the Performance Period.
The performance goals established by the Committee for a Performance Period are intended to satisfy the “objective compensation formula” requirements of Treasury Regulations Section 1.162-27(e)(2). To the degree consistent with Section 162(m) of the Internal Revenue Code, or any successor section thereto (the “Code”), the Committee may adjust, modify or amend the above criteria, either in establishing any performance measure or in determining the extent to which any performance measure has been achieved. In particular, the Committee shall have the authority to make equitable adjustments in the criteria where necessary (i) in response to changes in applicable laws or regulations, (ii) to account for items of gain, loss, or expense that are related to the disposal (or acquisition) of a business or change in accounting principles that was not anticipated at the time an award was made, (iii) to account for adjustments in expense due to re-measurement of pension benefits, (iv) to remove the effect of charges for asbestos, (v) to account for restructurings, discontinued operations, and any other items deemed by the Committee to be non-recurring in nature or otherwise not reflective of operating performance that were not anticipated at the time an award was made, and (vi) to reflect other unusual, non-recurring, or unexpected items similar in nature to the foregoing as determined in good faith by the Committee consistent with the principles set forth in section 162(m) of the Code and the regulations thereunder. Such adjustments may be made with respect to the performance of any subsidiary, division, or operating unit, as applicable, shall be made in a consistent manner from year to year, and shall be made in accordance with the objectives of the Plan and the requirements of Section 162(m) of the Code.
PERFORMANCE CERTIFICATION
As soon as practicable following the end of each Performance Period and prior to any award payments for the Performance Period, the Committee will certify the Company’s performance with respect to each performance measure used for that Performance Period.
 



AWARD CALCULATION AND PAYMENT
For each Performance Period, individual incentive awards will be calculated and paid to each Participant who is still employed with the Company (subject to the special provisions below for employees who terminate employment due to death, disability or retirement) as soon as practicable following the Committee’s certification of performance for the Performance Period. The amount of a Participant’s incentive award to be paid based on each individual performance measure will be calculated based on the following formula:
 
 
 
 
 
 
 
 
Participant’s
Target LTIP Award
×
Percentage of target
award to be paid
based on
performance
measure results
×
Relative weighting
of performance
measure
=
Amount of
incentive award
based on
performance
measure results
The incentive amounts to be paid to the Participant based on each performance measure will be summed to arrive at the Participant’s total incentive award payment for the Performance Period.
Payments from the Plan to a Participant, if any, will be made in cash (less any amount necessary to satisfy applicable withholding taxes); provided, however, that (i) if any portion of the award is in the form of Performance Shares, the applicable Performance Shares award agreement will specify whether the award will be settled in cash, shares of the Company’s common stock or a combination of cash and stock; and (ii) at the Participant’s election, receipt of all or part of an award may be deferred under the terms of the EnPro Industries, Inc. Deferred Compensation Plan (or other deferred compensation plan of the Company).
TERMINATION OF EMPLOYMENT DUE TO DEATH, DISABILITY, RETIREMENT
If a Participant becomes totally disabled under the Company’s Long-Term Disability Plan, or retires (or is deemed to retire) under the Company’s Salaried Retirement Plan during a Performance Period, the Participant will receive a pro rata payout at the end of the Performance Period, based upon the time portion of the Performance Period during which he or she was employed. The actual payout will not occur until after the end of the Performance Period, at which time the financial performance for the entire Performance Period will be used to determine the amount of the award prior to proration.
If a Participant dies during a Performance Period, the Participant will receive a pro rata payout based upon financial results calculated for the portion of the Performance Period through the end of the fiscal quarter following the Participant’s death.
OTHER TERMINATION OF EMPLOYMENT
If a Participant’s employment terminates prior to the end of a Performance Period for any reason (whether voluntary or involuntary) other than death, disability or retirement, the Participant will forfeit all rights to compensation under the Plan, unless the Committee determines otherwise.
NEW HIRES OR PROMOTIONS INTO ELIGIBLE POSITIONS
Participants will become eligible for participation in the Plan at their new position level beginning with the Performance Period which begins on the January 1 immediately following their hire or promotion date. No new performance awards or adjustments to awards for Performance Periods that commenced prior to a Participant’s hire or promotion date will be made.
PAYMENT UPON CHANGE IN CONTROL
Anything to the contrary notwithstanding,
(a) with respect to a Target LTIP Award awarded prior to December 2, 2015, if a Change in Control occurs prior to the end of a Performance Period, within five days following the occurrence of the Change in Control each Participant will receive a pro rata payout of the Participant’s award for that Performance Period based upon the portion of the Performance Period completed through the date of the Change in Control and the performance results calculated for that period (the “Interim LTIP Payment”). The Participant shall also remain entitled to a payout upon completion



of the Performance Period based on performance results for the entire Performance Period, such payout to be offset by the amount of the Interim LTIP Payment (if any); provided, however, that the Participant will not be required to refund to the Company, or have offset against any other payment due to the Participant from or on behalf of the Company, in the event the amount of the Interim LTIP Payment exceeds the amount of the payout upon completion of the Performance Period; and
(b) with respect to any other Target LTIP Award under this Plan, in the event of a Change in Control, the Committee may make such provision with respect to awards under this Plan as it deems appropriate in its discretion, provided that no such provision may cause this Plan or any award hereunder to fail to meet the requirements of Internal Revenue Code § 409A(a)(2), (3) or (4) or to violate § 409A(b), to the extent applicable.
 
For purposes of the Plan, a “Change in Control” shall mean:
(i)
The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that the following acquisitions shall not constitute a Change in Control: (A) any acquisition directly from the Company (other than by exercise of a conversion privilege), (B) any acquisition by the Company or any of its subsidiaries, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries or (D) any acquisition by any company with respect to which, following such acquisition, more than 70% of, respectively, the then outstanding shares of common stock of such company and the combined voting power of the then outstanding voting securities of such company entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such acquisition in substantially the same proportions as their ownership, solely in their capacity as shareholders of the Company, immediately prior to such acquisition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be; or
(ii)
individuals who, as of the Effective Date, constitute the Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board of Directors; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest; or
(iii)
consummation of a reorganization, merger or consolidation, in each case, with respect to which all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such reorganization, merger or consolidation, do not, following such reorganization, merger or consolidation, beneficially own, directly or indirectly, solely in their capacity as shareholders of the Company, more than 70% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the company resulting from such reorganization, merger or consolidation in substantially the same proportions as their ownership, immediately prior to such reorganization, merger or consolidation of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be; or
(iv)
consummation of (A) a complete liquidation or dissolution of the Company or (B) a sale or other disposition of all or substantially all of the assets of the Company, other than to a company, with respect to which following such sale or other disposition, more than 70% of, respectively, the then



outstanding shares of common stock of such company and the combined voting power of the then outstanding voting securities of such company entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities, solely in their capacity as shareholders of the Company, who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be.
 
PLAN ADMINISTRATION
The Plan will be administered by the Compensation and Human Resources Committee of the Company’s Board of Directors (or a subcommittee of that committee consisting only of those members of that committee who are “outside directors” within the meaning of Section 162(m) of the Internal revenue Code if any members of the committee are not “outside directors”) (the “Committee”). In administering the Plan, the Committee shall be empowered to interpret the provisions of the Plan and to perform and exercise all of the duties and powers granted to it under the terms of the Plan by action of a majority of its members in office from time to time. The Committee is empowered to set preestablished performance targets, measure the results and determine the amounts payable according to the Formula. While the Committee may not increase the amounts payable under the Plan formula for a Performance Period, it retains discretionary authority to reduce the amount of compensation that would otherwise be payable to the Participants if the goals are attained. The Committee may also adopt such rules and regulations for the administration of the Plan as are consistent with the terms hereof and shall keep adequate records of its proceedings and acts. All interpretations and decisions made (both as to law and fact) and other action taken by the Committee with respect to the Plan shall be conclusive and binding upon all parties having or claiming to have an interest under the Plan. Not in limitation of the foregoing, the Committee shall have the discretion to decide any factual or interpretative issues that may arise in connection with its administration of the Plan (including without limitation any determination as to claims for benefits hereunder), and the Committee’s exercise of such discretion shall be conclusive and binding on all affected parties as long as it is not arbitrary or capricious.
MISCELLANEOUS
(i)     Amendment and Termination . The Board of Directors of the Company may amend, modify, or terminate the Plan at any time, provided that no amendment, modification or termination of the Plan shall reduce the amount payable to a Participant under the Plan as of the date of such amendment, modification or termination.
(ii)     Shareholder Approval . No amounts shall be payable hereunder unless the material terms of the Plan are first approved by the shareholders of the Company consistent with the requirements of Section 162(m) of the Internal Revenue Code. In accordance with Section 162(m)(4)(C)(ii) of the Internal Revenue Code, the continued effectiveness of the Plan is subject to its approval by the shareholders of the Company at such other times as required by Section 162(m)(4)(C)(ii).
(iii)     Coordination With Other Company Benefit Plans . Any income participants derive from Plan payouts will not be considered eligible earnings for Company or subsidiary pension plans, savings plans, profit sharing plans or any other benefit plans.
(iv)     Participant’s Rights . A Participant’s rights and interests under the Plan may not be assigned or transferred by the Participant. To the extent the Participant acquires a right to receive payments from the Company under the Plan, such right shall be no greater than the right of any unsecured general creditor of the Company. Nothing contained herein shall be deemed to create a trust of any kind or any fiduciary relationship between the Company and the Participant. Designation as a Participant in the Plan for a Performance Period shall not entitle or be deemed to entitle the Participant to be designated as a Participant for any subsequent Performance Periods or to continued employment with the Company.
(v)     Applicable Law . The Plan shall be governed and construed in accordance with the laws of the State of North Carolina, except to the extent such laws are preempted by the laws of the United States of America.




Exhibit 10.10
ENPRO INDUSTRIES, INC.
AMENDED AND RESTATED 2002 EQUITY COMPENSATION PLAN, AS AMENDED
RESTRICTED SHARE UNITS AWARD AGREEMENT

THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING
SECURITIES THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.

GRANTED TO
 
GRANT DATE
 
NUMBER OF UNITS
[________________]

 
 
 
[_______]

This Restricted Share Units Award Agreement, including all Exhibits hereto (the “Agreement”), is made between EnPro Industries, Inc., a North Carolina corporation (the “Company”), and you, an employee of the Company or one of its subsidiaries.

The Company sponsors the EnPro Industries, Inc. Amended and Restated 2002 Equity Compensation Plan, as amended (the “Plan”). A prospectus describing the Plan is enclosed as Exhibit A. The Plan itself is available upon request, and its terms and provisions are incorporated herein by reference. When used herein, the terms which are defined in the Plan shall have the meanings given to them in the Plan, as modified herein (if applicable).

In recognition of the value of your contribution to the Company, you and the Company mutually covenant and agree as follows:

1.
Subject to the terms and conditions of the Plan and this Agreement, the Company awards to you the number of Restricted Share Units shown above (the “Units”).

2.
You acknowledge having read the Prospectus and agree to be bound by all the terms and conditions of the Plan and this Agreement.

3.
The Units are issued pursuant to this Agreement and shall vest on the date(s) shown on the enclosed Exhibit B. You shall not have the right to sell or otherwise dispose of the Units or any interest therein.

4.
You shall have no right to vote any of the Units with respect to any matter presented for a vote of the holders of the Company’s Common Stock and, with respect to the Units, you shall not be entitled to receive any dividends on the Company’s Common Stock when such dividends are paid.

5.
Upon the vesting of Units, you shall be entitled to receive from the Company either, at the Company’s election, (i) one share of Common Stock or (ii), if there are insufficient shares of Common Stock then available for issuance under the Plan, a cash payment in amount equal to the fair market value (as defined in the Plan) of one share of Common Stock on the date of vesting (the “Vesting Date”), plus, in either case (i) or (ii), a cash payment equal to the aggregate amount of cash dividends paid with respect to one share of Common Stock from the Grant Date to and including the Vesting Date.

6.
You acknowledge and agree that upon your termination of employment with the Company and its subsidiaries prior to the Units becoming vested in accordance with paragraph 3 and Exhibit B of this Agreement or otherwise in accordance with the Plan, your right to receive payment on any such unvested Units shall automatically, without further act, terminate.

7.
You agree that you shall comply with (or provide adequate assurance as to future compliance with) all applicable securities laws and income tax laws as determined by the Company as a condition precedent to the payment of any amount pursuant to this Agreement. In addition, you agree that, upon request, you will furnish a letter agreement providing that (i) you will not distribute or resell in violation of the Securities Act of 1933, as

1


amended, any of shares of the Company’s Common Stock delivered in payment of the Units (ii) you will indemnify and hold the Company harmless against all liability for any such violation and (iii) you will accept all liability for any such violation.

8.
By executing and returning the Beneficiary Designation Form attached as Exhibit C, you may designate a beneficiary to receive any payment to be made hereunder in the event of your death while in service with the Company. If you do not designate a beneficiary or if your designated beneficiary does not survive you, then your beneficiary will be your estate.

9.
The existence of this award shall not affect in any way the right or power of the Company to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company’s capital structure or its business, or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or prior preference stocks ahead of or convertible into, or otherwise affecting the Company’s Common Stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.
  
10.
Any notice which either party hereto may be required or permitted to give to the other shall be in writing and may be delivered personally, by intraoffice mail, by fax, by electronic mail or other electronic means, or via a postal service, postage prepaid, to such electronic mail or postal address and directed to such person as the Company may notify you from time to time; and to you at your electronic mail or postal address as shown on the records of the Company from time to time, or at such other electronic mail or postal address as you, by notice to the Company, may designate in writing from time to time.

11.
Regardless of any action the Company or your employer takes with respect to any or all income tax, payroll tax or other tax-related withholding (“Tax-Related Items”), you acknowledge that the ultimate liability for all Tax-Related Items owed by you is and remains your responsibility and that the Company and/or your employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of this award, including the grant and vesting of the Units and the subsequent sale of any shares of Common Stock delivered in payment of any Units; and (ii) do not commit to structure the terms of the grant or any aspect of the Units to reduce or eliminate your liability for Tax-Related Items.

In the event the Company determines that it and/or your employer must withhold any Tax-Related Items as a result of your participation in the Plan, you agree as a condition of the grant of the Units to make arrangements satisfactory to the Company and/or your employer to enable it to satisfy all withholding requirements, including, but not limited to, withholding any applicable Tax-Related Items from the vesting and payment of the Units. In addition, you authorize the Company and/or your employer to fulfill its withholding obligations by all legal means, including, but not limited to: withholding Tax-Related Items from your wages, salary or other cash compensation your employer pays to you; withholding Tax-Related Items from the cash proceeds, if any, received upon sale of any shares of Common Stock received in payment of Units; and at the time of vesting, withholding shares of Common Stock or the cash payment to be delivered in payment of the Units sufficient to meet minimum withholding obligations for Tax-Related Items. In the event that you have not advised the Company at least 21 days prior to the occurrence of any event requiring it and/or your employer to withhold any Tax-Related Items, you will be deemed to have irrevocably directed the Company and/or your employer to fulfill its withholding obligations by withholding any applicable Tax-Related Items from the vesting and payment of the Units. The Company may refuse to deliver shares of Common Stock, or the cash payment, upon vesting of the Units if you fail to comply with any withholding obligation.

12.
In the event any provision of this Agreement shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Agreement, and the Agreement shall be construed and enforced as if the illegal or invalid provision had not been included. This Agreement constitutes the final understanding between you and the Company regarding the Units. Any prior agreements, commitments or negotiations concerning the Units are superseded. Subject to the terms of the Plan, this Agreement may only be amended by a written instrument signed by both parties.


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IN WITNESS WHEREOF , the Company has caused this Agreement to be executed by its duly authorized officer, and you have hereunto set your hand, all effective as of the Grant Date listed above.




ENPRO INDUSTRIES, INC.


_______________________________________________
[___________________]

EMPLOYEE


__________________________________________
[___________________]




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EXHIBIT A

(This document constitutes part of a
prospectus covering securities that
have been registered under
the Securities Act of 1933)
PROSPECTUS

5,225,000 SHARES
ENPRO INDUSTRIES, INC.
COMMON STOCK
____________
AMENDED AND RESTATED 2002 EQUITY COMPENSATION PLAN
____________
This Prospectus relates to the offer and sale of up to 5,225,000 shares of our common stock to eligible employees under the EnPro Industries, Inc. Amended and Restated 2002 Equity Compensation Plan (the “Plan”). The Plan was most recently approved by our shareholders at the annual meeting held on April 30, 2014 and by our Board of Directors at its December 2015 meeting. The Plan terminates on February 10, 2019, unless terminated earlier by our Board of Directors.
The purpose of the Plan is to promote the interests of the shareholders by providing stock-based incentives to selected employees and “Outside Directors” to align their interests with shareholders and to motivate them to put forth maximum efforts toward the continued growth, profitability and success of our company.
The Plan is generally administered by the Compensation and Human Resources Committee of our Board (the “Committee”). See “Administration” below. The Plan is not a qualified pension, profit-sharing or stock bonus plan within the meaning of Section 401(a) of the Internal Revenue Code of 1986, as amended (the “Code”). Further, in our view, the Plan is not subject to the provisions of the Employee Retirement Income Security Act of 1974.
For additional information concerning awards made under the Plan, please contact Marc Mulliss at 704-731-1553.
This document constitutes part of a prospectus covering securities that have been registered under the Securities Act of 1933, as amended (the “Securities Act”).
_______________
The date of this Prospectus is February 16, 2016.





SUMMARY OF PLAN
The following summary of the Plan is subject to, and qualified in its entirety by reference to, all the provisions of the Plan, a copy of which may be obtained upon request.
Eligibility
Salaried, full-time employees of us or of our subsidiaries may participate in the Plan. The Committee, in its discretion, will select the award recipients and the nature and amount of any awards. The Committee may, within certain limits, delegate to our CEO and other senior officers authority to make such award determinations.
In addition, members of our Board of Directors and any of our subsidiary corporations of which we own more than 50% of the voting stock, excluding directors who are employees or former employees of us or our subsidiaries within five years after their termination of employment (“Outside Directors”) are eligible to receive awards of phantom shares as described below.
Number of Shares
There are 5,225,000 shares of our common stock available for issuance under the Plan. If an award made under the Plan terminates, expires, lapses or is canceled, the shares covered by that award remain available for issuance under the Plan. However, shares used to pay any option exercise price or to satisfy a tax withholding obligation are deemed to constitute shares delivered under the Plan and will not be available for future issuance under the Plan. Shares of our common stock issued pursuant to the Plan may be original issue shares or treasury shares.
Awards to Eligible Employees
Pursuant to the Plan, the Committee may award eligible employees incentive stock options (“ISOs”), nonqualified stock options (“NQSOs”), stock appreciation rights (“SARs”), performance shares, restricted stock units, restricted stock shares and other awards. Each award will be evidenced by an award document setting forth the terms and provisions applicable to the award.
Stock Options. The Plan provides for the grant of options to purchase shares of our common stock at option prices which are not less than the fair market value of shares of our common stock on the grant date. In making an option award, the Committee determines whether the award will be either an ISO or NQSO. The Committee also establishes all of the other terms and conditions of each option award at the time of grant, including any vesting requirements. The applicable award document will specify the term of the option (up to a maximum of ten years), and the extent to which options may be exercised during their terms, including in the event of your death, disability or termination of employment. You may pay the option exercise price either in cash or by tendering shares of our common stock with a fair market value at the date of the exercise equal to the portion of the exercise price which you do not pay in cash. In addition, the Committee may from time to time allow cashless exercises by any means which it determines to be consistent with the Plan’s purposes and applicable law. You will have no rights as a shareholder until you become the holder of record of shares of our common stock issued upon exercise of such stock options.
Stock Appreciation Rights. The Plan also provides for the grant of SARs, which entitle holders, upon exercise, to receive shares of our common stock with a value equal to the difference between (i) the fair market value on the exercise date of the shares with respect to which an SAR is exercised and (ii) the grant price of the SAR, which shall not be less than the fair market value of such shares on the grant date. The Committee establishes all of the terms and conditions of each SAR at the time of grant, including any vesting requirements; provided that the term may not exceed ten years from the grant date and each SAR must be settled only in common stock..

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Performance Shares . The Committee may make awards of performance shares (which may be actual shares of our common stock or phantom shares) subject to conditions established by the Committee that may include attainment of specific performance objectives. Performance share awards may include the awarding of additional shares upon attainment of the specified performance objectives.
Restricted Shares. A restricted share is an actual share of our common stock issued in your name that is subject to certain vesting requirements and which we hold until the applicable vesting date, at which time the share is released to you. The Committee establishes all of the terms and conditions of each award at the time of grant, including any vesting requirements, which are set forth in an award document. Restricted share awards that vest based on continued employment generally have a minimum three-year vesting period, though they may vest earlier in the event of death, disability or retirement. Prior to vesting, you may vote and receive cash dividends with respect to restricted shares as specified in your award document.
Restricted Stock Units . The Committee may make awards of restricted stock units which is the right to receive our common stock upon the vesting of the restricted stock unit. The Committee establishes all of the terms and conditions of each award at the time of grant, including any vesting requirements, which are set forth in an award document. Restricted stock units that vest based on continued employment generally have a minimum three-year vesting period, though they may vest earlier in the event of death, disability or retirement. If we pay any common stock dividends prior to the vesting of the restricted stock units, recipients of the restricted stock units will not be entitled to receive any such dividends when such dividends are paid. Recipients have no right to vote any restricted stock units on any matter presented to a vote of the company’s shareholders. Upon vesting, the recipient would be entitled to receive, for each restricted stock units vesting, one share of common stock plus a cash payment equal to the aggregate amount of cash dividends paid with respect to one share of common stock from the date the award was made to and including the date of vesting.
Other Awards . The Committee may make other awards under the Plan in units or phantom shares, the value of which is based, in whole or in part, on the value of our common stock. The Committee may provide that such awards are to be paid in cash, in shares, or in a combination of both cash and shares, under such terms and conditions as the Committee may establish, which are set forth in an award document.
Awards of Phantom Shares to Outside Directors
Pursuant to the Plan, the Committee will make a one-time grant of phantom shares, in an amount to be determined by the Committee, to each Outside Director upon his or her election to the board. Thereafter, each Outside Director will receive an annual grant of phantom shares, in an amount and on terms determined by the Committee. In addition, the Committee may, from time to time, make additional grants of phantom shares to Outside Directors.
The terms and provisions of the phantom shares are as follows:
Vesting . Phantom shares granted to Outside Directors are fully vested at grant.
Dividend Equivalents . Dividend equivalents accrue on all phantom shares granted to Outside Directors. Upon the payment date of each dividend declared on our common stock, that number of additional phantom shares will be credited to each Outside Director’s award which has an equivalent fair market value to the aggregate amount of dividends which would be paid if the number of the Outside Director’s phantom shares were actual shares of the common stock. Dividend equivalents are vested at the time the dividend is paid.
Payment . Upon termination of service of an Outside Director as a member of the Board of Directors (the “termination date”), we will pay to the Outside Director all phantom shares credited to the Outside Director on the termination date in the form of one share of our common stock for each whole phantom share, with cash for any fractional phantom share based on the fair market value of our common stock on the applicable date. The shares of common stock are paid and delivered as soon as administratively practicable after the termination date.

