EnPro Industries Reports Second Quarter 2003 Results.Business Editors CHARLOTTE, N.C.--(BUSINESS WIRE)--Aug. 4, 2003 EnPro Industries (NYSE NYSE See: New York Stock Exchange : NPO NPO [L.] nil per os (nothing by mouth). NPO abbr. Latin nil per os (nothing by mouth) NPO Nothing by mouth ) -- Second Quarter Sales and Income Increased over 2002 as Stronger Euro Boosts European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. Results -- Cash Flows from Operating Activities Improve -- Full Year Outlook Remains Positive as Focus on Operating Improvements Continues EnPro Industries, Inc. (NYSE: NPO) today reported net income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the of $11.4 million, or $0.56 a share for the second quarter of 2003. For the same period in 2002, the company reported a net loss from continuing operations of $12.1 million, or $0.60 a share. Earnings per share are expressed on a diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis throughout this release. The company's sales were $198.3 million in the second quarter of 2003, a 4% increase over the second quarter of 2002, when they were $191.2 million. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. improved by 26% from a year ago, to $17.9 million from $14.2 million. The results of the second quarters of 2003 and 2002 were affected by a number of items that management does not believe reflect the company's operating performance. These items include: changes in the fair value of call options on Goodrich Corporation Goodrich Corporation (formerly the B.F. Goodrich Company) NYSE: GR, is an American aerospace manufacturing company based in Charlotte, North Carolina. Founded in Akron, Ohio in 1870 as Goodrich, Tew & Co. by Dr. Benjamin Franklin Goodrich. common stock, which the company owns in connection with the TIDES TIDES Translingual Information Detection, Extraction and Summarization (US DARPA program) TIDES Translingual Information Detection, Extraction and Summarization (US DARPA) TIDES Training Impact Decision System convertible preferred securities; results from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. ; and income and expense associated with previously owned businesses. Excluding these items, non-GAAP as adjusted net income in the second quarter of 2003 was $9.9 million, or $0.48 a share, compared to $8.0 million, or $0.40 a share, in the second quarter of 2002. A full reconciliation of these non-GAAP results to our GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). results is available in the attached supplemental financial measures. Income in 2003 benefited from a $3.7 million, or 17%, improvement in segment profits which increased segment margins to 12.8% from 11.3%. The improvement in segment profits reflects the benefits of a stronger euro, lower restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. and favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. developments that resulted in the reduction of various reserves. The improvement also reflects the effect of a warranty An assurance, promise, or guaranty by one party that a particular statement of fact is true and may be relied upon by the other party. Warranties are used in a variety of commercial situations. In many instances a business may voluntarily make a warranty. claim which reduced segment profits in the second quarter of 2002. Pricing pressures, lower volume and a less profitable product mix partially offset these improvements. "The steps we took in 2002 to improve operating performance benefited second quarter 2003 results, but difficult markets and reduced levels of demand for certain products continue to slow our growth," said Ernie Ernie Noun (in Britain) a machine that randomly selects winning numbers of Premium Bonds [acronym of Electronic Random Number Indicator Equipment] ERNIE n abbr (BRIT Schaub Schaub may refer to:
2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or exist in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). . We are addressing these issues through our TCV TCV Total Contract ValueTCV Tokyo City View TCV Treasury Corporation of Victoria (Australia) TCV Temperature Control Valve (Industrial control description) TCV Total Containment Vessel program, which will improve productivity and reduce costs in our operations, and we are moving to develop manufacturing facilities in low-cost areas. We believe these actions will allow us to build long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. value as we meet our goals for increased profitability in the short term. "Turning to asbestos asbestos, mineral asbestos, common name for any of a variety of silicate minerals within the amphibole and serpentine groups that are fibrous in structure and more or less resistant to acid and fire. , Garlock Garlock may refer to: People:
