Document

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

_________________
Form 11-K
_________________




ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the fiscal year ended December 31, 2017

Commission file number: 001-31225


EnPro Industries, Inc.
Retirement Savings Plan
5605 Carnegie Boulevard, Suite 500
Charlotte, North Carolina 28209
(Full title of the plan and the address of the plan)



EnPro Industries, Inc.
5605 Carnegie Boulevard, Suite 500
Charlotte, North Carolina 28209
(Name of issuer of the securities held pursuant to the plan and the address of its principal executive office)






ENPRO INDUSTRIES, INC.
RETIREMENT SAVINGS PLAN

            
Financial Statements and Supplemental
Schedule for the Years Ended
December 31, 2017 and 2016
and Report of Independent Registered Public Accounting Firm





TABLE OF CONTENTS


 
Pages

 
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
1 - 2

 
 
FINANCIAL STATEMENTS:
 
Statements of Net Assets Available for Benefits as of December 31, 2017 and 2016
3

Statements of Changes in Net Assets Available for Benefits for the Years Ended
 
December 31, 2017 and 2016
4

Notes to Financial Statements for the Years Ended December 31, 2017 and 2016
5 - 10

 
 
SUPPLEMENTAL SCHEDULES:
 
Schedule H, line 4i - Schedule of Assets (Held at End of Year) as of
11

December 31, 2017
 

        










REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Participants and Administrator of the
EnPro Industries, Inc. Retirement Savings Plan
and the EnPro Industries, Inc. Benefits Committee
Charlotte, North Carolina:

Opinion on the Financial Statements

We have audited the accompanying statements of net assets available for benefits of the EnPro Industries, Inc. Retirement Savings Plan (the "Plan") as of December 31, 2017 and 2016 and the related statements of changes in net assets available for benefits for the years ended December 31, 2017 and 2016 and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2017 and 2016, and the changes in net assets available for benefits for the years ended December 31, 2017 and 2016, in conformity with generally accepted accounting principles in the United States of America.

Basis for Opinion
These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on the Plan's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Plan in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Supplemental Information
The supplemental information in the accompanying Schedule of Assets (Held at End of Year) as of December 31, 2017 has been subjected to audit procedures performed in conjunction with the audit of the Plan's financial statements. The supplemental information is the responsibility of the Plan's management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information, we evaluated whether the supplemental information, including its form and content, is presented in conformity with the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act


1


of 1974. In our opinion, the supplemental information is fairly stated, in all material respects, in relation to the financial statements as a whole.


/s/ GreerWalker LLP

Certified Public Accountants
Charlotte, North Carolina
June 28, 2018

We have served as the Plan's auditor since 2006.


2


ENPRO INDUSTRIES, INC. RETIREMENT SAVINGS PLAN

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2017 AND 2016

 
2017
 
2016
ASSETS:
 
 
 
Investments, at fair value
$
327,274,819

 
$
276,180,070

Receivables:
 
 
 
Notes receivable from participants
9,634,775

 
8,884,864

Participant contributions
48,793

 

Employer contributions
30,984

 
359,751

Total receivables
9,714,552

 
9,244,615

NET ASSETS AVAILABLE FOR BENEFITS
$
336,989,371

 
$
285,424,685






























See notes to financial statements.

3



ENPRO INDUSTRIES, INC. RETIREMENT SAVINGS PLAN

STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

 
2017
 
2016
ADDITIONS:
 
 
 
Additions to net assets attributed to:
 
 
 
Net investment income:
 
 
 
Net appreciation of investments
$
39,541,243

 
$
16,427,772

Interest and dividend income
9,357,618

 
6,353,992

Net investment income
48,898,861

 
22,781,764

 
 
 
 
Interest income on notes receivable from participants
381,495
 
332,677
 
 
 
 
Contributions:
 
 
 
Participants
16,451,728

 
15,708,744

Employer
13,618,836

 
13,830,866

Rollovers
5,579,091

 
4,042,438

Total contributions
35,649,655

 
33,582,048

 
 
