##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 Form 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For The Quarterly Period Ended June 30, 2005
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For
the transition period from            to     .
 Commission file number 1-892
 
 GOODRICH CORPORATION
 (Exact name of registrant as specified in its charter)
 New York
    
    34-0252680(State of incorporation)
    
    (I.R.S. Employer Identification No.)
 Four Coliseum Centre
    
    282172730 West Tyvola Road
    
    (Zip Code)Charlotte, North Carolina(Address of principal executive offices)
 Registrants telephone number, including area code: (704) 423-7000
 þ o
 þ o




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TABLE OF CONTENTS  PART I. FINANCIAL INFORMATIONItem 1. Financial StatementsItem 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresPART II. OTHER INFORMATIONItem 1. Legal ProceedingsItem 2. Unregistered Sales of Equity Securities and Use Of ProceedsItem 4. Submission of Matters to a Vote of Security HoldersItem 5. Other Information.Item 6. ExhibitsSIGNATUREEXHIBIT INDEXEX-15EX-31EX-32Ex-99.1    Table of Contents  
 PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 Report of Independent Registered Public Accounting Firm
     /s/Ernst & Young LLPCharlotte, North CarolinaAugust 5, 2005
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CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
 Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004(Dollars in millions,
    
    (Dollars in millions,except per share amounts)
    
    except per share amounts)Sales
    
    $
    1,352.7
    
    
    $
    1,128.0
    
    
    $
    2,628.2
    
    
    $
    2,284.5Operating costs and expenses:Cost of sales
    
    
    990.5
    
    
    
    824.6
    
    
    
    1,920.2
    
    
    
    1,690.8Selling and administrative costs
    
    
    226.1
    
    
    
    200.9
    
    
    
    441.8
    
    
    
    392.51,216.6
    
    
    
    1,025.5
    
    
    
    2,362.0
    
    
    
    2,083.3Operating Income
    
    
    136.1
    
    
    
    102.5
    
    
    
    266.2
    
    
    
    201.2Interest expense
    
    
    (33.0
    )
    
    
    (35.7
    )
    
    
    (66.9
    )
    
    
    (73.1
    )Interest income
    
    
    1.0
    
    
    
    0.5
    
    
    
    1.9
    
    
    
    1.3Other income (expense)  net
    
    
    (14.3
    )
    
    
    (11.7
    )
    
    
    (24.4
    )
    
    
    (29.7
    )Income from continuing operations before income taxes
    
    
    89.8
    
    
    
    55.6
    
    
    
    176.8
    
    
    
    99.7Income tax expense
    
    
    (27.4
    )
    
    
    (17.2
    )
    
    
    (57.6
    )
    
    
    (30.9
    )Income From Continuing Operations
    
    
    62.4
    
    
    
    38.4
    
    
    
    119.2
    
    
    
    68.8Income from discontinued operations  net of income taxes
    
    
    13.3
    
    
    
    0.4
    
    
    
    14.0
    
    
    
    0.6Cumulative effect of change in accounting
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16.2Net Income
    
    $
    75.7
    
    
    $
    38.8
    
    
    $
    133.2
    
    
    $
    85.6Basic Earnings Per Share:Continuing operations
    
    $
    0.52
    
    
    $
    0.33
    
    
    $
    0.99
    
    
    $
    0.58Discontinued operations
    
    
    0.11
    
    
    
    
    
    
    
    0.12
    
    
    
    0.01Cumulative effect of change in accounting
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.13Net Income
    
    $
    0.63
    
    
    $
    0.33
    
    
    $
    1.11
    
    
    $
    0.72Diluted Earnings Per Share:Continuing operations
    
    $
    0.51
    
    
    $
    0.32
    
    
    $
    0.97
    
    
    $
    0.57Discontinued operations
    
    
    0.10
    
    
    
    
    
    
    
    0.11
    
    
    
    0.01Cumulative effect of change in accounting
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.13Net Income
    
    $
    0.61
    
    
    $
    0.32
    
    
    $
    1.08
    
    
    $
    0.71Dividends declared per common share
    
    $
    0.20
    
    
    $
    0.20
    
    
    $
    0.40
    
    
    $
    0.40
  3




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CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
 June 30,
    
    December 31,2005
    
    2004(Dollars in millions,except share amounts)Current AssetsCash and cash equivalents
    
    $
    251.3
    
    
    $
    297.9Accounts and notes receivable, less allowances for doubtful
receivables ($19.3 at June 30, 2005 and $19.5 at December 31,
2004)
    
    
    737.4
    
    
    
    649.3Inventories  net
    
    
    1,256.0
    
    
    
    1,163.5Deferred income taxes
    
    
    115.4
    
    
    
    118.9Prepaid expenses and other assets
    
    
    64.1
    
    
    
    118.8Assets from discontinued operations
    
    
    
    
    
    
    17.8Total Current Assets
    
    
    2,424.2
    
    
    
    2,366.2Property, plant and equipment  net
    
    
    1,126.2
    
    
    
    1,164.1Prepaid pension
    
    
    242.6
    
    
    
    275.5Goodwill
    
    
    1,280.3
    
    
    
    1,258.5Identifiable intangible assets  net
    
    
    473.9
    
    
    
    507.0Deferred income taxes
    
    
    44.6
    
    
    
    44.7Other assets
    
    
    586.2
    
    
    
    601.5Total Assets
    
    $
    6,178.0
    
    
    $
    6,217.5Current LiabilitiesShort-term debt
    
    $
    
    
    
    $
    1.0Accounts payable
    
    
    518.4
    
    
    
    509.5Accrued expenses
    
    
    696.7
    
    
    
