EnPro Industries (NPO) 2008年年度報告「NYSE」.pdf

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1、2008 Annual ReportBusiness DescriptionEnPro Industries designs,develops,manufactures and markets proprietary engineered industrial products.They are used in critical applications that allow the processes and products of customers in dozens of industries around the world to operate safely and efficie

2、ntly.They include seals,gaskets and other products used in industrial applications and by the heavy-duty truck industry;bearings used in products ranging from office furniture to construction equipment;compressors that supply air for manufacturing and other processes;components for high-speed compre

3、ssors used in natural gas transmission and other applications;and diesel engines that help generate electrical power and propel ships.Our brands are respected for quality,reliability and performance,characteristics that have allowed many of them to achieve and maintain leading market shares.Operatio

4、ns in the Engineered Products segment manufacture plain bearings,rotary screw and reciprocating air compressors and components for high-speed reciprocating compressors.The segments products are most frequently used in original equip-ment applications,although the compressor and compressor prod-ucts

5、businesses have significant aftermarket sales.Companies:GGB Bearing TechnologyQuincy CompressorCompresor Products InternationalEnginEErEd ProductsEnginE Products and sErvicEsThe Engine Products and Services segment is comprised of Fairbanks Morse Engine,principal supplier of medium-speed diesel engi

6、nes to the U.S.Navy.For over a century,Fairbanks Morse Engine has pio-neered advances in engine design and development for marine pro-pulsion,industrial drive applications and electric power generation.Company:Fairbanks Morse EngineOperations in the Sealing Products segment manufacture seals and oth

7、er products that are used in a wide variety of industries.Many of the products sold by this segment are part of our customers regular maintenance and service programs.Companies:Garlock Sealing TechnologiesStemcoStemco KaiserPlastomer TechnologiesGarlock Rubber TechnologiessEaling ProductsSEALINGPROD

8、UCTSCONTRIBUTION TO 2008 SALESCONTRIBUTION TO 2008 SALESCONTRIBUTION TO 2008 SALESENGINEEREDPRODUCTSENGINE PRODUCTSAND SERVICES43%45%12%SEALINGPRODUCTSCONTRIBUTION TO 2008 SALESCONTRIBUTION TO 2008 SALESCONTRIBUTION TO 2008 SALESENGINEEREDPRODUCTSENGINE PRODUCTSAND SERVICES43%45%12%SEALINGPRODUCTSCO

9、NTRIBUTION TO 2008 SALESCONTRIBUTION TO 2008 SALESCONTRIBUTION TO 2008 SALESENGINEEREDPRODUCTSENGINE PRODUCTSAND SERVICES43%45%12%Business SegmentsLetter to shareholdersIn 2008,EnPro Industries once again completed a record-setting year.It was the sixth consecutive year in which our sales and our se

10、gment profits grew our sales by 13%over 2007,reaching$1.17 billion,and segment profits by 10%,reaching$179.3 million.While many factors have contributed to the consistency of our growth,none is more noteworthy than the dedication of people at every level of our company to supporting our corporate go

11、als.Their efforts are critical to our achievements,and to them I offer my sincere thanks.Our sales in 2008 reflected the benefits of initiatives to expand our markets,introduce new products and acquire complementary businesses.These activities contributed about 11%of our growth,with approximately eq

12、ual portions coming from businesses we acquired during 2007 and 2008 and from organic sources.The remainder came from beneficial foreign exchange rates.Segment profit,the primary measure of our operating performance,increased as a result of improvements in our Sealing Products and our Engine Product

13、s and Services segments,which reported increases of 16%and 36%,respectively.However,our Engineered Products segment reported a 2%decline in profits as it encountered increasingly difficult market conditions as the year progressed.Lower profits in this segment put pressure on our segment profit margi

14、ns,which decreased to 15.4%from 15.8%.Higher segment profits and lower asbestos-related expenses helped us achieve a 33%improvement in net income,which rose to$53.5 million,and a 41%increase in earnings per share,which grew to$2.54.Adjusted for asbestos-related expenses and other selected items,inco

15、me improved by about 8%to$90.3 million,while our earnings per share increased 14%to$4.29.During the year,our cash flows gave us sufficient liquidity to use$69 million to repurchase 1.95 million common shares,close nine acquisitions at a net cost of$43 million,make$37 million of net asbestos payments

16、 and invest$49 million on capital projects.After spending nearly$200 million on these items,we ended the year with$76 million in cash compared to$129 million at the beginning of the year.We used much of our cash to invest in our future.We made acquisitions that expand our product lines or introduce

17、us to new industries and geographic markets.We also invested in programs that reduce costs and increase productivity.The most significant example of these investments is the modernization of Garlock Sealing Technologies Palmyra,New York manufacturing complex,where in 2008 we opened the second of two

18、 new facilities on the site.We have now completed new construction associated with this ambitious five-year project,which will transform a facility developed during the first half of the 20th century into a modern and efficient operation.Even as we produced record results in 2008,we began to see the

19、 effects of a weakening world economy on our markets.We started the year with the strongest performance we have recorded in the first six months of any year,but as the year progressed,we experienced growing weakness in our markets.This became increasingly apparent in the fourth quarter.The most dram

20、atic example of these declines came in our automotive markets,which accounts for about 8%of our sales.Late in the year,many automakers in the United States and Europe shut down production and closed manufacturing plants due to lack of demand.Weve seen similar changes in other markets,and after sever

21、al years of solid,stable growth,we expect sales and earnings to decline in 2009.Industry forecasts indicate that most of our markets will be less active than in 2008.In some cases,Dear Shareholder:EnPro Industries,Inc.Financial HighlightsFor the Years Ended December 31 Percentage(Stated in Millions

22、of Dollars,Except Per Share Data)2008 2007 IncreaseSales$1,167.8$1,030.0 13%Segment Profit$179.3$162.7 10%Segment Profit Margins 15.4%15.8%Adjusted Net Income*$90.3$83.8 8%Adjusted Earnings Per Share*$4.29$3.75 14%*Non-GAAP measures.In 2008,GAAP net income was$53.5 million and earnings per share wer

23、e$2.54;in 2007,GAAP net income was$40.2 million and earnings per share were$1.80.Please refer to the Reconciliation of Income Before Asbestos-Related Expenses and Other Selected Items to Net Income(Unaudited)on the inside back cover of this report.activity levels are expected to fall by a few percen

24、tage points,while in other instances they are expected to fall by 20%or more.On a consolidated basis,we expect that the overall level of activity in our markets could decline by 8%to 10%during 2009.In addition to weaker markets,lower exchange rates for many foreign currencies are also likely to affe

25、ct our results.Despite these deteriorating conditions,we enter 2009 with confidence in our operations and our ability to take advantage of opportunities that arise during the year.Our businesses have long histories,and they have been through tough times before.The fact that they remain market leader

26、s,in some cases for more than a century,proves their resilience.As economic conditions create changes in the competitive landscape,we believe market leadership will bring opportuni-ties for our businesses to gain market share.We serve a diverse set of markets,which should temper our exposure to the

27、global economic decline.We expect certain segments of our markets,such as the oil and gas and power generation industries and the market created by U.S.Navy shipbuilding programs,to remain relatively stable over the course of the year.In addition,we believe demand in other industry segments may stab

28、ilize as customers begin to replenish inventories during the year.Many of our products are proprietary and are used in applications that are critical to the safety and efficiency of our customers equipment and facilities.A high proportion of these products go into service and maintenance-related act

29、ivities.Demand from the aftermarket provided just over half of our sales in 2008 at profit margins that tend to be higher than those we obtain in the original equipment sector.While aftermarket demand is likely to fall in the current environment,we expect the decline to be less severe than in 23our

30、original equipment markets as our customers continue to maintain their facilities and equipment.Finally,we have established clear priorities for our businesses designed to provide benefits not only in these demanding times but also when the world economy recovers.Our first priority is to pursue exce

31、llence in everything we do.The efficiency of our operations has improved over the past several years as we have implemented our Total Customer Value(TCV)lean manufacturing program.Now,we will expand the techniques of TCV into other areas of our company,including the way we market,price and sell our

32、products,and our procurement and purchasing practices.At the same time,TCV remains vital to our operational efficiency,as we seek to increase our level of excellence in this critical area.Our second priority is sound management of our cash flows.We will continue to focus on reducing the effect of as

33、bestos claims and expenses on our cash flows while we retain the flexibility to invest in programs that will return increasing value to our shareholders.An important element in creating value will come from our third priority,which is consistent growth of our company.We expect to achieve growth thro

34、ugh the acquisition of businesses that support our entry into new markets or new geographic regions or that expand our presence in markets we already serve.We will also invest in the development of new products that will bring our customers added benefit and stimulate renewed demand.There is no doub

35、t that as 2008 ended and 2009 began,EnPro Industries arrived at an important juncture.For the first time,we were confronted with weakening markets and declining demand for a broad range of our products.While we cant predict when these conditions will end,we are confident that we enter this environme

36、nt on sound footing.Our businesses are well positioned,our priorities are clear and,as new opportunities arise,we are prepared to take advantage of them.Regards,Stephen E.MacadamPresident and Chief Executive OfficerForward-Looking StatementsThis report contains certain statements that are“forward-lo

37、oking 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 words“may,”“hope,”“will,”“should,”“expect,”“plan,”“anticipate,”“intend,”“believe,”“estimate,”“predict,”“potential,”“continue,

38、”“likely,”and other expressions which are predictions of or indicate future events and 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-loo

39、king 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 stat

40、ements 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

41、 about certain of these and other risk factors set forth in Item 1A of the included Annual Report on Form 10-K.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 subseque

42、nt 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.Board of DirectorsWilliam R.HollandNon-Executive Chairman of the BoardStephen E.Macadam President and Chief Exe

43、cutive OfficerJ.P.BolducChairman and Chief Executive OfficerJPB EnterprisesPeter C.BrowningFormer Dean,McColl School of Business,Queens UniversityDon DeFossetFormer Chairman,President and Chief Executive Officer,Walter IndustriesJoe T.FordFormer Chairman,ALLTELGordon D.HarnettFormer Chief Executive

44、Officer and Chairman of the BoardBrush Engineered Materials Inc.David L.HauserGroup Executive and Chief Financial OfficerDuke Energy CorporationWilbur J.Prezzano Former Chairman,Eastman Kodak Company;Non-Executive Chairman,Lance,Inc.Stephen E.MacadamPresident and Chief Executive OfficerWilliam Dries

