Media Contact:

Lisa Bottle +1 704 423 7060

 

Investor Relations:

Paul Gifford +1 704 423 5517

 

For Immediate Release

Third quarter 2010 net income per diluted share of $1.25, compared to third quarter 2009 net income per diluted share of $1.14.

Third quarter 2010 segment operating income margin of 17.3 percent.

Third quarter 2010 sales grew 6 percent to $1,748 million, compared to third quarter 2009 sales of $1,648 million.

Full year 2010 outlook for net income per diluted share adjusted to $4.30 — $4.35, which now includes previously announced fourth quarter debt redemption costs of $0.18 per diluted share. Sales outlook adjusted to approximately $7.0 billion.

Full year 2011 outlook for sales of $7.7 — $7.8 billion and net income per diluted share of $5.00 — $5.20. Net cash provided by operating activities, minus capital expenditures, is expected to exceed 85 percent of net income.

Large commercial airplane original equipment sales increased by 2 percent,

Regional, business and general aviation airplane original equipment sales increased by 21 percent, including sales associated with the recent acquisition of DeCrane’s Cabin Management assets. Organic growth in this market channel was approximately 15 percent,

Large commercial, regional, business and general aviation airplane aftermarket sales increased by 3 percent. Six of the company’s eight commercial businesses reported higher aftermarket sales in the third quarter 2010, compared to the third quarter 2009. Sequentially, commercial aftermarket sales were 2 percent higher than during the second quarter 2010, and

Defense and space sales of both original equipment and aftermarket products and services increased by 12 percent, including organic growth of about 4 percent.

The company reported an effective tax rate of 28 percent for the third quarter 2010, compared to an effective tax rate of 24 percent during the third quarter 2009. Compared to the third quarter 2009, third quarter 2010 results included additional tax expense of approximately $0.06 per diluted share, of which approximately $0.03 is related to the delay in renewal of the U.S. R&D tax credit.

The third quarter 2010 results included higher pre-tax income of $10 million, $6 million after-tax or $0.05 per diluted share, related to the revision of estimates for certain long-term contracts primarily in our aerostructures and aircraft wheels and brakes businesses, compared to the third quarter 2009. Total revisions in estimates for the third quarter 2010 were $22 million, pre-tax. Revisions in both periods were primarily related to favorable cost and operational performance, changes in volume expectations and sales pricing improvements and finalization of contract terms on current and/or follow-on contracts.

The third quarter 2010 included higher corporate general and administrative pre-tax expenses of $9 million, $6 million after-tax or $0.05 per diluted share, primarily related to higher incentive compensation expense and higher medical costs.

The company reported an effective tax rate of 32 percent for the first nine months of 2010, compared to an effective tax rate of 26 percent for the first nine months of 2009. Compared to the first nine months of 2009, the first nine months of 2010 results included additional tax expense of $0.32 per diluted share, of which $0.08 is related to the U.S. health care reform legislation and approximately $0.08 is related to the delay in renewal of the U.S. R&D tax credit.

The first nine months of 2010 results included higher pre-tax income of $45 million, $28 million after-tax or $0.22 per diluted share, related to the revision of estimates for certain long-term contracts primarily in our aerostructures and aircraft wheels and brakes businesses, compared to the first nine months of 2009. Total revisions in estimates for the first nine months of 2010 were $71 million, pre-tax. Revisions in both periods were primarily related to favorable cost and operational performance, changes in volume expectations and sales pricing improvements and finalization of contract terms on current and/or follow-on contracts.

On October 12, the Board of Directors of Goodrich approved a seven percent increase in the company’s quarterly dividend to 29 cents per share from the previous level of 27 cents per share on its common stock. The dividend is payable December 30, 2010 to shareholders of record as of December 1, 2010.

On September 22, Goodrich completed the acquisition of the Cabin Management assets of DeCrane Holdings Co., a leading provider of seating, furniture, veneers and cabin management systems for the business jet market. The purchase price was approximately $280 million.

On October 12, Goodrich completed the redemption of all of its outstanding $257,460,000 aggregate principal amount 7.625% notes due 2012. The notes were redeemed using proceeds from a recent note offering. Costs and fees associated with the redemption were approximately $37 million pre-tax, $23 million after-tax or $0.18 per diluted share, which will be recognized in the fourth quarter of 2010.

