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Engineered for Per form ance
Garloc k Seal ing Tec hnologies LLCAsbestos Cla ims Resolu t ion
J une 7, 2010
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Forw ard Look ing St a tem ents
2
Statements in this presentation that express a belief, expectation or intention, as well asthose that are not historical fact, are forward-looking statements under the PrivateSecurities Litigation Reform Act of 1995. 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 futureevents and developments and which do not relate to historical matters identify forward-looking statements. These forward-looking statements involve a number of risks anduncertainties that may cause actual events and results to differ materially from suchforward-looking statements. These risks and uncertainties include, but are not limited to:Garlocks ability to reach acceptable agreements with asbestos claimants and othercreditors, Garlocks ability to obtain court approval for a proposed plan and its proposeddebtor-in-possession financing, unforeseen developments affecting Garlocks ability to paycreditors in full, operate in the ordinary course and adequately fund a trust to resolve allcurrent and future asbestos claims. Our filings with the Securities and ExchangeCommission, including the Form 10-K for the year ended December 31, 2009, and the Form
10-Q for the quarter ended March 31, 2010, describe risks and uncertainties in moredetail. We do not undertake to update any forward-looking statement made in this releaseto reflect any change in management's expectations or any change in the assumptions orcircumstances on which such statements are based.
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Date: June 10, 2010
Time: 8 a.m.- noon
Place: Omni Berkshire Place HotelNew York
Presenters: Bill Holland, Non-Executive ChairmanSteve Macadam, President & CEOBill Dries, CFORick Magee, General CounselMilt Childress, VP, Strategic Planning & Business
DevelopmentTony Gioffredi, Division President, Compressor ProductsInternational; President, Engine Products &Services Segment
Dale Herold, President, Garlock Sealing Technologies
RSVP: www.meetmax.com/enpro_investor_day.html
EnPro Inve st or Day
3
http://www.meetmax.com/enpro_investor_day.htmlhttp://www.meetmax.com/enpro_investor_day.html -
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Gar lock s Asbest os Li t igat ion
Limits EnPros value
Consumes significant amounts of cash
A billion dollars over the 10 years
Insurance is declining towards exhaustion Cash drain could go on for decades
Now is the time for a final and permanent solution
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A Changing Approac h t o Cla ims Resolu t ion
Historical strategy controlled cash outflows
Managed claims and insurance collections
Avoided undue litigation risks
Relied on strong defenses
Recent trends are disturbing Mesothelioma claims are increasing
Trust payments havent reduced demands against Garlock
State courts are no longer viable
Bankruptcy court offers a superior venue
One court and one judge
Claims are stayed, cash flows stop
Insurance is preserved
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Consol idat ed Financ ia l Report ing St ruc t ure: 2009
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Gar lock Fam i ly o f Com panies
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EnPro is Com m i t t ed t o Gar lock
Garlock is a core investment EnPro is excited by its prospects and opportunities
Financially sound, long history of profitability
$10 million DIP facility
Dedicated management and employees No disruptions to Garlocks business are expected
Asbestos claims resolution
Garlock has the means to fund a fairly constituted trust
Resolution removes allows Garlock and EnPro to achievefull potential
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Managing Gar lock s Asbestos L i t igat ion
CONTROL to RESOLUTION
--- why the change?
