Goodrich Announces 39 Percent Increase in Earnings per Diluted Share from Continuing Operations for Third Quarter 2007, Increase

CHARLOTTE, N.C., Oct. 25 /PRNewswire-FirstCall/ -- - Third quarter 2007 income per diluted share from continuing operations of $1.10, a 39 percent increase over third quarter 2006 income per diluted share from continuing operations of $0.79. - Third quarter 2007 net income per diluted share of $0.99, including an after-tax loss of $0.11 per diluted share associated with the pending sale of Goodrich Aviation Technical Services, Inc. (ATS). - Third quarter 2007 sales of $1,602 million increased 15 percent over third quarter 2006 sales of $1,395 million. - Total segment operating income margin increased to 17.2 percent, from 14.5 percent in the third quarter 2006. - Full year 2007 outlook for income per diluted share from continuing operations expected to be $3.65 - $3.70, an increase from prior expectations of $3.50 - $3.60. - Full year 2007 outlook for sales adjusted to $6.4 - $6.5 billion, excluding sales associated with ATS. - Full year 2008 sales and earnings per diluted share expected to be $7.1 - $7.2 billion and $4.15 - $4.30 respectively. Net cash provided by operating activities, minus capital expenditures, expected to exceed 75 percent of net income in 2008.

Goodrich Corporation announced results today for the third quarter 2007, updated its full year 2007 outlook ranges and provided its outlook for full year 2008 results.

Commenting on the company's performance, Marshall Larsen , Chairman, President and Chief Executive Officer said, "We had another excellent quarter, marked by strong top line growth, increased margins, and solid execution by our businesses. We achieved double-digit sales growth in all three of our major market channels, which drove growth in income from continuing operations of almost 40 percent. We also announced the expected sale of our airframe heavy maintenance business."

Larsen continued, "As we look ahead to 2008, we expect our double-digit sales growth to continue and our earnings per diluted share from continuing operations to grow by 12 - 16 percent. We expect strong growth in commercial aftermarket sales and even stronger growth in commercial original equipment sales due to increasing production rates at Boeing and Airbus, including the new Airbus A380 and Boeing 787 Dreamliner airplanes. We expect that our defense and space products will continue to experience above market growth rates led by sales to the helicopter market and sales of intelligence, surveillance and reconnaissance systems."

Goodrich reported third quarter 2007 income from continuing operations of $140 million, or $1.10 per diluted share, on sales of $1,602 million. In the third quarter 2006, the company reported income from continuing operations of $100 million, or $0.79 per diluted share, on sales of $1,395 million. Third quarter 2007 net income per diluted share was $0.99. Third quarter 2007 sales increased 15 percent and income per diluted share from continuing operations increased 39 percent compared with the third quarter 2006. The company reported an effective tax rate of 28 percent for the third quarter of 2007, compared with an effective tax rate of 21 percent during the third quarter 2006. Financial results for all periods have been reclassified to reflect the expected sale of ATS, and its treatment as a discontinued operation.

The increased sales for the quarter reflect continued strong growth for commercial airplane original equipment, aftermarket and defense and space sales. For the third quarter 2007 compared with the third quarter 2006, sales changes by market channel were as follows:

Net income in the third quarter 2007, compared with the third quarter 2006, was positively affected by increased sales and improved operational performance in most business units. Several other factors affected net income, including:

Net cash provided by operating activities during the third quarter 2007 was $214 million, an increase of $251 million from the same period in 2006. During the third quarter 2006, the company made non-recurring tax payments of $117 million related to the Rohr and Coltec tax cases. Increased net income also contributed to the improved cash flow. During the third quarter 2007, the company contributed $14 million to its worldwide pension plans, compared with $86 million during the third quarter 2006. Capital expenditures were $66 million in the third quarter 2007 compared with capital expenditures of $58 million in the third quarter 2006.

For the first nine months of 2007, the company reported income from continuing operations of $363 million, or $2.84 per diluted share, on sales of $4,724 million. During the first nine months of 2006, income from continuing operations was $380 million, or $3.01 per diluted share, on sales of $4,224 million. Net income for the first nine months of 2007 was $351 million, or $2.75 per diluted share, including an after-tax loss from discontinued operations of $12 million, or $0.09 per diluted share, primarily associated with the expected sale of ATS. Included in the net income results for the first nine months of 2006 was $145 million, or $1.15 per diluted share, related to tax settlements that were completed during the first nine months of 2006. The $500 million increase in sales is attributable to sales growth in the company's three major sales channels of commercial aircraft original equipment, aftermarket and defense and space. The effective tax rate for the first nine months of 2007 was 30 percent, slightly lower than the company's current outlook of approximately 31 - 32 percent for the full year 2007.

Net cash provided by operating activities during the first nine months of 2007 was $406 million, an increase of $387 million from the same period in 2006. The increase was primarily due to increased pre-tax income of $178 million, the impact of unwinding the company's $97 million accounts receivable securitization program in 2006 and non-recurring tax settlement payments made in 2006. Capital expenditures were $161 million for the first nine months of 2007 compared with capital expenditures for the first nine months of 2006 of $153 million.

2007 Outlook

The company's 2007 sales outlook is based on market assumptions for each of its major market channels. The current market assumptions for the full year 2007, compared with the full year 2006, include:

Full year 2007 sales expectations have been adjusted to $6.4 - $6.5 billion. The change in outlook from the prior range of $6.5 - $6.6 billion is primarily due to the removal of the expected sales associated with the ATS business which is now being reported as a discontinued operation. The outlook for 2007 income per diluted share from continuing operations is $3.65 - $3.70, and the outlook for net income per diluted share is now $3.55 - $3.60 per diluted share, including an expected loss from discontinued operations, primarily associated with the pending sale of ATS, of about $0.10 per diluted share. The income outlook reflects sales growth in all major market channels and margin expansion. The margin expansion is driven by sales growth, favorable mix and improved operating efficiencies.