 
 
Total additions
84,930,011

 
56,696,489

 
 
 
 
DEDUCTIONS:
 
 
 
Deductions from net assets attributed to:
 
 
 
Benefits paid to participants
33,160,177

 
26,100,346

Fees and commissions
257,910

 
311,366

Total deductions
33,418,087

 
26,411,712

 
 
 
 
CHANGE IN NET ASSETS AVAILABLE
   FOR BENEFITS
51,511,924

 
30,284,777

 
 
 
 
TRANSFERS OF ASSETS, NET
52,762

 
3,547,590

 
 
 
 
NET ASSETS AVAILABLE FOR BENEFITS,
   BEGINNING OF YEAR
285,424,685

 
251,592,318

 
 
 
 
NET ASSETS AVAILABLE FOR BENEFITS,
   END OF YEAR
$
336,989,371

 
$
285,424,685







See notes to financial statements.

4




ENPRO INDUSTRIES, INC. RETIREMENT SAVINGS PLAN

NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

1.    DESCRIPTION OF PLAN

The following description of the EnPro Industries, Inc. Retirement Savings Plan (the “Plan”) provides only general information. Participants should refer to the plan document for a more complete description of the Plan’s provisions.

General - The Plan is a defined contribution plan covering eligible employees of EnPro Industries, Inc. (the “Employer”) as defined by the plan document. Eligible employees of the Employer may enroll in the Plan on their date of hire. Deferrals begin on the first day of the month subsequent to enrollment. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”).

Trust - The Charles Schwab Trust Company (the “Trustee” or “Schwab”) serves as trustee for the Plan. The Plan’s assets are held in the Schwab Directed Employee Benefit Trust (the “Trust”).

Plan Merger - On May 16, 2016, the Fabrico, Inc. Retirement Plan (the "Fabrico Plan") was merged into the Plan. Approximately $3,548,000 in assets from the Fabrico Plan were transferred into the Plan. Participants that were transferred into the Plan maintained their account balances and vesting status from the Fabrico Plan and are eligible to fully participate in the Plan.

On July 26, 2017, a portion of the assets of the QCC, LLC Profit Sharing Plan (the “QCC Plan”) was merged into the Plan. Participants that were transferred into the Plan maintained their account balances and vesting status from the QCC Plan and are eligible to fully participate in the Plan.

Contributions - Each year, participants may contribute between 1% and 75% of their base pay by means of payroll deductions, subject to certain discrimination tests prescribed by the Internal Revenue Code (“IRC”) and other limitations specified in the Plan. Participants who have attained age 50 before the end of the plan year are eligible to make catch-up contributions. Participants may also contribute amounts representing distributions from other qualified defined benefit or defined contribution plans (rollover). Participants direct the investment of their contributions into various investment options offered by the Plan. The Plan includes an auto-enrollment provision whereby all newly eligible employees are automatically enrolled in the Plan unless they affirmatively elect not to participate in the Plan. Automatically enrolled participants have their deferral rate set at 6% of eligible compensation and their contributions invested in a designated balanced fund until changed by the participant. The Employer matches between 25% and 100% of employee contributions between 4% and 6% of base pay per payroll period, as defined by the plan document. The Employer also contributes an additional 2% to certain eligible employees.

Participant Accounts - Each participant’s account is credited with the participant’s contributions and the Employer’s matching contributions, as well as allocations of the Plan’s earnings. Participant accounts are charged with an allocation of administrative expenses that are paid by the Plan. Allocations are based on participant earnings, account balances, or specific participant transactions, as defined by the plan document. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.

Vesting - Participants are immediately vested in their voluntary contributions, the Employer’s matching contributions, and actual earnings thereon. However, vesting in the Employer’s additional 2% contributions

5



for certain employees is based on years of service. Prior to normal retirement age, a participant’s interest in the Employer’s additional 2% contribution becomes 100% vested after three years of service.