45、Senior Vice President and Chief Financial OfficerRichard L.MageeSenior Vice President,General Counsel and SecretaryJ.Milton Childress IIVice President,Strategic Planning and Business DevelopmentDale A.HeroldVice President,Continuous ImprovementOrville G.LunkingVice President and TreasurerRobert P.Mc

46、KinneyVice President,Human ResourcesDonald G.Pomeroy IIVice PresidentRobert D.RehleyVice President and ControllerCorporate OfficersUNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549_FORM 10-K(Mark One)ANNUAL REPORT PURSUANT TO SECTION13OR15(d)OF THESECURITIES EXCHANGE ACT OF 1934Fo

47、r the fiscal year ended December 31,2008TRANSITION REPORT PURSUANT TO SECTION 13OR15(d)OF THESECURITIES EXCHANGE ACT OF 1934Commission File Number 001-31225_ENPRO INDUSTRIES,INC.(Exact name of registrant,as specified in its charter)North Carolina(State or other jurisdiction of incorporation)01-05739

48、45(I.R.S.employer identification no.)5605 Carnegie Boulevard,Suite 500,Charlotte,North Carolina(Address of principal executive offices)28209(Zip code)(704)731-1500(Registrants telephone number,including area code)Securities registered pursuant to Section 12(b)of the Act:Title of each className of ea

49、ch exchangeon which registeredCommon stock,$0.01 par valuePreferred stock purchase rightsNew York Stock ExchangeNew York Stock ExchangeIndicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of theSecurities Act.YesNoIndicate by check mark if the registrant is

50、 not required to file reports pursuant to Section 13 or Section15(d)of the Act.YesNoIndicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or15(d)of the Securities Exchange Act of 1934 during the preceding 12 months(or for such shorter periodthat the

51、 registrant was required to file such reports),and(2)has been subject to such filing requirementsfor the past 90 days.YesNoIndicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is notcontained herein,and will not be contained,to the best of the registrants

52、knowledge,in definitive proxyor information statements incorporated by reference in Part III of this Form 10-K or any amendment tothis 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

53、the definitions of“large accelerated filer,”“accelerated filer”and“smaller reporting company”in Rule 12b-2 of the Exchange Act.(Check one):Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting company(Do not check if a smaller reporting company)Indicate by check mark whether

54、 the registrant is a shell company(as defined in Rule 12b-2 of theExchange Act).YesNoThe aggregate market value of voting and nonvoting common stock of the registrant held by non-affiliatesof the registrant as of June 30,2008 was$729,959,137.As of February 20,2009,there were 19,816,149shares of comm

55、on stock of the registrant outstanding.DOCUMENTS INCORPORATED BY REFERENCEPortions of the registrants definitive proxy statement for the 2009 annual meeting of shareholders areincorporated by reference into Part III.TABLE OF CONTENTSPagePART IItem 1Business.1Item 1ARisk Factors.7Item 1BUnresolved St

56、aff Comments.14Item 2Properties.14Item 3Legal Proceedings.15Item 4Submission of Matters to a Vote of Security Holders.15PART IIItem 5Registrants Common Equity and Related Shareholder Matters.17Item 6Selected Consolidated Financial Data.19Item 7Managements Discussion and Analysis of Financial Conditi

57、on and Results of Operations.20Item 7AQuantitative and Qualitative Disclosures About Market Risk.37Item 8Financial Statements and Supplemental Data.38Item 9Changes In and Disagreements with Accountants on Accounting and Financial Disclosure.38Item 9AControls and Procedures.38Item 9BOther Information

58、.39PART IIIItem 10Directors,Executive Officers and Corporate Governance.40Item 11Executive Compensation.40Item 12Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters.40Item 13Certain Relationships and Related Transactions,and Director Independence.41Item 14P

59、rincipal Accountant Fees and Services.41PART IVItem 15Exhibits and Financial Statement Schedules.41Signatures.42Exhibit Index.43Report of Independent Registered Public Accounting Firm.47Consolidated Statements of Operations.49Consolidated Statements of Cash Flows.50Consolidated Balance Sheets.51Cons

60、olidated Statements of Changes in Shareholders Equity.52Notes to Consolidated Financial Statements.53Schedule II Valuation and Qualifying Accounts.931ENPRO INDUSTRIES,INC.PART IITEM 1.BUSINESSAs used in this report,the terms“we,”“us,”“our,”“EnPro”and“Company”mean EnProIndustries,Inc.and its subsidia

61、ries(unless the context indicates another meaning).The term“commonstock”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 2015issued by the Company in October 2005.BackgroundWe we

62、re incorporated under the laws of the State of North Carolina on January 11,2002,as awholly owned subsidiary of Goodrich Corporation(“Goodrich”)in anticipation of Goodrichs announceddistribution of its Engineered Industrial Products segment to existing Goodrich shareholders,which tookplace on May 31

63、,2002(the“Distribution”).We are a leader in the design,development,manufacturing,and marketing of proprietary engineered industrial products.We have 43 primary manufacturingfacilities located in the United States and 10 other countries.Our sales by geographic region in 2008,2007 and 2006 were as fol

64、lows:200820072006(in millions)United States.$610.6$565.7$543.0Europe.329.7277.8222.8Other.227.5186.5162.6 Total.$1,167.8$1,030.0$928.4We maintain an Internet website at .We will make this annual report,in addition to our other annual reports on Form 10-K,quarterly reports on Form 10-Q,current report

65、s onForm 8-K and amendments to these reports,available free of charge on our website as soon as reasonablypracticable after we electronically file such material with,or furnish it to,the Securities and ExchangeCommission.Our Corporate Governance Guidelines and the charters for each of our Board Comm

66、ittees(Audit and Risk Management,Compensation and Human Resources,Executive,and Nominating andCorporate Governance committees)are also available on our website,and copies of this information areavailable in print to any shareholder who requests it.Information included on or linked to our website isn

67、ot incorporated by reference into this annual report.OperationsWe manage our business as three segments:a sealing products segment,which includes oursealing products,heavy-duty wheel end components,polytetrafluoroethylene(“PTFE”)products,andrubber products;an engineered products segment,which includ

68、es our bearings,rotary and reciprocatingair compressors,vacuum pumps,air systems and reciprocating compressor components;and an engineproducts and services segment,which manufactures heavy-duty,medium-speed diesel,natural gas anddual fuel reciprocating engines.For financial information with respect

69、to our business segments,see Item7,“Managements Discussion and Analysis of Financial Condition and Results of Operations Results of2Operations,”and Note 16 to our Consolidated Financial Statements.Item 7 and Note 16 containinformation about sales and profits for each segment,and Note 16 contains inf

70、ormation about eachsegments assets.Sealing Products SegmentOverview.Our Sealing Products segment designs,manufactures and sells sealing products,including metallic,non-metallic and composite material gaskets,rotary seals,compression packing,resilient metal seals,elastomeric seals,hydraulic component

71、s and expansion joints,as well as wheel-endcomponents and component systems,PTFE products,conveyor belting and sheeted rubber products.These products are used in a variety of industries,including chemical and petrochemical processing,petroleum extraction and refining,pulp and paper processing,heavy-

72、duty trucking,power generation,food and pharmaceutical processing,primary metal manufacturing,mining,water and waste treatment,aerospace,medical,filtration and semiconductor fabrication.In many of these industries,performanceand durability are vital for safety and environmental protection.Many of ou

73、r products are used inapplications that are highly demanding,e.g.,where extreme temperatures,extreme pressures,corrosiveenvironments and/or worn equipment make sealing difficult.Products.Our Sealing Products segment includes the product lines described below,which aredesigned,manufactured and sold b

74、y our Garlock Sealing Technologies,Stemco,Plastomer Technologiesand Garlock Rubber Technologies operations.Gasket products are used for sealing flange joints in chemical,petrochemical and pulp and paperprocessing facilities where high pressures,high temperatures and corrosive chemicals create the ne

75、ed forspecialized and highly engineered sealing products.We sell these gasket products under the Garlock,Gylon,Blue-Gard,Stress-Saver,Edge,Graphonic and Flexseal brand names.These productshave a long-standing reputation within the industries we serve for performance and reliability.Rotary seals are

76、used in rotating applications to contain the lubricants that protect the bearingsfrom excessive friction and heat generation.Because these sealing products are utilized in dynamicapplications,they are subject to wear.Durability,performance,and reliability are,therefore,criticalrequirements of our cu

77、stomers.These rotary seals are used in demanding applications in the steelindustry,mining and pulp and paper processing under well-known brand names including Klozure andModel 64.Compression packing is used to provide sealing in pressurized,static and dynamic applicationssuch as pumps and valves.Maj

78、or markets for compression packing products are the pulp and paper,mining,petrochemical and hydrocarbon processing industries.Branded products for these marketsinclude EVSP,Synthepak and Graph-lock.Resilient metal seals provide extremely tight sealing performance for highly demandingapplications suc

79、h as nuclear power generation,semiconductor fabrication facilities,specific chemicalprocessing applications and race car engines.Branded products for these markets include Helicoflexand Ultraflex.Critical service flange gaskets,seals and electrical flange isolation kits are used in high-pressurewell

80、head equipment,flow lines,water injection lines,sour hydrocarbon process applications and crude oiland natural gas pipeline/transmission line applications.These products are sold under the brand namesPikotek,VCS,Flowlok and PGE.Stemco manufactures a variety of high performance wheel-end,steering and

81、 suspensioncomponents used by the heavy-duty trucking industry to improve the performance and longevity of3commercial tractors and trailers.Products for this market include hub oil seals,axle fasteners,hub caps,wheel bearings,mileage counters,king pin kits and suspension kits.We sell these sealing p

82、roducts underthe Stemco,Stemco Kaiser,Grit Guard,Guardian,Guardian HP,Voyager,Discover,Pro-Torq,Sentinel,DataTrac,Qwikkit,Pluskit and Econokit brand names.We also sell productsunder our RFID sensor-based BAT RF product line.Plastomer Technologies manufactures PTFE specialty tape,formed PTFE products

83、,and PTFEsheets and shapes.These PTFE products provide highly specialized and engineered solutions to ourcustomers in the aircraft,fluid handling and semiconductor industries,and are sold under the Plastolon,Texolon and Amicon brand names.Garlock Rubber Technologies manufactures rubber bearing pads,