Large commercial airplane original equipment sales are expected to increase by about 4 percent,

Regional, business and general aviation airplane original equipment sales are expected to grow by about 4 percent, including sales associated with the DeCrane acquisition. Excluding the sales from the DeCrane acquisition, sales in this market channel would be expected to decrease by about 6 — 7 percent,

Large commercial, regional, business and general aviation airplane aftermarket sales are expected to be approximately the same as they were in 2009. Goodrich expects year-over-year sales growth in the fourth quarter 2010 to exceed 10 percent, and

Defense and space sales of both original equipment and aftermarket products and services are expected to increase by approximately 15 percent, including sales generated by the December 2009 acquisition of Atlantic Inertial Systems (AIS). Organic growth is expected to be approximately 5 percent in 2010, compared to 2009.

Large commercial airplane original equipment sales are expected to increase by about 15 — 20 percent. This outlook assumes all announced production rate increases are implemented, and that Boeing 787 deliveries begin in the first quarter of 2011 and 747-8 deliveries begin in mid-year 2011,

Regional, business and general aviation airplane original equipment sales are expected to grow by about 35 — 40 percent, including incremental sales associated with the DeCrane acquisition. Excluding the sales from the DeCrane acquisition, sales would be expected to increase by about 4 percent,

Large commercial, regional, business and general aviation airplane aftermarket sales are expected to increase by about 5 — 7 percent. This outlook assumes worldwide available seat miles (ASMs) increase by about 4 — 6 percent, compared to 2010, and

Defense and space sales of both original equipment and aftermarket products and services are expected to increase by about 5 — 6 percent.

Lower worldwide pre-tax pension expense of approximately $30 million, or $0.15 per diluted share. The estimate for 2011 pension expense currently assumes a 2010 actual return on U.S. plan assets of 9 percent and a 2011 U.S. discount rate of approximately 5.0 percent, both of which reflect conditions as of September 30, 2010. The lower 2011 pension expense is the result of actuarial changes and the benefit of a $300 million incremental contribution that the company expects to make during the fourth quarter 2010. Because almost all of the plan participants are now inactive, the company is changing its amortization period for gains and losses on its U.S. salaried pension plan to the estimated remaining life of plan participants rather than the estimated remaining service period of active plan participants. The change will have the added benefit of lowering pension expense sensitivity to changes in discount rates and rate of return on plan assets in future years. The company also expects to reduce its expected long-term rate of return on plan assets assumptions as of January 1, 2011. Pension expense for 2011 will be finalized based on actual asset values and discount rates on December 31, 2010.

A full-year effective tax rate of approximately 30 percent for 2011, consistent with the expected tax rate for 2010. The 2011 effective tax rate includes a full-year 2011 benefit of approximately 1.5 percent, or $0.10 per diluted share, related to an assumed extension of the U.S. R&D tax credit, which has not yet occurred.

demand for and market acceptance of new and existing products, such as the Airbus A350 XWB and A380, the Boeing 787 Dreamliner, the EMBRAER 190, the Mitsubishi Regional Jet (MRJ), the Bombardier CSeries, the Dassault Falcon 7X, the Lockheed Martin F-35 Lightning II and the Northrop Grumman Joint STARS re-engining program;

our ability to extend our commercial OE contracts beyond the initial contract periods;

cancellation or delays of orders or contracts by customers or with suppliers, including delays or cancellations associated with the Boeing 787 Dreamliner, the Airbus A380 and A350 XWB aircraft programs, and major military programs;

our ability to obtain price adjustments pursuant to certain of our long-term contracts;

the financial viability of key suppliers and the ability of our suppliers to perform under existing contracts;

the extent to which we are successful in integrating and achieving expected operating synergies for recent and future acquisitions;

successful development of products and advanced technologies;

the impact of bankruptcies and/or consolidations in the airline industry;

the health of the commercial aerospace industry, including the large commercial, regional, business and general aviation aircraft manufacturers;

global demand for aircraft spare parts and aftermarket services;

changing priorities or reductions in the defense budgets in the U.S. and other countries, U.S. foreign policy and the level of activity in military flight operations;