Mississippi (mĭs'əsĭp`ē), one of the Deep South states of the United States. It is bordered by Alabama (E), the Gulf of Mexico (S), Arkansas and Louisiana, with most of the border formed by , Texas and West Virginia West Virginia, E central state of the United States. It is bordered by Pennsylvania and Maryland (N), Virginia (E and S), and Kentucky and, across the Ohio R., Ohio (W). Facts and Figures Area, 24,181 sq mi (62,629 sq km). Pop. , and uncertainty about the prospects for and terms of proposed federal legislation." For the first half of 2003, sales improved to $382.3 million, a 7% increase over 2002, when sales were $358.5 million. About three quarters of the increase in first half sales was attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to a stronger euro while the remainder is the result of gains in market share and expanded sales efforts. Net income from continuing operations for the first half of 2003 was $17.5 million, or $0.86 a share, compared with a net loss from continuing operations of $12.3 million, or $0.61 a share, in 2002. Non-GAAP as adjusted net income in the first half of 2003 was $16.6 million, or $0.81 a share, compared to $11.3 million, or $0.56 a share, in 2002. A full reconciliation of these non-GAAP results to our GAAP results is available in the attached supplemental financial measures. Sealing Products Sealing Products segment profit improved by 45% over the second quarter of 2002. Profits increased at Garlock Sealing Technologies Garlock Sealing Technologies, an EnPro Industries company NYSE: NPO, produces Klozure® Dynamic Seals and other quality sealing products. Garlock has a global presence, with 1,887 employees, at 15 facilities, in eight countries. because of a stronger euro and a warranty reserve which reduced results in 2002. Profits also increased at Stemco, which continued to benefit from a strong heavy-duty heav·y-dut·y adj. Made to withstand hard use or wear. heavy-duty Adjective made to withstand hard wear, bad weather, etc. Adj. 1. truck market, and at Plastomer Technologies, which recorded restructuring charges in 2002. Higher segment profits also reflect the benefits of cost reduction programs initiated at Garlock and Plastomer during 2002. A stronger euro and an improved heavy-duty truck market led to a 3% increase in sales at the Sealing Products segment, compared to a year ago. Quarter Ended ($ Millions) 6/30/03 6/30/02 ---------------------------------------------------------------------- Segment Sales $86.2 $83.6 Segment Profit $14.8 $10.2 Segment Margin 17.1% 12.2% ---------------------------------------------------------------------- Engineered Products In Engineered Products, segment profit declined by 8% as profits were lower at all operations except Fairbanks Fairbanks, city (1990 pop. 30,843), Fairbanks North Star Borough, E central Alaska, on the Chena River near its confluence with the Tanana; inc. 1903. Fairbanks is the only sizable urban center in the vast Alaskan interior. Morse Engine. Despite the benefit of a stronger euro, earnings declined at Glacier glacier, moving mass of ice that survives year to year, formed by the compacting of snow into névé and then into granular ice and set in motion outward and downward by the force of gravity and the stress of its accumulated mass. Garlock Bearings, reflecting pricing pressure and a less profitable product mix. Weak markets continue to affect other operations in the segment, particularly Quincy Quincy. 1 (kwĭnt`sē) City (1990 pop. 39,681), seat of Adams co., W Ill., on a bluff above the Mississippi; inc. 1839. It is a trade, industrial (steel parts), and distribution center in a grain and livestock area. Compressor compressor, machine that decreases the volume of air or other gas by the application of pressure. Compressor types range from the simple hand pump and the piston-equipped compressor used to inflate tires to machines that use a rotating, bladed element to achieve , where demand in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. has been reduced by historically low capacity utilization Capacity Utilization measures the rate at which a firm makes use of their capital productive capacities, such as factories and machinery. Capacity Utilization generally rises when the economy is healthy and falls when demand softens. . A favorable legal settlement and successful cost reduction programs helped contribute to improved profits at Fairbanks Morse Engine. Higher segment sales were due to a stronger euro, which benefited the European operations of Glacier Garlock Bearings and France Compressor Products. Quarter Ended ($ Millions) 6/30/03 6/30/02 ---------------------------------------------------------------------- Segment Sales $112.5 $108.1 Segment Profit $ 10.5 $ 11.4 Segment Margin 9.4% 10.6% ---------------------------------------------------------------------- Cash Flows The company's cash flows improved in the second quarter as operating activities provided $1.5 million of cash for the first six months of the year after working capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. of $14.6 million, payments of $17.7 million for asbestos-related claims, net of insurance proceeds, and a contribution of $4.0 million to the company's pension plans. Working capital levels are expected to decline through the remainder of 2003, which should further improve cash flows from operating activities. Cash balances improved to $81.6 million at the end of the second quarter, a $4.6 million increase since March 31. Capital expenditures continued at a modest level in the second quarter, although for the full year, they are expected to exceed the $18.7 million spent in 2002. For the full year, the company continues to expect cash flows from operating activities, less capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. , to