84、conveyor belts and other rubberproducts for industrial applications under the DuraKing,FlexKing,Viblon,Techflex andHeatKing brand names.Customers.Our Sealing Products segment sells products to industrial agents and distributors,original equipment manufacturers(“OEMs”),engineering and construction fi

85、rms and end usersworldwide.Sealing products are offered to global customers,with approximately 43%of sales deliveredto customers outside the United States in 2008.Representative customers include Saudi Aramco,MotionIndustries,Applied Industrial Technologies,Electricite de France,AREVA,Bayer,BASF Cor

86、poration,General Electric Company,Georgia-Pacific Corporation,Eastman Chemical Company,Exxon MobilCorporation,Minara Resources,Queensland Alumina,AK Steel Corporation,Volvo Corporation,UtilityTrailer,Great Dane,Mack Trucks,International Truck,PACCAR and Applied Materials.In 2008,nosingle customer ac

87、counted for more than 2%of segment revenues.Competition.Competition in the sealing markets in which we operate is based on proven productperformance and reliability,as well as price,customer service,application expertise,delivery terms,breadth of product offering,reputation for quality and the avail

88、ability of product.Our leading brandnames,including Garlock and Stemco,have been built upon long-standing reputations for reliabilityand durability.In addition,the breadth,performance and quality of our product offerings allow us toachieve premium pricing and have made us a preferred supplier among

89、our agents and distributors.Webelieve that our record of product performance in the major markets in which this segment operates is asignificant competitive advantage for us.Major competitors include A.W.Chesterton Company,KlingerGroup,Teadit,Lamons,SIEM/Flexitallic,SKF USA Inc.,Freudenberg-NOK,Fede

90、ral-MogulCorporation and Saint-Gobain.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 compone

91、nts,and various fibersand resins.We believe that all of these raw materials and components are readily available from varioussuppliers.Engineered Products SegmentOverview.Our Engineered Products segment includes operations that design,manufacture andsell self-lubricating,non-rolling bearing products

92、,aluminum blocks for hydraulic applications,rotary andreciprocating air compressors,vacuum pumps,air systems and compressor components.Products.Our Engineered Products segment includes the product lines described below,whichare designed,manufactured and sold by GGB,Quincy Compressor and Compressor P

93、roductsInternational.4GGB produces self-lubricating,non-rolling,metal polymer,solid polymer and filament woundbearing products.The metal-backed or epoxy-backed bearing surfaces are made of PTFE or a mixturethat includes PTFE to provide maintenance-free performance and reduced friction.These products

94、typically perform as sleeve bearings or thrust washers under conditions of no lubrication,minimallubrication or pre-lubrication.These products are used in a wide variety of markets such as theautomotive,pump and compressor,construction,power generation and machine tool markets.We haveover 20,000 bea

95、ring part numbers of different designs and physical dimensions.GGB is a leading andwell recognized brand name in this product area.Quincy Compressor designs and manufactures rotary screw and reciprocating air compressorsand vacuum pumps,ranging from one-third to 500 horsepower,used in a wide range o

96、f industrialapplications,including the pharmaceutical,pulp and paper,gas transmission,health,construction,petrochemical and automotive industries.Quincy also sells a comprehensive line of dryers,filters andair treatment products.In addition,Quincy performs comprehensive compressed air system audits

97、underthe Air Science Engineering brand name and manufactures a complete line of pneumatic and hydrauliccylinders under the Ortman brand name.Compressor Products International designs,manufactures and services components forreciprocating compressors and engines.These components(packing and wiper asse

98、mblies and rings,piston and rider rings,compressor valve assemblies and components)are primarily utilized in therefining,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

99、Polymer Alloys,Twin Ring and Liard.Compressor Products International also designs andmanufactures the Gar-Seal family of PTFE lined butterfly valves.Customers.Our Engineered Products segment sells its products to a diverse customer base usinga combination of direct sales and independent distribution

100、 networks.GGB has customers worldwide inall major industrial sectors,and supplies products both directly to customers through their own localdistribution system and indirectly to the market through independent agents and distributors with theirown local network.Quincy Compressor products are sold th

101、rough a global network of independentagents and distributors.Quincy Compressor also sells directly to national accounts,OEMs and climatecontrol houses.Compressor Products International sells its products globally through a network ofcompany salespersons,independent sales representatives and distribu

102、tors.In 2008,no single customeraccounted for more than 3%of segment revenues.Competition.GGB has a number of competitors,including Kolbenschmidt Pierburg AG,NortonCompany and Federal-Mogul Corporation.In the markets in which GGB competes,competition is basedprimarily on performance of the product fo

103、r specific applications,product reliability,delivery and price.Quincy Compressors major competitors include Gardner Denver,Inc.,Sullair Corporation,Ingersoll-Rand Company,Atlas Copco North America Inc.and Kaeser Compressors,Inc.In the markets in whichQuincy Compressor competes,competition generally

104、is based on reliability,quality,delivery times,energy efficiency,service and price.Compressor Products International competes against othercomponent manufacturers,such as Cook Compression,Hoerbiger Corporation,OEMs and numeroussmaller component manufacturers worldwide.Price,availability,product qual

105、ity,engineering supportand reliability are the primary competitive drivers in the markets served by Compressor ProductsInternational.Raw Materials and Components.GGBs major raw material purchases include steel coil,bronzepowder and PTFE.GGB sources components from a number of external suppliers.Quin

106、cy Compressorsprimary raw materials are iron castings.Components used by Quincy Compressor are motors,coolersand accessories such as air dryers,filters and electronic controls.Compressor Products Internationalsmajor raw material purchases include PTFE,PEEK(Polyetheretherketone),compound additives,ca

107、st5iron,bronze,steel and stainless steel bar stock.We believe that all of these raw materials andcomponents are readily available from various suppliers.Engine Products and Services SegmentOverview.Our Engine Products and Services segment designs,manufactures,sells and servicesheavy-duty,medium-spee

108、d diesel,natural gas and dual fuel reciprocating engines.We market ourproducts and services under the Fairbanks Morse Engine brand name.Products.Our Engine Products and Services segment manufactures licensed heavy-duty,medium-speed diesel,natural gas and dual fuel reciprocating engines,in addition t

109、o its own designs.Thereciprocating engines range in size from 700 to 31,970 horsepower and from five to 20 cylinders.Thegovernment and the general industrial market for marine propulsion,power generation,and pump andcompressor applications use these products.We have been building engines for over 11

110、5 years under theFairbanks Morse Engine brand name and we have a large installed base of engines for which we supplyaftermarket parts and service.Additionally,we have been the U.S.Navys supplier of choice for medium-speed diesel engines and have supplied engines to the U.S.Navy for over 70 years.Cus

111、tomers.Our Engine Products and Services segment sells its products to customersworldwide,including major shipyards,municipal utilities,institutional and industrial organizations,sewage treatment plants,nuclear power plants and offshore oil and gas platforms.We market ourproducts through a direct sal

112、es force of engineers in North America and through independent agentsworldwide.Our representative customers include Northrop Grumman,General Dynamics,LockheedMartin,the U.S.Navy,the U.S.Coast Guard and Exelon.In 2008,the largest customer accounted forapproximately 25%of segment revenues.Competition.

113、Major competitors for our Engine Products and Services segment include MTU,Caterpillar Inc.and Wartsila Corporation.Price,delivery time,engineering and service support,andengine efficiency relating to fuel consumption and emissions drive competition.Raw Materials and Components.Our Engine Products a

114、nd Services segment purchases multipleferrous and non-ferrous castings,forgings,plate stock and bar stock for fabrication and machining intoengines.In addition,we buy a considerable amount of precision-machined engine components.Webelieve that all of these raw materials and components are readily av

115、ailable from various suppliers.Research and DevelopmentWe refer to our research and development efforts as our“EnNovation”program.The goal of theprogram is to strengthen our product portfolios for traditional markets while simultaneously creatingdistinctive and breakthrough products.“EnNovation”inco

116、rporates a process to move product innovationsfrom concept to commercialization,and to identify,analyze,develop and implement new productconcepts and opportunities aimed at business growth.We employ scientists,engineers and technicians throughout our operations to develop,design andtest new and impr

117、oved products.We work closely with our customers to identify issues and developtechnical solutions.The majority of our research and development expenditures are directed toward thedevelopment of new sealing products for hostile environments,the development of truck and trailer fleetinformation syste

118、ms,the development of bearing products and materials with increased load carryingcapability and superior friction and wear characteristics,and the extension of our air compressor productline.Prior to introduction,new products are subject to extensive testing at our various facilities and atbeta test

119、 sites in conjunction with our customers.6BacklogAt December 31,2008,we had a backlog of orders valued at$259.4 million compared with$268.6 million at December 31,2007.Approximately 62%of the backlog,mainly at Fairbanks MorseEngine,is expected to be filled beyond 2009.Backlog represents orders on ha

120、nd that we believe to befirm.However,there is no certainty that the backlog orders will in fact result in actual sales at the timesor in the amounts ordered.In addition,for most of our business,backlog is not particularly predictive offuture performance because of our short lead times and some seaso

121、nality.Quality AssuranceWe believe that product quality is among the most important factors in developing andmaintaining strong,long-term relationships with our customers.In order to meet the exactingrequirements of our customers,we maintain stringent standards of quality control.We routinely employ

122、in-process inspection by using testing equipment as a process aid during all stages of development,designand production to ensure product quality and reliability.These include state-of-the-art CAD/CAMequipment,statistical process control systems,laser tracking devices,failure mode and effect analysi

123、s andcoordinate measuring machines.We are also able to extract numerical quality control data as a statisticalmeasurement of the quality of the parts being manufactured from our CNC machinery.In addition,weperform quality control tests on parts that we outsource.As a result,we are able to significan

124、tly reducethe number of defective parts and therefore improve efficiency,quality and reliability.As of December 31,2008,31 of our manufacturing facilities were ISO 9000,QS 9000 and/or TS16949 certified with the remaining facilities working towards obtaining ISO and/or TS certification.Twelve of our

125、facilities are ISO 14001 certified.OEMs are increasingly requiring these standards in lieuof individual certification procedures and as a condition of awarding business.Patents,Trademarks and Other Intellectual PropertyWe maintain a number of patents and trademarks issued by the U.S.and other countr

126、ies relatingto the name and design of our products and have granted licenses to some of these trademarks andpatents.We routinely evaluate the need to protect new and existing products through the patent andtrademark systems in the U.S.and other countries.We also have proprietary information,consisti