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Fair Market Value
For all purposes of the Plan, the fair market value of a share of our common stock will be the closing selling price on the relevant date (as of 4:00 p.m. New York, New York time), as reported on the New York Stock Exchange – Composite Transactions listing (or similar report), or, if no sale was made on such date, on the next preceding day on which a sale was made.
Award Limits
The following limits apply to awards made under the Plan:
•
In no event may any individual receive awards under the Plan for a given calendar year covering in excess of 500,000 shares of our common stock; and
•
We will not grant ISOs covering in the aggregate more than 1,000,000 shares of our common stock during the term of the Plan.
Transferability of Awards
You may not transfer any award granted under this Plan other than by will or the laws of descent and distribution or by such other means as the Committee may approve from time to time.
Withholding for Payment of Taxes
The Committee will have the right to determine the amount of any Federal, state or local required withholding tax, and may require that any such required withholding tax be satisfied by withholding shares of our common stock or other amounts which would otherwise be payable under this Plan.
Changes in Capitalization and Similar Changes
In the event of any corporate event or transaction (including a change in common stock or capitalization or our company), such as a merger, consolidation, reorganization, recapitalization, separation, partial or complete liquidation, stock dividend, stock split, reverse stock split, split up, spin off, or other distribution of stock or property or our company, a combination or exchange of our common stock, dividend in kind or other similar change in capital structure, number of outstanding shares of our common stock, distribution (other than normal cash dividends) to our shareholders or any similar corporate event or transaction, the aggregate number of shares of our common stock with respect to which awards may be made under the Plan, and the terms, types of shares and number of shares of any outstanding awards under the Plan will be equitably adjusted by the Committee in its discretion to preserve the benefit of the award for both you and us.
Change in Control
The Plan provides that, in the event of a change in control of our company (as defined in the Plan), all options awarded prior to December 2, 2015 will be fully exercisable as of the date of the change in control and will remain exercisable for a period of two years thereafter (not to exceed the original award term). The Committee may also take actions with respect to options awarded after December 2, 2015 and outstanding awards of SARS, performance shares, restricted stock units, restricted shares or other awards.
Amendment and Termination of Plan
Our Board of Directors has the power to amend, modify or terminate the Plan on a prospective basis, provided that the Board of Directors may condition any amendment to the Plan on shareholder approval if it deems shareholder approval to be necessary or appropriate.

A-4




Administration
The Plan is administered by the Committee. Under the Plan, the Committee has the authority to (i) select the employees to receive awards from time to time, (ii) make awards in such amounts as it determines, (iii) impose limitations, restrictions and conditions upon awards as it deems appropriate, (iv) establish performance targets and allocation formulas for awards of performance shares, restricted shares or other awards intended to be “qualified performance‑based compensation” under Code Section 162(m), (v) certify the attainment of performance goals, if applicable, as required by Code Section 162(m), (vi) interpret the Plan and adopt, amend and rescind administrative guidelines and other rules and regulations relating to the Plan, (vii) correct any defect or omission or reconcile any inconsistency in the Plan or any award granted thereunder and (viii) make all other determinations and take all other actions necessary or advisable for the implementation and administration of the Plan. The Committee may delegate its authority under the Plan to the extent permitted by applicable law. All determinations and decisions made by the Committee pursuant to the Plan will be final, conclusive and binding.
Code Section 162(m)
Because stock options and SARs granted under the Plan must have an exercise price equal at least to fair market value at the date of grant, compensation from the exercise of stock options and SARs should be treated as “qualified performance‑based compensation” for Code Section 162(m) purposes.
In addition, the Plan authorizes the Committee to make awards of performance shares, restricted shares and other awards that are conditioned on the satisfaction of certain performance criteria. For awards intended to result in “qualified performance‑based compensation,” the Committee will establish prior to or within 90 days after the start of the applicable performance period the applicable performance conditions. The Committee may select from the following performance measures for such purpose: total sales, sales growth (with or excluding acquisitions), revenue-based measures for particular products, product lines or product groups, net income (before or after asbestos charges and/or other selected items), earnings per share of Common Stock (before or after asbestos and/or other selected items), pretax income (before or after asbestos charges and/or other selected items), consolidated operating income (pre or post-tax and before or after asbestos charges and/or other selected items), segment operating income (pre or post-tax and before or after asbestos charges and/or other selected items), earnings before interest and taxes (before or after asbestos charges and/or other selected items), earnings before interest, taxes, depreciation and amortization (before or after asbestos charges and/or other selected items), free cash flow (pre or post-tax and before or after asbestos charges and/or other selected items), asbestos-related cash outflows (or changes in asbestos-related cash outflow), new asbestos commitments (or changes in new asbestos commitments), return on equity, assets, investment, invested capital, capital, total or net capital employed, or sales (pre or post-tax and before or after asbestos charges and/or other selected items), cash flow return on investments, total shareholder return, Common Stock price increases, total business return (before or after asbestos charges and/or other selected items), economic value added or similar “after cost of capital” measures, return on sales or margin rate, in total or for a particular product, product line or product group, working capital (or any of its components or related metrics), working capital improvement, market share, measures of customer satisfaction (including survey results or other measures of satisfaction), safety (determined by reference to recordable or lost time rates, first aids, near misses or a combination of two or more such measures or other measures), measures of operating efficiency such as productivity, cost of non-conformance, cost of quality, on time delivery and efficiency ratio and strategic objectives with specifically identified areas of emphasis such as cost reduction, acquisition assimilation synergies, acquisitions or organization restructuring. The Committee will state the performance conditions in the form of an objective, nondiscretionary formula and will certify in writing the attainment of such performance conditions prior to any payout with respect to such awards. The Committee in its discretion may adjust downward the permissible amount of any such award, even if the performance objective is achieved.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of the current federal income tax consequences of the granting and exercise of stock options and of awards of common stock (including both performance shares and restricted stock), phantom stock, stock units and SARs under the Plan. It does not attempt to describe all possible federal or other tax

A-5




consequences of participation in the Plan. Furthermore, the tax consequences of awards made under the Plan are complex and subject to change, and some variation of the described rules may be applicable to any particular participant’s tax situation. The summary assumes in each case that there will no violation of the deferred compensation rules of the Internal Revenue Service, which would subject the affected participants to immediate taxation and penalties on unvested awards.

Incentive Stock Options.   An employee who is granted an ISO under the Plan will not be subject to federal income tax upon the grant or exercise of the option. However, upon the exercise of an ISO, the difference between the exercise price for the option and its fair market value on the date of exercise, which is commonly referred to as the spread, is a tax preference item that must be taken into account in determining the employee’s alternative minimum tax. If the employee disposes of the shares in the same year the option was exercised, there are no alternative minimum tax implications. Generally, the employee can recover any alternative minimum tax liability paid as a credit against ordinary income taxes owed in future years.

In the event of a sale of the shares received upon exercise of an ISO after two years from the date of grant and one year after the date of exercise (which we refer to as the “Holding Period”), any appreciation of the shares received above the exercise price should be a capital gain. The current federal tax rate applicable to long-term capital gains is 15 percent.

We will not be entitled to a tax deduction with respect to the grant or exercise of an ISO, or with respect to any disposition of such shares after the Holding Period. However, if shares acquired pursuant to the exercise of an ISO are sold by the employee before the end of the Holding Period, any gain on the sale will be ordinary income for the taxable year in which the sale occurs. Income will be realized only to the extent the amount received upon sale exceeds the employee’s adjusted basis for the stock. We will be entitled to a tax deduction in the amount of the ordinary income realized by the employee.

Non-incentive Stock Options.   An employee who is granted an NQSO under the Plan will not be subject to federal income tax upon the grant of the option, and we will not be entitled to a tax deduction by reason of such grant. Upon exercise of an NQSO, the spread or excess of the fair market value of the shares on the exercise date over the option price will be considered compensation taxable as ordinary income to the employee. Because it is treated as compensation, the spread is subject to withholding of applicable payroll taxes. We may claim a tax deduction in the amount of the taxable compensation realized by the employee.

Common Stock Awards.   Common stock awards made without restrictions are subject to federal tax to the recipient and are deductible to our company. Stock awards with restrictions (including both performance shares, restricted stock units and restricted shares) generally will not be subject to federal tax upon grant, and we will not be entitled to a tax deduction upon grant. When the restrictions lapse, the fair market value of shares free of restrictions will be considered compensation taxable as ordinary income to the employee and we may claim a tax deduction at the same time in the same amount.

Phantom Stock, Stock Unit Awards and SARs.   A director or employee who is granted a phantom share, stock unit or SAR award under the Plan will not be subject to federal tax upon the grant of the award and we will not be entitled to a tax deduction by reason of such grant. However, when common stock or cash is delivered to the participant pursuant to such an award, the participant will recognize ordinary income equal to the fair market value of the shares or cash delivered under the award, and we may claim a tax deduction at the same time in the same amount.

RESTRICTIONS ON RESALE
If you are one of our “affiliates” as defined in Rule 405 under the Securities Act, resales of shares of our common stock that you acquire under awards under the Plan will be subject to the volume, manner of sale and reporting requirements of Rule 144 under the Securities Act unless we register your shares under the Securities Act for resale pursuant to a separate prospectus. If you have been designated as one of our reporting officers for purposes of Section 16(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), resales of shares of our

A-6




common stock that you acquire under awards pursuant to the Plan may be “matched” with nonexempt purchases of our common stock within the previous or following six months for purposes of the “short‑swing profits” recovery provisions of Section 16(b). Further, in no event may you sell shares of our common stock, whether acquired pursuant to the Plan or otherwise, if you are in possession of material information regarding our company that has not been publicly disclosed.
You are advised to consult with counsel regarding your status as an affiliate and as a Section 16(b) reporting officer and the application of other federal and state securities laws to resales of shares of our common stock that you acquire pursuant to the Plan.
ADDITIONAL INFORMATION
We have filed a registration statement with respect to the shares of our common stock offered under the Plan with the Securities and Exchange Commission under the Securities Act. This registration statement incorporates by reference certain documents including our most recent Annual Report on Form 10-K and all subsequent reports on Form 10-K, Form 10-Q and Form 8-K, our proxy statements, and a description of our common stock filed under the Exchange Act, which documents are also incorporated by reference in this Prospectus.
We will promptly furnish, without charge, on your request, a copy of any of the documents incorporated by reference in the registration statement and in this Prospectus (other than exhibits to such documents which are not specifically incorporated by reference in such documents), as well as our most recent Annual Report to Shareholders, if any, and any and all documents supplementing or updating the information contained in this Prospectus (including Plan information previously delivered, if requested). Such requests should be addressed to: EnPro Industries, Inc., 5605 Carnegie Boulevard, Suite 500, Charlotte, North Carolina, 28209-4674, Attn: Julie Lentz.



A-7




EXHIBIT B

ENPRO INDUSTRIES, INC.
AMENDED AND RESTATED 2002 EQUITY COMPENSATION PLAN
RESTRICTED SHARE UNITS AWARD AGREEMENT

Vesting of Shares

(a)    Vesting Schedule. Subject to the provisions of paragraph (b) and (c) below, the Units shall become vested as follows if you remain employed with the Company and its subsidiaries through the dates specified: the Units will vest on the third anniversary of the Grant Date.

(b)    Termination of Employment Prior To Vesting. If your employment with the Company and its subsidiaries terminates prior to the Vesting Date of Units, then such Units shall be forfeited; provided, however, that the Units shall become immediately vested in the event of termination of your employment as a result of: (i) your death or (ii) your becoming totally disabled under the Company’s Long-Term Disability Plan, and provided, further that in the event of termination of your employment as a result of your retirement under the Company’s Salaried Pension Plan (or a similar pension plan maintained by a subsidiary that is your employer) the Units shall become immediately vested upon the earlier of the third anniversary of the Grant Date or the date of your death, in an amount equal to the product of the total number of Units awarded multiplied by the quotient of (i) the whole number of calendar months (with any portion of a calendar month greater than 15 days being considered a whole calendar month and any portion of a month constituting 15 or fewer days not being considered a whole calendar month) from the date of the award of the Units to the date of your termination of your employment as a result of your retirement, which shall not exceed 36, divided by (ii) 36.

(c)    Change in Control. Notwithstanding anything herein to the contrary, in the event of a Change in Control, the Units will vest as follows:

(i)    To the extent the Units are assumed, converted or replaced by the resulting entity in the Change in Control, if within two years after the date of the Change in Control you have a termination of employment either (A) by the Company other than for “Cause” or (B) by you for “Good Reason” (each as defined in paragraph (d) below), then the Units shall become vested in full and shall be paid as soon as administratively practicable (not more than 30 days) after the date of such termination of employment; provided, however, that if you are eligible for retirement under paragraph (b) above as of the date of such termination of employment, payment of the Units shall occur on the earlier of the third anniversary of the Grant Date or the date of your death to the extent necessary to avoid the imposition of any additional tax under Section 409A of the Code.

(ii)    To the extent the Units are not assumed, converted or replaced by the resulting entity in the Change in Control, then upon the Change in Control, the Units shall become vested in full and shall be paid as soon as administratively practicable (not more than 30 days) after the date of the Change in Control.

(d)    Definitions. For purposes of this Exhibit B, the following terms shall have the following meanings:

(i) “ Cause ” shall be defined as that term is defined in your offer letter or other applicable employment or management continuity agreement; or, if there is no such definition, “Cause” means your termination of employment with the Company due to (A) the willful and continued failure by you to substantially perform your duties with the Company, which failure causes material and demonstrable injury to the Company (other than any such failure resulting from your incapacity due to physical or mental illness), after a demand for substantial performance is delivered to you by the Company which specifically identifies the manner in which the Company believes that you have not substantially performed your duties, and after you have been given a period (hereinafter known as the "Cure Period") of at least thirty (30) days to correct your performance, (B) the willful engaging by you in other gross misconduct materially and demonstrably injurious to the Company, (C) conviction of a felony or a misdemeanor involving moral turpitude, (D) your willful receipt of an improper personal benefit that demonstrably injures the Company, and (E) your willful and material violation of the Company’s written policies after being

B-1



provided written notice of such violation and a Cure Period of at least thirty (30) days. For purposes hereof, no act, or failure to act, on your part shall be considered "willful" unless conclusively demonstrated to have been done, or omitted to be done, by you not in good faith and without reasonable belief that your action or omission was in the best interests of the Company.

(ii) “ Good Reason ” shall be defined as that term is defined in your offer letter or other applicable employment or management continuity agreement; or, if there is no such definition, “Good Reason” means, provided that you have complied with the Good Reason Process, the occurrence of any of the following events without your consent: (A) a material diminution in your responsibility, authority or duty; (B) a material diminution in your base salary except for across-the-board salary reductions based on the Company and its Subsidiaries’ financial performance similarly affecting all or substantially all management employees of the Company and its Subsidiaries; or (C) the relocation of the office at which you were principally employed immediately prior to a Change in Control to a location more than fifty (50) miles from the location of such office, or your being required to be based anywhere other than such office, except to the extent you were not previously assigned to a principal location and except for required travel on your employer’s business to an extent substantially consistent with your business travel obligations at the time of the Change in Control.

“ Good Reason Process ” means that (A) you reasonably determine in good faith that a Good Reason condition has occurred; (B) you notify the Company and its Subsidiaries in writing of the occurrence of the Good Reason condition within sixty (60) days of such occurrence; (C) you cooperate in good faith with the Company and its Subsidiaries’ efforts, for a period of not less than thirty (30) days following such notice (the “Cure Period”), to remedy the condition; (D) notwithstanding such efforts, the Good Reason condition continues to exist following the Cure Period; and (E) you terminate your employment for Good Reason within sixty (60) days after the end of the Cure Period. If the Company or its Subsidiaries cures the Good Reason condition during the Cure Period, and you terminate your employment with the Company and its Subsidiaries due to such condition (notwithstanding its cure), then you will not be deemed to have terminated your employment for Good Reason.

B-2



EXHIBIT C
ENPRO INDUSTRIES, INC.
AMENDED AND RESTATED 2002 EQUITY COMPENSATION PLAN, AS AMENDED
RESTRICTED SHARE UNITS AWARD AGREEMENT
Beneficiary Designation Form
Please complete this form only if you haven’t already designated a beneficiary for your Units granted under the Plan (defined below) or if you wish to change your current beneficiary designation. Completed forms should be returned to Julie Lentz at 5605 Carnegie Blvd., Suite 500, Charlotte, NC 28209 or julie.lentz@enproindustries.com.

GRANT DATE
 
NUMBER OF UNITS
[_________________]
 
[_____]

With respect to the above described award of Units under the EnPro Industries, Inc. Amended and Restated 2002 Equity Compensation Plan, as amended (the “Plan”), I hereby designate the following person or entity as my beneficiary with respect to any delivery of payment with respect to the Units in the event of my death.
If my beneficiary named below predeceases me, any such payment will be made to my estate.
Name and Address
of Beneficiary
 
Social Security #
 
Relationship
to Participant
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

I understand that I may change this designation at any time by executing a new form and delivering it to the Human Resources Department. This designation supersedes any prior beneficiary designation made by me under the Plan with respect to the Units.


 
 
 
 
 
Employee's Name (Please print)
Witness:______________________________________
 
 
 
 
Signature of Employee
 
 
 
 
 
Date:_______________________________
 
 
 



Received by the Human Resources Department this ____ day of _________, _____.


By:__________________________________________



C-1


Exhibit 10.11
ENPRO INDUSTRIES, INC.
AMENDED AND RESTATED 2002 EQUITY COMPENSATION PLAN
RESTRICTED SHARE UNITS AWARD AGREEMENT
FOR
MANAGEMENT STOCK PURCHASE DEFERRAL PLAN

THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING
SECURITIES THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.


GRANTED TO
 
GRANT DATE
 
NUMBER OF UNITS
[________________]

 
 
 
[_______]

This Restricted Share Units Award Agreement, including all Exhibits hereto (the “Agreement”), is made between EnPro Industries, Inc., a North Carolina corporation (the “Company”), and you, an employee of the Company or one of its subsidiaries.

The Company sponsors the EnPro Industries, Inc. Amended and Restated 2002 Equity Compensation Plan (the “Plan”). A prospectus describing the Plan is enclosed as Exhibit A. The Plan itself is available upon request, and its terms and provisions are incorporated herein by reference. When used herein, the terms which are defined in the Plan shall have the meanings given to them in the Plan, as modified herein (if applicable).

In recognition of the value of your contribution to the Company, you and the Company mutually covenant and agree as follows:

1.
Subject to the terms and conditions of the Plan and this Agreement, the Company awards to you the number of Restricted Share Units shown above (the “Units”), upon the grant date shown above (the “Grant Date”), in connection with your participation in the EnPro Industries, Inc. Management Stock Purchase Deferral Plan.

2.
You acknowledge having read the Prospectus and agree to be bound by all the terms and conditions of the Plan and this Agreement.

3.
The Units are issued pursuant to this Agreement and shall vest and become payable on the date(s) shown on the enclosed Exhibit B. You shall not have the right to sell or otherwise dispose of the Units or any interest therein.

4.
You shall have no right to vote any of the Units with respect to any matter presented for a vote of the holders of the Company’s Common Stock and, with respect to the Units, you shall not be entitled to receive any dividends on the Company’s Common Stock when such dividends are paid.

5.
Upon the vesting of Units, with respect to each vested Unit you shall be entitled to receive from the Company, on a deferred basis, either, at the Company’s election, (i) one share of Common Stock or (ii) a cash payment in amount equal to the fair market value (as defined in the Plan) of one share of Common Stock, to be paid upon the payment date to be determined in accordance with paragraph (d) of the enclosed Exhibit B (the “Payment Date”), plus, in either case (i) or (ii), a cash payment equal to the aggregate amount of cash dividends paid with respect to one share of Common Stock from the Grant Date to and including the Payment Date.

6.
You acknowledge and agree that upon your termination of employment with the Company and its subsidiaries prior to the Units becoming vested in accordance with paragraph 3 and Exhibit B of this Agreement or otherwise in accordance with the Plan, your right to receive payment on any such unvested Units shall automatically, without further act, terminate.




7.
You agree that you shall comply with (or provide adequate assurance as to future compliance with) all applicable securities laws and income tax laws as determined by the Company as a condition precedent to the payment of any amount pursuant to this Agreement. In addition, you agree that, upon request, you will furnish a letter agreement providing that (i) you will not distribute or resell in violation of the Securities Act of 1933, as amended, any of shares of the Company’s Common Stock delivered in payment of the Units (ii) you will indemnify and hold the Company harmless against all liability for any such violation and (iii) you will accept all liability for any such violation.