be more than sufficient to satisfy its obligations for asbestos-related payments, net of insurance proceeds. Outlook Although the company sees no signs of significant overall improvement in its markets for the remainder of 2003, it continues to expect sales and income for the full year of 2003 to exceed 2002 results, as it takes advantage of improvements in market shares, new products and expanded sales efforts. Because the second quarter typically benefits from higher seasonal activity, third quarter and fourth quarter results are likely to be lower than second quarter results. Conference Call Information EnPro will hold a conference call today, August 4, at 1:30 p.m. Eastern Time to discuss this release. To participate in the call, dial (800) 289-0468 approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 10 minutes before the call begins. The call will also be webcast at www.enproindustries.com. A replay of the call will be available on the company's website or by telephone approximately two hours after the end of the call. To listen to the telephone replay, dial (888) 289-0468 and enter the access code 686444. The replay will be available on the Company's website and by telephone through August 15, 2003. Cautions: Forward Looking Statements and Non-GAAP Financial Measures Statements in this release that express a belief, expectation or intention, as well as those that are not historical fact, are forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. . They involve a number of risks and uncertainties that may cause actual events and results to differ materially from such forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . These risks and uncertainties include, but are not limited to, the resolution of current and potential future asbestos claims against certain of our subsidiaries which depends on such factors as the possibility of asbestos reform legislation, the financial viability of insurance carriers, the timing of payments of claims and related expenses, limitations on the amount that may be recovered from insurance carriers, the bankruptcies of other defendants and the results of litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. ; general economic conditions in the markets served by our businesses, some of which are cyclical cyclical Of or relating to a variable, such as housing starts, car sales, or the price of a certain stock, that is subject to regular or irregular up-and-down movements. and experience periodic downturns; and the amount of any payments required to satisfy contingent liabilities Contingent Liability 1. The possibility of an obligation to pay certain sums dependent on future events. 2. Defined obligations by a company that must be met, but the probability of payment is minimal. Notes: 1. related to discontinued operations of our predecessors, including liabilities for certain products, environmental matters, guaranteed debt and lease payments, employee benefit obligations and other matters. Our filings with the Securities and Exchange Commission, including the Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December December: see month. 31, 2002 and the Form 10-Q Form 10-Q See 10-Q. for the quarter ended March 31, 2003, describe these and other risks and uncertainties in more detail. We do not undertake to update any forward-looking statement made in this release to reflect any change in management's expectations or any change in the assumptions or circumstances on which such statements are based. This press release presents non-GAAP as adjusted net income for the quarters and six months ended June June: see month. 30, 2003 and 2002. Non-GAAP as adjusted net income is not a financial measure under generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting in the United States. We have included these non-GAAP financial measures because we believe they permit a meaningful comparison of our performance between the periods presented and because they are used by management in evaluating the company's performance. Because non-GAAP as adjusted net income is not a GAAP financial measure, companies may present similarly titled items determined with differing adjustments. Accordingly, the non-GAAP as adjusted net income presented in this press release should not be used to evaluate our performance by comparison to any similarly titled measures presented by other companies. Included at the end of this press release is a table reconciling each of these non-GAAP financial measures with the most comparable GAAP measurement. Investors are strongly urged to review this reconciliation, including the accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. explanation of estimates and assumptions used by management in making the adjustments. EnPro Industries, Inc. (NYSE:NPO), with 2002 sales of $710 million and 4,400 employees, is a leader in sealing products, metal polymer polymer (pŏl`əmər), chemical compound with high molecular weight consisting of a number of structural units linked together by covalent bonds (see chemical bond). bearings, compressor systems, diesel and dual-fuel engines and other engineered products for use in critical applications by industries worldwide. For more information about EnPro, visit our website at www.enproindustries.com.