127、ng ofknow-how and trade secrets relating to the design,manufacture and operation of our products and theiruse that is not patented.We do not consider our business as a whole to be materially dependent upon anyparticular patent,patent right,trademark,trade secret or license.In general,we are the owne

128、r 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 andindividuals in order to broaden our product offerings.We are dependent on the ability of these thirdparties to diligently protect the

129、ir intellectual property rights.In several cases,the intellectual propertylicenses are integral to the manufacture of our products.For example,Fairbanks Morse Engine licensestechnology from MAN Diesel for the four-stroke reciprocating engine,and Quincy Compressor licensesfrom Svenska Rotor Maskiner

130、AB its rotary screw compressor design and technology.A loss of theselicenses or a failure on the part of the third party to protect its own intellectual property could reduce ourrevenues.Although these licenses are all long-term and subject to renewal,it is possible that we may notsuccessfully reneg

131、otiate these licenses or that they could be terminated for a material breach.If this wereto occur,our business,financial condition,results of operations and cash flows could be adverselyaffected.7Employees and Labor RelationsWe currently have approximately 5,100 employees worldwide.Approximately 2,8

132、00 employeesare located within the U.S.and approximately 2,300 employees are located outside the U.S.,primarily inEurope,Canada and Mexico.Approximately 30%of our U.S.employees are members of trade unionscovered by collective bargaining agreements.Union agreements relate,among other things,to wages,

133、hours and conditions of employment.The wages and benefits furnished are generally comparable toindustry and area practices.We have collective bargaining agreements in place at four of our U.S.facilities.The hourlyemployees who are unionized are covered by collective bargaining agreements with a numb

134、er of laborunions and with varying contract termination dates ranging from November 2010 to June 2012.Inaddition,some of our employees located outside the U.S.are subject to national collective bargainingagreements.ITEM 1A.RISK FACTORSIn addition to the risks stated elsewhere in this annual report,s

135、et forth below are certain riskfactors that we believe are material.If any of these risks occur,our business,financial condition,resultsof operations,cash flows and reputation could be harmed.You should also consider these risk factorswhen you read“forward-looking statements”elsewhere in this report

136、.You can identify forward-lookingstatements by terms such as“may,”“hope,”“will,”“should,”“expect,”“plan,”“anticipate,”“intend,”“believe,”“estimate,”“predict,”or“continue,”the negative of those terms or othercomparable terms.Those forward-looking statements are only predictions and can be adversely a

137、ffectedif any of these risks occur.Risks Related to Our BusinessCertain of our subsidiaries are defendants in asbestos litigation.The historical business operations of certain subsidiaries of our subsidiary,Coltec Industries Inc(“Coltec”),principally Garlock Sealing Technologies LLC and The Anchor P

138、acking Company(“Anchor”),have resulted in a substantial volume of asbestos litigation in which plaintiffs have allegedpersonal injury or death as a result of exposure to asbestos fibers.Those subsidiaries manufacturedand/or sold industrial sealing products,predominately gaskets and packing products,

139、that containedencapsulated asbestos fibers.Anchor is an inactive and insolvent indirect subsidiary of Coltec.There isno remaining insurance coverage available to Anchor and it has no assets.Our subsidiaries exposure toasbestos litigation and their relationships with insurance carriers are actively m

140、anaged through anotherColtec subsidiary,Garrison Litigation Management Group,Ltd.Several risks and uncertainties mayresult in potential liabilities to us in the future that could have a material adverse effect on our business,financial condition,results of operations and cash flows.Those risks and u

141、ncertainties include thefollowing:the potential for a large number of future asbestos claims that are not covered by insurancebecause insurance coverage is,or will be,depleted;the uncertainty of the number and per claim value of pending and potential future asbestosclaims;the results of litigation a

142、nd the success of our litigation and settlement strategies;8the potential for large adverse judgments against us not covered by insurance and anysurety/appeal bonds(and related cash collateral)required in connection with appeals;an increase in litigation costs,fees and expenses that are not covered

143、by insurance;the financial viability of our subsidiaries insurance carriers and their reinsurance carriers,and our subsidiaries ability to collect on claims from them;the timing of claims,payments and insurance recoveries,and limitations imposed on theamount that may be recovered from insurance in a

144、ny year;the unavailability of any insurance for claims alleging first exposure to asbestos after July 1,1984;the potential for asbestos exposure to extend beyond specific Coltec subsidiaries arising fromcorporate veil piercing efforts or other claims by asbestos plaintiffs;bankruptcies of other defe

145、ndants;andthe prospect for and impact of any federal legislation providing national asbestos litigationreform.When settlement payments exceed insurance recoveries from our subsidiaries carriers,oursubsidiaries will be required to fund these obligations from available cash.This could adversely affect

146、our ability to use cash for other purposes,including growth of our business,and adversely affect ourfinancial condition.In addition,our estimated liability for claims is highly uncertain and is based on subjectiveassumptions.The actual liability could vary significantly from the estimate recorded in

147、 our financialstatements.Because of the uncertainty as to the number and timing of potential future asbestos claims,aswell as the amount that will have to be paid to settle or satisfy any such claims in the future(includingsignificant bonds required by certain states while we appeal adverse verdicts

148、),and the finite amount ofinsurance available for future payments,future asbestos claims could have a material adverse effect onour financial condition,results of operations and cash flows.For a further discussion of our asbestos exposure,see“Managements Discussion and Analysis ofFinancial Condition

149、 and Results of Operations Contingencies Asbestos.”Our business and some of the markets we serve are cyclical and distressed market conditions couldhave a material adverse effect on our business.The markets in which we sell our products,particularly chemical companies,petroleumrefineries,heavy-duty

150、trucking,semiconductor manufacturing,capital equipment and the automotiveindustry,are,to varying degrees,cyclical and have historically experienced periodic downturns.Priordownturns have been characterized by diminished product demand,excess manufacturing capacity andsubsequent erosion of average se

151、lling prices in these markets resulting in negative effects on our net sales,gross margins and net income.The current downward cycle has impacted our results of operations forour most recent quarterly periods.The current economic environment may affect our opportunities fororganic growth and a conti

152、nued downward cycle could adversely affect our operating results.Moreover,a prolonged downward cycle may critically impair the continued viability of certain of our customers and9may adversely impact our accounts receivable with these customers.A prolonged and severe downwardcycle in our markets cou

153、ld have a material adverse effect on our business,financial condition,results ofoperations 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 business.Customers for many of ourproducts are a

154、ttempting to reduce the number of vendors from which they purchase in order to reduceinventories.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 tocontinue to meet the need

155、s and desires of our customers.We may not have sufficient resources tocontinue to make such investments or maintain our competitive position.Additionally,some of ourcompetitors are larger than we are and have substantially greater financial resources than we do.As aresult,they may be better able to

156、withstand the effects of periodic economic downturns.Pricing and othercompetitive pressures could adversely affect our business,financial condition,results of operations andcash flows.If we fail to retain the independent agents and distributors upon whom we rely to market our products,we may be unab

157、le to effectively market our products and our revenue and profitability may decline.Our marketing success in the U.S.and abroad depends largely upon our independent agents anddistributors sales and service expertise and relationships with customers in our markets.Many of theseagents have developed s

158、trong ties to existing and potential customers because of their detailed knowledgeof our products.A loss of a significant number of these agents or distributors,or of a particular agent ordistributor in a key market or with key customer relationships,could significantly inhibit our ability toeffecti

159、vely market our products,which could have a material adverse effect on our business,financialcondition,results of operations and cash flows.Increased costs for raw materials or the termination of existing supply agreements could have amaterial adverse effect on our business.The prices for raw materi

160、als we purchase increased in 2008.While we have been successful inpassing along a portion of these higher costs,there can be no assurance that we will be able to continuedoing so without losing customers.Similarly,the loss of a key supplier or the unavailability of a key rawmaterial could adversely

161、affect our business,financial condition,results of operations and cash flows.We have exposure to some contingent liabilities relating to discontinued operations,which could havea material adverse effect on our financial condition,results of operations or cash flows in any fiscalperiod.We have some c

162、ontingent liabilities related to discontinued operations of our predecessors,including environmental liabilities and liabilities for certain products and other matters.In someinstances we have indemnified others against those liabilities,and in other instances we have receivedindemnities from third

163、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 damages.Specifically,we may potentially besubject to the liabilities related to the firearms manufactured prior to 19

164、90 by Colt Firearms,a formeroperation of Coltec,and for electrical transformers manufactured prior to 1994 by Central Moloney,another former Coltec operation.Coltec also has ongoing obligations with regard to workerscompensation,retiree medical and other retiree benefit matters associated with disco

165、ntinued operationsthat relate to Coltecs periods of ownership of those operations.10We have insurance,reserves and funds held in trust to address these liabilities.However,if ourinsurance coverage is depleted,our reserves are not adequate or the funds held in trust are insufficient,environmental and

166、 other liabilities relating to discontinued operations could have a material adverse effecton 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 toadditional business risks that may cause our prof

167、itability to decline.Because we sell our products in a number of foreign countries,we are subject to risks associatedwith doing business internationally.In 2008,we derived approximately 48%of our revenues from salesof our products outside of the U.S.Our international operations are,and will continue

168、 to be,subject to anumber of risks,including:unfavorable fluctuations in foreign currency exchange rates;adverse changes in foreign tax,legal and regulatory requirements;difficulty in protecting intellectual property;trade protection measures and import or export licensing requirements;differing lab

169、or regulations;political and economic instability;andacts 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.We intend to continue to pursue international growth opport

170、unities,which could increase ourexposure to risks associated with international sales and operations.As we expand our internationaloperations,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 dis

171、tribution networks in new geographicregions,we must continue to develop relationships with qualified local agents,distributors and tradingcompanies.If we are not successful in developing these relationships,we may not be able to increasesales in these regions.If we are unable to protect our intellec

172、tual property rights and knowledge relating to our products,ourbusiness and prospects may be negatively impacted.We believe that proprietary products and technology are important to our success.If we areunable to adequately protect our intellectual property and know-how,our business and prospects co

173、uld benegatively impacted.Our efforts to protect our intellectual property through patents,trademarks,servicemarks,domain names,trade secrets,copyrights,confidentiality,non-compete and nondisclosureagreements and other measures may not be adequate to protect our proprietary rights.Patents issued tot