The 2007 outlook assumes a full year effective tax rate of approximately 31 - 32 percent. The effective tax rate for the first nine months was 30 percent and the company expects an effective tax rate in the fourth quarter of 2007 of 34 - 36 percent.

Goodrich continues to expect net cash provided by operating activities, minus capital expenditures, to be in the range of 60 - 75 percent of net income in 2007. This outlook reflects a continuation of cash expenditures for investments in the Boeing 787 Dreamliner and the Airbus A350 XWB and capital expenditures for facility expansions to support increased aftermarket demand, low cost country manufacturing and productivity initiatives that are expected to enhance margins over the near and long term. The company continues to expect capital expenditures for 2007 to be in a range of $270 - $290 million. Of these capital expenditures, approximately 40 percent are expected to be associated with investments in low cost country manufacturing, previously announced MRO facility expansions and new facilities to support aftermarket sales growth, and expenditures related to the company-wide implementation of a new Enterprise Resource Planning (ERP) system.

The current sales, net income and net cash provided by operating activities outlooks for 2007 do not include the impact of acquisitions or divestitures, other than the completion of the recently announced sale of ATS, or resolution of an A380 claim against Northrop Grumman.

2008 Outlook

The company's 2008 sales outlook is based on market assumptions for each of its major market channels. The current market assumptions for the full year 2008, compared with the full year 2007 outlook, include:

The company's initial full year 2008 sales expectations are for sales of $7.1 - $7.2 billion, representing expected growth of about 11 percent from the current outlook for 2007. The outlook for 2008 net income per diluted share is for a range of $4.15 - $4.30, an expected increase of 12 - 16 percent compared with the outlook for income per diluted share from continuing operations in 2007, and a higher growth rate when compared with the expected 2007 net income per diluted share.

The 2008 outlook assumes, among other factors, a full-year effective tax rate of 33 - 35 percent, which includes the benefit of extension of the U.S. research tax credit. This compares with an expected effective tax rate of approximately 31 - 32 percent for 2007.

For 2008, Goodrich expects net cash provided by operating activities, minus capital expenditures, to exceed 75 percent of net income. This outlook reflects a continuation of working capital investments to support the Boeing 787 Dreamliner and Airbus A380 programs, cash expenditures for investments in the Airbus A350 XWB and capital expenditures for low cost country manufacturing and productivity initiatives that are expected to enhance margins over the near and long term. The company expects capital expenditures for 2008 to be in a range of $250 - $270 million.

The current sales, net income and net cash provided by operating activities outlooks for 2008 do not include the impact of acquisitions or divestitures, other than the completion of the previously announced sale of ATS, or resolution of an A380 claim against Northrop Grumman.

The supplemental discussion and tables that follow provide more detailed information about the third quarter 2007 segment results.

Goodrich will hold a conference call on October 25, 2007 at 10:00 AM U.S. Eastern Time to discuss this announcement. Interested parties can listen to a live webcast of the conference call, and view the related presentation materials, at www.goodrich.com, or listen via telephone by dialing 913-981-5592.

Goodrich Corporation, a Fortune 500 company, is a global supplier of systems and services to aerospace, defense and homeland security markets. With one of the most strategically diversified portfolios of products in the industry, Goodrich serves a global customer base with significant worldwide manufacturing and service facilities. For more information visit http://www.goodrich.com.

FORWARD-LOOKING INFORMATION IS SUBJECT TO RISK AND UNCERTAINTY

Certain statements made in this document are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding our future plans, objectives and expected performance. Specifically, statements that are not historical facts, including statements accompanied by words such as "believe," "expect," "anticipate," "intend," "should," "estimate," or "plan," are intended to identify forward-looking statements and convey the uncertainty of future events or outcomes. We caution readers that any such forward-looking statements are based on assumptions that we believe are reasonable, but are subject to a wide range of risks, and actual results may differ materially.

Important factors that could cause actual results to differ from expected performance include, but are not limited to:

We caution you not to place undue reliance on the forward-looking statements contained in this document, which speak only as of the date on which such statements are made. We undertake no obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date on which such statements were made or to reflect the occurrence of unanticipated events.

Actuation and Landing Systems: Actuation and Landing Systems segment sales of $608 million for the quarter ended September 30, 2007 increased $92 million, or 18 percent, from $516 million for the quarter ended September 30, 2006 . The increase was primarily due to the following:

Actuation and Landing Systems segment operating income of $73 million for the quarter ended September 30, 2007 increased $31 million, or 74 percent, from $42 million for the quarter ended September 30, 2006 . This increase in operating income was primarily due to the following:

Nacelles and Interior Systems: Nacelles and Interior Systems segment sales of $545 million in the quarter ended September 30, 2007 increased $81 million, or 17 percent, from $464 million in the quarter ended September 30, 2006 . The increase was primarily due to the following:

Nacelles and Interior Systems segment operating income of $144 million in the quarter ended September 30, 2007 increased $41 million, or 39 percent, from $103 million in the quarter ended September 30, 2006 . The increased segment operating income was primarily due to the following:

Electronic Systems: Electronic Systems segment sales of $449 million in the quarter ended September 30, 2007 increased $34 million, or 8 percent, from $415 million in the quarter ended September 30, 2006 . The increase was primarily due to the following:

Electronic Systems segment operating income of $59 million in the quarter ended September 30, 2007 increased $2 million, or 4 percent, from $57 million in the quarter ended September 30, 2006 . The increased segment operating income was primarily due to the following:

SOURCE Goodrich Corporation



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