EnPro Industries, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
----------------------------------------------------------------------
For the Quarters and Six Months Ended June 30, 2003 and 2002
(Stated in Millions of Dollars)
Quarters Six Months
Ended Ended
----------------------------------------------------------------------
June 30, June 30,
2003 2002 2003 2002
----------------------------------------------------------------------
Sales $ 198.3 $ 191.2 $ 382.3 $ 358.5
----------------------------------------------------------------------
Operating costs and expenses:
Cost of sales 137.9 133.4 265.2 250.2
Selling, general and administrative
expenses 39.6 40.7 80.7 75.6
Asbestos-related expenses 2.5 1.8 5.4 7.0
Restructuring costs 0.4 1.1 0.5 2.0
----------------------------------------------------------------------
Total operating costs and expenses 180.4 177.0 351.8 334.8
----------------------------------------------------------------------
Operating income 17.9 14.2 30.5 23.7
Interest expense - net (2.0) (3.2) (3.9) (9.8)
Mark-to-market adjustment
for call options 1.0 (5.1) (0.2) (5.1)
Other income (expenses) 0.5 (25.2) 0.5 (25.2)
----------------------------------------------------------------------
Income (loss) before income taxes and
distributions on convertible
preferred securities of trust 17.4 (19.3) 26.9 (16.4)
Income tax (expense) benefit (6.0) 8.5 (9.4) 7.4
Distributions on convertible preferred
securities of trust - (1.3) - (3.3)
----------------------------------------------------------------------
Income (loss) from
continuing operations 11.4 (12.1) 17.5 (12.3)
Income from discontinued
operations - net of taxes - 10.8 - 24.2
----------------------------------------------------------------------
Income (loss) before cumulative effect
of a change in accounting principle 11.4 (1.3) 17.5 11.9
Cumulative effect of a change in
accounting principle, net of taxes - - - (14.6)
----------------------------------------------------------------------
Net income (loss) $ 11.4 $ (1.3) $ 17.5 $ (2.7)
======================================================================
Basic earnings per share:
Continuing operations $ 0.57 $ (0.60) $ 0.87 $ (0.61)
======================================================================
Net income $ 0.57 $ (0.06) $ 0.87 $ (0.14)
======================================================================
Diluted earnings per share:
Continuing operations $ 0.56 $ (0.60) $ 0.86 $ (0.61)
======================================================================
Net income $ 0.56 $ (0.06) $ 0.86 $ (0.14)
======================================================================
EnPro Industries, Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
----------------------------------------------------------------------
For the Six Months Ended June 30, 2003 and 2002
(Stated in Millions of Dollars)
2003 2002
----------------------------------------------------------------------
Cash provided by (used in) operating activities of
continuing operations:
Income (loss) from continuing
operations $17.5 $(12.3)
Adjustments to reconcile income (loss) from
continuing operations to net cash provided
by (used in) operating activities
of continuing operations:
Mark-to-market adjustment for call options 0.2 5.1
Non-operating (income) expenses (0.5) 25.2
Payments for asbestos-related claims,
net of insurance proceeds (17.7) (42.7)
Depreciation and amortization 15.6 15.3
Deferred income taxes 5.0 4.5
Net increase in working capital (14.6) (7.9)
Change in other non-current
assets and liabilities (4.0) (6.4)
-------------------------------=--------------------------------------
Net cash provided by (used in) operating activities of
continuing operations 1.5 (19.2)
----------------------------------------------------------------------
Cash provided by (used in) investing activities of
continuing operations:
Purchases of property, plant and equipment (6.6) (10.3)
Proceeds from sale of assets 1.6 -
Purchase of call options - (16.2)
Receipt (payment) in connection with acquisitions (2.5) 3.7
----------------------------------------------------------------------
Net cash used in investing activities of continuing
operations (7.5) (22.8)
----------------------------------------------------------------------
Cash provided by (used in) financing activities of
continuing operations:
Net additions to (repayment of) debt 4.5 (0.4)
Proceeds from issuance of common stock 0.2 -
Distributions on convertible
preferred securities of trust - (3.9)
Net transfers (to) from Goodrich (0.6) 54.3
----------------------------------------------------------------------
Net cash provided by financing
activities of continuing
operations 4.1 50.0
----------------------------------------------------------------------
Net cash provided by discontinued
operations - 13.0
----------------------------------------------------------------------
Effect of exchange rate changes on
cash and cash equivalents 1.7 1.2
----------------------------------------------------------------------
Net increase (decrease) in cash
and cash equivalents (0.2) 22.2
Cash and cash equivalents at
beginning of period 81.8 25.9
----------------------------------------------------------------------
Cash and cash equivalents at end
of period $81.6 $48.1
======================================================================
EnPro Industries, Inc.