174、hird parties,whether before or after the issue date of our patents,could render our intellectual propertyless valuable.Questions as to whether our competitors products infringe our intellectual property rightsor whether our products infringe our competitors intellectual property rights may be disput

175、ed.Inaddition,intellectual property rights may be unavailable,limited or difficult to enforce in somejurisdictions,which could make it easier for competitors to capture market share in those jurisdictions.11Our competitors may capture market share from us by selling products that claim to mirror the

176、capabilities of our products or technology.Without sufficient protection nationally and internationally forour intellectual property,our competitiveness worldwide could be impaired,which would negativelyimpact our growth and future revenue.As a result,we may be required to spend significant resource

177、s tomonitor and police our intellectual property rights.Risks Related to Ownership of Our Common StockThe 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 affect on themarket price of our common sto

178、ck.The market price of our common stock could fluctuate significantlyfor many reasons,including in response to the risks described in this section and elsewhere in this reportor for reasons unrelated to our operations,such as reports by industry analysts,investor perceptions ornegative announcements

179、 by our customers,competitors or suppliers regarding their own performance,aswell as industry conditions and general financial,economic and political instability.In particular,reportsconcerning asbestos litigation or asbestos reform could cause a significant increase or decrease in themarket price o

180、f our common stock.Because our quarterly revenues and operating results may vary significantly in future periods,ourstock price may fluctuate.Our revenue and operating results may vary significantly from quarter to quarter.A highproportion of our costs are fixed,due in part to significant selling an

181、d manufacturing costs.Smalldeclines in revenues could disproportionately affect operating results in a quarter and the price of ourcommon stock may fall.We may also incur charges to income to cover increases in the estimate of oursubsidiaries future asbestos liability.Other factors that could affect

182、 quarterly operating results include,but are not limited to:demand for our products;the timing and execution of customer contracts;the timing of sales of our products;payments related to asbestos litigation or annual costs related to asbestos litigation that arenot covered by insurance;the timing of

183、 receipt of insurance proceeds;increases in manufacturing costs due to equipment or labor issues;changes in foreign currency exchange rates;unanticipated delays or problems in introducing new products;announcements by competitors of new products,services or technological innovations;changes in our p

184、ricing policies or the pricing policies of our competitors;12increased expenses,whether related to sales and marketing,raw materials or supplies,productdevelopment or administration;major changes in the level of economic activity in North America,Europe,Asia and othermajor regions in which we do bus

185、iness;costs related to possible future acquisitions or divestitures of technologies or businesses;an increase in the number or magnitude of product liability claims;our ability to expand our operations and the amount and timing of expenditures related toexpansion of our operations,particularly outsi

186、de the United States;andeconomic assumptions and market factors used to determine post-retirement benefits andpension liabilities.Various provisions and laws could delay or prevent a change of control.The anti-takeover provisions of our articles of incorporation and bylaws,our shareholder rightsplan

187、 and provisions of North Carolina law could delay or prevent a change of control or may impede theability of the holders of our common stock to change our management.In particular,our articles ofincorporation and bylaws,among other things,will:require a supermajority shareholder vote to approve any

188、business combination transactionwith an owner of 5%or more of our shares unless the transaction is recommended bydisinterested directors;limit the right of shareholders to remove directors and fill vacancies;regulate how shareholders may present proposals or nominate directors for election atshareho

189、lders meetings;andauthorize our board of directors to issue preferred stock in one or more series,withoutshareholder approval.Our shareholder rights plan will also make an acquisition of a controlling interest in EnPro in atransaction not approved by our board of directors more difficult.Future sale

190、s of our common stock in the public market could lower the market price for our commonstock and adversely impact the trading price of our convertible debentures.In the future,we may sell additional shares of our common stock to raise capital.In addition,asubstantial number of shares of our common st

191、ock are reserved for issuance under our equitycompensation plans,including shares to be issued upon the exercise of stock options,and uponconversion of our convertible debentures.We cannot predict the size of future issuances or the effect,ifany,that they may have on the market price for our common

192、stock.The issuance and sales of substantialamounts of common stock,or the perception that such issuances and sales may occur,could adverselyaffect the trading price of the debentures and the market price of our common stock.13Absence of dividends could reduce our attractiveness to investors.We have

193、never declared or paid cash dividends on our common stock.Moreover,our currentsenior secured credit facility restricts our ability to pay cash dividends on common stock if availabilityunder the facility falls below$20 million.As a result,our common stock may be less attractive to certaininvestors th

194、an the stock of companies with a history of paying regular dividends.Risks Related to Our Capital StructureOur debt agreement imposes limitations on our operations,which could impede our ability to respondto market conditions,address unanticipated capital investments and/or pursue business opportuni

195、ties.We have a$75 million senior secured revolving credit facility that imposes limitations on ouroperations,such as limitations on distributions,limitations on incurrence and repayment of indebtedness,and maintenance of a fixed charge coverage financial ratio.These limitations could impede our abil

196、ity torespond to market conditions,address unanticipated capital investment needs and/or pursue businessopportunities.We may not have sufficient cash to repurchase our convertible debentures at the option of the holderor upon a change of control or to pay the cash payable upon a conversion.Upon a ch

197、ange of control,subject to certain conditions,we will be required to make an offer torepurchase for cash all outstanding convertible debentures at 100%of their principal amount plus accruedand unpaid interest,including liquidated damages,if any,up to but not including the date of repurchase.Upon a c

198、onversion,we will be required to make a cash payment of up to$1,000 for each$1,000 inprincipal amount of debentures converted.However,we may not have enough available cash or be ableto obtain financing at the time we are required to make repurchases of tendered debentures or settlementof converted d

199、ebentures.Any credit facility in place at the time of a repurchase or conversion of thedebentures may also limit our ability to use borrowings to pay any cash payable on a repurchase orconversion of the debentures and may prohibit us from making any cash payments on the repurchase orconversion of th

200、e debentures if a default or event of default has occurred under that facility without theconsent of the lenders under that credit facility.Our current$75 million senior secured credit facilityprohibits distributions from our subsidiaries to us to make payments of interest on the debentures if adefa

201、ult or event of default exists under the facility.Our senior secured credit facility also prohibitsprepayments of the debentures or distributions from our subsidiaries to us to make principal payments orpayments upon conversion of the debentures if a default or event of default exists under the faci

202、lity or theamount of the borrowing base under the facility,less the amount of outstanding borrowings under thefacility and letters of credit and reserves,is less than$20 million.Our failure to repurchase tendereddebentures at a time when the repurchase is required by the indenture or to pay any cash

203、 payable on aconversion of the debentures would constitute a default under the indenture.A default under theindenture or the change of control itself could lead to a default under the other existing and futureagreements governing our indebtedness.If the repayment of the related indebtedness were to

204、beaccelerated after any applicable notice or grace periods,we may not have sufficient funds to repay theindebtedness and repurchase the debentures or make cash payments upon conversion thereof.Risks Related to the Current Global Financial CrisisThe volatility and disruption of global credit markets

205、and adverse changes arising from the currentglobal financial crisis may negatively impact our ability to access financing and expose us tounexpected risks.14The current global financial and credit crisis exposes us to a variety of risks.We have historically fundedour business with cash from operatio

206、ns and the proceeds from the issuance of our convertible debentures.We have a$75 million senior secured revolving credit facility with a group of lenders as a backstop to ourliquidity needs and there have been no borrowings under this facility to date.In light of theunprecedented disruption of globa

207、l credit markets and the instability of financial institutions that untilrecently were of unquestioned strength,there is a risk that a borrowing request properly made under thecredit facility would not be honored by one or more of our lenders.Under the terms of the credit facility,no lender is oblig

208、ated to fund a portion of a borrowing request that is not funded by another lender.Accordingly,in such an instance actual borrowings under our credit facility may be insufficient to supportour liquidity needs and we would be required to seek alternate sources of liquidity.In light of the currentcapi

209、tal and credit market disruption and volatility,we cannot assure you that such alternate funding willbe available to us on terms and conditions acceptable to us,or at all.As of the date of this filing we haveno reason to believe that a borrowing request,properly submitted by us,would not be honored

210、by any ofour lenders,all of whom have assured us of their continuing ability to fund our facility.In addition,wemaintain deposit accounts with numerous financial institutions around the world in amounts that exceedapplicable governmental deposit insurance levels.While we actively monitor our deposit

211、 relationships,we are subject to risk of loss in the event of the unanticipated failure of a financial institution in which wemaintain deposits,which loss could be material to our results of operations and financial condition.Derivative transactions may expose us to unexpected risk and potential los

212、ses.We are party to certain derivative transactions,such as foreign exchange contracts and calloptions(hedge and warrant transactions)with respect to our convertible debentures,with financialinstitutions to hedge against certain financial risks.In light of current economic uncertainty and potentialf

213、or financial institution failures,we may be exposed to the risk that our counterparty in a derivativetransaction may be unable to perform its obligations as a result of being placed in receivership orotherwise.In the event that a counterparty to a material derivative transaction is unable to perform

214、 itsobligations thereunder,we may experience material losses that could materially adversely affect ourresults of operations and financial condition.ITEM 1B.UNRESOLVED STAFF COMMENTSNot applicable.ITEM 2.PROPERTIESWe are headquartered in Charlotte,North Carolina and have 43 primary manufacturing fac

215、ilitiesin 12 states within the U.S.and 10 countries outside of 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:LocationSegmentOwned/LeasedSize(Square Feet)U.S.Palmyra,New York.Sealing ProductsOwned

216、538,000Longview,Texas.Sealing ProductsOwned210,000Paragould,Arkansas.Sealing ProductsOwned142,000Quincy,Illinois.Engineered ProductsOwned323,000Bay Minette,Alabama.Engineered ProductsLeased143,000Thorofare,New Jersey.Engineered ProductsOwned120,000Beloit,Wisconsin.Engine Products and ServicesOwned43

217、3,00015LocationSegmentOwned/LeasedSize(Square Feet)ForeignMexico City,Mexico.Sealing ProductsOwned131,000Saint Etienne,France.Sealing ProductsOwned108,000Annecy,France.Engineered ProductsLeased196,000Heilbronn,Germany.Engineered ProductsOwned127,000Sucany,Slovakia.Engineered ProductsOwned109,000Our

218、manufacturing capabilities are flexible and allow us to customize the manufacturing processto increase performance and value for our customers and meet particular specifications.We also maintainnumerous sales offices and warehouse facilities in strategic locations in the U.S.,Canada and othercountri