8.
By executing and returning the Beneficiary Designation Form attached as Exhibit C, you may designate a beneficiary to receive any payment to be made hereunder in the event of your death while in service with the Company. If you do not designate a beneficiary or if your designated beneficiary does not survive you, then your beneficiary will be your estate.

9.
The existence of this award shall not affect in any way the right or power of the Company to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company’s capital structure or its business, or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or prior preference stocks ahead of or convertible into, or otherwise affecting the Company’s Common Stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.
  
10.
Any notice which either party hereto may be required or permitted to give to the other shall be in writing and may be delivered personally, by intraoffice mail, by fax, by electronic mail or other electronic means, or via a postal service, postage prepaid, to such electronic mail or postal address and directed to such person as the Company may notify you from time to time; and to you at your electronic mail or postal address as shown on the records of the Company from time to time, or at such other electronic mail or postal address as you, by notice to the Company, may designate in writing from time to time.

11.
Regardless of any action the Company or your employer takes with respect to any or all income tax, payroll tax or other tax-related withholding (“Tax-Related Items”), you acknowledge that the ultimate liability for all Tax-Related Items owed by you is and remains your responsibility and that the Company and/or your employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of this award, including the grant, vesting and payment of the Units and the subsequent sale of any shares of Common Stock delivered in payment of any Units; and (ii) do not commit to structure the terms of the grant or any aspect of the Units to reduce or eliminate your liability for Tax-Related Items.

In the event the Company determines that it and/or your employer must withhold any Tax-Related Items as a result of your participation in the Plan, you agree as a condition of the grant of the Units to make arrangements satisfactory to the Company and/or your employer to enable it to satisfy all withholding requirements, including, but not limited to, withholding any applicable Tax-Related Items from the vesting and payment of the Units. In addition, you authorize the Company and/or your employer to fulfill its withholding obligations by all legal means, including, but not limited to: withholding Tax-Related Items from your wages, salary or other cash compensation your employer pays to you; withholding Tax-Related Items from the cash proceeds, if any, received upon sale of any shares of Common Stock received in payment of Units; and at the time of vesting or payment, withholding shares of Common Stock or the cash payment to be delivered in payment of the Units sufficient to meet minimum withholding obligations for Tax-Related Items. The Company may refuse to deliver shares of Common Stock, or the cash payment, upon vesting of the Units if you fail to comply with any withholding obligation.

12.
In the event any provision of this Agreement shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Agreement, and the Agreement shall be construed and enforced as if the illegal or invalid provision had not been included. This Agreement constitutes the final understanding between you and the Company regarding the Units. Any prior agreements, commitments or negotiations concerning the Units are superseded. Subject to the terms of the Plan, this Agreement may only be amended by a written instrument signed by both parties.




13. The validity, construction and effect of this Agreement are governed by, and subject to, the laws of the State of North Carolina and the laws of the United States, as provided in the Plan. For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by this grant or this Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of North Carolina and agree that such litigation shall be conducted solely in the courts of Mecklenburg County, North Carolina or the federal courts for the United States for the Western District of North Carolina, where this grant is made and/or to be performed, and no other courts.


IN WITNESS WHEREOF , the Company has caused this Agreement to be executed by its duly authorized officer, and you have hereunto set your hand, all effective as of the Grant Date listed above.


ENPRO INDUSTRIES, INC.


________________________________________________
[___________________]

EMPLOYEE


___________________________________________
[___________________]


























EXHIBIT A

(This document constitutes part of a
prospectus covering securities that
have been registered under
the Securities Act of 1933)
ARTICLE I PROSPECTUS

5,225,000 SHARES
ENPRO INDUSTRIES, INC.
COMMON STOCK
____________
AMENDED AND RESTATED 2002 EQUITY COMPENSATION PLAN
____________
This Prospectus relates to the offer and sale of up to 5,225,000 shares of our common stock to eligible employees under the EnPro Industries, Inc. Amended and Restated 2002 Equity Compensation Plan (the “Plan”). The Plan was most recently approved by our shareholders at the annual meeting held on April 30, 2014 and by our Board of Directors at its December 2015 meeting. The Plan terminates on February 10, 2019, unless terminated earlier by our Board of Directors.
The purpose of the Plan is to promote the interests of the shareholders by providing stock-based incentives to selected employees and “Outside Directors” to align their interests with shareholders and to motivate them to put forth maximum efforts toward the continued growth, profitability and success of our company.
The Plan is generally administered by the Compensation and Human Resources Committee of our Board (the “Committee”). See “Administration” below. The Plan is not a qualified pension, profit-sharing or stock bonus plan within the meaning of Section 401(a) of the Internal Revenue Code of 1986, as amended (the “Code”). Further, in our view, the Plan is not subject to the provisions of the Employee Retirement Income Security Act of 1974.
For additional information concerning awards made under the Plan, please contact Marc Mulliss at 704-731-1553.
This document constitutes part of a prospectus covering securities that have been registered under the Securities Act of 1933, as amended (the “Securities Act”).
_______________
The date of this Prospectus is February 16, 2016.





SUMMARY OF PLAN
The following summary of the Plan is subject to, and qualified in its entirety by reference to, all the provisions of the Plan, a copy of which may be obtained upon request.
Eligibility
Salaried, full-time employees of us or of our subsidiaries may participate in the Plan. The Committee, in its discretion, will select the award recipients and the nature and amount of any awards. The Committee may, within certain limits, delegate to our CEO and other senior officers authority to make such award determinations.
In addition, members of our Board of Directors and any of our subsidiary corporations of which we own more than 50% of the voting stock, excluding directors who are employees or former employees of us or our subsidiaries within five years after their termination of employment (“Outside Directors”) are eligible to receive awards of phantom shares as described below.
Number of Shares
There are 5,225,000 shares of our common stock available for issuance under the Plan. If an award made under the Plan terminates, expires, lapses or is canceled, the shares covered by that award remain available for issuance under the Plan. However, shares used to pay any option exercise price or to satisfy a tax withholding obligation are deemed to constitute shares delivered under the Plan and will not be available for future issuance under the Plan. Shares of our common stock issued pursuant to the Plan may be original issue shares or treasury shares.
Awards to Eligible Employees
Pursuant to the Plan, the Committee may award eligible employees incentive stock options (“ISOs”), nonqualified stock options (“NQSOs”), stock appreciation rights (“SARs”), performance shares, restricted stock units, restricted stock shares and other awards. Each award will be evidenced by an award document setting forth the terms and provisions applicable to the award.
Stock Options. The Plan provides for the grant of options to purchase shares of our common stock at option prices which are not less than the fair market value of shares of our common stock on the grant date. In making an option award, the Committee determines whether the award will be either an ISO or NQSO. The Committee also establishes all of the other terms and conditions of each option award at the time of grant, including any vesting requirements. The applicable award document will specify the term of the option (up to a maximum of ten years), and the extent to which options may be exercised during their terms, including in the event of your death, disability or termination of employment. You may pay the option exercise price either in cash or by tendering shares of our common stock with a fair market value at the date of the exercise equal to the portion of the exercise price which you do not pay in cash. In addition, the Committee may from time to time allow cashless exercises by any means which it determines to be consistent with the Plan’s purposes and applicable law. You will have no rights as a shareholder until you become the holder of record of shares of our common stock issued upon exercise of such stock options.
Stock Appreciation Rights. The Plan also provides for the grant of SARs, which entitle holders, upon exercise, to receive shares of our common stock with a value equal to the difference between (i) the fair market value on the exercise date of the shares with respect to which an SAR is exercised and (ii) the grant price of the SAR, which shall not be less than the fair market value of such shares on the grant date. The Committee establishes all of the terms and conditions of each SAR at the time of grant, including any vesting requirements; provided that the term may not exceed ten years from the grant date and each SAR must be settled only in common stock..

A-2




Performance Shares . The Committee may make awards of performance shares (which may be actual shares of our common stock or phantom shares) subject to conditions established by the Committee that may include attainment of specific performance objectives. Performance share awards may include the awarding of additional shares upon attainment of the specified performance objectives.
Restricted Shares. A restricted share is an actual share of our common stock issued in your name that is subject to certain vesting requirements and which we hold until the applicable vesting date, at which time the share is released to you. The Committee establishes all of the terms and conditions of each award at the time of grant, including any vesting requirements, which are set forth in an award document. Restricted share awards that vest based on continued employment generally have a minimum three-year vesting period, though they may vest earlier in the event of death, disability or retirement. Prior to vesting, you may vote and receive cash dividends with respect to restricted shares as specified in your award document.
Restricted Stock Units . The Committee may make awards of restricted stock units which is the right to receive our common stock upon the vesting of the restricted stock unit. The Committee establishes all of the terms and conditions of each award at the time of grant, including any vesting requirements, which are set forth in an award document. Restricted stock units that vest based on continued employment generally have a minimum three-year vesting period, though they may vest earlier in the event of death, disability or retirement. If we pay any common stock dividends prior to the vesting of the restricted stock units, recipients of the restricted stock units will not be entitled to receive any such dividends when such dividends are paid. Recipients have no right to vote any restricted stock units on any matter presented to a vote of the company’s shareholders. Upon vesting, the recipient would be entitled to receive, for each restricted stock units vesting, one share of common stock plus a cash payment equal to the aggregate amount of cash dividends paid with respect to one share of common stock from the date the award was made to and including the date of vesting.
Other Awards . The Committee may make other awards under the Plan in units or phantom shares, the value of which is based, in whole or in part, on the value of our common stock. The Committee may provide that such awards are to be paid in cash, in shares, or in a combination of both cash and shares, under such terms and conditions as the Committee may establish, which are set forth in an award document.
Awards of Phantom Shares to Outside Directors
Pursuant to the Plan, the Committee will make a one-time grant of phantom shares, in an amount to be determined by the Committee, to each Outside Director upon his or her election to the board. Thereafter, each Outside Director will receive an annual grant of phantom shares, in an amount and on terms determined by the Committee. In addition, the Committee may, from time to time, make additional grants of phantom shares to Outside Directors.
The terms and provisions of the phantom shares are as follows:
Vesting . Phantom shares granted to Outside Directors are fully vested at grant.
Dividend Equivalents . Dividend equivalents accrue on all phantom shares granted to Outside Directors. Upon the payment date of each dividend declared on our common stock, that number of additional phantom shares will be credited to each Outside Director’s award which has an equivalent fair market value to the aggregate amount of dividends which would be paid if the number of the Outside Director’s phantom shares were actual shares of the common stock. Dividend equivalents are vested at the time the dividend is paid.
Payment . Upon termination of service of an Outside Director as a member of the Board of Directors (the “termination date”), we will pay to the Outside Director all phantom shares credited to the Outside Director on the termination date in the form of one share of our common stock for each whole phantom share, with cash for any fractional phantom share based on the fair market value of our common stock on the applicable date. The shares of common stock are paid and delivered as soon as administratively practicable after the termination date.

A-3




Fair Market Value
For all purposes of the Plan, the fair market value of a share of our common stock will be the closing selling price on the relevant date (as of 4:00 p.m. New York, New York time), as reported on the New York Stock Exchange – Composite Transactions listing (or similar report), or, if no sale was made on such date, on the next preceding day on which a sale was made.
Award Limits
The following limits apply to awards made under the Plan:
•
In no event may any individual receive awards under the Plan for a given calendar year covering in excess of 500,000 shares of our common stock; and
•
We will not grant ISOs covering in the aggregate more than 1,000,000 shares of our common stock during the term of the Plan.
Transferability of Awards
You may not transfer any award granted under this Plan other than by will or the laws of descent and distribution or by such other means as the Committee may approve from time to time.
Withholding for Payment of Taxes
The Committee will have the right to determine the amount of any Federal, state or local required withholding tax, and may require that any such required withholding tax be satisfied by withholding shares of our common stock or other amounts which would otherwise be payable under this Plan.
Changes in Capitalization and Similar Changes
In the event of any corporate event or transaction (including a change in common stock or capitalization or our company), such as a merger, consolidation, reorganization, recapitalization, separation, partial or complete liquidation, stock dividend, stock split, reverse stock split, split up, spin off, or other distribution of stock or property or our company, a combination or exchange of our common stock, dividend in kind or other similar change in capital structure, number of outstanding shares of our common stock, distribution (other than normal cash dividends) to our shareholders or any similar corporate event or transaction, the aggregate number of shares of our common stock with respect to which awards may be made under the Plan, and the terms, types of shares and number of shares of any outstanding awards under the Plan will be equitably adjusted by the Committee in its discretion to preserve the benefit of the award for both you and us.
Change in Control
The Plan provides that, in the event of a change in control of our company (as defined in the Plan), all options awarded prior to December 2, 2015 will be fully exercisable as of the date of the change in control and will remain exercisable for a period of two years thereafter (not to exceed the original award term). The Committee may also take actions with respect to options awarded after December 2, 2015 and outstanding awards of SARS, performance shares, restricted stock units, restricted shares or other awards.
Amendment and Termination of Plan
Our Board of Directors has the power to amend, modify or terminate the Plan on a prospective basis, provided that the Board of Directors may condition any amendment to the Plan on shareholder approval if it deems shareholder approval to be necessary or appropriate.

A-4




Administration
The Plan is administered by the Committee. Under the Plan, the Committee has the authority to (i) select the employees to receive awards from time to time, (ii) make awards in such amounts as it determines, (iii) impose limitations, restrictions and conditions upon awards as it deems appropriate, (iv) establish performance targets and allocation formulas for awards of performance shares, restricted shares or other awards intended to be “qualified performance‑based compensation” under Code Section 162(m), (v) certify the attainment of performance goals, if applicable, as required by Code Section 162(m), (vi) interpret the Plan and adopt, amend and rescind administrative guidelines and other rules and regulations relating to the Plan, (vii) correct any defect or omission or reconcile any inconsistency in the Plan or any award granted thereunder and (viii) make all other determinations and take all other actions necessary or advisable for the implementation and administration of the Plan. The Committee may delegate its authority under the Plan to the extent permitted by applicable law. All determinations and decisions made by the Committee pursuant to the Plan will be final, conclusive and binding.
Code Section 162(m)
Because stock options and SARs granted under the Plan must have an exercise price equal at least to fair market value at the date of grant, compensation from the exercise of stock options and SARs should be treated as “qualified performance‑based compensation” for Code Section 162(m) purposes.
In addition, the Plan authorizes the Committee to make awards of performance shares, restricted shares and other awards that are conditioned on the satisfaction of certain performance criteria. For awards intended to result in “qualified performance‑based compensation,” the Committee will establish prior to or within 90 days after the start of the applicable performance period the applicable performance conditions. The Committee may select from the following performance measures for such purpose: total sales, sales growth (with or excluding acquisitions), revenue-based measures for particular products, product lines or product groups, net income (before or after asbestos charges and/or other selected items), earnings per share of Common Stock (before or after asbestos and/or other selected items), pretax income (before or after asbestos charges and/or other selected items), consolidated operating income (pre or post-tax and before or after asbestos charges and/or other selected items), segment operating income (pre or post-tax and before or after asbestos charges and/or other selected items), earnings before interest and taxes (before or after asbestos charges and/or other selected items), earnings before interest, taxes, depreciation and amortization (before or after asbestos charges and/or other selected items), free cash flow (pre or post-tax and before or after asbestos charges and/or other selected items), asbestos-related cash outflows (or changes in asbestos-related cash outflow), new asbestos commitments (or changes in new asbestos commitments), return on equity, assets, investment, invested capital, capital, total or net capital employed, or sales (pre or post-tax and before or after asbestos charges and/or other selected items), cash flow return on investments, total shareholder return, Common Stock price increases, total business return (before or after asbestos charges and/or other selected items), economic value added or similar “after cost of capital” measures, return on sales or margin rate, in total or for a particular product, product line or product group, working capital (or any of its components or related metrics), working capital improvement, market share, measures of customer satisfaction (including survey results or other measures of satisfaction), safety (determined by reference to recordable or lost time rates, first aids, near misses or a combination of two or more such measures or other measures), measures of operating efficiency such as productivity, cost of non-conformance, cost of quality, on time delivery and efficiency ratio and strategic objectives with specifically identified areas of emphasis such as cost reduction, acquisition assimilation synergies, acquisitions or organization restructuring. The Committee will state the performance conditions in the form of an objective, nondiscretionary formula and will certify in writing the attainment of such performance conditions prior to any payout with respect to such awards. The Committee in its discretion may adjust downward the permissible amount of any such award, even if the performance objective is achieved.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of the current federal income tax consequences of the granting and exercise of stock options and of awards of common stock (including both performance shares and restricted stock), phantom stock, stock units and SARs under the Plan. It does not attempt to describe all possible federal or other tax

A-5




consequences of participation in the Plan. Furthermore, the tax consequences of awards made under the Plan are complex and subject to change, and some variation of the described rules may be applicable to any particular participant’s tax situation. The summary assumes in each case that there will no violation of the deferred compensation rules of the Internal Revenue Service, which would subject the affected participants to immediate taxation and penalties on unvested awards.

Incentive Stock Options.   An employee who is granted an ISO under the Plan will not be subject to federal income tax upon the grant or exercise of the option. However, upon the exercise of an ISO, the difference between the exercise price for the option and its fair market value on the date of exercise, which is commonly referred to as the spread, is a tax preference item that must be taken into account in determining the employee’s alternative minimum tax. If the employee disposes of the shares in the same year the option was exercised, there are no alternative minimum tax implications. Generally, the employee can recover any alternative minimum tax liability paid as a credit against ordinary income taxes owed in future years.

In the event of a sale of the shares received upon exercise of an ISO after two years from the date of grant and one year after the date of exercise (which we refer to as the “Holding Period”), any appreciation of the shares received above the exercise price should be a capital gain. The current federal tax rate applicable to long-term capital gains is 15 percent.

We will not be entitled to a tax deduction with respect to the grant or exercise of an ISO, or with respect to any disposition of such shares after the Holding Period. However, if shares acquired pursuant to the exercise of an ISO are sold by the employee before the end of the Holding Period, any gain on the sale will be ordinary income for the taxable year in which the sale occurs. Income will be realized only to the extent the amount received upon sale exceeds the employee’s adjusted basis for the stock. We will be entitled to a tax deduction in the amount of the ordinary income realized by the employee.

Non-incentive Stock Options.   An employee who is granted an NQSO under the Plan will not be subject to federal income tax upon the grant of the option, and we will not be entitled to a tax deduction by reason of such grant. Upon exercise of an NQSO, the spread or excess of the fair market value of the shares on the exercise date over the option price will be considered compensation taxable as ordinary income to the employee. Because it is treated as compensation, the spread is subject to withholding of applicable payroll taxes. We may claim a tax deduction in the amount of the taxable compensation realized by the employee.

Common Stock Awards.   Common stock awards made without restrictions are subject to federal tax to the recipient and are deductible to our company. Stock awards with restrictions (including both performance shares, restricted stock units and restricted shares) generally will not be subject to federal tax upon grant, and we will not be entitled to a tax deduction upon grant. When the restrictions lapse, the fair market value of shares free of restrictions will be considered compensation taxable as ordinary income to the employee and we may claim a tax deduction at the same time in the same amount.

Phantom Stock, Stock Unit Awards and SARs.   A director or employee who is granted a phantom share, stock unit or SAR award under the Plan will not be subject to federal tax upon the grant of the award and we will not be entitled to a tax deduction by reason of such grant. However, when common stock or cash is delivered to the participant pursuant to such an award, the participant will recognize ordinary income equal to the fair market value of the shares or cash delivered under the award, and we may claim a tax deduction at the same time in the same amount.

RESTRICTIONS ON RESALE
If you are one of our “affiliates” as defined in Rule 405 under the Securities Act, resales of shares of our common stock that you acquire under awards under the Plan will be subject to the volume, manner of sale and reporting requirements of Rule 144 under the Securities Act unless we register your shares under the Securities Act for resale pursuant to a separate prospectus. If you have been designated as one of our reporting officers for purposes of Section 16(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), resales of shares of our

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common stock that you acquire under awards pursuant to the Plan may be “matched” with nonexempt purchases of our common stock within the previous or following six months for purposes of the “short‑swing profits” recovery provisions of Section 16(b). Further, in no event may you sell shares of our common stock, whether acquired pursuant to the Plan or otherwise, if you are in possession of material information regarding our company that has not been publicly disclosed.
You are advised to consult with counsel regarding your status as an affiliate and as a Section 16(b) reporting officer and the application of other federal and state securities laws to resales of shares of our common stock that you acquire pursuant to the Plan.
ADDITIONAL INFORMATION
We have filed a registration statement with respect to the shares of our common stock offered under the Plan with the Securities and Exchange Commission under the Securities Act. This registration statement incorporates by reference certain documents including our most recent Annual Report on Form 10-K and all subsequent reports on Form 10-K, Form 10-Q and Form 8-K, our proxy statements, and a description of our common stock filed under the Exchange Act, which documents are also incorporated by reference in this Prospectus.
We will promptly furnish, without charge, on your request, a copy of any of the documents incorporated by reference in the registration statement and in this Prospectus (other than exhibits to such documents which are not specifically incorporated by reference in such documents), as well as our most recent Annual Report to Shareholders, if any, and any and all documents supplementing or updating the information contained in this Prospectus (including Plan information previously delivered, if requested). Such requests should be addressed to: EnPro Industries, Inc., 5605 Carnegie Boulevard, Suite 500, Charlotte, North Carolina, 28209-4674, Attn: Julie Lentz.



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EXHIBIT B

ENPRO INDUSTRIES, INC.
AMENDED AND RESTATED 2002 EQUITY COMPENSATION PLAN
RESTRICTED SHARE UNITS AWARD AGREEMENT
FOR
MANAGEMENT STOCK PURCHASE DEFERRAL PLAN


Vesting of Shares

(a)     Vesting Schedule . Subject to the provisions of paragraph (b) and (c) below, the Units shall become vested as follows if you remain employed with the Company and its subsidiaries through the dates specified: the Units will vest on the third anniversary of the Grant Date (the “Vesting Date”).