the possibility of restructuring and consolidation actions;

threats and events associated with and efforts to combat terrorism;

the extent to which changes in regulation and/or assumptions result in changes to expenses relating to employee and retiree medical and pension benefits;

competitive product and pricing pressures;

our ability to recover under contractual rights of indemnification for environmental, asbestos and other claims arising out of the divestiture of our tire, vinyl, engineered industrial products and other businesses;

the effect of changes in accounting policies or legislation, including tax legislation;

cumulative catch-up adjustments or loss contract reserves on long-term contracts accounted for under the percentage of completion method of accounting;

domestic and foreign government spending, budgetary and trade policies;

economic and political changes in international markets where we compete, such as changes in currency exchange rates, interest rates, inflation, fuel prices, deflation, recession and other external factors over which we have no control;

the outcome of contingencies including completion of acquisitions, joint ventures, divestitures, tax audits, litigation and environmental remediation efforts; and

the impact of labor difficulties or work stoppages at our, a customer’s or a supplier’s facilities

Actuation and Landing Systems

Nacelles and Interior Systems

Electronic Systems

 

Total Sales

 

Actuation and Landing Systems

Nacelles and Interior Systems

Electronic Systems

 

Segment Operating Income

Higher large commercial, regional, business and general aviation airplane aftermarket sales of approximately $14 million, primarily in our wheels and brakes business; and

Higher defense and space OE and aftermarket sales primarily in our wheels and brakes business of approximately $4 million; partially offset by

Lower large commercial airplane OE sales of approximately $11 million, primarily in our landing gear and actuation systems businesses; and

Lower other aerospace sales of approximately $4 million primarily in our engine components business.

Favorable product mix and higher sales volume primarily in our landing gear and wheels and brakes businesses, which resulted in higher income of approximately $20 million;

Higher income of approximately $8 million related to changes in estimates for certain long-term contracts in our wheels and brakes business that were more favorable in 2010; and

Favorable foreign exchange, including remeasurement of monetary assets/liabilities, of approximately $2 million; partially offset by

Lower income of approximately $10 million due to higher operating costs, primarily in our landing gear business, partially offset by favorable pricing across all businesses.

Higher large commercial OE sales of approximately $17 million, primarily in our aerostructures business; and

Higher regional, business and general aviation airplane OE sales of approximately $13 million, primarily in our aerostructures business; partially offset by

Lower large commercial, regional, business and general aviation airplane aftermarket sales of approximately $10 million, primarily in our aerostructures business.

Reduced operating costs across all businesses, which resulted in higher income of approximately $7 million; and

Higher income of approximately $3 million related to revisions in estimates for certain long-term contracts, which were primarily related to favorable cost and operational performance, changes in volume expectations and sales pricing improvements on current and/or follow-on contracts; partially offset by

Lower aftermarket sales volume primarily in our aerostructures business, which resulted in lower income of approximately $4 million.

Higher defense and space OE and aftermarket sales of approximately $53 million, across most businesses, including sales associated with the acquisition of AIS which occurred in December 2009;

Higher large commercial, regional, business and general aviation airplane aftermarket sales of approximately $9 million, primarily in our engine controls and electrical power systems business;

Higher regional, business and general aviation OE sales of approximately $6 million, primarily in our sensors and integrated systems business; and

Higher other aerospace and non-aerospace sales of approximately $6 million primarily in our sensors and integrated systems and intelligence, surveillance and reconnaissance businesses.

Higher sales volume partially offset by unfavorable product mix across most businesses, which resulted in higher income of approximately $17 million; and

Favorable foreign exchange, including remeasurement of monetary assets/liabilities, of approximately $2 million; partially offset by

Higher operating costs across all businesses, including incremental costs associated with the acquisition of AIS, offset by favorable pricing primarily in our sensors and integrated systems and engine controls and electrical power systems businesses.