219、es.We believe our facilities and equipment are generally in good condition and are wellmaintained and able to continue to operate at present levels.ITEM 3.LEGAL PROCEEDINGSDescriptions of environmental,asbestos and legal matters are included in Item 7 of this annualreport under the heading“Managemen

220、ts Discussion and Analysis of Financial Condition and Results ofOperations Contingencies”and in Note 17 to our Consolidated Financial Statements which descriptionsare incorporated by reference herein.In addition to the matters referenced above,we are from time to time subject to,and are presentlyinv

221、olved in,other litigation and legal proceedings arising in the ordinary course of business.We believethat the outcome of such other litigation and legal proceedings will not have a material adverse affect onour financial condition,results of operations or cash flows.We were not subject to any penalt

222、ies associated with any failure to disclose“reportabletransactions”under Section 6707A of the Internal Revenue Code.ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSNo matter was submitted to a vote of security holders during the fourth quarter of the fiscal yearcovered by this annual repor

223、t.EXECUTIVE OFFICERS OF THE REGISTRANTInformation concerning our executive officers is set forth below:NameAgePositionStephen E.Macadam48President,Chief Executive Officer andDirectorWilliam Dries57Senior Vice President and Chief FinancialOfficerRichard L.Magee51Senior Vice President,General Counsela

224、nd Secretary16NameAgePositionJ.Milton Childress II51Vice President,Strategic Planning andBusiness DevelopmentDale A.Herold41Vice President,Continuous ImprovementRobert P.McKinney45Vice President,Human ResourcesDonald G.Pomeroy II41Vice PresidentRobert D.Rehley48Vice President and ControllerOrville G

225、.Lunking53Vice President and TreasurerStephen E.Macadam has served as our Chief Executive Officer and President and as a directorsince April 2008.Prior to accepting these positions with EnPro,Mr.Macadam served as Chief ExecutiveOfficer of BlueLinx Holdings Inc.since October 2005.Before joining BlueL

226、inx Holdings Inc.,Mr.Macadam was the President and Chief Executive Officer of Consolidated Container Company LLC sinceAugust 2001.He served previously with Georgia-Pacific Corp.where he held the position of ExecutiveVice President,Pulp&Paperboard from July 2000 until August 2001,and the position of

227、Senior VicePresident,Containerboard&Packaging from March 1998 until July 2000.Mr.Macadam held positionsof increasing responsibility with McKinsey and Company,Inc.from 1988 until 1998,culminating in therole of principal in charge of McKinseys Charlotte,North Carolina operation.Mr.Macadam is a directo

228、rof Solo Cup Company.William Dries is currently Senior Vice President and Chief Financial Officer and has held thesepositions since May 2002.He served as a consultant to Goodrich Corporation from September 2001through December 2001 and was employed by Coltec Industries Inc from January 2002 through

229、April2002.Prior to that,Mr.Dries was employed by United Dominion Industries,Inc.He was Senior VicePresident and Chief Financial Officer of United Dominion from December 1999 until May 2001,havingpreviously served as Senior Vice President Finance,Vice President and Controller.Mr.Dries,acertified publ

230、ic accountant,was with Ernst&Young LLP in New York prior to joining United Dominionin 1985.Mr.Dries is a director of Polypore International,Inc.Richard L.Magee is currently Senior Vice President,General Counsel and Secretary and has heldthese positions since May 2002.He served as a consultant to Goo

231、drich Corporation from October 2001through December 2001,and was employed by Coltec Industries Inc from January 2002 through April2002.Prior to that,Mr.Magee was Senior Vice President,General Counsel and Secretary of UnitedDominion Industries,Inc.from April 2000 until July 2001,having previously ser

232、ved as Vice President,Secretary and General Counsel.Mr.Magee was a partner in the Charlotte,North Carolina law firmRobinson,Bradshaw&Hinson,P.A.prior to joining United Dominion in 1989.J.Milton Childress II is currently Vice President,Strategic Planning and Business Developmentand has held this posi

233、tion since February 2006,after having joined the EnPro corporate staff in December2005.He was a co-founder of and served from October 2001 through December 2005 as ManagingDirector of Charlotte-based McGuireWoods Capital Group.Prior to that,Mr.Childress was Senior VicePresident,Planning and Developm

234、ent of United Dominion Industries,Inc.from December 1999 untilMay 2001,having previously served as Vice President.Mr.Childress held a number of positions withErnst&Youngs corporate finance consulting group prior to joining United Dominion in 1992.17Dale A.Herold is currently Vice President,Continuou

235、s Improvement and has held this positionsince August 2008.Prior to joining EnPro,Mr.Herold was a regional vice president for BlueLinxHoldings Inc.from October 2007 to August 2008.Previously,he was that companys Vice President,Marketing and Sales Excellence from January 2006 to October 2007.Prior to

236、joining BlueLinx,Mr.Herold worked in a variety of marketing and manufacturing roles at Consolidated Container Companyfrom March 2004 to January 2006,and at General Electric from July 1989 to March 2004.Robert P.McKinney is currently Vice President,Human Resources and has held this positionsince Apri

237、l 2008,after having previously served as Deputy General Counsel from May 2002 to April2008.Prior to joining EnPro,Mr.McKinney was General Counsel at Tredegar Corporation and AssistantGeneral Counsel with The Pittston Company,both in Richmond,Virginia.From 1990 to 1999,Mr.McKinney was employed by Uni

238、ted Dominion Industries,Inc.in Charlotte,North Carolina,as CorporateCounsel and subsequently Assistant General Counsel.Prior to joining United Dominion,he was anassociate with the law firm of Smith Helms Mulliss&Moore.Donald G.Pomeroy II is currently Vice President with responsibility for pricing st

239、rategies in theCompanys Continuous Improvement organization.He has held this position since November 2008,afterhaving previously served as the Companys Vice President and Controller since September 2007 and fromMay 2002 through August 2004,Mr.Pomeroy served as the Vice President,Finance for Garlock

240、SealingTechnologies from August 2004 until August 2007.He was Vice President,Finance and InformationTechnology at Stemco for Coltec Industries Inc from August 1998 until October 2001,and an employeeof Coltec Industries Inc from November 2001 through May 2002.From May 1995 to February 1996,Mr.Pomeroy

241、 was a financial analyst,and from February 1996 to August 1998,he was Controller International Operations at Garlock Sealing Technologies.Prior to joining Garlock Sealing Technologies,Mr.Pomeroy,a certified public accountant,was with Coopers&Lybrand LLP.Robert D.Rehley is currently Vice President an

242、d Controller and has held these positions sinceNovember 2008,after having previously served as the Companys Vice President and Treasurer sinceMay 2002.He was employed by Coltec Industries Inc from January 2002 through April 2002.Mr.Rehley was Assistant Treasurer of Metaldyne Corporation from October

243、 2001 to January 2002,and wasExecutive Director Corporate Tax for Metaldyne from December 2000 until October 2001.Previously,he was Treasurer of Simpson Industries from April 1998 until December 2000.Mr.Rehley was Director Finance and Business Development for Cummins Engine Company,Inc.from October

244、1996 until April1998.Orville G.Lunking is currently Vice President and Treasurer and has held these positions sinceFebruary 2009.Prior to joining EnPro,Mr.Lunking served as Vice President and Treasurer for NovelisInc.from January 2005 to March 2008.Prior to that,he was Corporate Treasurer for Smithf

245、ield Foods,Inc.from July 2001 to December 2004.He previously served as Assistant Treasurer International atSara Lee Corporation from July 1997 to June 2001.Prior to this time,he worked in different finance-related roles at Allied Signal Inc.,Bankers Trust Company,General Motors Corporation and Milli

246、ken&Company.PART IIITEM 5.REGISTRANTS COMMON EQUITY AND RELATED SHAREHOLDERMATTERSOur common stock is publicly traded on the New York Stock Exchange(“NYSE”)under thesymbol“NPO.”As required by Section 3.03A.12(a)of the NYSE listing standards,we filed with theNYSE the certification of our Chief Execut

247、ive Officer that he is not aware of any violation by theCompany of NYSE corporate governance listing standards.18As of February 20,2008,there were 5,343 holders of record of our common stock.The pricerange of our common stock from January 1,2007 through December 31,2008 is listed below by quarter:Lo

248、wSale PriceHighSale PriceFiscal 2008:Fourth Quarter.$14.40$37.25Third Quarter.33.5643.68Second Quarter.31.2140.81First Quarter.24.4033.46Fiscal 2007:Fourth Quarter.$29.65$43.32Third Quarter.31.0146.46Second Quarter.35.8544.99First Quarter.30.8740.70We did not declare any cash dividends to our shareh

249、olders during 2008.For a discussion of therestrictions on payment of dividends on our common stock,see“Managements Discussion and Analysis ofFinancial Condition and Results of Operations Liquidity and Capital Resources Dividends.”The following table sets forth all purchases made by us or on our beha

250、lf or any“affiliatedpurchaser,”as defined in Rule 10b-18(a)(3)under the Exchange Act,of shares of our common stock duringeach month in the fourth quarter of 2008.Period(a)Total Numberof Shares(orUnits)Purchased(b)Average PricePaid per Share(or Unit)(c)Total Number ofShares(or Units)Purchased as Part

251、 ofPublicly AnnouncedPlans or Programs(1)(2)(d)Maximum Number(or Approximate DollarValue)of Shares(orUnits)that May Yet BePurchased Under thePlans or Programs(1)(2)October 1 October 31,2008252,400(2)28.05(2)252,400-November 1 November 30,2008-0-December 1 December 31,2008 2,230(1)-Total 254,630(1)(2

252、)28.05(2)252,400-(1)A total of 2,230 shares were transferred to a rabbi trust that we established in connection with ourDeferred Compensation Plan for Non-Employee Directors,pursuant to which non-employeedirectors may elect to defer directors fees into common stock units.Coltec,which is a whollyowne

253、d subsidiary of EnPro,furnished these shares in exchange for management and otherservices provided by EnPro.These shares were valued at a price of$21.02 per share,the averageof the high and low prices of our common stock on December 31,2008.We do not consider thetransfer of shares from Coltec in thi

254、s context to be pursuant to a publicly announced plan orprogram.19(2)Pursuant to a share repurchase authorization approved by our board of directors and inaccordance with the terms of a plan to repurchase shares of our common stock up to$38 million,which we announced on September 8,2008,we purchased

255、 252,400 shares of our common stockat an aggregate price of approximately$7.09 million from October 1,2008 to October 29,2008,including commissions and other fees.On October 29,2008,in light of the volatility in thefinancial and credit markets,the board of directors terminated the share repurchase p

256、lan.CUMULATIVE TOTAL RETURN PERFORMANCE GRAPHSet forth below is a line graph showing the yearly percentage change in the cumulative totalshareholder return for our common stock as compared to similar returns for the Russell 2000 StockIndex and a group of our peers consisting of Flowserve Corporation

257、,Robbins&Myers,Inc.,GardnerDenver,Inc.,Circor International,Inc.,IDEX Corporation and The Gormann-Rupp Company.Thesemanufacturing companies were chosen because they are all similarly situated to EnPro in terms of sizeand markets served.Each of the returns is calculated assuming the investment of$100

258、 in each of thesecurities on December 31,2003 and reinvestment of dividends into additional shares of the respectiveequity securities when paid.The graph plots the respective values beginning on December 31,2003 andcontinuing through December 31,2008.Past performance is not necessarily indicative of

259、 futureperformance.COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURNAMONG ENPRO INDUSTRIES,INC.,RUSSELL 2000 INDEX AND PEER GROUP INDEX0100200300400DOLLARSENPRO INDUSTRIES100.00211.97193.19238.06219.71154.41PEER GROUP INDEX100.00134.75158.99217.23308.25186.65RUSSELL 2000 INDEX100.00117.49121.40142.12135.