(b)     Termination of Employment Prior To Vesting . If your employment with the Company and its subsidiaries terminates prior to the Vesting Date of Units, then such Units shall be forfeited; provided , however , that the Units shall become immediately vested in the event of termination of your employment as a result of: (i) your death or (ii) your becoming totally disabled under the Company’s Long-Term Disability Plan, and provided, further that in the event of termination of your employment as a result of your retirement under the Company’s Salaried Pension Plan (or a similar pension plan maintained by a subsidiary that is your employer) the Units shall become immediately vested upon retirement in an amount equal to the product of the total number of Units awarded multiplied by the quotient of (i) the whole number of calendar months (with any portion of a calendar month greater than 15 days being considered a whole calendar month and any portion of a month constituting 15 or fewer days not being considered a whole calendar month) from the date of the award of the Units to the date of your termination of your employment as a result of your retirement, which shall not exceed 36, divided by (ii) 36.

(c)     Change in Control . Notwithstanding anything herein to the contrary, in the event of a Change in Control, the Units will vest as follows:

(i)    To the extent the Units are assumed, converted or replaced by the resulting entity in the Change in Control, if within two years after the date of the Change in Control you have a termination of employment either (A) by the Company other than for “Cause” or (B) by you for “Good Reason” (each as defined in paragraph (e) below), then the Units shall become vested in full.

(ii)    To the extent the Units are not assumed, converted or replaced by the resulting entity in the Change in Control, then the Units shall become vested in full upon the Change in Control.

(d)     Payment of Vested Units . Vested Units are payable on a deferred basis at the same time that your “Payment Sub-Account” for the 2015 “Plan Year” under the EnPro Industries, Inc. Management Stock Purchase Deferral Plan is payable, based on your prior election under such plan.

(e)     Definitions . For purposes of this Exhibit B, the following terms shall have the following meanings:

(i)    “Cause” shall be defined as that term is defined in your offer letter or other applicable employment or management continuity agreement; or, if there is no such definition, “Cause” means your termination of employment with the Company due to (A) the willful and continued failure by you to substantially perform your duties with the Company, which failure causes material and demonstrable injury to the Company (other than any such failure resulting from your incapacity due to physical or mental illness), after a demand for substantial performance is delivered to you by the Company which specifically identifies the manner in which the Company believes that you have not substantially performed your duties, and after you have been given a period (hereinafter known as the "Cure Period") of at least thirty (30) days to correct your performance, (B) the willful engaging by you in other gross misconduct materially and demonstrably injurious to the Company, (C) conviction of a felony or a misdemeanor involving moral turpitude, (D) your willful receipt of an improper personal benefit that demonstrably

B-1



injures the Company, and (E) your willful and material violation of the Company’s written policies after being provided written notice of such violation and a Cure Period of at least thirty (30) days. For purposes hereof, no act, or failure to act, on your part shall be considered "willful" unless conclusively demonstrated to have been done, or omitted to be done, by you not in good faith and without reasonable belief that your action or omission was in the best interests of the Company.

(ii)    “Good Reason” shall be defined as that term is defined in your offer letter or other applicable employment or management continuity agreement; or, if there is no such definition, “Good Reason” means, provided that you have complied with the Good Reason Process, the occurrence of any of the following events without your consent: (A) a material diminution in your responsibility, authority or duty; (B) a material diminution in your base salary except for across-the-board salary reductions based on the Company and its Subsidiaries’ financial performance similarly affecting all or substantially all management employees of the Company and its Subsidiaries; or (C) the relocation of the office at which you were principally employed immediately prior to a Change in Control to a location more than fifty (50) miles from the location of such office, or your being required to be based anywhere other than such office, except to the extent you were not previously assigned to a principal location and except for required travel on your employer’s business to an extent substantially consistent with your business travel obligations at the time of the Change in Control.

(iii)    “Good Reason Process” means that (A) you reasonably determine in good faith that a Good Reason condition has occurred; (B) you notify the Company and its Subsidiaries in writing of the occurrence of the Good Reason condition within sixty (60) days of such occurrence; (C) you cooperate in good faith with the Company and its Subsidiaries’ efforts, for a period of not less than thirty (30) days following such notice (the “Cure Period”), to remedy the condition; (D) notwithstanding such efforts, the Good Reason condition continues to exist following the Cure Period; and (E) you terminate your employment for Good Reason within sixty (60) days after the end of the Cure Period. If the Company or its Subsidiaries cures the Good Reason condition during the Cure Period, and you terminate your employment with the Company and its Subsidiaries due to such condition (notwithstanding its cure), then you will not be deemed to have terminated your employment for Good Reason.

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EXHIBIT C
ENPRO INDUSTRIES, INC.
AMENDED AND RESTATED 2002 EQUITY COMPENSATION PLAN
RESTRICTED SHARE UNITS AWARD AGREEMENT
FOR
MANAGEMENT STOCK PURCHASE DEFERRAL PLAN

Beneficiary Designation Form
Please complete this form only if you haven’t already designated a beneficiary for your Units granted under the Plan or if you wish to change your current beneficiary designation. Completed forms should be returned to Julie Lentz at 5605 Carnegie Blvd., Suite 500, Charlotte, NC 28209 or julie.lentz@enproindustries.com.
GRANT DATE
 
NUMBER OF UNITS
 
 
[_____]

With respect to the above described award of Units under the EnPro Industries, Inc. Amended and Restated 2002 Equity Compensation Plan (the “Plan”), I hereby designate the following person or entity as my beneficiary with respect to any delivery of payment with respect to the Units in the event of my death.
If my beneficiary named below predeceases me, any such payment will be made to my estate.
Name and Address
of Beneficiary
 
Social Security #
 
Relationship
to Participant
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

I understand that I may change this designation at any time by executing a new form and delivering it to the Human Resources Department. This designation supersedes any prior beneficiary designation made by me under the Plan with respect to the Units.


 
 
 
 
 
Employee's Name (Please print)
Witness:______________________________________
 
 
 
 
Signature of Employee
 
 
 
 
 
Date:_______________________________
 
 
 


Received by the Human Resources Department this ____ day of _________, _____.


By:__________________________________________


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Exhibit 10.12
ENPRO INDUSTRIES, INC. LONG-TERM INCENTIVE PLAN
2016-2018
AWARD GRANT
(Performance Shares)

THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING
SECURITIES THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.


Name :    [____________]

TARGET LTIP AWARD

You have been granted by EnPro Industries, Inc. (the "Company") a Target LTIP Award under the Company's Long-Term Incentive Plan for the three-year performance period 2016 through 2018, comprised of the following:

Target Performance Shares Award:    [____________]

Each Performance Share will be equivalent to one share of EnPro common stock.

Your award is subject to the terms and conditions of the Long-Term Incentive Plan, as amended, and, with respect to your Performance Shares Award, the Company's Amended and Restated 2002 Equity Compensation Plan, as amended (collectively, the “Plan Documents”). If this award agreement varies from the terms of the Plan Documents, the Plan Documents will control. Attached as Appendix A is a copy of the Long-Term Incentive Plan, as amended, and attached as Appendix B is a copy of the prospectus for the Equity Compensation Plan.

PERFORMANCE GOALS

The number of Performance Shares you earn will depend on the performance of the Company relative to the performance goal for the three-year performance cycle from January 1, 2016 through December 31, 2018 (the “Performance Cycle”). The performance goals with respect to the Performance Shares are attached as Appendix C hereto.

The determination of whether the performance goals have been met will be made by the Compensation Committee following the end of the Performance Cycle.

OTHER IMPORTANT INFORMATION

•
Performance Shares will not receive dividend equivalents accrued in cash.

•
You will not earn any Performance Shares if the Company's performance during the 2016-2018 period is below minimum performance.

•
If actual performance equals or exceeds minimum performance, the number of Performance Shares earned will range from 50% to 200% of your Target Performance Share award based on attainment against the performance goal.

•
In order to receive any Performance Shares, you must remain employed with the Company through December 31, 2018, except in the case of death, disability, retirement or in connection with a Change in Control as discussed below. If your employment terminates prior to December 31, 2018 for any reason other than death, disability, retirement or in connection with a Change in Control, you will forfeit all Performance Shares.




•
Performance Shares earned at the end of the Performance Cycle, if any, will be paid in actual shares of Company common stock, less the number of shares to satisfy applicable withholding taxes. Any Performance Shares earned will be issued as soon as practicable following the Compensation Committee’s certification of performance for the Performance Cycle. Notwithstanding the foregoing, the Company reserves the right in its sole discretion to pay the value of any Performance Shares in cash instead of issuing actual shares of Company common stock.

•
If you become totally disabled under the Company's Long-Term Disability Plan or retire under the Company's Salaried Pension Plan (or a similar pension plan maintained by a subsidiary that is your employer) during the Performance Cycle, you will receive a pro rata payout at the end of the Performance Cycle, based upon the time portion of the cycle during which you were employed. The actual payout will not occur until after the end of the Performance Cycle, at which time the financial performance for the entire Performance Cycle will be used to determine the size of the award in that event.

•
If you die during the Performance Cycle, any beneficiary you have designated by will (or, if you do not so designate a beneficiary or your designated beneficiary fails to survive you, your estate) will receive a pro rata payout based upon the financial results calculated for the portion of the Performance Cycle through the end of the fiscal quarter following your death.

•
In the event of a Change in Control during the Performance Cycle, see Appendix D.

•
The performance factors and weightings applicable to your award are determined based upon your position with the Company.

•
“Net After-Tax Shares” (as defined below) acquired upon vesting and payment of the Performance Shares must be held by you until the first anniversary of the end of the Performance Cycle. For purposes hereof, “Net After-Tax Shares” means those shares, as determined by the Company, representing the total number of shares remaining after taking into account the amount of all applicable taxes with respect to the payment of the vested Performance Shares, assuming your maximum applicable federal, state and local tax rates for such purpose.
 
•
The Compensation Committee retains the right in its sole discretion to reduce any award which would otherwise be payable, unless there has been a Change in Control, as defined in the Equity Compensation Plan.

•
Any income you derive from a payout of Performance Shares will not be considered eligible earnings for Company or subsidiary pension plans, savings plans, profit sharing plans or other benefit plans.

FOR MORE INFORMATION

If you have any questions about the Performance Shares, the Plan Documents or need additional information, contact Marc Mullis at (704) 731-1553.

2


APPENDIX A

ENPRO INDUSTRIES, INC.
LONG-TERM INCENTIVE PLAN
(2015 AMENDMENT AND RESTATEMENT)
PURPOSE
The EnPro Industries, Inc. Long-Term Incentive Plan (the “Plan”) was established effective as of January 1, 2003 (the “Effective Date”) to provide long-term incentive compensation to key employees who are in a position to influence the performance of EnPro Industries, Inc. (the “Company”), and thereby enhance shareholder value over time. The Plan provides a significant additional financial opportunity and complements other parts of the Company’s total compensation program for key employees.
ELIGIBILITY AND PERFORMANCE PERIODS
The Committee (as defined in the “Plan Administration” section of the Plan) will determine which employees of the Company are eligible to participate in the Plan from time to time. Participants will be selected within 90 days after the beginning of each multi-year performance cycle (“Performance Period”). Each Performance Period will be of two or more years duration as determined by the Committee and will commence on January 1 of the first year of the Performance Period. A new Performance Period will commence each year unless the Committee determines otherwise.
TARGET AWARDS
At the time a Participant is selected for participation in the Plan for a Performance Period, the Committee will assign the Participant a Target LTIP Award to be earned if the Company’s target performance levels are met for the Performance Period (the “Target LTIP Award”). The Target LTIP Award may be expressed as a dollar amount, a number of Performance Shares under the Company’s Equity Compensation Plan, or a combination of a dollar amount and a number of Performance Shares. Any portion of the Target LTIP Award made in the form of Performance Shares will be evidenced by a Performance Shares award agreement consistent with the provisions of the Equity Compensation Plan.
MAXIMUM AND THRESHOLD AWARDS
At the time a Participant is selected for participation in the Plan for a Performance Period, the Participant will be assigned maximum and threshold award levels, expressed as a percentage of the Target LTIP Award. Maximum award level represents the maximum percentage of the Target LTIP Award that may be paid to a Participant for a Performance Period based on performance above target performance levels. Threshold award level represents the minimum percentage of the Target LTIP Award that may be paid to a Participant for a Performance Period based on performance below target performance levels. Performance below the threshold performance award level will earn no incentive payments.
Under no circumstances will any Participant earn an award for a Performance Period expressed in dollars exceeding $2,500,000. In addition, any award of Performance Shares hereunder shall be subject to the individual award limit applicable under the Equity Compensation Plan.
PERFORMANCE MEASURES
The Committee may use any quantitative or qualitative performance measure or measures that it determines to use to measure the level of performance of the Company or any individual participant during a Performance Period.
Performance measures that may be used under the Plan include, but are not limited to, the following, which shall be considered “qualifying performance measures” and which may be used individually, alternatively, or in any combination, applied to the Company as a whole or to a division or business unit or related company, and measured either annually or cumulatively over a period of years, on an absolute basis

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or relative to a pre-established target, to a previous year’s results or to a designated comparison group, in each case as specified by the Committee in the award. Each performance measure may be determined on a pre-tax or after tax basis, as specified by the Committee at the time of the award:
Revenue-related measures:
•
Total sales
•
Sales growth
•
Sales growth excluding acquisitions
•
Other specific revenue-based measures for particular products, product lines or product groups
Income-based measures:
•
Net income
•
Earnings per share
•
EPS before or after asbestos and/or other selected items
•
Net income before or after asbestos charges and/or other selected items
•
Pretax income before or after asbestos charges and/or other selected items
•
Consolidated operating income before or after asbestos charges and/or other selected items
•
Pretax consolidated operating income before or after asbestos charges and/or other selected items
•
Segment operating income before or after asbestos charges and/or other selected items
•
Pretax segment operating income before or after asbestos charges and/or other selected items
•
Earnings before interest and taxes (EBIT) before or after asbestos charges and/or other selected items
•
EBITDA before or after asbestos charges and/or other selected items
Cash flow-based measures:
•
Free cash flow before or after asbestos charges and/or other selected items
•
Pretax free cash flow before or after asbestos charges and/or other selected items
•
Asbestos-related cash outflow (or changes in asbestos-related cash outflow)
•
Pretax asbestos-related cash outflow (or pretax changes in asbestos-related cash outflow)
•
New asbestos commitments (or changes in new asbestos commitments)
Return-based measures:
•
Return on equity, assets, investment, invested capital, capital, total or net capital employed, or sales, before or after asbestos charges and/or other selected items
•
Pretax return on equity, assets, investment, invested capital, capital, total or net capital employed, or sales, before or after asbestos charges and/or other selected items
•
Total shareholder return
•
Share price increase

•
Total business return before or after asbestos charges and/or selected items
•
Economic value added or similar “after cost of capital” measures
•
Return on sales or margin rate, in total or for a particular product, product line or product group
•
Cash flow return on investment

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Other measures:
•
Working capital (or any of its components or related metrics, e.g. DSO, DSI, DWC, working capital to sales ratio)
•
Working capital improvement
•
Market share
•
Measures of customer satisfaction (including survey results or other measures of satisfaction)
•
Safety (determined by reference to recordable or lost time rates, first aids, near misses or a combination of two or more such measures or other measures)
•
Measures of operating efficiency, e.g. productivity, cost of non-conformance or cost of quality, on time delivery, efficiency ratio (controllable expenses divided by operating income or other efficiency metric)
•
Strategic objectives with specifically identified areas of emphasis, e.g. cost reduction, acquisition assimilation synergies, acquisitions, organization restructuring
PERFORMANCE GOALS
•
The Committee will designate, within 90 days of the beginning of each Performance Period:
•
The performance measures and calculation methods to be used for the Performance Period;
•
A schedule for each performance measure relating achievement levels for the performance measure to incentive award levels as a percentage of Participants’ Target LTIP Awards; and
•
The relative weightings of the performance measures for the Performance Period.
The performance goals established by the Committee for a Performance Period are intended to satisfy the “objective compensation formula” requirements of Treasury Regulations Section 1.162-27(e)(2). To the degree consistent with Section 162(m) of the Internal Revenue Code, or any successor section thereto (the “Code”), the Committee may adjust, modify or amend the above criteria, either in establishing any performance measure or in determining the extent to which any performance measure has been achieved. In particular, the Committee shall have the authority to make equitable adjustments in the criteria where necessary (i) in response to changes in applicable laws or regulations, (ii) to account for items of gain, loss, or expense that are related to the disposal (or acquisition) of a business or change in accounting principles that was not anticipated at the time an award was made, (iii) to account for adjustments in expense due to re-measurement of pension benefits, (iv) to remove the effect of charges for asbestos, (v) to account for restructurings, discontinued operations, and any other items deemed by the Committee to be non-recurring in nature or otherwise not reflective of operating performance that were not anticipated at the time an award was made, and (vi) to reflect other unusual, non-recurring, or unexpected items similar in nature to the foregoing as determined in good faith by the Committee consistent with the principles set forth in section 162(m) of the Code and the regulations thereunder. Such adjustments may be made with respect to the performance of any subsidiary, division, or operating unit, as applicable, shall be made in a consistent manner from year to year, and shall be made in accordance with the objectives of the Plan and the requirements of Section 162(m) of the Code.
PERFORMANCE CERTIFICATION
As soon as practicable following the end of each Performance Period and prior to any award payments for the Performance Period, the Committee will certify the Company’s performance with respect to each performance measure used for that Performance Period.
  AWARD CALCULATION AND PAYMENT
For each Performance Period, individual incentive awards will be calculated and paid to each Participant who is still employed with the Company (subject to the special provisions below for employees who terminate employment due to death, disability or retirement) as soon as practicable following the

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Committee’s certification of performance for the Performance Period. The amount of a Participant’s incentive award to be paid based on each individual performance measure will be calculated based on the following formula:
 
 
 
 
 
 
 
Participant’s
Target LTIP Award
×
Percentage of target
award to be paid
based on
performance
measure results

×
Relative weighting
of performance
measure

=
Amount of
incentive award
based on
performance
measure results
The incentive amounts to be paid to the Participant based on each performance measure will be summed to arrive at the Participant’s total incentive award payment for the Performance Period.
Payments from the Plan to a Participant, if any, will be made in cash (less any amount necessary to satisfy applicable withholding taxes); provided, however, that (i) if any portion of the award is in the form of Performance Shares, the applicable Performance Shares award agreement will specify whether the award will be settled in cash, shares of the Company’s common stock or a combination of cash and stock; and (ii) at the Participant’s election, receipt of all or part of an award may be deferred under the terms of the EnPro Industries, Inc. Deferred Compensation Plan (or other deferred compensation plan of the Company).
TERMINATION OF EMPLOYMENT DUE TO DEATH, DISABILITY, RETIREMENT
If a Participant becomes totally disabled under the Company’s Long-Term Disability Plan, or retires (or is deemed to retire) under the Company’s Salaried Retirement Plan during a Performance Period, the Participant will receive a pro rata payout at the end of the Performance Period, based upon the time portion of the Performance Period during which he or she was employed. The actual payout will not occur until after the end of the Performance Period, at which time the financial performance for the entire Performance Period will be used to determine the amount of the award prior to proration.
If a Participant dies during a Performance Period, the Participant will receive a pro rata payout based upon financial results calculated for the portion of the Performance Period through the end of the fiscal quarter following the Participant’s death.
OTHER TERMINATION OF EMPLOYMENT
If a Participant’s employment terminates prior to the end of a Performance Period for any reason (whether voluntary or involuntary) other than death, disability or retirement, the Participant will forfeit all rights to compensation under the Plan, unless the Committee determines otherwise.
NEW HIRES OR PROMOTIONS INTO ELIGIBLE POSITIONS
Participants will become eligible for participation in the Plan at their new position level beginning with the Performance Period which begins on the January 1 immediately following their hire or promotion date. No new performance awards or adjustments to awards for Performance Periods that commenced prior to a Participant’s hire or promotion date will be made.
PAYMENT UPON CHANGE IN CONTROL
Anything to the contrary notwithstanding,
(a) with respect to a Target LTIP Award awarded prior to December 2, 2015, if a Change in Control occurs prior to the end of a Performance Period, within five days following the occurrence of the Change in Control each Participant will receive a pro rata payout of the Participant’s award for that Performance Period based upon the portion of the Performance Period completed through the date of the Change in Control and the performance results calculated for that period (the “Interim LTIP Payment”). The Participant shall also remain entitled to a payout upon completion of the Performance Period based on performance results for the entire Performance Period, such payout to be offset by the amount of the Interim LTIP Payment (if any); provided, however, that the Participant will not be required to refund to the Company, or have offset against

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any other payment due to the Participant from or on behalf of the Company, in the event the amount of the Interim LTIP Payment exceeds the amount of the payout upon completion of the Performance Period; and
(b) with respect to any other Target LTIP Award under this Plan, in the event of a Change in Control, the Committee may make such provision with respect to awards under this Plan as it deems appropriate in its discretion, provided that no such provision may cause this Plan or any award hereunder to fail to meet the requirements of Internal Revenue Code § 409A(a)(2), (3) or (4) or to violate § 409A(b), to the extent applicable.
 