Strategy controlled cash impact
Situation expected to improve
Assumptions challenged
Bankruptcy system offers a better alternative
Asbestos claims resolution process now underway
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St rat egy Cont ro l led Cash Im pac t
Late 1990s
Smallpayments on
large numbersof claims
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St rat egy Cont ro l led Cash Im pac t
Late 1990s
Smallpayments on
large numbersof claims
2000-2001
Bankruptcywave caused
paymentincrease
Particularly formesotheliomaclaims
Increasing
number ofjunk claims
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Insurance agreements
provided significant funding More than $1 billion in coverage
St rat egy Cont ro l led Cash Im pac t
Late 1990s
Smallpayments on
large numbersof claims
2000-2001
Bankruptcywave caused
paymentincrease
Particularly formesotheliomaclaims
Increasing
number ofjunk claims
2002 on
Intense focus on cash
2002 spin-off
Mesothelioma payments increasing But decline in junk payments more
than offset increases
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St rat egy Cont ro l led Cash Im pac t
Total and net cash outflows declining and manageablePre-EnPro After EnPro Spin Off
$8 3 $8 8 $94 $9 9 $83 $107 $8 8 $9 0$7 3
$8 2 $7 8 $52 $3 6
$40
$2 2
$3 8$2 5
$3 7
$165 $166
$146$135
$123 $129 $126$115
$110
$0
$30
$60
$90
$120
$150
$180
2000 2001 2002 2003 2004 2005 2006 2007 2008
Millions
Insurance Recoveries Net Cash Outflow
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Si t ua t ion Ex pect ed t o Improve
Improvements would more thanoffset eventual insurance decline
Tort reform would eliminate junk claims Non-malignancy claims had overwhelmed system
Reform initiative underway (national and state)
Wealthy bankruptcy trusts would pay claims
Garlocks payments would decline when trusts funded
Number of serious disease claims in decline Mesothelioma incidence had peaked in late 90s
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Si t ua t ion Ex pect ed t o Improve
Improvements would more than offseteventual insurance decline
Tort reform would eliminate junk claims Non-malignancy claims had overwhelmed system
Reform initiative underway (national and state)
Wealthy bankruptcy trusts would pay claims
Garlocks payments would decline when trusts funded
Number of serious disease claims in decline Mesothelioma incidence had peaked in late 90s
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One Assum pt ion Proved Ac c urat e
Tort reform did largely eliminate junk claims Comprehensive state reform
Mississippi and Texas led way
Texas silicosis hearing exposed fraud
Cases moved to inactive dockets
National legislative reform failed
Defendants confident disease claims manageable Claims numbers no longer overwhelming
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Ot her Assum pt ions Chal lenged
Trusts payments did not mitigate demands, settlements orverdicts Trust money delayed for years
Culpable defendants remained in bankruptcy
A full decade for WR Grace and Pittsburgh Corning
Insignificant recoveries from trusts
Targets changed
Risk grew for peripheral defendants
A new world by the time multi-billion dollar trusts emerged
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Ot her Assum pt ions Chal lenged
Trusts finally emerged with billions 2004 - $4.5 billion (DII and Western Macarthur)
2006 - $16 billion (OCF, USG, Armstrong, B&W, CE, Kaiser)
$3.5 $5.0
$7.6
$20.1
$23.1
$18.4 $20.1
$0
$5
$10
$15
$20
$25
2003 2004 2005 2006 2007 2008 2009
Billions
Trust Assets Available
Several additional trusts proposed but not yet funded will add at least $10 billion18
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Ot her Assum pt ions Chal lenged
Significant dollars began to flow from bankruptcy trusts
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Ot her Assum pt ions Chal lenged
But Garlock payments have NOT declined No credit for bankruptcy trust payments
$9.1
$23.1 $23.4
$35.1$30.1
$43.5
$59.2
$78.7$72.4 $75.6 $74.1 $70.7
$0
$20
$40
$60
$80
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Thousands
Average Mesothelioma Settlement
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1,6562,058 1,862 1,967
1,610 1,6921,822 1,883
0
500
1,000
1,500
2,000
2,500
3,000
2002 2003 2004 2005 2006 2007 2008 2009
New Meso Filings Overall Incidence Industrial Incidence
Ot her Assum pt ions Chal lenged
And targeting of Garlock has increased
Disease incidence in decline Garlock claims also began decline in 2004 But then increased each year from 2007-2009
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Cont rol ve rsus Resolu t ion --- w hy the change?
Insurance collections about to decline significantly
2011 collections $34 million lower
$70
$36 $30 $24 $20 $20 $18 $13 $11 $0
$0
$20
$40
$60
$80
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Millions
Insurance Collections
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Cont rol ve rsus Resolu t ion --- w hy the change?