Condensed Consolidated Balance Sheets (Unaudited)
---------------------------------------------------------------------
As of June 30, 2003 and December 31, 2002
(Stated in Millions of Dollars)
June Dec.
30, 31,
2003 2002
----------------------------------------------------------------------
Current assets
Cash and cash equivalents $ 81.6 $ 81.8
Accounts and notes receivable 110.6 92.8
Asbestos insurance receivable 88.1 90.0
Inventories 60.3 61.9
Other current assets 22.5 22.4
----------------------------------------------------------------------
Total current assets 363.1 348.9
Property, plant and equipment 132.6 136.0
Goodwill and other intangible assets 185.4 185.0
Asbestos insurance receivable 184.2 205.9
Other assets 81.6 79.5
----------------------------------------------------------------------
Total assets $ 946.9 $ 955.3
======================================================================
Current liabilities
Current maturities of long-term debt $ 0.4 $ 0.4
Accounts payable 43.1 43.0
Asbestos liability 55.9 78.9
Other accrued expenses 60.6 71.9
----------------------------------------------------------------------
Total current liabilities 160.0 194.2
Long-term debt 175.0 170.5
Deferred income taxes 27.0 20.4
Retained liabilities of previously owned businesses 42.9 41.3
Environmental liabilities 33.9 35.0
Asbestos liability 41.2 59.9
Other liabilities 52.5 46.5
----------------------------------------------------------------------
Total liabilities 532.5 567.8
----------------------------------------------------------------------
Shareholders' equity
Common stock 0.2 0.2
Additional paid-in capital 406.4 406.9
Retained earnings (accumulated deficit) 9.8 (7.7)
Accumulated other comprehensive loss (0.4) (10.3)
Common stock held in treasury, at cost (1.6) (1.6)
----------------------------------------------------------------------
Total shareholders' equity 414.4 387.5
----------------------------------------------------------------------
Total liabilities and shareholders' equity $ 946.9 $ 955.3
======================================================================
EnPro Industries, Inc.
Segment Information (Unaudited)
----------------------------------------------------------------------
For the Quarters and Six Months Ended June 30, 2003 and 2002
(Stated in Millions of Dollars)
Sales
---------------------------------------------------------------------
Quarters Ended Six Months Ended
June 30, June 30,
--------------- ---------------
2003 2002 2003 2002
--------------- ---------------
Sealing Products $ 86.2 $ 83.6 $ 168.3 $ 160.5
Engineered Products 112.5 108.1 214.8 199.0
---------------------------------------------------------------------
198.7 191.7 383.1 359.5
Less intersegment sales (0.4) (0.5) (0.8) (1.0)
---------------------------------------------------------------------
$198.3 $191.2 $382.3 $358.5
=====================================================================
Segment Profit
---------------------------------------------------------------------
Quarters Ended Six Months Ended
June 30, June 30,
--------------- ---------------
2003 2002 2003 2002
--------------- ---------------
Sealing Products $ 14.8 $ 10.2 $ 25.6 $ 18.6
Engineered Products 10.5 11.4 21.6 20.4
---------------------------------------------------------------------
$ 25.3 $ 21.6 $ 47.2 $ 39.0
=====================================================================
Reconciliation of Segment Profit to Income (Loss) from Continuing
Operations
---------------------------------------------------------------------
Quarters Ended Six Months Ended
June 30, June 30,
--------------- ---------------
2003 2002 2003 2002
--------------- ---------------
Segment profit $ 25.3 $ 21.6 $ 47.2 $ 39.0
Corporate expenses (5.5) (5.0) (10.9) (7.2)
Asbestos-related expenses (2.5) (1.8) (5.4) (7.0)
Interest expense - net (2.0) (3.2) (3.9) (9.8)
Mark-to-market adjustment for call
options 1.0 (5.1) (0.2) (5.1)
Other income (expenses) 1.1 (25.8) 0.1 (26.3)
---------------------------------------------------------------------
Income (loss) before income taxes and
distributions
on convertible preferred
securities of trust 17.4 (19.3) 26.9 (16.4)
Income tax (expense) benefit (6.0) 8.5 (9.4) 7.4
Distributions on convertible
preferred
securities of trust - (1.3) - (3.3)
---------------------------------------------------------------------
Income (loss) from continuing
operations $ 11.4 $ (12.1) $ 17.5 $ (12.3)
=====================================================================
Segment ROS
---------------------------------------------------------------------
Quarters Ended Six Months Ended
June 30, June 30,
--------------- ---------------
2003 2002 2003 2002
--------------- ---------------
Sealing Products 17.1% 12.2% 15.2% 11.6%
Engineered Products 9.4% 10.6% 10.0% 10.3%
---------------------------------------------------------------------
12.8% 11.3% 12.3% 10.9%
=====================================================================
Note: During 2002, operating responsibility for a business within
the Sealing Products segment was transferred to the
Engineered Products segment. Historical segment information
has been reclassified to conform with this internal
organizational change.