For purposes of the Plan, a “Change in Control” shall mean:
(i)
The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that the following acquisitions shall not constitute a Change in Control: (A) any acquisition directly from the Company (other than by exercise of a conversion privilege), (B) any acquisition by the Company or any of its subsidiaries, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries or (D) any acquisition by any company with respect to which, following such acquisition, more than 70% of, respectively, the then outstanding shares of common stock of such company and the combined voting power of the then outstanding voting securities of such company entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such acquisition in substantially the same proportions as their ownership, solely in their capacity as shareholders of the Company, immediately prior to such acquisition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be; or
(ii)
individuals who, as of the Effective Date, constitute the Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board of Directors; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest; or
(iii)
consummation of a reorganization, merger or consolidation, in each case, with respect to which all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such reorganization, merger or consolidation, do not, following such reorganization, merger or consolidation, beneficially own, directly or indirectly, solely in their capacity as shareholders of the Company, more than 70% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the company resulting from such reorganization, merger or consolidation in substantially the same proportions as their ownership, immediately prior to such reorganization, merger or consolidation of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be; or

A-5

(iv)
consummation of (A) a complete liquidation or dissolution of the Company or (B) a sale or other disposition of all or substantially all of the assets of the Company, other than to a company, with respect to which following such sale or other disposition, more than 70% of, respectively, the then outstanding shares of common stock of such company and the combined voting power of the then outstanding voting securities of such company entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities, solely in their capacity as shareholders of the Company, who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be.
PLAN ADMINISTRATION
The Plan will be administered by the Compensation and Human Resources Committee of the Company’s Board of Directors (or a subcommittee of that committee consisting only of those members of that committee who are “outside directors” within the meaning of Section 162(m) of the Internal revenue Code if any members of the committee are not “outside directors”) (the “Committee”). In administering the Plan, the Committee shall be empowered to interpret the provisions of the Plan and to perform and exercise all of the duties and powers granted to it under the terms of the Plan by action of a majority of its members in office from time to time. The Committee is empowered to set preestablished performance targets, measure the results and determine the amounts payable according to the Formula. While the Committee may not increase the amounts payable under the Plan formula for a Performance Period, it retains discretionary authority to reduce the amount of compensation that would otherwise be payable to the Participants if the goals are attained. The Committee may also adopt such rules and regulations for the administration of the Plan as are consistent with the terms hereof and shall keep adequate records of its proceedings and acts. All interpretations and decisions made (both as to law and fact) and other action taken by the Committee with respect to the Plan shall be conclusive and binding upon all parties having or claiming to have an interest under the Plan. Not in limitation of the foregoing, the Committee shall have the discretion to decide any factual or interpretative issues that may arise in connection with its administration of the Plan (including without limitation any determination as to claims for benefits hereunder), and the Committee’s exercise of such discretion shall be conclusive and binding on all affected parties as long as it is not arbitrary or capricious.
MISCELLANEOUS
(i)     Amendment and Termination . The Board of Directors of the Company may amend, modify, or terminate the Plan at any time, provided that no amendment, modification or termination of the Plan shall reduce the amount payable to a Participant under the Plan as of the date of such amendment, modification or termination.
(ii)     Shareholder Approval . No amounts shall be payable hereunder unless the material terms of the Plan are first approved by the shareholders of the Company consistent with the requirements of Section 162(m) of the Internal Revenue Code. In accordance with Section 162(m)(4)(C)(ii) of the Internal Revenue Code, the continued effectiveness of the Plan is subject to its approval by the shareholders of the Company at such other times as required by Section 162(m)(4)(C)(ii).
(iii)     Coordination With Other Company Benefit Plans . Any income participants derive from Plan payouts will not be considered eligible earnings for Company or subsidiary pension plans, savings plans, profit sharing plans or any other benefit plans.
(iv)     Participant’s Rights . A Participant’s rights and interests under the Plan may not be assigned or transferred by the Participant. To the extent the Participant acquires a right to receive payments from the Company under the Plan, such right shall be no greater than the right of any unsecured general creditor of the Company. Nothing contained herein shall be deemed to create a trust of any kind or any fiduciary relationship between the Company and the Participant. Designation as a Participant in the Plan for a

A-6

Performance Period shall not entitle or be deemed to entitle the Participant to be designated as a Participant for any subsequent Performance Periods or to continued employment with the Company.
(v)     Applicable Law . The Plan shall be governed and construed in accordance with the laws of the State of North Carolina, except to the extent such laws are preempted by the laws of the United States of America.






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APPENDIX B

(This document constitutes part of a
prospectus covering securities that
have been registered under
the Securities Act of 1933)

PROSPECTUS

5,225,000 SHARES
ENPRO INDUSTRIES, INC.
COMMON STOCK
____________
AMENDED AND RESTATED 2002 EQUITY COMPENSATION PLAN
____________
This Prospectus relates to the offer and sale of up to 5,225,000 shares of our common stock to eligible employees under the EnPro Industries, Inc. Amended and Restated 2002 Equity Compensation Plan (the “Plan”). The Plan was most recently approved by our shareholders at the annual meeting held on April 30, 2014 and by our Board of Directors at its December 2015 meeting. The Plan terminates on February 10, 2019, unless terminated earlier by our Board of Directors.
The purpose of the Plan is to promote the interests of the shareholders by providing stock-based incentives to selected employees and “Outside Directors” to align their interests with shareholders and to motivate them to put forth maximum efforts toward the continued growth, profitability and success of our company.
The Plan is generally administered by the Compensation and Human Resources Committee of our Board (the “Committee”). See “Administration” below. The Plan is not a qualified pension, profit-sharing or stock bonus plan within the meaning of Section 401(a) of the Internal Revenue Code of 1986, as amended (the “Code”). Further, in our view, the Plan is not subject to the provisions of the Employee Retirement Income Security Act of 1974.
For additional information concerning awards made under the Plan, please contact Marc Mulliss at 704-731-1553.
This document constitutes part of a prospectus covering securities that have been registered under the Securities Act of 1933, as amended (the “Securities Act”).
_______________
The date of this Prospectus is February 16, 2016.





SUMMARY OF PLAN
The following summary of the Plan is subject to, and qualified in its entirety by reference to, all the provisions of the Plan, a copy of which may be obtained upon request.
Eligibility
Salaried, full-time employees of us or of our subsidiaries may participate in the Plan. The Committee, in its discretion, will select the award recipients and the nature and amount of any awards. The Committee may, within certain limits, delegate to our CEO and other senior officers authority to make such award determinations.
In addition, members of our Board of Directors and any of our subsidiary corporations of which we own more than 50% of the voting stock, excluding directors who are employees or former employees of us or our subsidiaries within five years after their termination of employment (“Outside Directors”) are eligible to receive awards of phantom shares as described below.
Number of Shares
There are 5,225,000 shares of our common stock available for issuance under the Plan. If an award made under the Plan terminates, expires, lapses or is canceled, the shares covered by that award remain available for issuance under the Plan. However, shares used to pay any option exercise price or to satisfy a tax withholding obligation are deemed to constitute shares delivered under the Plan and will not be available for future issuance under the Plan. Shares of our common stock issued pursuant to the Plan may be original issue shares or treasury shares.
Awards to Eligible Employees
Pursuant to the Plan, the Committee may award eligible employees incentive stock options (“ISOs”), nonqualified stock options (“NQSOs”), stock appreciation rights (“SARs”), performance shares, restricted stock units, restricted stock shares and other awards. Each award will be evidenced by an award document setting forth the terms and provisions applicable to the award.
Stock Options. The Plan provides for the grant of options to purchase shares of our common stock at option prices which are not less than the fair market value of shares of our common stock on the grant date. In making an option award, the Committee determines whether the award will be either an ISO or NQSO. The Committee also establishes all of the other terms and conditions of each option award at the time of grant, including any vesting requirements. The applicable award document will specify the term of the option (up to a maximum of ten years), and the extent to which options may be exercised during their terms, including in the event of your death, disability or termination of employment. You may pay the option exercise price either in cash or by tendering shares of our common stock with a fair market value at the date of the exercise equal to the portion of the exercise price which you do not pay in cash. In addition, the Committee may from time to time allow cashless exercises by any means which it determines to be consistent with the Plan’s purposes and applicable law. You will have no rights as a shareholder until you become the holder of record of shares of our common stock issued upon exercise of such stock options.
Stock Appreciation Rights. The Plan also provides for the grant of SARs, which entitle holders, upon exercise, to receive shares of our common stock with a value equal to the difference between (i) the fair market value on the exercise date of the shares with respect to which an SAR is exercised and (ii) the grant price of the SAR, which shall not be less than the fair market value of such shares on the grant date. The Committee establishes all of the terms and conditions of each SAR at the time of grant,

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including any vesting requirements; provided that the term may not exceed ten years from the grant date and each SAR must be settled only in common stock.
Performance Shares . The Committee may make awards of performance shares (which may be actual shares of our common stock or phantom shares) subject to conditions established by the Committee that may include attainment of specific performance objectives. Performance share awards may include the awarding of additional shares upon attainment of the specified performance objectives.
Restricted Shares. A restricted share is an actual share of our common stock issued in your name that is subject to certain vesting requirements and which we hold until the applicable vesting date, at which time the share is released to you. The Committee establishes all of the terms and conditions of each award at the time of grant, including any vesting requirements, which are set forth in an award document. Restricted share awards that vest based on continued employment generally have a minimum three-year vesting period, though they may vest earlier in the event of death, disability or retirement. Prior to vesting, you may vote and receive cash dividends with respect to restricted shares as specified in your award document.
Restricted Stock Units . The Committee may make awards of restricted stock units which is the right to receive our common stock upon the vesting of the restricted stock unit. The Committee establishes all of the terms and conditions of each award at the time of grant, including any vesting requirements, which are set forth in an award document. Restricted stock units that vest based on continued employment generally have a minimum three-year vesting period, though they may vest earlier in the event of death, disability or retirement. If we pay any common stock dividends prior to the vesting of the restricted stock units, recipients of the restricted stock units will not be entitled to receive any such dividends when such dividends are paid. Recipients have no right to vote any restricted stock units on any matter presented to a vote of the company’s shareholders. Upon vesting, the recipient would be entitled to receive, for each restricted stock units vesting, one share of common stock plus a cash payment equal to the aggregate amount of cash dividends paid with respect to one share of common stock from the date the award was made to and including the date of vesting.
Other Awards . The Committee may make other awards under the Plan in units or phantom shares, the value of which is based, in whole or in part, on the value of our common stock. The Committee may provide that such awards are to be paid in cash, in shares, or in a combination of both cash and shares, under such terms and conditions as the Committee may establish, which are set forth in an award document.
Awards of Phantom Shares to Outside Directors
Pursuant to the Plan, the Committee will make a one-time grant of phantom shares, in an amount to be determined by the Committee, to each Outside Director upon his or her election to the board. Thereafter, each Outside Director will receive an annual grant of phantom shares, in an amount and on terms determined by the Committee. In addition, the Committee may, from time to time, make additional grants of phantom shares to Outside Directors.
The terms and provisions of the phantom shares are as follows:
Vesting . Phantom shares granted to Outside Directors are fully vested at grant.
Dividend Equivalents . Dividend equivalents accrue on all phantom shares granted to Outside Directors. Upon the payment date of each dividend declared on our common stock, that number of additional phantom shares will be credited to each Outside Director’s award which has an equivalent fair market value to the aggregate amount of dividends which would be paid if the number of the Outside Director’s phantom shares were actual shares of the common stock. Dividend equivalents are vested at the time the dividend is paid.

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Payment . Upon termination of service of an Outside Director as a member of the Board of Directors (the “termination date”), we will pay to the Outside Director all phantom shares credited to the Outside Director on the termination date in the form of one share of our common stock for each whole phantom share, with cash for any fractional phantom share based on the fair market value of our common stock on the applicable date. The shares of common stock are paid and delivered as soon as administratively practicable after the termination date.
Fair Market Value
For all purposes of the Plan, the fair market value of a share of our common stock will be the closing selling price on the relevant date (as of 4:00 p.m. New York, New York time), as reported on the New York Stock Exchange – Composite Transactions listing (or similar report), or, if no sale was made on such date, on the next preceding day on which a sale was made.
Award Limits
The following limits apply to awards made under the Plan:
•
In no event may any individual receive awards under the Plan for a given calendar year covering in excess of 500,000 shares of our common stock; and
•
We will not grant ISOs covering in the aggregate more than 1,000,000 shares of our common stock during the term of the Plan.
Transferability of Awards
You may not transfer any award granted under this Plan other than by will or the laws of descent and distribution or by such other means as the Committee may approve from time to time.
Withholding for Payment of Taxes
The Committee will have the right to determine the amount of any Federal, state or local required withholding tax, and may require that any such required withholding tax be satisfied by withholding shares of our common stock or other amounts which would otherwise be payable under this Plan.
Changes in Capitalization and Similar Changes
In the event of any corporate event or transaction (including a change in common stock or capitalization or our company), such as a merger, consolidation, reorganization, recapitalization, separation, partial or complete liquidation, stock dividend, stock split, reverse stock split, split up, spin off, or other distribution of stock or property or our company, a combination or exchange of our common stock, dividend in kind or other similar change in capital structure, number of outstanding shares of our common stock, distribution (other than normal cash dividends) to our shareholders or any similar corporate event or transaction, the aggregate number of shares of our common stock with respect to which awards may be made under the Plan, and the terms, types of shares and number of shares of any outstanding awards under the Plan will be equitably adjusted by the Committee in its discretion to preserve the benefit of the award for both you and us.

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Change in Control
The Plan provides that, in the event of a change in control of our company (as defined in the Plan), all options awarded prior to December 2, 2015 will be fully exercisable as of the date of the change in control and will remain exercisable for a period of two years thereafter (not to exceed the original award term). The Committee may also take actions with respect to options awarded after December 2, 2015 and outstanding awards of SARS, performance shares, restricted stock units, restricted shares or other awards.
Amendment and Termination of Plan
Our Board of Directors has the power to amend, modify or terminate the Plan on a prospective basis, provided that the Board of Directors may condition any amendment to the Plan on shareholder approval if it deems shareholder approval to be necessary or appropriate.
Administration
The Plan is administered by the Committee. Under the Plan, the Committee has the authority to (i) select the employees to receive awards from time to time, (ii) make awards in such amounts as it determines, (iii) impose limitations, restrictions and conditions upon awards as it deems appropriate, (iv) establish performance targets and allocation formulas for awards of performance shares, restricted shares or other awards intended to be “qualified performance‑based compensation” under Code Section 162(m), (v) certify the attainment of performance goals, if applicable, as required by Code Section 162(m), (vi) interpret the Plan and adopt, amend and rescind administrative guidelines and other rules and regulations relating to the Plan, (vii) correct any defect or omission or reconcile any inconsistency in the Plan or any award granted thereunder and (viii) make all other determinations and take all other actions necessary or advisable for the implementation and administration of the Plan. The Committee may delegate its authority under the Plan to the extent permitted by applicable law. All determinations and decisions made by the Committee pursuant to the Plan will be final, conclusive and binding.
Code Section 162(m)
Because stock options and SARs granted under the Plan must have an exercise price equal at least to fair market value at the date of grant, compensation from the exercise of stock options and SARs should be treated as “qualified performance‑based compensation” for Code Section 162(m) purposes.
In addition, the Plan authorizes the Committee to make awards of performance shares, restricted shares and other awards that are conditioned on the satisfaction of certain performance criteria. For awards intended to result in “qualified performance‑based compensation,” the Committee will establish prior to or within 90 days after the start of the applicable performance period the applicable performance conditions. The Committee may select from the following performance measures for such purpose: total sales, sales growth (with or excluding acquisitions), revenue-based measures for particular products, product lines or product groups, net income (before or after asbestos charges and/or other selected items), earnings per share of Common Stock (before or after asbestos and/or other selected items), pretax income (before or after asbestos charges and/or other selected items), consolidated operating income (pre or post-tax and before or after asbestos charges and/or other selected items), segment operating income (pre or post-tax and before or after asbestos charges and/or other selected items), earnings before interest and taxes (before or after asbestos charges and/or other selected items), earnings before interest, taxes, depreciation and amortization (before or after asbestos charges and/or other selected items), free cash flow (pre or post-tax and before or after asbestos charges and/or other selected items), asbestos-related cash outflows (or changes in asbestos-related cash outflow), new asbestos commitments (or changes in new asbestos commitments), return on equity, assets, investment, invested capital, capital, total or net capital employed, or sales (pre or post-tax and before or after asbestos charges and/or other selected items), cash flow return on investments, total shareholder return,

B-5



Common Stock price increases, total business return (before or after asbestos charges and/or other selected items), economic value added or similar “after cost of capital” measures, return on sales or margin rate, in total or for a particular product, product line or product group, working capital (or any of its components or related metrics), working capital improvement, market share, measures of customer satisfaction (including survey results or other measures of satisfaction), safety (determined by reference to recordable or lost time rates, first aids, near misses or a combination of two or more such measures or other measures), measures of operating efficiency such as productivity, cost of non-conformance, cost of quality, on time delivery and efficiency ratio and strategic objectives with specifically identified areas of emphasis such as cost reduction, acquisition assimilation synergies, acquisitions or organization restructuring. The Committee will state the performance conditions in the form of an objective, nondiscretionary formula and will certify in writing the attainment of such performance conditions prior to any payout with respect to such awards. The Committee in its discretion may adjust downward the permissible amount of any such award, even if the performance objective is achieved.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of the current federal income tax consequences of the granting and exercise of stock options and of awards of common stock (including both performance shares and restricted stock), phantom stock, stock units and SARs under the Plan. It does not attempt to describe all possible federal or other tax consequences of participation in the Plan. Furthermore, the tax consequences of awards made under the Plan are complex and subject to change, and some variation of the described rules may be applicable to any particular participant’s tax situation. The summary assumes in each case that there will no violation of the deferred compensation rules of the Internal Revenue Service, which would subject the affected participants to immediate taxation and penalties on unvested awards.

Incentive Stock Options.   An employee who is granted an ISO under the Plan will not be subject to federal income tax upon the grant or exercise of the option. However, upon the exercise of an ISO, the difference between the exercise price for the option and its fair market value on the date of exercise, which is commonly referred to as the spread, is a tax preference item that must be taken into account in determining the employee’s alternative minimum tax. If the employee disposes of the shares in the same year the option was exercised, there are no alternative minimum tax implications. Generally, the employee can recover any alternative minimum tax liability paid as a credit against ordinary income taxes owed in future years.

In the event of a sale of the shares received upon exercise of an ISO after two years from the date of grant and one year after the date of exercise (which we refer to as the “Holding Period”), any appreciation of the shares received above the exercise price should be a capital gain. The current federal tax rate applicable to long-term capital gains is 15 percent.

We will not be entitled to a tax deduction with respect to the grant or exercise of an ISO, or with respect to any disposition of such shares after the Holding Period. However, if shares acquired pursuant to the exercise of an ISO are sold by the employee before the end of the Holding Period, any gain on the sale will be ordinary income for the taxable year in which the sale occurs. Income will be realized only to the extent the amount received upon sale exceeds the employee’s adjusted basis for the stock. We will be entitled to a tax deduction in the amount of the ordinary income realized by the employee.

Non-incentive Stock Options.   An employee who is granted an NQSO under the Plan will not be subject to federal income tax upon the grant of the option, and we will not be entitled to a tax deduction by reason of such grant. Upon exercise of an NQSO, the spread or excess of the fair market value of the shares on the exercise date over the option price will be considered compensation taxable as ordinary income to the employee. Because it is treated as compensation, the spread is subject to withholding of applicable payroll taxes. We may claim a tax deduction in the amount of the taxable compensation realized by the employee.

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Common Stock Awards.   Common stock awards made without restrictions are subject to federal tax to the recipient and are deductible to our company. Stock awards with restrictions (including both performance shares, restricted stock units and restricted shares) generally will not be subject to federal tax upon grant, and we will not be entitled to a tax deduction upon grant. When the restrictions lapse, the fair market value of shares free of restrictions will be considered compensation taxable as ordinary income to the employee and we may claim a tax deduction at the same time in the same amount.

Phantom Stock, Stock Unit Awards and SARs.   A director or employee who is granted a phantom share, stock unit or SAR award under the Plan will not be subject to federal tax upon the grant of the award and we will not be entitled to a tax deduction by reason of such grant. However, when common stock or cash is delivered to the participant pursuant to such an award, the participant will recognize ordinary income equal to the fair market value of the shares or cash delivered under the award, and we may claim a tax deduction at the same time in the same amount.

RESTRICTIONS ON RESALE
If you are one of our “affiliates” as defined in Rule 405 under the Securities Act, resales of shares of our common stock that you acquire under awards under the Plan will be subject to the volume, manner of sale and reporting requirements of Rule 144 under the Securities Act unless we register your shares under the Securities Act for resale pursuant to a separate prospectus. If you have been designated as one of our reporting officers for purposes of Section 16(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), resales of shares of our common stock that you acquire under awards pursuant to the Plan may be “matched” with nonexempt purchases of our common stock within the previous or following six months for purposes of the “short‑swing profits” recovery provisions of Section 16(b). Further, in no event may you sell shares of our common stock, whether acquired pursuant to the Plan or otherwise, if you are in possession of material information regarding our company that has not been publicly disclosed.
You are advised to consult with counsel regarding your status as an affiliate and as a Section 16(b) reporting officer and the application of other federal and state securities laws to resales of shares of our common stock that you acquire pursuant to the Plan.
ADDITIONAL INFORMATION
We have filed a registration statement with respect to the shares of our common stock offered under the Plan with the Securities and Exchange Commission under the Securities Act. This registration statement incorporates by reference certain documents including our most recent Annual Report on Form 10-K and all subsequent reports on Form 10-K, Form 10-Q and Form 8-K, our proxy statements, and a description of our common stock filed under the Exchange Act, which documents are also incorporated by reference in this Prospectus.
We will promptly furnish, without charge, on your request, a copy of any of the documents incorporated by reference in the registration statement and in this Prospectus (other than exhibits to such documents which are not specifically incorporated by reference in such documents), as well as our most recent Annual Report to Shareholders, if any, and any and all documents supplementing or updating the information contained in this Prospectus (including Plan information previously delivered, if requested). Such requests should be addressed to: EnPro Industries, Inc., 5605 Carnegie Boulevard, Suite 500, Charlotte, North Carolina, 28209-4674, Attn: Julie Lentz.