Insurance collections about to decline significantly
2011 collections $34 million lower
AND developments in bankruptcy cases encouraging
$70
$36 $30 $24 $20 $20 $18 $13 $11 $0
$0
$20
$40
$60
$80
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Millions
Insurance Collections
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We Be l ieve Bankrupt c y Now Of fe rs a Bet t e r A l te rna t i ve
Asbestos claims resolution process under Chapter 11 Automatic stay stops cash drain
One court and one judge
Federal rules of evidence
Fair analysis of science and medicine
Permanent resolution available Estimation trial offers fair claims valuation
Credit for trust payments available
Process can lead to negotiated resolution
Without the risk of a significant adverse verdict Potentially at a significantly lower cost
With opportunity to preserve equity
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Gar lock Asbestos Cla im s Resolu t ion Proc essNow Underw ay
Filing on June 5 Western District of NC (Charlotte) Bankruptcy Court
Garlock in good financial position Will continue operations in ordinary course
Intends to meet obligations in full
Affiliate asbestos claims can be enjoined Protects EnPro and other EnPro businesses
Court to estimate liability
Garlock to establish trust
Permanently resolves asbestos claims
Garlock has the means to fund trust
Value preser ved, fu ture pro t ect ed25
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Ac c ount ing/Report ing Ram if ic at ions for EnPro
Stop consolidating Garlock operating results
Asbestos liability/insurance asset removed
Operating assets/liabilities combined Net assets restated to fair value
Investment balance frozen review for impairment
If claims resolution process successful, reconsolidate
Garlock results presented in EnPro footnote
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EnProGAAP
GarlockAdjustments
EnProProforma
Sales $ 803.0 $(134.4) $ 668.6
Normalized EBIT $ 56.8 $ (21.8) $ 35.0
Asbestos-related expenses (135.5) 135.5 -
Other (1) (108.1) 2.1 (106.0)
Interest expense, net (11.4) (13.4) (24.8)
Pre-tax continuing operations (198.2) 102.4 (95.8)
Tax 54.6 (39.6) 15.0
Net loss continuing operations $ (143.6) $ 62.8 $ (80.8)
EPS $ (7.19) $ 3.15 $ (4.04)
Profo rma Income St a tement Im pac t 2009($M)
(1) Includes goodwill impairment charge and other selected items.
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Asbestos Cla ims Resolut ion
Proforma Incom e St a tem ent Im pact : Q1 2010
EnProGAAP
GarlockAdjustments
EnProProforma
Sales $ 228.2 $(39.6) $ 188.6
Pre-asbestos EBIT $ 25.6 $ (6.4) $ 19.2
Asbestos-related expenses (14.5) 14.5 -
Interest expense, net (2.8) (6.4) (9.2)
Pre-tax continuing operations 8.3 1.7 10.0
Tax (2.7) $ (.6)(3.3)
Net income continuing operations $ 5.6 $ 1.1 $ 6.7
EPS $ .27 $ .06 $ .33
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Proforma Cash Flow Impac t 2009($M)
EnProGAAP
GarlockAdjustments
EnProProforma
Operating activities $ 59.0 $ (11.6) $ 47.4
Investing activities (66.3) 2.9 (63.4)
Financing activities (9.5) - (9.5)
Discontinued operations 15.4 - 15.4
Effect of FX 1.9 (0.2) 1.7
Net change in cash $ .5 $ (8.9) $ (8.4)
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EnProGAAP
GarlockAdjustments
EnProProforma
Cash $ 254 $ (14) $ 240
Other current assets 347 (114) 233
Investment in Garlock - 191 191*
Other non-current assets 727 (314) 413
$1,328 $ (251) $ 1,077
Current liabilities $ 256 $ (94) $ 162
Other non-current liabilities 535 (408) 127
Debt 132 251 383
Total liabilities 923 (251) 672
Shareholders equity 405 - 405*
$1,328 $ (251) $ 1,077
Proforma Balanc e Sheet Im pact 3/31/10($M)
* Does not reflect re-measurement gain/loss to restate net assets to fair value.
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Credi t Fac i l i t y Updat e
Post-Filing
Pre-Filing EnPro Garlock
Facility Size ($M) $75.0 $60.0 $10.0
Type ABL ABL ABL
Spread L+125 L+200 L+350
Maturity April '11 April '11Dec '11; annualrenewal rights
Unused Fee 0.25% 0.50% 0.75%Minimum Fixed ChargeCoverage Covenant 1.0 1.0 1.0
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Subordinat ed Prom issory Not es Payable t o Gar loc k($M)
Pre-Filing Post-Filing
Principal (1) $227.2 $227.2
Maturity Jan 2010 Jan 2017
Interest Rate 6.5% 11%
Cash Portion 6.5% 6.5%
PIK (non cash) n/a 4.5%
(1) Does not include notes payable by EnPro European finance subsidiary to Garlock ($24M at March 31, 2010).
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QUESTIONS
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NON-GAAP RECONCILIATIONS
34
R i l i t i f "N l i d" EBIT t L f C t i i
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Rec onci l ia t ion of "Norm al ized" EBIT to Loss f rom Cont inu ingOperat ions Before Incom e Taxes (Unaudi ted)
For the Year Ended December 31, 2009
(Stated in Millions of Dollars)
2009
"Normalized" EBIT $ 56.8
Adjustments:
Asbestos-related expenses (135.5)
Goodwill impairment charge (113.1)
Restructuring costs (10.2)
Adjustment of liability for retiree medical benefits 19.2
Interest expense, net (11.4)
Environmental reserve adjustment (2.1)
Other (1.9)
Impact (255.0)
Loss from continuing operations before income taxes $ (198.2)