260、1088.09200320042005200620072008ITEM 6.SELECTED CONSOLIDATED FINANCIAL DATAThe following historical consolidated financial information as of and for each of the years endedDecember 31,2008,2007,2006,2005 and 2004 has been derived from,and should be read together with,our audited Consolidated Financia

261、l Statements and the related notes,for each of those years.The auditedConsolidated Financial Statements and related notes as of December 31,2008 and 2007 and for the yearsended December 31,2008,2007 and 2006 are included elsewhere in this annual report.The informationpresented below with respect to

262、the last three completed fiscal years should also be read together withItem 7,“Managements Discussion and Analysis of Financial Condition and Results of Operations.”20Year Ended December 31,20082007200620052004(in millions,except per share data)Statement of Operations Data:Net sales$1,167.8$1,030.0$

263、928.4$838.6$826.3Income(loss)before extraordinaryitem$53.5$37.7$(158.9)$58.6$33.8Balance Sheet Data:Total assets(1)$1,352.5$1,470.3$1,406.6$1,276.2$1,181.0Long-term debt(including current portion)$182.2$185.7$185.7$185.2$164.8Per Common Share Data Diluted:Income(loss)before extraordinaryitem$2.54$1.

264、69$(7.60)$2.75$1.60(1)For 2004,the total assets reported in the table above contains immaterial errors relating to thetranslation of foreign currency denominated goodwill and other intangible assets.If thetranslation adjustments had been properly recorded,total assets would have been$1,213.2million.

265、There would have been no impact upon net income,earnings per share or cash flows forthe period due to the errors.ITEM 7.MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND RESULTS OF OPERATIONSThe following is managements discussion and analysis of certain significant factors that haveaffe

266、cted our consolidated financial condition and operating results during the periods included in theaccompanying audited Consolidated Financial Statements and the related notes.You should read thefollowing discussion in conjunction with our audited Consolidated Financial Statements and the relatednote

267、s,included elsewhere in this annual report.Forward-Looking StatementsThis report contains certain statements that are“forward-looking statements”as that term isdefined under the Private Securities Litigation Reform Act of 1995(the“Act”)and releases issued by theSecurities and Exchange Commission.The

268、 words“may,”“hope,”“will,”“should,”“expect,”“plan,”“anticipate,”“intend,”“believe,”“estimate,”“predict,”“potential,”“continue,”and otherexpressions which are predictions of or indicate future events and trends and which do not relate tohistorical matters identify forward-looking statements.We believ

269、e that it is important to communicateour future expectations to our shareholders,and we therefore make forward-looking statements inreliance upon the safe harbor provisions of the Act.However,there may be events in the future that weare not able to accurately predict or control,and our actual result

270、s may differ materially from theexpectations we describe in our forward-looking statements.Forward-looking statements involve knownand unknown risks,uncertainties and other factors,which may cause our actual results,performance orachievements to differ materially from anticipated future results,perf

271、ormance or achievements expressedor implied by such forward-looking statements.We advise you to read further about certain of these andother risk factors set forth in Item 1A of this annual report,entitled“Risk Factors”We undertake noobligation to publicly update or revise any forward-looking statem

272、ent,either as a result of newinformation,future events or otherwise.Whenever you read or hear any subsequent written or oralforward-looking statements attributed to us or any person acting on our behalf,you should keep in mindthe cautionary statements contained or referred to in this section.21Overv

273、iew and OutlookOverview.EnPro was incorporated under the laws of the State of North Carolina on January 11,2002.We design,develop,manufacture and market proprietary engineered industrial products.We have43 primary manufacturing facilities located in the United States and 10 countries outside the Uni

274、tedStates.We manage our business as three segments:a Sealing Products segment,an Engineered Productssegment,and an Engine Products and Services segment.Our Sealing Products segment designs,manufactures and sells sealing products,includingmetallic,non-metallic and composite material gaskets,rotary se

275、als,compression packing,resilient metalseals,elastomeric seals,hydraulic components and expansion joints,as well as wheel-end componentsystems,PTFE products,conveyor belting and sheeted rubber products.These products are used in avariety of industries,including chemical and petrochemical processing,

276、petroleum extraction and refining,pulp and paper processing,heavy-duty trucking,power generation,food and pharmaceutical processing,primary metal manufacturing,mining,water and waste treatment,aerospace,medical,filtration andsemiconductor fabrication.Our Engineered Products segment includes operatio

277、ns that design,manufacture and sell self-lubricating,non-rolling,metal-polymer,solid polymer and filament wound bearing products,aluminumblocks for hydraulic applications,rotary and reciprocating air compressors,vacuum pumps,air systemsand compressor components.These products are used in a wide rang

278、e of applications,including theautomotive,pharmaceutical,pulp and paper,natural gas,health,pump and compressor construction,power generation,machine tools,air treatment,refining,petrochemical and general industrial markets.Our Engine Products and Services segment designs,manufactures,sells and servi

279、ces heavy-duty,medium-speed diesel,natural gas and dual fuel reciprocating engines.The United States government andthe general markets for marine propulsion,power generation,and pump and compressor applications usethese products and services.In January 2008,we acquired certain assets and assumed cer

280、tain liabilities of Sinflex SealingTechnologies,a distributor and manufacturer of industrial sealing products,located in Shanghai,China.The operation conducts business as Garlock Sealing Technologies(Shanghai)Co.Ltd.and is operatedand managed as part of the global Garlock Sealing Technologies busine

281、ss unit in the Sealing Productssegment.Sinflex was Garlocks principal distributor in China for over a decade.In February 2008,we acquired the stock of V.W.Kaiser Engineering,a manufacturer of pins,bushings and suspension kits primarily for the heavy-duty truck and bus aftermarket.V.W.KaiserEngineeri

282、ng is located in Michigan.It is operated and managed as part of the Stemco business unit,which is in the Sealing Products segment.In May 2008,we acquired certain assets and assumed certain liabilities of Air Perfection inCalifornia.Air Perfection is engaged in the audit,sale,distribution,rental and

283、service of compressed airsystems and the various components that comprise such systems.The business is operated and managedas part of the Quincy Compressor business unit,which is in the Engineered Products segment.In June 2008,we purchased the 20%ownership of the minority shareholder of Garlock PtyL

284、imited in Australia.Subsequent to the share purchase,we own 100%of Garlock Pty Limited,which isin the Sealing Products segment.22In October and November 2008,we acquired certain assets of and assumed certain liabilities ofthree businesses which provide components and aftermarket services for recipro

285、cating compressors tocustomers in the petroleum,natural gas,PET bottle molding and chemical processing industries.Theacquired businesses are Horizon Compressor Services,Inc.,located in Houston,Texas;RAM Air,Inc.,located in New Smyrna Beach,Florida;and C&P Services(Northern)Limited,located in Warring

286、ton,UK.The businesses are operated and managed as part of the CPI business unit in the EngineeredProducts segment.In December 2008,we acquired certain assets and assumed certain liabilities of Northern Gasketsand Mouldings Limited(NGM),a distributor of sealing products and a manufacturer of gaskets,

287、locatedin Batley,UK.NGM operates as part of Garlock(Great Britain)Limited in the Sealing Productssegment.NGM increases Garlocks presence in the petrochemical,pharmaceutical and oil and gasindustries in the UK.On March 3,2008,pursuant to a$100 million share repurchase authorization approved by ourboa

288、rd of directors,we entered into an accelerated share repurchase(“ASR”)agreement with a financialinstitution to provide for the immediate retirement of$50 million of our common stock.Under the ASRagreement,we purchased approximately 1.7 million shares of our common stock from a financialinstitution a

289、t an initial price of$29.53 per share.Total consideration paid at initial settlement torepurchase these shares,including commissions and other fees,was approximately$50.2 million and wasrecorded in shareholders equity as a reduction of common stock and additional paid-in capital.The priceadjustment

290、period under the ASR terminated on August 29,2008.In connection with the finalization ofthe ASR,we remitted in cash a final settlement adjustment of$11.9 million to the financial institution thatexecuted the ASR.The final settlement adjustment,recorded as a reduction of additional paid-in capital,wa

291、s based on the average of the reported daily volume-weighted average price of our common stockduring the term of the ASR.It resulted in a remittance to the financial institution because the volume-weighted average price of our common stock during the term of the ASR exceeded the initial price of$29.

292、53 per share.After the final settlement adjustment,we had completed about$62 million of the sharerepurchase authorization.Pursuant to the share repurchase authorization and in accordance with the terms of a plan torepurchase shares announced on September 8,2008,we acquired 252,400 shares of our comm

293、on stock inopen-market transactions at an average price of about$28.00 per share,resulting in total repurchases ofapproximately$7.1 million,including commissions and fees,from October 1,2008 to October 29,2008.On October 29,2008,in light of the volatility in the financial and credit markets,the boar

294、d of directorsterminated the share repurchase plan.As described elsewhere in this Managements Discussion and Analysis of Financial Conditionand Results of Operations,we actively manage the asbestos claims against our subsidiaries and theremaining insurance assets available for the payment of these c

295、laims.We accrue an estimated liability forboth pending and future asbestos claims for the next ten years.For additional information on this subjectdiscussed in this section,see“Contingencies Asbestos.”OutlookWe believe we are making progress in connection with our business priorities to pursueoperat

296、ional,commercial,pricing and sourcing excellence;to accelerate growth through new products,new markets and acquisitions;and to effectively manage cash.We believe the acquisitions we havecompleted contribute to the geographic expansion of our key businesses and that they improve ourproduct offerings.