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APPENDIX C


Awards have the following mix:

a)
1/3 restricted stock awards, cliff vesting 3 years from grant

b)
1/3 performance cash vesting based on performance against three-year average ROIC performance targets set at the beginning of cycle (includes goodwill and intangibles)

c)
1/3 performance shares vesting based on relative total shareholder return performance

i)
Shares earned will vary from a target award based on EnPro’s TSR ranking compared to the SmallCap 600 Capital Goods industry group over the 3-year period beginning January 2016 and ending December 31, 2018

* FX translation effect neutral


Determination of performance shall be in accordance with the method for calculation approved by the Compensation Committee at its February 23, 2016 meeting and shall be subject to equitable adjustment where necessary (i) in response to changes in applicable laws or regulations, (ii) to account for items of gain, loss, or expense that are related to the disposal (or acquisition) of a business or change in accounting principles that was not anticipated at the time this award was made, (iii) to account for adjustments in expense due to re-measurement of pension benefits, (iv) to account for restructurings, discontinued operations, and any other items deemed by the Compensation Committee to be non-recurring in nature or otherwise not reflective of operating performance that were not anticipated at the time this award was made, and (v) to reflect other unusual, non-recurring, or unexpected items similar in nature to the foregoing, in each case as determined in good faith by the Compensation Committee consistent with the principles set forth in section 162(m) of the Internal Revenue Code and the regulations thereunder.


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APPENDIX D

Change in Control Treatment

A.    In the event of a Change in Control during the Performance Cycle:

i)
To the extent the Performance Share award is assumed, converted or replaced by the resulting entity in the Change in Control, if within two years after the date of the Change in Control you have a termination of employment either (1) by the Company other than for “Cause” or (2) by you for “Good Reason” (each as defined below), then the target payout opportunities attainable under the award shall be deemed to have been earned as of the applicable termination of employment based upon the greater of: (A) an assumed achievement of all relevant performance goals at their “target” level, or (B) the actual level of achievement of all relevant performance goals against target as of the Company’s fiscal quarter end preceding the Change in Control. The award, as adjusted for such deemed performance, shall become vested in full and shall be paid as soon as administratively practicable (not more than 30 days) after the date of such termination of employment.

ii)
To the extent the Performance Share award is not assumed, converted or replaced by the resulting entity in the Change in Control, then upon the Change in Control the target payout opportunities attainable under the award shall be deemed to have been earned as of the Change in Control based upon the greater of: (A) an assumed achievement of all relevant performance goals at their “target” level, or (B) the actual level of achievement of all relevant performance goals against target as of the Company’s fiscal quarter end preceding the Change in Control. The award, as adjusted for such deemed performance, shall become vested in full and shall be paid as soon as administratively practicable (not more than 30 days) after the date of the Change in Control.

B.
For purposes of the Performance Share award, the following terms shall have the following meanings:

i)
“ Cause ” shall be defined as that term is defined in your offer letter or other applicable employment or management continuity agreement; or, if there is no such definition, “Cause” means your termination of employment with the Company due to (A) the willful and continued failure by you to substantially perform your duties with the Company, which failure causes material and demonstrable injury to the Company (other than any such failure resulting from your incapacity due to physical or mental illness), after a demand for substantial performance is delivered to you by the Company which specifically identifies the manner in which the Company believes that you have not substantially performed your duties, and after you have been given a period (hereinafter known as the "Cure Period") of at least thirty (30) days to correct your performance, (B) the willful engaging by you in other gross misconduct materially and demonstrably injurious to the Company, (C) conviction of a felony or a misdemeanor involving moral turpitude, (D) your willful receipt of an improper personal benefit that demonstrably injures the Company, and (E) your willful and material violation of the Company’s written policies after being provided written notice of such violation and a Cure Period of at least thirty (30) days. For purposes hereof, no act, or failure to act, on your part shall be considered "willful" unless conclusively demonstrated to have been done, or omitted to be done, by you not in good faith and without reasonable belief that your action or omission was in the best interests of the Company.

ii)
“ Good Reason ” shall be defined as that term is defined in your offer letter or other applicable employment or management continuity agreement; or, if there is no such definition, “Good Reason” means, provided that you have complied with the Good Reason Process, the occurrence of any of the following events without your consent: (A) a material diminution in your responsibility, authority or duty; (B) a material diminution in your base salary except for across-the-board salary reductions based on the Company and its Subsidiaries’ financial performance similarly affecting all or substantially all management employees of the Company and its Subsidiaries; or (C) the relocation of the office at which you were principally employed immediately prior to a Change in Control to a

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location more than fifty (50) miles from the location of such office, or your being required to be based anywhere other than such office, except to the extent you were not previously assigned to a principal location and except for required travel on your employer’s business to an extent substantially consistent with your business travel obligations at the time of the Change in Control.

iii)
“ Good Reason Process ” means that (A) you reasonably determine in good faith that a Good Reason condition has occurred; (B) you notify the Company and its Subsidiaries in writing of the occurrence of the Good Reason condition within sixty (60) days of such occurrence; (C) you cooperate in good faith with the Company and its Subsidiaries’ efforts, for a period of not less than thirty (30) days following such notice (the “Cure Period”), to remedy the condition; (D) notwithstanding such efforts, the Good Reason condition continues to exist following the Cure Period; and (E) you terminate your employment for Good Reason within sixty (60) days after the end of the Cure Period.  If the Company or its Subsidiaries cures the Good Reason condition during the Cure Period, and you terminate your employment with the Company and its Subsidiaries due to such condition (notwithstanding its cure), then you will not be deemed to have terminated your employment for Good Reason.

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Exhibit 10.13
ENPRO INDUSTRIES, INC. LONG-TERM INCENTIVE PLAN
2016-2018
AWARD GRANT
(Cash)

Name: [____________]

TARGET LTIP AWARD

You have been granted by EnPro Industries, Inc. (the "Company") a Target LTIP Award under the Company's Long-Term Incentive Plan for the three-year performance period 2016 through 2018, comprised of the following:

Target Cash LTIP Award:
[____________]

Your award is subject to the terms and conditions of the Long-Term Incentive Plan, as amended (the “Plan Document”). If this award agreement varies from the terms of the Plan Document, the Plan Document will control. Attached as Appendix A is a copy of the Plan Document.

PERFORMANCE GOALS

The amount of Cash LTIP award you earn will depend on the performance of the Company relative to the performance goal for the three-year performance cycle from January 1, 2016 through December 31, 2018 (the “Performance Cycle”). The performance goals with respect to the Cash LTIP award are attached as Appendix B hereto.

The determination of whether the performance goals have been met will be made by the Compensation Committee following the end of the Performance Cycle.

OTHER IMPORTANT INFORMATION

•
You will not earn any amount with respect to the Cash LTIP award if the Company's performance during the 2016-2018 period is below minimum performance.

•
If actual performance equals or exceeds minimum performance, the amount you will earn with respect to the Cash LTIP will range from 50% to 200% of your Target Cash LTIP award based on attainment against the performance goal.

•
In order to receive any amount with respect to the Cash LTIP award, you must remain employed with the Company through December 31, 2018, except in the case of death, disability, retirement or in connection with a Change in Control, as discussed below. If your employment terminates prior to December 31, 2018 for any reason other than death, disability, retirement or in connection with a Change in Control, you will forfeit the entire Cash LTIP award.

•
The amount of the Cash LTIP award earned at the end of the Performance Cycle, if any, will also be reduced to satisfy applicable withholding taxes and will be paid as soon as practicable following the Compensation Committee’s certification of performance for the Performance Cycle.

•
If you become totally disabled under the Company's Long-Term Disability Plan or retire under the Company's Salaried Pension Plan (or a similar pension plan maintained by a subsidiary that is your employer) during the Performance Cycle, you will receive a pro rata payout at the end of the Performance Cycle, based upon the time portion of the cycle during which you were employed. The actual payout will not occur until after the end of the Performance Cycle, at which time the financial




performance for the entire Performance Cycle will be used to determine the size of the award in that event.

•
If you die during the Performance Cycle, any beneficiary you have designated by will (or, if you do not so designate a beneficiary or your designated beneficiary fails to survive you, your estate) will receive a pro rata payout based upon the financial results calculated for the portion of the Performance Cycle through the end of the fiscal quarter following your death.

•
In the event of a Change in Control during the Performance Cycle, see Appendix C.

•
The performance factors and weightings applicable to your award are determined based upon your position with the Company.

•
The Compensation Committee retains the right in its sole discretion to reduce any award which would otherwise be payable, unless there has been a Change in Control, as defined in the Equity Compensation Plan.

•
Any income you derive from a payout of the Cash LTIP award will not be considered eligible earnings for Company or subsidiary pension plans, savings plans, profit sharing plans or other benefit plans.

FOR MORE INFORMATION

If you have any questions about the Cash LTIP award, the Plan Document or need additional information, contact Marc Mullis at (704) 731-1553.

2



APPENDIX A

ENPRO INDUSTRIES, INC.
LONG-TERM INCENTIVE PLAN
(2015 AMENDMENT AND RESTATEMENT)
PURPOSE
The EnPro Industries, Inc. Long-Term Incentive Plan (the “Plan”) was established effective as of January 1, 2003 (the “Effective Date”) to provide long-term incentive compensation to key employees who are in a position to influence the performance of EnPro Industries, Inc. (the “Company”), and thereby enhance shareholder value over time. The Plan provides a significant additional financial opportunity and complements other parts of the Company’s total compensation program for key employees.
ELIGIBILITY AND PERFORMANCE PERIODS
The Committee (as defined in the “Plan Administration” section of the Plan) will determine which employees of the Company are eligible to participate in the Plan from time to time. Participants will be selected within 90 days after the beginning of each multi-year performance cycle (“Performance Period”). Each Performance Period will be of two or more years duration as determined by the Committee and will commence on January 1 of the first year of the Performance Period. A new Performance Period will commence each year unless the Committee determines otherwise.
TARGET AWARDS
At the time a Participant is selected for participation in the Plan for a Performance Period, the Committee will assign the Participant a Target LTIP Award to be earned if the Company’s target performance levels are met for the Performance Period (the “Target LTIP Award”). The Target LTIP Award may be expressed as a dollar amount, a number of Performance Shares under the Company’s Equity Compensation Plan, or a combination of a dollar amount and a number of Performance Shares. Any portion of the Target LTIP Award made in the form of Performance Shares will be evidenced by a Performance Shares award agreement consistent with the provisions of the Equity Compensation Plan.
MAXIMUM AND THRESHOLD AWARDS
At the time a Participant is selected for participation in the Plan for a Performance Period, the Participant will be assigned maximum and threshold award levels, expressed as a percentage of the Target LTIP Award. Maximum award level represents the maximum percentage of the Target LTIP Award that may be paid to a Participant for a Performance Period based on performance above target performance levels. Threshold award level represents the minimum percentage of the Target LTIP Award that may be paid to a Participant for a Performance Period based on performance below target performance levels. Performance below the threshold performance award level will earn no incentive payments.
Under no circumstances will any Participant earn an award for a Performance Period expressed in dollars exceeding $2,500,000. In addition, any award of Performance Shares hereunder shall be subject to the individual award limit applicable under the Equity Compensation Plan.
PERFORMANCE MEASURES
The Committee may use any quantitative or qualitative performance measure or measures that it determines to use to measure the level of performance of the Company or any individual participant during a Performance Period.
Performance measures that may be used under the Plan include, but are not limited to, the following, which shall be considered “qualifying performance measures” and which may be used individually, alternatively, or in any combination, applied to the Company as a whole or to a division or business unit or related company, and measured either annually or cumulatively over a period of years, on an absolute basis

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or relative to a pre-established target, to a previous year’s results or to a designated comparison group, in each case as specified by the Committee in the award. Each performance measure may be determined on a pre-tax or after tax basis, as specified by the Committee at the time of the award:
Revenue-related measures:
•
Total sales
•
Sales growth
•
Sales growth excluding acquisitions
•
Other specific revenue-based measures for particular products, product lines or product groups
Income-based measures:
•
Net income
•
Earnings per share
•
EPS before or after asbestos and/or other selected items
•
Net income before or after asbestos charges and/or other selected items
•
Pretax income before or after asbestos charges and/or other selected items
•
Consolidated operating income before or after asbestos charges and/or other selected items
•
Pretax consolidated operating income before or after asbestos charges and/or other selected items
•
Segment operating income before or after asbestos charges and/or other selected items
•
Pretax segment operating income before or after asbestos charges and/or other selected items
•
Earnings before interest and taxes (EBIT) before or after asbestos charges and/or other selected items
•
EBITDA before or after asbestos charges and/or other selected items
Cash flow-based measures:
•
Free cash flow before or after asbestos charges and/or other selected items
•
Pretax free cash flow before or after asbestos charges and/or other selected items
•
Asbestos-related cash outflow (or changes in asbestos-related cash outflow)
•
Pretax asbestos-related cash outflow (or pretax changes in asbestos-related cash outflow)
•
New asbestos commitments (or changes in new asbestos commitments)
Return-based measures:
•
Return on equity, assets, investment, invested capital, capital, total or net capital employed, or sales, before or after asbestos charges and/or other selected items
•
Pretax return on equity, assets, investment, invested capital, capital, total or net capital employed, or sales, before or after asbestos charges and/or other selected items
•
Total shareholder return
•
Share price increase
 
•
Total business return before or after asbestos charges and/or selected items
•
Economic value added or similar “after cost of capital” measures
•
Return on sales or margin rate, in total or for a particular product, product line or product group
•
Cash flow return on investment

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Other measures:
•
Working capital (or any of its components or related metrics, e.g. DSO, DSI, DWC, working capital to sales ratio)
•
Working capital improvement
•
Market share
•
Measures of customer satisfaction (including survey results or other measures of satisfaction)
•
Safety (determined by reference to recordable or lost time rates, first aids, near misses or a combination of two or more such measures or other measures)
•
Measures of operating efficiency, e.g. productivity, cost of non-conformance or cost of quality, on time delivery, efficiency ratio (controllable expenses divided by operating income or other efficiency metric)
•
Strategic objectives with specifically identified areas of emphasis, e.g. cost reduction, acquisition assimilation synergies, acquisitions, organization restructuring
PERFORMANCE GOALS
•
The Committee will designate, within 90 days of the beginning of each Performance Period:
•
The performance measures and calculation methods to be used for the Performance Period;
•
A schedule for each performance measure relating achievement levels for the performance measure to incentive award levels as a percentage of Participants’ Target LTIP Awards; and
•
The relative weightings of the performance measures for the Performance Period.
The performance goals established by the Committee for a Performance Period are intended to satisfy the “objective compensation formula” requirements of Treasury Regulations Section 1.162-27(e)(2). To the degree consistent with Section 162(m) of the Internal Revenue Code, or any successor section thereto (the “Code”), the Committee may adjust, modify or amend the above criteria, either in establishing any performance measure or in determining the extent to which any performance measure has been achieved. In particular, the Committee shall have the authority to make equitable adjustments in the criteria where necessary (i) in response to changes in applicable laws or regulations, (ii) to account for items of gain, loss, or expense that are related to the disposal (or acquisition) of a business or change in accounting principles that was not anticipated at the time an award was made, (iii) to account for adjustments in expense due to re-measurement of pension benefits, (iv) to remove the effect of charges for asbestos, (v) to account for restructurings, discontinued operations, and any other items deemed by the Committee to be non-recurring in nature or otherwise not reflective of operating performance that were not anticipated at the time an award was made, and (vi) to reflect other unusual, non-recurring, or unexpected items similar in nature to the foregoing as determined in good faith by the Committee consistent with the principles set forth in section 162(m) of the Code and the regulations thereunder. Such adjustments may be made with respect to the performance of any subsidiary, division, or operating unit, as applicable, shall be made in a consistent manner from year to year, and shall be made in accordance with the objectives of the Plan and the requirements of Section 162(m) of the Code.
PERFORMANCE CERTIFICATION
As soon as practicable following the end of each Performance Period and prior to any award payments for the Performance Period, the Committee will certify the Company’s performance with respect to each performance measure used for that Performance Period.
AWARD CALCULATION AND PAYMENT
For each Performance Period, individual incentive awards will be calculated and paid to each Participant who is still employed with the Company (subject to the special provisions below for employees who terminate employment due to death, disability or retirement) as soon as practicable following the Committee’s certification of performance for the Performance Period. The amount of a Participant’s incentive

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award to be paid based on each individual performance measure will be calculated based on the following formula:
 
 
 
 
 
 
 
 
Participant’s
Target LTIP Award
×
Percentage of target
award to be paid
based on
performance
measure results

×
Relative weighting
of performance
measure

=
Amount of
incentive award
based on
performance
measure results
The incentive amounts to be paid to the Participant based on each performance measure will be summed to arrive at the Participant’s total incentive award payment for the Performance Period.
Payments from the Plan to a Participant, if any, will be made in cash (less any amount necessary to satisfy applicable withholding taxes); provided, however, that (i) if any portion of the award is in the form of Performance Shares, the applicable Performance Shares award agreement will specify whether the award will be settled in cash, shares of the Company’s common stock or a combination of cash and stock; and (ii) at the Participant’s election, receipt of all or part of an award may be deferred under the terms of the EnPro Industries, Inc. Deferred Compensation Plan (or other deferred compensation plan of the Company).
TERMINATION OF EMPLOYMENT DUE TO DEATH, DISABILITY, RETIREMENT
If a Participant becomes totally disabled under the Company’s Long-Term Disability Plan, or retires (or is deemed to retire) under the Company’s Salaried Retirement Plan during a Performance Period, the Participant will receive a pro rata payout at the end of the Performance Period, based upon the time portion of the Performance Period during which he or she was employed. The actual payout will not occur until after the end of the Performance Period, at which time the financial performance for the entire Performance Period will be used to determine the amount of the award prior to proration.
If a Participant dies during a Performance Period, the Participant will receive a pro rata payout based upon financial results calculated for the portion of the Performance Period through the end of the fiscal quarter following the Participant’s death.
OTHER TERMINATION OF EMPLOYMENT
If a Participant’s employment terminates prior to the end of a Performance Period for any reason (whether voluntary or involuntary) other than death, disability or retirement, the Participant will forfeit all rights to compensation under the Plan, unless the Committee determines otherwise.
NEW HIRES OR PROMOTIONS INTO ELIGIBLE POSITIONS
Participants will become eligible for participation in the Plan at their new position level beginning with the Performance Period which begins on the January 1 immediately following their hire or promotion date. No new performance awards or adjustments to awards for Performance Periods that commenced prior to a Participant’s hire or promotion date will be made.
PAYMENT UPON CHANGE IN CONTROL
Anything to the contrary notwithstanding,
(a) with respect to a Target LTIP Award awarded prior to December 2, 2015, if a Change in Control occurs prior to the end of a Performance Period, within five days following the occurrence of the Change in Control each Participant will receive a pro rata payout of the Participant’s award for that Performance Period based upon the portion of the Performance Period completed through the date of the Change in Control and the performance results calculated for that period (the “Interim LTIP Payment”). The Participant shall also remain entitled to a payout upon completion of the Performance Period based on performance results for the entire Performance Period, such payout to be offset by the amount of the Interim LTIP Payment (if any); provided, however, that the Participant will not be required to refund to the Company, or have offset against

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any other payment due to the Participant from or on behalf of the Company, in the event the amount of the Interim LTIP Payment exceeds the amount of the payout upon completion of the Performance Period; and
(b) with respect to any other Target LTIP Award under this Plan, in the event of a Change in Control, the Committee may make such provision with respect to awards under this Plan as it deems appropriate in its discretion, provided that no such provision may cause this Plan or any award hereunder to fail to meet the requirements of Internal Revenue Code § 409A(a)(2), (3) or (4) or to violate § 409A(b), to the extent applicable.
 
For purposes of the Plan, a “Change in Control” shall mean:
(i)
The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that the following acquisitions shall not constitute a Change in Control: (A) any acquisition directly from the Company (other than by exercise of a conversion privilege), (B) any acquisition by the Company or any of its subsidiaries, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries or (D) any acquisition by any company with respect to which, following such acquisition, more than 70% of, respectively, the then outstanding shares of common stock of such company and the combined voting power of the then outstanding voting securities of such company entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such acquisition in substantially the same proportions as their ownership, solely in their capacity as shareholders of the Company, immediately prior to such acquisition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be; or
(ii)
individuals who, as of the Effective Date, constitute the Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board of Directors; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest; or
(iii)
consummation of a reorganization, merger or consolidation, in each case, with respect to which all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such reorganization, merger or consolidation, do not, following such reorganization, merger or consolidation, beneficially own, directly or indirectly, solely in their capacity as shareholders of the Company, more than 70% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the company resulting from such reorganization, merger or consolidation in substantially the same proportions as their ownership, immediately prior to such reorganization, merger or consolidation of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be; or

A-5


(iv)
consummation of (A) a complete liquidation or dissolution of the Company or (B) a sale or other disposition of all or substantially all of the assets of the Company, other than to a company, with respect to which following such sale or other disposition, more than 70% of, respectively, the then outstanding shares of common stock of such company and the combined voting power of the then outstanding voting securities of such company entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities, solely in their capacity as shareholders of the Company, who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be.
PLAN ADMINISTRATION
The Plan will be administered by the Compensation and Human Resources Committee of the Company’s Board of Directors (or a subcommittee of that committee consisting only of those members of that committee who are “outside directors” within the meaning of Section 162(m) of the Internal revenue Code if any members of the committee are not “outside directors”) (the “Committee”). In administering the Plan, the Committee shall be empowered to interpret the provisions of the Plan and to perform and exercise all of the duties and powers granted to it under the terms of the Plan by action of a majority of its members in office from time to time. The Committee is empowered to set preestablished performance targets, measure the results and determine the amounts payable according to the Formula. While the Committee may not increase the amounts payable under the Plan formula for a Performance Period, it retains discretionary authority to reduce the amount of compensation that would otherwise be payable to the Participants if the goals are attained. The Committee may also adopt such rules and regulations for the administration of the Plan as are consistent with the terms hereof and shall keep adequate records of its proceedings and acts. All interpretations and decisions made (both as to law and fact) and other action taken by the Committee with respect to the Plan shall be conclusive and binding upon all parties having or claiming to have an interest under the Plan. Not in limitation of the foregoing, the Committee shall have the discretion to decide any factual or interpretative issues that may arise in connection with its administration of the Plan (including without limitation any determination as to claims for benefits hereunder), and the Committee’s exercise of such discretion shall be conclusive and binding on all affected parties as long as it is not arbitrary or capricious.
MISCELLANEOUS
(i)     Amendment and Termination . The Board of Directors of the Company may amend, modify, or terminate the Plan at any time, provided that no amendment, modification or termination of the Plan shall reduce the amount payable to a Participant under the Plan as of the date of such amendment, modification or termination.
(ii)     Shareholder Approval . No amounts shall be payable hereunder unless the material terms of the Plan are first approved by the shareholders of the Company consistent with the requirements of Section 162(m) of the Internal Revenue Code. In accordance with Section 162(m)(4)(C)(ii) of the Internal Revenue Code, the continued effectiveness of the Plan is subject to its approval by the shareholders of the Company at such other times as required by Section 162(m)(4)(C)(ii).
(iii)     Coordination With Other Company Benefit Plans . Any income participants derive from Plan payouts will not be considered eligible earnings for Company or subsidiary pension plans, savings plans, profit sharing plans or any other benefit plans.
(iv)     Participant’s Rights . A Participant’s rights and interests under the Plan may not be assigned or transferred by the Participant. To the extent the Participant acquires a right to receive payments from the Company under the Plan, such right shall be no greater than the right of any unsecured general creditor of the Company. Nothing contained herein shall be deemed to create a trust of any kind or any fiduciary relationship between the Company and the Participant. Designation as a Participant in the Plan for a

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Performance Period shall not entitle or be deemed to entitle the Participant to be designated as a Participant for any subsequent Performance Periods or to continued employment with the Company.
(v)     Applicable Law . The Plan shall be governed and construed in accordance with the laws of the State of North Carolina, except to the extent such laws are preempted by the laws of the United States of America.