Non-GAAP Supplemental Financial Measures Reconciliation of GAAP Net Income (Loss) to Non-GAAP "As Adjusted" Net Income (Unaudited) To assist in understanding the performance of our operations, we present supplemental financial measures in a manner consistent with what we believe our results would have been had we been an independent public company during the quarter and six months ended June 30, 2002. The measures do not conform to Verb 1. conform to - satisfy a condition or restriction; "Does this paper meet the requirements for the degree?" fit, meet coordinate - be co-ordinated; "These activities coordinate well" U.S. generally accepted accounting principles, or GAAP. Earnings or losses as a result of these measures are referred to as "as adjusted." While we believe that these measures are useful aids in understanding our results in the periods shown and we use these measures to evaluate our performance, they should be used only in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with results presented in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP. A table reconciling the "as adjusted" results with the most comparable GAAP measurement follows. On May 31, 2002, Goodrich Corporation ("Goodrich Goodrich is a surname, and may refer to:
adj. Not subject to taxation; tax-exempt. tax-free Adjective not needing to have tax paid on it: a tax-free lump sum Adj. 1. spin-off The situation that arises when a parent corporation organizes a subsidiary corporation, to which it transfers a portion of its assets in exchange for all of the subsidiary's capital stock, which is subsequently transferred to the parent corporation's shareholders. of its Engineered Industrial Products ("EIP (1) (Enterprise Information Portal) See corporate portal. (2) (Extended Instruction Pointer) The program counter on x86 CPUs. ") business to its shareholders (the "Distribution"). Prior to the Distribution, Coltec Coltec a fictional character from , portrayed by Byron Chief-Moon. He is an Immortal. History 1150-1190 Coltec is a Native American who was born in 1150, Mississippi. Coltec grew up in the Cahokia Indian tribe. Industries Inc ("Coltec"), which at that time was a Goodrich subsidiary, owned the EIP business and an aerospace business ("Coltec Aerospace"). During May 2002, Coltec transferred to Goodrich, by way of a dividend, all of the assets, liabilities and operations of Coltec Aerospace. Upon the Distribution, Coltec became a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of EnPro. The financial results prior to the Distribution include the results of Coltec Aerospace and certain other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. and liabilities (and the associated income and expenses) that were retained by Goodrich and not distributed as part of the Distribution. In addition, while a part of Goodrich, Coltec was allocated a portion of certain headquarters expenses. These expenses were not representative of the level that would have been incurred had Coltec operated as an independent public company during that period. During the second quarter of 2002, the Company recorded pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta charges of a non-operating nature totaling $25.2 million, or $15.8 million after tax. These charges consisted of two primary components. First, in connection with the Distribution, the Company conducted a review of its process for managing and estimating environmental liabilities. As a result of changes in the Company's strategies growing out of this review, and in light of recent developments at a number of environmental sites associated with previously divested businesses, the Company increased its environmental reserves by $12 million to reflect an increase in the estimated costs to remediate re·me·di·a·tion n. The act or process of correcting a fault or deficiency: remediation of a learning disability. re·me those sites. Second, based on new information in the quarter ended June 30, 2002, the Company revised the estimated costs associated with an adverse court ruling during 2002 related to severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when owed as a result of the closing of a plant in 1982. The Company increased its reserve for the case by $11 million in the quarter ended June 30, 2002. In March 2002, the Company purchased call options on Goodrich common stock to provide protection against the risk that the cash required to finance conversion of the convertible preferred securities ("TIDES") into Goodrich common stock would exceed the liquidation value Liquidation value Net amount that could be realized by selling the assets of a firm after paying the debt. of the TIDES. The call options are a derivative instrument Noun 1. derivative instrument - a financial instrument whose value is based on another security derivative legal document, legal instrument, official document, instrument - (law) a