Notes Receivable from Participants - Participants may borrow from their account a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50% of their vested account balance. The loans are secured by the balance in the participant’s account. The loan interest rate, determined quarterly, is set at 1% above the prime rate, as defined by the plan document. Principal and interest are paid ratably through payroll deductions.

Payment of Benefits - Upon retirement, disability or death, a participant or beneficiary receives the entire amount credited to the participant’s account in either a lump sum or, at the participant’s election, in annual installments. Upon termination, other than by retirement, disability or death, a participant becomes eligible to receive the current value of the participant’s vested account in a lump-sum. Distributions of the EnPro Industries, Inc. common stock are made, at the option of the participant, in either cash or shares.

Forfeited Accounts - The non-vested portion of terminated participants’ account balances are used to reduce future Employer contributions and to pay plan expenses. As of December 31, 2017 and 2016, forfeited non-vested accounts in the Plan totaled approximately $735,000 and $473,000, respectively. During the years ended December 31, 2017 and 2016, the Employer’s contributions were reduced by approximately $8,000 and $64,000, respectively, from forfeited non-vested accounts.

2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting - The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with generally accepted accounting principles in the United States of America.

Use of Accounting Estimates - The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of certain assets, liabilities and disclosures. Accordingly, the actual amounts could differ from those estimates. Any adjustments applied to estimated amounts are recognized in the year in which such adjustments are determined.

Investment Valuation and Income Recognition - Investments are reported at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between participants at the measurement date. The EnPro Industries, Inc. Benefits Committee determines the Plan’s valuation policies utilizing information provided by the investment advisor and the Trustee. See Note 3 for disclosure of fair value measurements.

Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Net appreciation of investments includes the Plan’s gains and losses on investments bought and sold as well as held during the year.

Contributions - Contributions from participants are recorded as they are withheld from the participant’s wages. Contributions from the Employer are recorded in the period in which the related participant contributions are due.

Notes Receivable From Participants - Notes receivables from participants are measured at their unpaid principal balance plus any accrued but unpaid interest. Interest income is recorded on the accrual basis. Related fees are recorded as administrative expenses and are expensed when they are incurred. No allowance for credit losses has been recorded as of December 31, 2017 and 2016. If a participant ceases to make loan repayments and the plan administrator deems the participant loan to be in default, the participant loan balance is reduced and a benefit payment is recorded.

6




Payment of Benefits - Benefits are recorded when paid.

Administrative Expenses - Certain expenses of maintaining the Plan are paid by the Plan, unless otherwise paid by the Employer. Expenses that are paid by the Employer are excluded from these financial statements. Fees related to the administration of notes receivable from participants are charged directly to the participant’s account and are included in administrative expenses. Investment related expenses are included in net appreciation of investments.

Subsequent Events - In preparing its financial statements, the Employer has evaluated subsequent events through June 28, 2018, which is the date the financial statements were available to be issued for 2017.

3.
FAIR VALUE MEASUREMENTS

Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures, provides the framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under FASB ASC 820 are described as follows:

Level 1
Inputs to the valuation methodology are unadjusted quoted prices for
 
identical assets or liabilities in active markets that the Plan has the ability
 
to access.
 
 
Level 2
Inputs to the valuation methodology include:
 
Quoted prices for similar assets or liabilities in active markets;
 
Quoted prices for identical or similar assets or liabilities in inactive markets;
 
Inputs other than quoted prices that are observable for the asset or liability;
 
Inputs that are derived principally from or corroborated by observable market
 
data by correlation or other means.
 
If the asset or liability has a specified (contractual) term, the level 2 input must
 
be observable for substantially the full term of the asset or liability.
 
 
Level 3
Inputs to the valuation methodology are unobservable and significant to the fair
 
value measurement.

The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

The following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodology used as of December 31, 2017 or 2016.