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APPENDIX B


Awards have the following mix:

a)
1/3 restricted stock awards, cliff vesting 3 years from grant

b)
1/3 performance cash vesting based on performance against three-year average ROIC performance targets set at the beginning of cycle (includes goodwill and intangibles)

c)
1/3 performance shares vesting based on relative total shareholder return performance

i)
Shares earned will vary from a target award based on EnPro’s TSR ranking compared to the SmallCap 600 Capital Goods industry group over the 3-year period beginning January 2016 and ending December 31, 2018

* FX translation effect neutral


Determination of performance shall be in accordance with the method for calculation approved by the Compensation Committee at its February 23, 2016 meeting and shall be subject to equitable adjustment where necessary (i) in response to changes in applicable laws or regulations, (ii) to account for items of gain, loss, or expense that are related to the disposal (or acquisition) of a business or change in accounting principles that was not anticipated at the time this award was made, (iii) to account for adjustments in expense due to re-measurement of pension benefits, (iv) to account for restructurings, discontinued operations, and any other items deemed by the Compensation Committee to be non-recurring in nature or otherwise not reflective of operating performance that were not anticipated at the time this award was made, and (v) to reflect other unusual, non-recurring, or unexpected items similar in nature to the foregoing, in each case as determined in good faith by the Compensation Committee consistent with the principles set forth in section 162(m) of the Internal Revenue Code and the regulations thereunder.



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APPENDIX C

Change in Control Treatment

A.    In the event of a Change in Control during the Performance Cycle:

i)
To the extent the Cash LTIP award is assumed, converted or replaced by the resulting entity in the Change in Control, if within two years after the date of the Change in Control you have a termination of employment either (1) by the Company other than for “Cause” or (2) by you for “Good Reason” (each as defined below), then the target payout opportunities attainable under the award shall be deemed to have been earned as of the applicable termination of employment based upon the greater of: (A) an assumed achievement of all relevant performance goals at their “target” level, or (B) the actual level of achievement of all relevant performance goals against target as of the Company’s fiscal quarter end preceding the Change in Control. The award, as adjusted for such deemed performance, shall become vested in full and shall be paid as soon as administratively practicable (not more than 30 days) after the date of such termination of employment.

ii)
To the extent the Cash LTIP award is not assumed, converted or replaced by the resulting entity in the Change in Control, then upon the Change in Control the target payout opportunities attainable under the award shall be deemed to have been earned as of the Change in Control based upon the greater of: (A) an assumed achievement of all relevant performance goals at their “target” level, or (B) the actual level of achievement of all relevant performance goals against target as of the Company’s fiscal quarter end preceding the Change in Control. The award, as adjusted for such deemed performance, shall become vested in full and shall be paid as soon as administratively practicable (not more than 30 days) after the date of the Change in Control.

B.
For purposes of the Cash LTIP award, the following terms shall have the following meanings:

i)
“ Cause ” shall be defined as that term is defined in your offer letter or other applicable employment or management continuity agreement; or, if there is no such definition, “Cause” means your termination of employment with the Company due to (A) the willful and continued failure by you to substantially perform your duties with the Company, which failure causes material and demonstrable injury to the Company (other than any such failure resulting from your incapacity due to physical or mental illness), after a demand for substantial performance is delivered to you by the Company which specifically identifies the manner in which the Company believes that you have not substantially performed your duties, and after you have been given a period (hereinafter known as the "Cure Period") of at least thirty (30) days to correct your performance, (B) the willful engaging by you in other gross misconduct materially and demonstrably injurious to the Company, (C) conviction of a felony or a misdemeanor involving moral turpitude, (D) your willful receipt of an improper personal benefit that demonstrably injures the Company, and (E) your willful and material violation of the Company’s written policies after being provided written notice of such violation and a Cure Period of at least thirty (30) days. For purposes hereof, no act, or failure to act, on your part shall be considered "willful" unless conclusively demonstrated to have been done, or omitted to be done, by you not in good faith and without reasonable belief that your action or omission was in the best interests of the Company.

ii)
“ Good Reason ” shall be defined as that term is defined in your offer letter or other applicable employment or management continuity agreement; or, if there is no such definition, “Good Reason” means, provided that you have complied with the Good Reason Process, the occurrence of any of the following events without your consent: (A) a material diminution in your responsibility, authority or duty; (B) a material diminution in your base salary except for across-the-board salary reductions based on the Company and its Subsidiaries’ financial performance similarly affecting all or substantially all management employees of the Company and its Subsidiaries; or (C) the relocation of the office at which you were principally employed immediately prior to a Change in Control to a

C-1




location more than fifty (50) miles from the location of such office, or your being required to be based anywhere other than such office, except to the extent you were not previously assigned to a principal location and except for required travel on your employer’s business to an extent substantially consistent with your business travel obligations at the time of the Change in Control.

iii)
“ Good Reason Process ” means that (A) you reasonably determine in good faith that a Good Reason condition has occurred; (B) you notify the Company and its Subsidiaries in writing of the occurrence of the Good Reason condition within sixty (60) days of such occurrence; (C) you cooperate in good faith with the Company and its Subsidiaries’ efforts, for a period of not less than thirty (30) days following such notice (the “Cure Period”), to remedy the condition; (D) notwithstanding such efforts, the Good Reason condition continues to exist following the Cure Period; and (E) you terminate your employment for Good Reason within sixty (60) days after the end of the Cure Period.  If the Company or its Subsidiaries cures the Good Reason condition during the Cure Period, and you terminate your employment with the Company and its Subsidiaries due to such condition (notwithstanding its cure), then you will not be deemed to have terminated your employment for Good Reason.




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Exhibit 10.19
ENPRO INDUSTRIES, INC.
DEFERRED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS
(as amended and restated effective January 1, 2016)
1. INTRODUCTION . EnPro Industries, Inc. (the “Company”) maintains the EnPro Industries, Inc. Deferred Compensation Plan for Non-Employee Directors (the “Plan”). The Company amended and restated the Plan effective as of February 12, 2008 to reflect certain design changes in order for the Plan to comply with the requirements of Section 409A of the Code and to otherwise meet current needs and subsequently amended and restated the Plan effective January 1, 2014. The Company is hereby amending and restating the Plan, effective January 1, 2016, to correct a documentary inaccuracy in Section 4(b) hereof to confirm that Non-Elective Deferrals under such Section 4(b) hereof occurred only in 2008 and 2009 and were thereafter replaced by awards of Phantom Shares (as defined herein) and to make other minor changes. It is the intent of the Company that amounts deferred under the Plan for a Non-Employee Director shall not be taxable to the Non-Employee Director for income tax purposes until the time they are actually received by the Non-Employee Director. The provisions of the Plan shall be construed and interpreted to give effect to this intent.
2. DEFINITIONS .
“ Accounts ” of a Participant mean collectively the Participant’s Cash Account and Stock Account.
“ Board ” means the members of the Board of Directors of the Company.
“ Cash Account ” means the account maintained in dollars on the books of the Company to record a Participant’s interest under the Plan attributable to any amounts deferred by the Participant into the Cash Account pursuant to Section 6(b) below, as adjusted from time to time pursuant to the terms of the Plan.
“ Code ” means the Internal Revenue Code of 1986, as amended. References to the Code include the valid and binding governmental regulations, court decisions and other regulatory and judicial authority issued or rendered thereunder.
“ Common Stock ” means the common stock of the Company.
“ Company ” means EnPro Industries, Inc. and includes any successor thereto.
“ Fair Market Value ” of a share of Common Stock means (i) for events occurring on or after January 1, 2016, the closing selling price of Common Stock and (ii) for events occurring prior to such date, the mean of the high and low prices of Common Stock, in each case on the relevant date (as of 4:00 P.M. Eastern Standard Time) as reported on the New York Stock Exchange — Composite Transactions listing (or similar report), or, if no sale was made on such date, then on the next preceding day on which such a sale was made.
“ Meeting Fees ” means the fees a Non-Employee Director receives for attending meetings of the Board and any committee of the Board, as well as any fee a Non-Employee Director receives for serving as chairman of any committee of the Board.
“ Non-Employee Director ” means a member of the Board who is not an employee of the Company or any affiliate of the Company.



“ Participant ” means any Non-Employee Director who has an Account under the Plan. Participant shall also include any former Non-Employee Director who continues to have an Account maintained under the Plan.
“ Phantom Shares ” means Phantom Shares awarded under the EnPro Industries, Inc. Amended and Restated 2002 Equity Compensation Plan, as amended.
“ Phantom Units ” means the Stock Units awarded to Non-Employee Directors under Section 4(b).
“ Plan ” means the EnPro Industries, Inc. Deferred Compensation Plan for Non-Employee Directors, as the same may be amended from time to time.
“ Plan Administrator ” means a committee consisting of the Chief Executive Officer of the Company and two other officers of the Company selected by him.
“ Plan Year ” means a calendar year.
“ Retainer ” means the cash portion of the annual retainer paid by the Company to a Non-Employee Director, and does not include the portion of the annual retainer (if any) paid in the form of Phantom Units or Phantom Shares.
“ Stock Account ” means the account maintained in Stock Units on the books of the Company to record a Participant’s interest under the Plan attributable to any amounts deferred by the Participant into the Stock Account pursuant to Section 6(b) or credited by the Company pursuant to Section 4(b), as adjusted from time to time pursuant to the terms of the Plan. If applicable, a Participant’s Stock Account will have two subaccounts, one to record amounts deferred pursuant to Section 4(a), and one to record amounts credited by the Company pursuant to Section 4(b).
“ Stock Unit ” means a unit having a value as of a given date equal to the Fair Market Value of one (1) share of Common Stock on such date.
3. ADMINISTRATION . The Plan shall be administered by the Plan Administrator. The Plan Administrator shall be empowered to interpret the provisions of the Plan and to perform and exercise all of the duties and powers granted to it under the terms of the Plan. The Plan Administrator may adopt such rules and regulations for the administration of the Plan as are consistent with the terms hereof and shall keep adequate records of its proceedings and acts. All interpretations and decisions made (both as to law and fact) and other action taken by the Plan Administrator with respect to the Plan shall be conclusive and binding upon all parties having or claiming to have an interest under the Plan. Not in limitation of the preceding provisions of this Section, the Plan Administrator shall have the discretion to decide any factual or interpretative issues that may arise in connection with its administration of the Plan (including without limitation any determination as to claims for benefits hereunder), and the Plan Administrator’s exercise of such discretion shall be conclusive and binding on all affected parties as long as it is not arbitrary or capricious. The Plan Administrator may delegate any of its duties and powers hereunder to the extent permitted by applicable law.
4. PARTICIPATION .
(a) Elective Deferrals . Each Non-Employee Director may elect to defer compensation under the Plan by filing the written Election Form described in Section 5 with the Plan Administrator with respect to Retainers and Meeting Fees payable to the Non-Employee Director for such Non-Employee Director’s

2


services as a member of the Board. If a person ceases to be a Non-Employee Director but continues to serve as a Director, the person shall no longer be eligible to make deferral elections under the Plan.
(b) Nonelective Deferrals . Effective on the date of the first Board meeting in 2008 and 2009, the Company awarded each Non-Employee Director Phantom Units having a value of $50,000. For years thereafter, such awards were replaced by awards of Phantom Shares to Non-Employee Directors.
5. DEFERRAL ELECTIONS .
(a)     Elections to Defer . Each Participant may elect to defer receipt of all or a portion of such Participant’s Retainer and Meeting Fees at such times and pursuant to such procedures as set forth in paragraph (b) of this Section, such amounts to be credited to the Participant’s Accounts as described in Section 6 and to become payable in accordance with the provisions of Section 7.
(b)     Form and Timing of Elections . To be effective, elections to defer all or any portion of the Retainer or Meeting Fees for a Plan Year must be made on such form and pursuant to such procedures as the Plan Administrator may establish from time to time and shall be irrevocable for the Plan Year. The election must be made prior to the start of the applicable Plan Year; provided, however, that an individual who first becomes a Non-Employee Director after the start of a Plan Year may make such deferral election within thirty (30) days after first becoming a Non-Employee Director solely with respect to the Retainer and Meeting Fees for services performed after such deferral election. An election to defer for a Plan Year shall continue in effect for each subsequent Plan Year unless revoked or modified by the Participant in accordance with procedures established by the Plan Administrator; provided, however, that with respect to any Retainer and Meeting Fees for any subsequent Plan Year, the election to defer becomes irrevocable no later than December 31 of the preceding Plan Year.
6. ESTABLISHMENT OF AND ADJUSTMENT OF ACCOUNTS .
(c)     Establishment of Accounts . The Company shall establish and maintain a Cash Account and a Stock Account for each Participant. Each Account shall be designated by the name of the Participant for whom established. Each Account shall be maintained on the books of the Company until full payment of the balance thereof has been made to the applicable Participant (or the beneficiaries of a deceased Participant). No funds shall be set aside or earmarked for any Account, which shall be purely a bookkeeping device.
(d)     Direction of Elective Deferrals into Cash Account or Stock Account . Any elective deferrals by a Participant under Section 4(a) shall be credited to the Participant’s Cash Account or Stock Account as the Participant shall elect at such times, on such forms and pursuant to such procedures as the Plan Administrator may establish from time to time in accordance with Section 5(b). If no election is made, any amount deferred shall be credited to the Participant’s Cash Account. To the extent any amount is to be credited to a Participant’s Cash Account, such amount shall be credited to the Cash Account as of the date the amount would have otherwise been paid to the Participant. To the extent any amount is to be credited to a Participant’s Stock Account, the Stock Account shall be credited as of the date the amount would have otherwise been paid to the Participant with the number of whole and fractional Stock Units equal to the applicable dollar amount divided by the Fair Market Value of a share of Common Stock on such date. Except as otherwise provided in Section 6(e) below, a Participant may not subsequently reallocate amounts between the Cash Account and Stock Account after the deferrals have been credited.
(e)     Account Adjustments: Cash Account . The Plan Administrator shall designate from time to time one or more investment vehicle(s) in which the Cash Accounts of Participants shall be deemed to be invested. The investment vehicle(s) may be designated by reference to the deemed investments available

3


under the management deferred compensation plan. Each Participant shall designate the investment vehicle(s) in which his or her Cash Account shall be deemed to be invested according to the procedures developed by the Plan Administrator, except as otherwise required by the terms of the Plan. The Company shall not be under any obligation to acquire or invest in any of the deemed investment vehicle(s) under this subparagraph, and any acquisition of or investment in a deemed investment vehicle by the Company shall be made in the name of the Company and shall remain the sole property of the Company. The Plan Administrator shall also establish from time to time a default fund into which a Participant’s Cash Account shall be deemed to be invested if the Participant fails to provide investment instructions pursuant to this Section 6(c).
The intervals at which each Cash Account shall be adjusted shall be as determined by the Plan Administrator from time to time. The Plan Administrator may determine the frequency of Cash Account adjustments by reference to the frequency of account adjustments under the management deferred compensation plan. The amount of the adjustment shall equal the amount that the Participant’s Cash Account would have earned (or lost) for the period since the last adjustment had the Cash Account actually been invested in the deemed investment vehicle(s) designated by the Participant for such period pursuant to this Section 6(c).
(f)     Account Adjustments: Stock Account . Each Stock Account shall be credited additional whole or fractional Stock Units for cash dividends paid on the Common Stock based on the number of Stock Units in the Stock Account on the applicable dividend record date and calculated based on the Fair Market Value of the Common Stock on the applicable dividend payment date. Each Stock Account shall also be equitably adjusted as determined by the Plan Administrator in the event of any stock dividend, stock split or similar change in the capitalization of the Company.
(g)     Reallocation to Stock Account . Notwithstanding anything in the Plan to the contrary, during the period from February 21, 2006 through March 14, 2006 only, a Participant may elect to reallocate all or any portion of amounts allocated to the Cash Account to the Stock Account. To the extent any amount is to be credited to a Participant’s Stock Account pursuant to a reallocation election, the Stock Account shall be credited as of March 31, 2006 with the number of whole and fractional Stock Units equal to the applicable dollar amount the Participant has elected to reallocate divided by the Fair Market Value of a share of Common Stock on such date. A Participant may not elect to reallocate any amounts between the Cash Account and the Stock Account other than as provided in this Section 6(e).
7. PAYMENT .
(h)     Special Payment Elections
(i) Special Payments Elections for 2006 . Each Participant who is a Non-Employee Director as of a date specified by the Plan Administrator prior to December 31, 2006 shall be given the opportunity during an election window specified by the Plan Administrator and ending no later than December 31, 2006 to make a payment election applicable to the aggregate balance of the Participant’s Accounts. The Participant may elect from the payment options set forth in Subsection (b) of this Section, and such election shall be immediately effective; provided, however, that a Participant may not elect to receive during 2006 any payment that would otherwise be payable in a future year; and provided further, that a Participant may not make a new payment election with respect to payments the Participant is otherwise scheduled to receive during 2006. In the event a Participant covered by this Section fails to make a payment election on or before December 31, 2006 under this Section, the payment method shall be (X) the payment method most recently elected by

4


the Participant under the Plan according to the records of the Plan Administrator, even if that prior payment election had not yet become effective, or (Y) in the absence of any such prior payment election, a single payment following termination of service as a member of the Board as set forth in Subsection (b) of this Section. Any subsequent change to such payment election must comply with the requirements of Subsection (c) of this Section. Payments pursuant to such election shall otherwise be subject to the requirements of this Section.
(ii) Special Payments Elections for 2007 . Each Participant who is a Non-Employee Director as of a date specified by the Plan Administrator prior to December 31, 2007 shall be given the opportunity during an election window specified by the Plan Administrator and ending no later than December 31, 2007 to make a payment election applicable to the Participant’s Accounts. For each of the Participant’s Accounts, the Participant may elect (A) a single payment of the Participant’s Accounts payable between January 1, 2008 and January 31, 2008, as set forth in Subsection (b) of this Section treating 2007 as the year of the Participant’s termination of services as a member of the Board, (B) from the payment options set forth in Subsection (b) of this Section, or (C) a combination of (A) and (B); provided, however, that the portion of the Participant’s Accounts payable in accordance with (A) must be at least 25% of the Participant’s Accounts calculated on December 31, 2007. Such election shall be immediately effective; provided, however, that a Participant may not make a new payment election with respect to payments the Participant is otherwise scheduled to receive during 2007. In the event a Participant covered by this paragraph fails to make a payment election on or before December 31, 2007 under this paragraph, the payment method shall be (X) the payment method most recently elected by the Participant under the Plan according to the records of the Plan Administrator, even if that prior payment election had not yet become effective, or (Y) in the absence of any such prior payment election, a single payment following termination of service as a member of the Board as set forth in Subsection (b) of this Section. Any subsequent change to such payment election must comply with the requirements of Subsection (c) of this Section. Payments pursuant to such election shall otherwise be subject to the requirements of this Section.
(i)     Payment Options for Elective Deferrals . At the time a Participant first makes an election to defer a Retainer or Meeting Fees under Section 4(a) of the Plan, the Participant shall be given the opportunity to elect one of the following payment options for the distribution of the Participant’s Accounts attributable to elective deferrals:
(i)     Single Payment Following Termination of Service as Board Member . If a Participant to whom the single payment applies terminates service as a member of the Board, such Participant’s Accounts shall continue to be adjusted under Section 6 through the end of the calendar year in which such termination occurs. The final balance of the Participant’s Accounts as of such date shall be paid in a single payment to the Participant (or to the Participant’s designated beneficiary if the Participant dies prior to distribution of such Participant’s Account) between January 1 and January 31 of the following calendar year. The Cash Account shall be payable in cash, and the Stock Account shall be payable by delivery of one share of Common Stock for each whole Stock Unit, with cash for any fractional Stock Unit (based on the Fair Market Value of the Common Stock as of December 31 of the calendar year in which termination occurs).
(ii)     Annual Installments Following Termination of Service as Board Member . A Participant may elect to receive annual installments over a period of five or ten years. If a Participant to whom the annual installments method applies terminates service as a member of the Board, the amount of such annual installments shall be calculated and paid pursuant to the provisions of this paragraph (b)(ii). The Participant’s Accounts shall continue to be credited with adjustments under