Operating costs and expenses:

Cost of sales

Selling and administrative costs

 

 

 

Interest expense

Interest income

Other income (expense) — net

 

Income from continuing operations before income taxes

Income tax expense

 

Income from discontinued operations — net of income taxes

 

Net income attributable to noncontrolling interests

 

 

 

Income from continuing operations

Income from discontinued operations — net of income taxes

 

 

 

 

Continuing operations

Discontinued operations

 

 

Continuing operations

Discontinued operations

 

 

 

 

Sales:

Actuation and Landing Systems

Nacelles and Interior Systems

Electronic Systems

 

 

Total Sales

 

 

Operating Income:

Actuation and Landing Systems

Nacelles and Interior Systems

Electronic Systems

 

 

Total Segment Operating Income (1)

 

Corporate General and Administrative Costs

ERP Costs

 

 

Total Operating Income

 

 

Segment Operating Income as a Percent of Sales:

Actuation and Landing Systems

Nacelles and Interior Systems

Electronic Systems

 

Total Segment Operating Income as a Percent of Sales

Income from continuing operations attributable to Goodrich

Percentage allocated to common shareholders

 

 

 

Weighted-average shares

Effect of dilutive securities

 

Adjusted weighted-average shares and assumed conversion

 

Basic

 

Diluted

 

Cash and cash equivalents

Accounts and notes receivable — net

Inventories — net

Deferred income taxes

Prepaid expenses and other assets

Income taxes receivable

 

 

Property, plant and equipment — net

Prepaid pension

Goodwill

Identifiable intangible assets — net

Deferred income taxes

Other assets

 

 

Short-term debt

Accounts payable

Accrued expenses

Income taxes payable

Deferred income taxes

Current maturities of long-term debt and capital lease obligations

 

 

Long-term debt and capital lease obligations

Pension obligations

Postretirement benefits other than pensions

Long-term income taxes payable

Deferred income taxes

Other non-current liabilities

Common stock — $5 par value

Authorized 200,000,000 shares; issued 147,530,374 shares at September 30, 2010 and 145,241,995 shares at December 31, 2009 (excluding 14,000,000 shares held by a wholly owned subsidiary)

Additional paid-in capital

Income retained in the business

Accumulated other comprehensive income (loss)

Common stock held in treasury, at cost (22,154,917 shares at September 30, 2010 and 20,854,137 shares at December 31, 2009)

 

Noncontrolling interests

 

 

 

Consolidated net income

Adjustments to reconcile consolidated net income to net cash provided by operating activities:

Income from discontinued operations

Pension and postretirement benefits:

Expenses

Contributions and benefit payments

Depreciation and amortization

Excess tax benefits related to share-based payment arrangements

Share-based compensation expense

Deferred income taxes

Change in assets and liabilities, net of effects of acquisitions and divestitures:

Receivables

Inventories, net of pre-production and excess-over-average

Pre-production and excess-over-average inventories

Other current assets

Accounts payable

Accrued expenses

Income taxes payable/receivable

Other assets and liabilities

 

 

Purchases of property, plant and equipment

Proceeds from sale of property, plant and equipment

Payments made for acquisitions, net of cash acquired

Investments in and advances to equity investees

 

 

Increase (decrease) in short-term debt, net

Proceeds (repayments) of long-term debt and capital lease obligations

Proceeds from issuance of common stock

Purchases of treasury stock

Dividends paid

Excess tax benefits related to share-based payment arrangements

Distributions to noncontrolling interests

 

 

Net cash (used in) provided by operating activities

Net cash (used in) provided by investing activities

Net cash (used in) provided by financing activities

 

Effect of exchange rate changes on cash and cash equivalents

 

Cash and cash equivalents at beginning of period

 

Cash and cash equivalents at end of period

 

 

Net Interest Expense

 

Other Income (Expense), Net:

 

- Divested business retiree health care

- Income (expense) related to previously owned businesses

- Equity in affiliated companies

- Other Income (expense)

 

Dividends

 

Depreciation and Amortization

 

- Depreciation

- Amortization

Net Cash Provided By Operating Activities

Purchases of Property, Plant and Equipment (Capital Expenditures)

 

Net Cash Provided By Operating Activities minus Capital Expenditures (Free Cash Flow^[1])

 

 

Preproduction and Excess-Over-Average Inventory

 

Short-term Debt

Current Maturities of Long-term Debt and Capital Lease Obligations

Long-term Debt and Capital Lease Obligations

 

 

Total Debt^[2]

Cash and Cash Equivalents

 

 

Net Debt^[2]