Registered investment companies: Valued at the daily closing price as reported by the fund. Mutual funds held by the Plan are open-ended mutual funds that are registered with the Securities and Exchange Commission. These funds are required to publish at their daily net asset value (“NAV”) and to transact at that price. The mutual funds held by the Plan are deemed to be actively traded.


7



EnPro Industries, Inc. common stock: Valued at the closing price of EnPro Industries, Inc. common stock reported on the New York Stock Exchange.

Money market fund: Valued as of the ending cash balance plus any accrued interest held by the Plan as of year-end.

Self-directed accounts: Valued at the closing price reported on the active market on which the individually owned securities are traded.

Common/collective trusts: Valued at the NAV of units of a bank collective trust. The NAV, as provided by the Trustee, is used as a practical expedient to estimate fair value. This practical expedient is not used when it is determined to be probable that the fund will sell the investment for an amount different than the reported NAV.

The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the plan management believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The following table sets forth by level, within the fair value hierarchy, the Plan’s investments at fair value as of December 31, 2017:

 
Level 1
Level 2
Level 3
Total
Registered investment companies
$
183,876,672

$


$
183,876,672

Employer common stock
10,000,053



10,000,053

Money market fund
3,390



3,390

Self-directed accounts
4,763,380



4,763,380

Total investments in the fair value hierarchy
$
198,643,495



198,643,495

Investments measured at net asset value
 
 
 
128,631,324

Investments, at fair value
 
 
 
$
327,274,819


The following table sets forth by level, within the fair value hierarchy, the Plan's investments at fair value as of December 31, 2016:
 
Level 1
Level 2
Level 3
Total
Registered investment companies
$
158,084,537

$


$
158,084,537

Employer common stock
7,599,468



7,599,468

Money market fund
1,782



1,782

Self-directed accounts
4,402,801



4,402,801

Total investments in the fair value hierarchy
$
170,088,588



170,088,588

Investments measured at net asset value
 
 
 
106,091,482

Investments, at fair value
 
 
 
$
276,180,070



8



The following table summarizes investments measured at fair value based on NAV per share as of December 31, 2017 and 2016, respectively.

December 31, 2017
Fair Value
Unfunded Commitments
Redemption Frequency (if currently eligible)
Redemption Notice Period
Common/Collective Trust - Target Date
$
105,046,863

N/A
Daily
10 days
Common/Collective Trust - Income
$
23,584,461

N/A
Daily
0 to 10 days

December 31, 2016
Fair Value
Unfunded Commitments
Redemption Frequency (if currently eligible)
Redemption Notice Period
Common/Collective Trust - Target Date
$
80,919,048

N/A
Daily
10 days
Common/Collective Trust - Income
$
25,172,434

N/A
Daily
0 to 10 days

4.
TRANSACTIONS WITH PARTIES-IN-INTEREST

Certain plan investments are managed by Charles Schwab Bank (“Schwab”). Schwab is the “Trustee” as defined by the Plan, and therefore, these transactions qualify as party-in-interest transactions.

The Plan also invests in shares of the Employer. The Employer is the plan sponsor and, therefore, these transactions qualify as party-in-interest transactions.

5.
PLAN TERMINATION

Although it has not expressed any intent to do so, the Employer has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will become fully vested in their accounts.

6.
TAX STATUS

The Plan has been operating under a prototype plan sponsored by Charles Schwab Bank, the recordkeeper of the Plan. Schwab has received a letter dated June 19, 2014 from the Internal Revenue Service stating that the prototype plan is designed in accordance with applicable sections of the IRC. Although the Plan has been amended since receiving the determination letter, the plan administrator and the Plan’s tax counsel believe that the Plan is designed, and is currently being operated, in compliance with the applicable requirements of the IRC and, therefore, believe that the Plan is qualified, and the related trust is tax-exempt.

Generally accepted accounting principles in the United States of America require plan management to evaluate tax positions taken by the Plan and recognize a tax liability if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the taxing authorities. The plan administrator has analyzed the tax position taken by the Plan, and has concluded that as of December 31, 2017 and 2016, there are no uncertain positions taken or expected to be taken that would require recognition of a liability or disclosure in the financial statements. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits of any tax periods in progress.