5


Sections 6 above until the Accounts are fully paid out. The first installment shall be paid between January 1 and January 31 of the calendar year immediately following the calendar year in which such termination of services occurs, and each subsequent installment shall be paid between January 1 and January 31 of each subsequent calendar year. Each payment shall be equal to (i) the sum of the Participant’s balance in each Account as of December 31 of the calendar year immediately preceding the calendar year of payment, multiplied by (ii) a fraction, the numerator of which is one and the denominator is the number of installments remaining, including the current year’s payment. The portion of each installment payable from the Cash Account shall be paid in cash, and the portion of each installment payable from the Stock Account shall be payable by delivery of one share of Common Stock for each whole Stock Unit, with cash for any fractional Stock Unit (based on the Fair Market Value of the Common Stock as of December 31 of the calendar year immediately preceding the calendar year of payment).
A Participant’s payment election shall be made on the election form used by the Participant for making such Participant’s initial deferral election and shall be effective with respect to the aggregate balance of the Participant’s Accounts attributable to elective deferrals. A Participant who fails to make a payment election in accordance with the provisions of this Subsection shall be deemed to have elected a single payment to be paid in accordance with the requirements of paragraph (i) of this Subsection.
(j)     Subsequent Changes to Elective Deferral Payment Elections . A Participant whose services as a Board member have not terminated may change the form of payment elected under Section 7(a) or (b) only if (i) such election is made at least 12 months prior to the date payment would have otherwise commenced and (ii) the effect of such election is to defer commencement of such payment by at least five years. For purpose of this Section, a series of installment payments over five or ten years is treated as a single payment to be made in the year that the first installment would otherwise be paid.
(k)     Payment Method for Phantom Units . When a Participant terminates service as a member of the Board, the value of a Participant’s Stock Account attributable to Phantom Units will continue to be adjusted under Section 6 through the end of the calendar year in which such termination occurs. The final balance of this subaccount of the Participant’s Stock Account shall be paid in a single cash payment to the Participant (or to the Participant’s designated beneficiary, if the Participant dies prior to distribution of such Participant’s Account) between January 1 and January 31 of the following calendar year. The amount paid will be based on the Fair Market Value of the Common Stock as of December 31 of the calendar year in which termination occurs.
(l)     Death . If a Participant dies after having commenced installment payments, any remaining unpaid installment payments shall be paid to the Participant’s beneficiary as and when they would have otherwise been paid to the Participant had the Participant not died. If a Participant’s termination of service as a Board member is due to his death, the Participant’s Accounts shall be payable to the Participant’s beneficiary in a single payment to be made as soon as administratively practicable after the date of the Participant’s death. In this event, amounts paid from the Participant’s Stock Account will be based on the Fair Market Value of the Common Stock on the date of death. Participants shall designate a beneficiary under the Plan on a form furnished by the Plan Administrator, and if a Participant does not have a beneficiary designation in effect, the designated beneficiary shall be the Participant’s estate.
(m)     Other Payment Provisions . Subject to the provisions of Section 8, a Participant shall not be paid any portion of the Participant’s Accounts prior to the Participant’s termination of service as a member of the Board. Any payment hereunder shall be subject to applicable withholding taxes. If any amount becomes payable under the provisions of the Plan to a Participant, beneficiary or other person who is a minor

6


or an incompetent, whether or not declared incompetent by a court, such amount may be paid directly to the minor or incompetent person or to such person’s legal representative (or attorney-in-fact in the case of an incompetent) as the Plan Administrator, in its sole discretion, may decide, and the Plan Administrator shall not be liable to any person for any such decision or any payment pursuant thereto.
(n)     Account Statements . Each Participant shall receive an annual statement of the balance in the Participant’s Accounts.
8. TERMINATION AND AMENDMENT .
(o)    The Corporation may amend or terminate the Plan at any time so that no further benefits shall accrue under the Plan or may, from time to time, amend the Plan, without the consent of Participants or Beneficiaries; provided, however, that no such amendment or termination shall reduce the actual amount of the accrued benefit of a Participant under the Plan on the date of such amendment or termination.
(p)    Notwithstanding Section 8(a) above, the Company may terminate the Plan and accelerate the distribution of all benefits accrued hereunder to the extent permitted by Code Section 409A.
9. APPLICABLE LAW . The Plan shall be construed, administered, regulated and governed in all respects under and by the laws of the United States to the extent applicable, and to the extent such laws are not applicable, by the laws of the state of North Carolina.
10. COMPLIANCE WITH SECTION 409A OF THE CODE . The Plan is intended to comply with Section 409A of the Code. Notwithstanding any provision of the Plan to the contrary, the Plan shall be interpreted, operated and administered consistent with this intent.
11. COMPLIANCE WITH LAWS AND REGULATIONS . Notwithstanding any other provisions of the Plan, the issuance or delivery of any shares of Common Stock may be postponed for such period as may be required to comply with any applicable requirements of any national securities exchange or any requirements under any other law or regulation applicable to the issuance or delivery of such shares, and the Company shall not be obligated to issue or deliver any such shares if the issuance or delivery thereof shall constitute a violation of any provision of any law or any regulation of any governmental authority, whether foreign or domestic, or any national securities exchange.
12. MISCELLANEOUS . A Participant’s rights and interests under the Plan may not be assigned or transferred by the Participant. The Plan shall be an unsecured, unfunded arrangement. To the extent the Participant acquires a right to receive payments from the Company under the Plan, such right shall be no greater than the right of any unsecured general creditor of the Company. The Company shall not be required to segregate any amounts credited to any Accounts, which shall be established merely as an accounting convenience. Nothing contained herein shall be deemed to create a trust of any kind or any fiduciary relationship between the Company and any Participant. The Plan shall be binding on the Company and any successor in interest of the Company.

7


IN WITNESS WHEREOF , this instrument has been executed by an authorized officer of the Company as of the 18th day of December, 2015, effective as of January 1, 2016.
ENPRO INDUSTRIES, INC.


By:     /s/ Robert S. McLean    
Name:    Robert S. McLean
Title:
Vice President, General Counsel and Secretary

8



Exhibit 10.34

Summary of Director and Executive Officer Compensation Arrangements

In addition to the compensation arrangements filed as other exhibits to this annual report, EnPro Industries, Inc. (the “Company”) has the following compensation arrangements with its directors and named executive officers.

Compensation Arrangements for Directors

The Company has an arrangement to pay non-employee members of the Company’s board of directors compensation for their service on the board. Effective for 2016, each non-employee member of the Company’s board of directors receives an annual retainer of $165,000, $75,000 of which is paid in cash and $90,000 of which is paid in phantom shares of our common stock upon the director’s termination of service as a director. The non-executive chairman of the board receives an additional quarterly fee of $11,875 for his service in that capacity and for his service as chairman of the Nominating and Corporate Governance Committee, the chairman of the Audit and Risk Management Committee receives an additional annual fee of $15,000, and the chairman of the Compensation and Human Resources Committee receives an annual fee of $12,000.

Compensation Arrangements for Named Executive Officers

The Company’s chief executive officer and its other most highly compensated executive officers based on 2015 base salaries and bonuses (such five individuals, the “named executive officers”), are all “at-will” employees who serve at the pleasure of the board of directors. The board of directors sets the annual base salary for each of the named executive officers and has the discretion to change the salary of any of the officers at any time. Effective for 2016, the annual base salaries for the named executive officers are as follows:
Named Executive Officer
Base Salary
Stephen E. Macadam
$850,000
J. Milton Childress II
$375,000
Kenneth D. Walker
$420,000
Jon A. Cox
$345,000
Marvin A. Riley
$310,000




Exhibit 21             
Subsidiaries of EnPro Industries, Inc.            
(as of December 31, 2015)



Consolidated Subsidiary Companies

Place of
Incorporation
% of Voting
Securities Owned
EnPro Industries, Inc.
North Carolina
100
Coltec Industries Inc
Pennsylvania
100
Garlock Do Brasil Produtos Industriais Ltda.
Brazil
89
Coltec Finance Company Limited
United Kingdom
100
Coltec Industries Pacific Pte Ltd
Singapore
100
CPI Service (Thailand) Ltd.
Thailand
45
CPI Asia Co., Ltd.
Thailand
100
CPI Service (Thailand) Ltd.
Thailand
55
Garlock India Private Limited
India
99.99999
Garlock Singapore Pte. Ltd.
Singapore
100
Garlock Taiwan Corporation
Taiwan
100
Link Seal Japan Ltd.
Japan
50
Coltec International Services Co.
Delaware
100
Garlock Do Brasil Produtos Industriais Ltda.
Brazil
11
Stempro de Mexico, S. de R.L. de C.V.
Mexico
25
Compressor Products Holdings, Limited
United Kingdom
100
Compressor Products International Ltd.
United Kingdom
100
Compressor Products International Ltda.
Brazil
99
Indústria de Compressores Ltda.
Brazil
100
CPI Investments Limited
United Kingdom
100
Compressor Products International Ltda.
Brazil
1
CPI Pacific Pty Limited
Australia
100
Player & Cornish Limited
United Kingdom
100
Robix Limited
United Kingdom
100
Compressor Products International LLC
Delaware
100
EnPro Associates, LLC
North Carolina
100
EnPro Learning System, LLC
North Carolina
100
EnPro Int’l Trade (Shanghai) Co., Ltd.
China
100
EnPro Hong Kong Holdings Company Limited
Hong Kong
100
Garlock Sealing Technologies (Shanghai) Co., Ltd.
China
100
EnPro Corporate Management Consulting (Shanghai) Co. Ltd.
China
100
Compressor Products Int’l (Shanghai) Co., Ltd.
China
100
Stemco Vehicle Technology (Shanghai) Co. Ltd.
China
100
GGB LLC
Delaware
100
Garlock (Great Britain) Limited
United Kingdom
100
Garlock Pipeline Technologies Limited
United Kingdom
100
Technetics Group U.K. Ltd.
United Kingdom
100
Technetics UK Limited
United Kingdom
100
Pipeline Seal & Insulator Co. (Limited)
United Kingdom
100
Garlock Pipeline Technologies, Inc.
Colorado
100
Garlock Sealing Technologies LLC
North Carolina
100

 

Garlock International Inc
Delaware
100
Consolidated Subsidiary Companies
Place of Incorporation
% of Voting Securities Owned
Garlock of Canada Ltd
Ontario, Canada
100
Garlock de Mexico, S.A. de C.V.
Mexico
99.62
Garlock Overseas Corporation
Delaware
100
Garlock de Mexico, S.A. de C.V.
Mexico
0.38
Garlock Pty Limited
Australia
100
Garlock Valqua Japan, Inc.
Japan
51
Garrison Litigation Management Group, Ltd.
North Carolina
100
The Anchor Packing Company
North Carolina
100
GGB Brasil Industria de Mancais E Componentes Ltda.
Brazil
0.1
GGB, Inc.
Delaware
100
EnPro Luxembourg Holding Company S.a.r.l.
Luxembourg
100
GGB France E.U.R.L.
France
100
Compressor Products International Canada, Inc.
Alberta, Canada
100
Compressor Products Int'l Colombia S.A.S.
Colombia
100
Stempro Mexico Acquisition Co., S. de R.L. de C.V.
Mexico
99.99
STEMCO Productos Industriales, S. de R.L. de C.V.
Mexico
0.01
EnPro German Holding GmbH
Germany
100
GGB Heilbronn GmbH
Germany
100
GGB Kunststoff-Technologie GmbH
Germany
100
Garlock GmbH
Germany
100
Compressor Products International GmbH
Germany
100
Franken Plastiks GmbH
Germany
100
PSI Products GmbH
Germany
100
Garlock India Private Limited
India
0.00001
Technetics Group Germany GmbH
Germany
100
GGB Slovakia s.r.o.
Slovakia
95.47
Coltec Industries France SAS
France
100
CPI-LIARD SAS
France
100
Technetics Group France SAS
France
100
GGB Austria GmbH
Austria
100
GGB Bearing Technology (Suzhou) Co., Ltd.
China
100
GGB Brasil Industria de Mancais E Componentes Ltda.
Brazil
99.9
GGB Italy s.r.l.
Italy
100
GGB Real Estate GmbH
Germany
100
GGB Slovakia s.r.o.
Slovakia
4.53
GGB Tristar Suisse S.A.
Switzerland
100
Fairbanks Morse Engine France E.U.R.L.
France
100
Stemco Holdings, Inc.
Delaware
100
Advanced Transit Dynamics, Inc.
Delaware
100
Stemco Products, Inc.
Delaware
100
Stemco LP
Texas
99
Stemco LP
Texas
1
Stempro de Mexico, S. de R.L. de C.V.
Mexico
75
Stemco Kaiser Incorporated
Michigan
100
SD Friction, LLC
Delaware
100

2


Stempro Mexico Acquisition Co., S. de R.L. de C.V.
Mexico
.01
Consolidated Subsidiary Companies
Place of Incorporation
% of Voting Securities Owned
STEMCO Productos Industriales, S. De R.L. de C.V.
Mexico
99.99
Technetics Group LLC
North Carolina
100
Technetics Group Oxford, Inc.
Delaware
100
Technetics Group Daytona, Inc.
Delaware
100
Applied Surface Technology, Inc.
California
100
Belfab, Inc.
Delaware
100
Technetics Group Singapore Pte. Ltd.
Singapore
100



3


Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S‑8 (Nos. 333-89576, 333-89580, 333-107775, 333-113284, 333-159099, 333-178668, 333-181282 and 333-195661) of EnPro Industries, Inc. of our report dated February 26, 2016 relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this Form 10‑K.



/s/ PricewaterhouseCoopers LLP
                            
Charlotte, North Carolina
February 26, 2016



Exhibit 23.2

CONSENT OF EXPERT

We consent to the incorporation by reference in the Registration Statement (Form S-8, No. 333-89576 and Form S-8, No. 333-178668) pertaining to the EnPro Industries, Inc. Retirement Savings Plan for Hourly Workers and the EnPro Industries, Inc. Retirement Savings Plan for Salaried Workers, the Registration Statement (Form S-8, No. 333-89580, Form S-8, No. 333-107775, Form S-8, No. 333-159099, Form S-8, No. 333-181282 and Form S-8, No. 333-195661) pertaining to the EnPro Industries, Inc. Amended and Restated 2002 Equity Compensation Plan, and the Registration Statement (Form S-8, No. 333-113284) pertaining to the EnPro Industries, Inc. Deferred Compensation Plan for Non-Employee Directors, of excerpts of our report dated February 2, 2010, with respect to the estimation of the liability of Garlock Sealing Technologies LLC for pending and reasonably estimable unasserted future asbestos claims, which excerpts are included in this Annual Report (Form 10-K) of EnPro Industries, Inc. for the year ended December 31, 2015.


/s/ Bates White, LLC


Washington, D.C.
February 23, 2016





Exhibit 24.1

POWER OF ATTORNEY

THE UNDERSIGNED director of EnPro Industries, Inc. (the “Company”), hereby appoints Robert S. McLean, and J. Milton Childress II, and each of them singly, with full power to act without the other and with full power of substitution, his true and lawful attorneys-in-fact and agents, for him and in his name, place and stead, to execute on his behalf, the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, and to file the same with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, and grants unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done as fully as to all intents and purposes as he might or could do in person, and hereby ratifies and confirms all that such attorneys-in-fact or agents, or any of them, or their substitutes shall lawfully do or cause to be done by virtue thereof.

EXECUTED on the 23rd day of February 2016.


/s/ Thomas M. Botts        
Thomas M. Botts




Exhibit 24.2

POWER OF ATTORNEY

THE UNDERSIGNED director of EnPro Industries, Inc. (the “Company”), hereby appoints Robert S. McLean and J. Milton Childress II, and each of them singly, with full power to act without the other and with full power of substitution, his true and lawful attorneys-in-fact and agents, for him and in his name, place and stead, to execute on his behalf, the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, and to file the same with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, and grants unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done as fully as to all intents and purposes as he might or could do in person, and hereby ratifies and confirms all that such attorneys-in-fact or agents, or any of them, or their substitutes shall lawfully do or cause to be done by virtue thereof.

EXECUTED on the 23rd day of February 2016.


/s/ Felix M. Brueck        
Felix M. Brueck




Exhibit 24.3

POWER OF ATTORNEY

THE UNDERSIGNED director of EnPro Industries, Inc. (the “Company”), hereby appoints Robert S. McLean and J. Milton Childress II, and each of them singly, with full power to act without the other and with full power of substitution, his true and lawful attorneys-in-fact and agents, for him and in his name, place and stead, to execute on his behalf, the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, and to file the same with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, and grants unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done as fully as to all intents and purposes as he might or could do in person, and hereby ratifies and confirms all that such attorneys-in-fact or agents, or any of them, or their substitutes shall lawfully do or cause to be done by virtue thereof.

EXECUTED on the 23rd day of February 2016.


/s/ B. Bernard Burns        
B. Bernard Burns




Exhibit 24.4

POWER OF ATTORNEY

THE UNDERSIGNED director of EnPro Industries, Inc. (the “Company”), hereby appoints Robert S. McLean and J. Milton Childress II, and each of them singly, with full power to act without the other and with full power of substitution, his true and lawful attorneys-in-fact and agents, for him and in his name, place and stead, to execute on his behalf, the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, and to file the same with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, and grants unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done as fully as to all intents and purposes as he might or could do in person, and hereby ratifies and confirms all that such attorneys-in-fact or agents, or any of them, or their substitutes shall lawfully do or cause to be done by virtue thereof.

EXECUTED on the 23rd day of February 2016.


/s/ Diane C. Creel    
Diane C. Creel




Exhibit 24.5

POWER OF ATTORNEY

THE UNDERSIGNED director of EnPro Industries, Inc. (the “Company”), hereby appoints Robert S. McLean and J. Milton Childress II, and each of them singly, with full power to act without the other and with full power of substitution, his true and lawful attorneys-in-fact and agents, for him and in his name, place and stead, to execute on his behalf, the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, and to file the same with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, and grants unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done as fully as to all intents and purposes as he might or could do in person, and hereby ratifies and confirms all that such attorneys-in-fact or agents, or any of them, or their substitutes shall lawfully do or cause to be done by virtue thereof.

EXECUTED on the 23rd day of February 2016.


/s/ Kees van der Graaf        
Kees van der Graaf




Exhibit 24.6

POWER OF ATTORNEY

THE UNDERSIGNED director of EnPro Industries, Inc. (the “Company”), hereby appoints Robert S. McLean and J. Milton Childress II, and each of them singly, with full power to act without the other and with full power of substitution, his true and lawful attorneys-in-fact and agents, for him and in his name, place and stead, to execute on his behalf, the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, and to file the same with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, and grants unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done as fully as to all intents and purposes as he might or could do in person, and hereby ratifies and confirms all that such attorneys-in-fact or agents, or any of them, or their substitutes shall lawfully do or cause to be done by virtue thereof.

EXECUTED on the 23rd day of February 2016.


/s/ Gordon D. Harnett        
Gordon D. Harnett




Exhibit 24.7

POWER OF ATTORNEY

THE UNDERSIGNED director of EnPro Industries, Inc. (the “Company”), hereby appoints Robert S. McLean and J. Milton Childress II, and each of them singly, with full power to act without the other and with full power of substitution, his true and lawful attorneys-in-fact and agents, for him and in his name, place and stead, to execute on his behalf, the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, and to file the same with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, and grants unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done as fully as to all intents and purposes as he might or could do in person, and hereby ratifies and confirms all that such attorneys-in-fact or agents, or any of them, or their substitutes shall lawfully do or cause to be done by virtue thereof.

EXECUTED on the 23rd day of February 2016.


/s/ David L. Hauser        
David L. Hauser




Exhibit 24.8

POWER OF ATTORNEY

THE UNDERSIGNED director of EnPro Industries, Inc. (the “Company”), hereby appoints Robert S. McLean and J. Milton Childress II, and each of them singly, with full power to act without the other and with full power of substitution, his true and lawful attorneys-in-fact and agents, for him and in his name, place and stead, to execute on his behalf, the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, and to file the same with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, and grants unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done as fully as to all intents and purposes as he might or could do in person, and hereby ratifies and confirms all that such attorneys-in-fact or agents, or any of them, or their substitutes shall lawfully do or cause to be done by virtue thereof.

EXECUTED on the 23rd day of February 2016.


/s/ John Humphrey        
John Humphrey





Exhibit 31.1
CERTIFICATION
I, Stephen E. Macadam, President and Chief Executive Officer of EnPro Industries, Inc. (the “registrant”), certify that:
1. I have reviewed this report on Form 10-K of the registrant;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:
February 26, 2016
/s/ Stephen E. Macadam
 
 
Stephen E. Macadam
 
 
President and Chief Executive Officer




Exhibit 31.2
CERTIFICATION
I, J. Milton Childress II, Senior Vice President and Chief Financial Officer of EnPro Industries, Inc. (the “registrant”), certify that:
1. I have reviewed this report on Form 10-K of the registrant;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:
February 26, 2016
/s/ J. Milton Childress II
 
 
J. Milton Childress II
 
 
Senior Vice President and Chief Financial Officer





Exhibit 32
CERTIFICATION
The undersigned chief executive officer and chief financial officer of the registrant each certifies pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge, this report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and that to his knowledge, the information contained in this report fairly presents, in all material respects, the financial condition and results of operations of the registrant.
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to EnPro Industries, Inc. and will be retained by EnPro Industries, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

Date:
February 26, 2016
/s/ Stephen E. Macadam
 
 
Stephen E. Macadam
 
 
President and Chief Executive Officer
 
 
 
Date:
February 26, 2016
/s/ J. Milton Childress II
 
 
J. Milton Childress II
 
 
Senior Vice President and Chief Financial Officer