document that states some contractual relationship or grants some right and are carried at fair value on the Company's balance sheets. Changes in fair value are reflected in income. During the quarter and six months ended June 30, 2003, the Company recorded a $1.0 million increase and a $0.2 million decline, respectively, in the fair value of these call options. During the quarter and six months ended June 30, 2002, the Company recorded a $5.1 million decline in the fair value of these call options. With respect to the amounts described above, we believe that: -- 1. the magnitude magnitude, in astronomy, measure of the brightness of a star or other celestial object. The stars cataloged by Ptolemy (2d cent. A.D.), all visible with the unaided eye, were ranked on a brightness scale such that the brightest stars were of 1st magnitude and the of the items is such that it is important for readers of our Condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. Consolidated Financial Statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge (Unaudited) to be aware of these items and the effect that they had on net income (loss) during the periods presented; and -- 2. with respect to the mark-to-market Mark-to-market Adjustment of the book value or collateral value of a security to reflect current market value. adjustment on our call options on Goodrich common stock, the expense we recognized does not involve an additional cash outlay and is driven by changes in the Goodrich stock price that have no bearing on our operating activities. Based on the factors cited above, we believe that it is helpful in understanding the ongoing operating results to provide non-GAAP supplemental financial measures showing the GAAP results adjusted to eliminate the impact of income and expenses associated with assets and liabilities retained by Goodrich that will have no bearing on our ongoing results in the future. In addition, we believe that the non-GAAP supplemental financial measures are more meaningful if the operating results are further adjusted to approximate ap·prox·i·mate v. To bring together, as cut edges of tissue. adj. 1. Relating to the contact surfaces, either proximal or distal, of two adjacent teeth; proximate. 2. Close together. what they would have been had we operated as an independent public company during all periods presented, and if we exclude from the GAAP results those items that are not representative of our ongoing operational activities.
EnPro Industries, Inc.
Non-GAAP Supplemental Financial Measures - As Adjusted (Unaudited)
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For the Quarters and Six Months Ended June 30, 2003 and 2002
(Stated in Millions of Dollars)
Quarters Ended Six Months Ended
--------------------------------
June 30, June 30,
2003 2002 2003 2002
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GAAP net income (loss) $ 11.4 $ (1.3) $ 17.5 $ (2.7)
Eliminate items included in GAAP
results (net of tax):
Mark-to-market adjustment for
call options (1) (0.7) 3.2 0.1 3.2
Other (income) expenses (2) (0.3) 15.8 (0.3) 15.8
Income tax expense (3) (0.5) - (0.7) -
Results of discontinued operations - (10.8) - (24.2)
Cumulative effect of a change in
accounting principle - - - 14.6
Interest expense on debt retained
by Goodrich - 0.6 - 5.4
Add items not included in GAAP results
(net of tax):
Corporate administrative costs (4) - 0.5 - (0.8)
----------------------------------------------------------------------
Non-GAAP "as adjusted" net income $ 9.9 $ 8.0 $ 16.6 $ 11.3
======================================================================
EPS - GAAP (basic) $ 0.57 $(0.06) $ 0.87 $(0.14)
======================================================================
EPS - GAAP (diluted) $ 0.56 $(0.06) $ 0.86 $(0.14)
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EPS - non-GAAP "as adjusted" (basic) $ 0.49 $ 0.40 $ 0.82 $ 0.56
======================================================================
EPS - non-GAAP "as adjusted"
(diluted) $ 0.48 $ 0.40 $ 0.81 $ 0.56
======================================================================
(1) Represents the net of tax charge (credit) for the
mark-to-market adjustments for the call options on Goodrich
common stock.
(2) Represents the net of tax impact of the non-operating amounts
discussed previously.
(3) Represents a reduction in the current year effective tax rate
for a tax refund from prior years related to a previously
owned business, which was received in the first quarter of
2003. Also includes a reimbursement from Goodrich received in
the second quarter of 2003 related to a pre-Distribution tax
matter that reduces the current year effective tax rate.
(4) Represents management's estimate of the additional costs that
would have been incurred had we operated as an independent
public company prior to the Distribution.
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