9




7.
RISKS AND UNCERTAINTIES

The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market, and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the statements of net assets available for benefits.




10



ENPRO INDUSTRIES, INC. RETIREMENT SAVINGS PLAN

SCHEDULE H, LINE 4i – SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2017

EIN: 01-0573945 – PLAN NUMBER: 004

(a)
(b)
(c)
(e)
Party-in-
Identity of issuer, borrower,
Description of investment including maturity date,
Current
Interest
lessor or similar party
rate of interest, collateral, par or maturity value
Value
 
 
 
 
 
Vanguard Institutional Index
Registered investment company
$
55,338,489

*
Schwab Managed Retirement 2030
Common/collective trust
33,176,853

*
Schwab Managed Retirement 2040
Common/collective trust
25,999,001

*
Schwab Managed Retirement 2050
Common/collective trust
21,474,221

*
Schwab Managed Retirement 2020
Common/collective trust
21,368,039

 
Galliard Retirement Income Fund
Common/collective trust
20,760,213

 
Dodge & Cox Stock Fund
Registered investment company
19,609,470

 
T Rowe Price Mid-Cap Growth
Registered investment company
19,186,574

 
PIMCO Total Return Fund
Registered investment company
18,406,834

 
Nuveen Winslow Large-Cap Growth Fund
Registered investment company
13,367,826

 
Europacific Growth
Registered investment company
12,187,734

*
EnPro Company Stock
Common stock
10,000,053

 
Columbia Small Cap Value
Registered investment company
8,629,648

 
Invesco Van Kampen Equity and Income
Registered investment company
6,746,756

 
Vanguard Total Bond Market Index
Registered investment company
6,398,559

 
Vanguard Selected Value Mid Cap
Registered investment company
5,671,448

 
Vanguard Total International Stock Index
Registered investment company
5,656,730

 
Virtus Emerging Markets Opportunity Fund
Registered investment company
4,826,557

 
Personal Choice Retirement Account
Self-directed brokerage account
4,763,380

 
Vanguard Extended Market Index
Registered investment company
3,194,143

*
Schwab Managed Retirement Income
Common/collective trust
2,824,248

 
American Beacon Small Cap Growth Fund
Registered investment company
2,593,993

 
BlackRock Global Allocation Fund
Registered investment company
2,061,911

*
Schwab Managed Retirement 2010
Common/collective trust
1,691,725

*
Schwab Managed Retirement 2025
Common/collective trust
681,141

*
Schwab Managed Retirement 2035
Common/collective trust
372,110

*
Schwab Managed Retirement 2055
Common/collective trust
135,383

*
Schwab Managed Retirement 2045
Common/collective trust
71,207

*
Schwab Managed Retirement 2060
Common/collective trust
70,816

*
Schwab Managed Retirement 2015
Common/collective trust
6,367

*
Schwab US Treasury Money Fund
Money market fund
3,390

*
Participant loans
Interest rate of 3.25 - 8.00%
9,634,775

 
 
 
 
 
 
 
$
336,909,594



*    Party-in-interest transaction.

See report of independent registered public accounting firm.





11




EXHIBIT INDEX


Exhibit No.
Document
 
 
23.1
 
 
 
 
 
 
 
 
 
 
 
 
 
 








SIGNATURES


The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, EnPro Industries, Inc., as Plan Administrator, has duly caused this annual report to be signed on behalf of the Plan by the undersigned hereunto duly authorized.


ENPRO INDUSTRIES, INC. RETIREMENT
SAVINGS PLAN
 
By: ENPRO INDUSTRIES, INC., Plan Administrator
 

By:
/s/ Robert S. McLean
 
Robert S. McLean
 
Executive Vice President, General Counsel and
 
Secretary
 
 
Date: June 29, 2018