297、However,in the current economic environment,activity in our markets has slowedsignificantly.Short lead times for most of our products give us a very limited view of the future,which ismade even more uncertain by the deterioration of many of our markets in recent months.Circumstances23that include fa

298、cility shutdowns by customers in the automotive industry,curtailed demand for many ofour industrial products,and less favorable foreign exchange rates lead us to expect lower sales andoperating income in 2009 compared to 2008.As a result of recent structural and organizational changes we have made i

299、n our Europeanoperations,we anticipate that our effective tax rate for 2009 should be less than 30%.The actual effectivetax rate will depend on several factors,including our mix of domestic and foreign earnings and our actualresults versus the projections used in estimating the effective tax rate.Du

300、e to these factors,the actualeffective tax rate may vary significantly from the estimate.For years beyond 2009,we anticipate that oureffective tax rate should generally be lower than historical rates,but may not be as low as we expect toexperience in 2009.We anticipate that cash flows in 2009 should

301、 benefit from reduced expenditures for sharerepurchases and lower capital expenditures partially offset by reduced operating income.Due to recent volatility in the equity and fixed income investment markets,we,like manycompanies,have experienced a significant decline in the value of the assets that

302、fund our U.S.definedbenefit pension plans and an increase in the value of plan liabilities.Based on currently available data,which is subject to change,we estimate that we will be required to make cash contributions in 2009totaling$6.4 million.We estimate that the annual U.S.pension expense will inc

303、rease to approximately$14.0-$15.0 million in 2009 compared to$4.8 million in 2008.In connection with our business strategy to accelerate growth,we will continue to evaluateacquisitions and divestitures in 2009;however,the impact of such acquisitions and divestitures cannot bepredicted and therefore

304、is not reflected in this outlook.Results of OperationsYears Ended December 31,200820072006(in millions)SalesSealing Products$503.5$457.3$432.5Engineered Products524.1445.5391.7Engine Products and Services142.1128.1105.21,169.71,030.9929.4Intersegment sales(1.9)(0.9)(1.0)Total sales$1,167.8$1,030.0$9

305、28.4Segment ProfitSealing Products$90.4$78.0$76.5Engineered Products68.169.461.5Engine Products and Services20.815.34.9Total segment profit179.3162.7142.9Corporate expenses(34.5)(34.1)(31.6)Asbestos-related expenses(52.1)(68.4)(359.4)Interest income(expense),net(5.3)0.2(3.2)Other income(expense),net

306、(6.7)(2.4)(2.9)Income(loss)before income taxes80.758.0(254.2)Income tax benefit(expense)(27.2)(20.3)95.3Income(loss)before extraordinary item53.537.7(158.9)Extraordinary item,net of taxes-2.5-Net income(loss)$53.5$40.2$(158.9)24Segment profit is total segment revenue reduced by operating expenses an

307、d restructuring andother costs identifiable with the segment.Corporate expenses include general corporate administrativecosts.Expenses not directly attributable to the segments,corporate expenses,net interest expense,asbestos-related expenses,gains/losses or impairments related to the sale of assets

308、 and income taxes arenot included in the computation of segment profit.The accounting policies of the reportable segments arethe same as those for EnPro.2008 Compared to 2007Sales of$1.17 billion in 2008 increased 13%from$1.03 billion in 2007.The results ofacquisitions added six percentage points of

309、 the sales increase.Five percentage points of growth wereprimarily the result of selected price increases and additional volume at several businesses partially offsetby lower volume at Stemco due to a decline in demand from OEM heavy-duty truck and trailermanufacturers and aftermarket customers.The

310、increase in the values of foreign currencies relative to theU.S.dollar contributed the remaining two percentage points to the increase.Segment profit,managements primary measure of how our operations perform,increased 10%from$162.7 million in 2007 to$179.3 million in 2008.Segment profit increased pr

311、imarily due toselected price increases,increased volume and acquisitions.These improvements were partially offset bycost increases in several areas,particularly raw materials and other manufacturing input costs.Segmentmargins,defined as segment profit divided by sales,decreased from 15.8%in 2007 to

312、15.4%in 2008.Asbestos expenses in 2008 were$52.1 million and included net cash outlays of$26.2 million forlegal fees and expenses incurred during the year and$25.9 million in non-cash charges to maintain a ten-year liability estimate for future claims and to reflect an adjustment in insurance value,

313、asbestos trustinterest income and accrued legal fees.In 2007,asbestos expenses were$68.4 million.The higherexpense in 2007 was primarily the result of adjustments made to managements estimation model in thefourth quarter of 2007.Net interest expense in 2008 was$5.3 million compared to net interest i

314、ncome of$0.2 million in2007.The net interest expense was a result of the decrease in invested cash balances and lower yields oninvestments.Our effective tax rate for 2008 was 33.7%compared to 35.0%in 2007.The change in the rate isprincipally a result of the reversal of reserves for uncertain tax pos

315、itions in connection with the settlementof various tax audits and the benefit of reductions in statutory income tax rates in several countries.Net income was$53.5 million,or$2.54 per share,in 2008 compared to$40.2 million,or$1.80per share,in 2007.Earnings per share are expressed on a diluted basis.F

316、ollowing is a discussion of operating results for each segment during the year:Sealing Products.Sales of$503.5 million in 2008 were 10%higher than the$457.3 millionreported in 2007,however,the year-to-year improvement decelerated as the year progressed.Acquisitions added three percentage points of t

317、he growth while organic growth contributed fivepercentage points.The favorable impact of foreign currency exchange rates versus the U.S.dollaraccounted for two percentage points of the growth.Sales at Garlock Sealing Technologies increased12%.Its sales were favorably impacted by increased demand in

318、European markets;strength in the oil andgas,energy,mining and primary metals sectors;selected price increases;and increases in the value offoreign currencies.Stemcos sales during the year increased 10%as a result of the acquisition of theV.W.Kaiser business in late February.Its OEM and aftermarket s

319、ales for the U.S.heavy-duty truckmarket continued to be lower compared to 2007 as the number of new trailers built and usage of existing25trucks decreased as a result of the U.S.economic slowdown.Garlock Rubber Technologies experienced asales increase of 16%due to strong demand for belt and sheet pr

320、oducts.Sales for Plastomer Technologieswere down 12%in 2008 compared to last year due to slowdowns in its semi-conductor markets.Segment profit of$90.4 million in 2008 increased 16%compared to the$78.0 million reported in2007.An increase in profit at Garlock Sealing Technologies resulted from lower

321、restructuring chargesand reflects the benefits of its higher sales volumes.Stemco reported a 6%increase in profit due to theimpact of the addition of the V.W.Kaiser business,partially offset by the slowdown in the heavy-dutyvehicle markets.As a result of its increase in sales,Garlock Rubber Technolo

322、gies contributed to theincrease in segment profit.Costs associated with the consolidation of its facilities and lower volumesnegatively impacted Plastomer Technologies results compared to last year.Operating margins for thesegment increased to 18.0%in 2008 from 17.1%in 2007 primarily as a result of

323、the earningsimprovement at Garlock Sealing Technologies.Engineered Products.Sales of$524.1 million in 2008 were 18%higher than 2007 sales of$445.5.Acquisitions favorably impacted revenue by nine percentage points and increased activity in thesegments operations added five percentage points.The incre

324、ase in the value of foreign currenciescontributed four percentage points of the sales increase.Sales for Compressor Products International in2008 were higher than 2007 due to acquisitions and increased volumes.Despite a significant decline latein the year,GGB sales in 2008 exceeded 2007 sales due to

325、 favorable foreign exchange rates and anacquisition.Quincy Compressors sales increased as a result of the acquisition completed in the secondquarter of 2008 and more shipments of higher-priced compressors than in 2007.Segment profits were$68.1 million in 2008,which compares to$69.4 million reported

326、in 2007.GGBs profits decreased in 2008 due to material cost increases that exceeded price increases.Significantmarket declines in the second half largely negated first half volume gains and resulted in lowerproductivity.Quincy Compressor reported slightly lower profit as a result of material and oth

327、er costincreases and competitive pricing conditions which offset the benefit of more favorable sales mix.Profitsat Compressor Products International increased as a result of higher volumes and acquisitions.Operatingmargins for the segment decreased from 15.6%in 2007 to 13.0%in 2008.Engine Products a

328、nd Services.Sales increased from$128.1 million in 2007 to$142.1 million in2008.The increase in sales was principally due to higher revenue from engines and higher parts sales in2008.The segment reported a profit of$20.8 million in 2008 compared to$15.3 million in 2007.Theimprovement resulted from hi

329、gher margins on engine sales,increased parts volumes and productivityimprovements in 2008 compared to 2007.Operating margins for the segment increased to 14.6%in 2008from 11.9%in 2007.2007 Compared to 2006Sales were$1.03 billion in 2007,an 11%increase compared to the$928.4 million recorded in2006.In

330、creases in foreign currency exchange rates relative to the U.S.dollar,with the euro being themost significant,and acquisitions added approximately six percentage points to revenue growth on a year-over-year basis.The five percentage points of organic growth were the result of stronger demand fromGar

331、lock Sealing Technologies U.S.and European markets,higher shipments from GGBs Europeanoperations,continued strong demand in the energy-related markets of Compressor Products International,increased engine and parts shipments from Fairbanks Morse Engine,and selected price increases atseveral business

332、es.These favorable variances were partially offset by lower OEM and aftermarketvolumes in Stemcos heavy duty truck market,a drop in demand for Plastomer Technologies products in26the semiconductor and industrial markets,and a small decrease in shipments from Quincy Compressor,coming off of a strong

333、year in 2006,for key markets such as energy,industrial and contractors.Segment profit,one of managements primary measures of how our operations perform,increased14%from$142.9 million in 2006 to$162.7 million in 2007.Segment profit was impacted by selectedprice increases and increased sales volume at several businesses,improved margins on Fairbanks MorseEngine shipments,a contract loss provision fo