    731.9Income taxes payable
    
    
    328.9
    
    
    
    294.4Deferred income taxes
    
    
    22.0
    
    
    
    22.0Current maturities of long-term debt and capital lease obligations
    
    
    83.8
    
    
    
    2.4Liabilities from discontinued operations
    
    
    
    
    
    
    4.0Total Current Liabilities
    
    
    1,649.8
    
    
    
    1,565.2Long-term debt and capital lease obligations
    
    
    1,711.8
    
    
    
    1,899.4Pension obligations
    
    
    768.3
    
    
    
    761.7Postretirement benefits other than pensions
    
    
    297.8
    
    
    
    302.7Deferred income taxes
    
    
    8.9
    
    
    
    33.7Other non-current liabilities
    
    
    328.7
    
    
    
    311.9Commitments and contingent liabilities
    
    
    
    
    
    
    Shareholders EquityCommon stock  $5 par value  Authorized 200,000,000 shares;
issued 135,152,924 shares at June 30, 2005 and 132,709,310 shares
at December 31, 2004 (excluding 14,000,000 shares held by a
wholly owned subsidiary)
    
    
    675.8
    
    
    
    663.5Additional paid-in capital
    
    
    1,145.5
    
    
    
    1,077.9Income retained in the business
    
    
    204.4
    
    
    
    119.5Accumulated other comprehensive loss
    
    
    (197.9
    )
    
    
    (103.7
    )Common stock held in treasury, at cost (13,588,968 shares at June
30, 2005 and 13,566,071 shares at December 31, 2004)
    
    
    (415.1
    )
    
    
    (414.3
    )Total Shareholders Equity
    
    
    1,412.7
    
    
    
    1,342.9Total Liabilities And Shareholders Equity
    
    $
    6,178.0
    
    
    $
    6,217.5
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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
 Six Months EndedJune 30,2005
    
    2004(Dollars in millions)Operating ActivitiesIncome from continuing operations
    
    $
    119.2
    
    
    $
    68.8Adjustments to reconcile income from continuing operations to net cash provided by operating activities:Restructuring and consolidation:Expenses
    
    
    3.7
    
    
    
    4.9Payments
    
    
    (5.8
    )
    
    
    (15.1
    )Depreciation and amortization
    
    
    112.2
    
    
    
    109.8Stock-based compensation expense
    
    
    10.4
    
    
    
    9.6Loss on extinguishment of debt
    
    
    5.7
    
    
    
    Deferred income taxes
    
    
    (25.3
    )
    
    
    (1.6
    )Change in assets and liabilities, net of effects of acquisitions and dispositions of businesses:Receivables
    
    
    (136.2
    )
    
    
    (45.2
    )Change in receivables sold, net
    
    
    28.8
    
    
    
    Inventories
    
    
    (111.5
    )
    
    
    (51.6
    )Other current assets
    
    
    50.4
    
    
    
    (11.7
    )Accounts payable
    
    
    29.9
    
    
    
    6.4Accrued expenses
    
    
    (22.8
    )
    
    
    47.2Income taxes payable
    
    
    60.3
    
    
    
    6.6Tax benefit on non-qualified options
    
    
    8.8
    
    
    
    2.2Other non-current assets and liabilities
    
    
    (20.4
    )
    
    
    (3.5
    )Net Cash Provided By Operating Activities
    
    
    107.4
    
    
    
    126.8Investing ActivitiesPurchases of property, plant and equipment
    
    
    (66.4
    )
    
    
    (51.3
    )Proceeds from sale of property, plant and equipment
    
    
    5.3
    
    
    
    0.2Payments made in connection with acquisitions, net of cash acquired
    
    
    (9.3
    )
    
    
    (0.5
    )Net Cash Used By Investing Activities
    
    
    (70.4
    )
    
    
    (51.6
    )Financing ActivitiesDecrease in short-term debt, net
    
    
    (1.0
    )
    
    
    (1.8
    )Repayment of long-term debt and capital lease obligations
    
    
    (106.1
    )
    
    
    (70.0
    )Proceeds from issuance of common stock
    
    
    51.3
    
    
    
    18.3Purchases of treasury stock
    
    
    (0.6
    )
    
    
    (0.2
    )Dividends
    
    
    (47.9
    )
    
    
    (47.2
    )Distributions to minority interest holders
    
    
    (2.4
    )
    
    
    Net Cash Used By Financing Activities
    
    
    (106.7
    )
    
    
    (100.9
    )Discontinued OperationsNet cash provided by discontinued operations
    
    
    27.2
    
    
    
    3.0Effect of exchange rate changes on cash and cash equivalents
    
    
    (4.1
    )
    
    
    0.5Net decrease in cash and cash equivalents
    
    
    (46.6
    )
    
    
    (22.2
    )Cash and cash equivalents at beginning of year
    
    
    297.9
    
    
    
    378.4Cash and cash equivalents at end of period
    
    $
    251.3
    
    
    $
    356.2
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 Note 1. Basis of Interim Financial Statement Preparation
  Note 2. New Accounting Standards
 Accounting Changes and Error Corrections
  Inventory Costs
  Share-Based Payment
  6




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Accounting for Conditional Asset Retirement Obligations
 conditional asset retirement obligation
 FASB Staff Position 109-1 (FSP 109-1) and 109-2 (FSP 109-2)
  7




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Note 3. Restructuring and Consolidation Costs
  Restructuring and Consolidation Costs excluding Aeronautical Systems Business Restructuring
Programs
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004(Dollars in millions)
    
    (Dollars in millions)Personnel-related costs
    
    $
    0.2
    
    
    $
    2.2
    
    
    $
    2.7
    
    
    $
    3.6Facility closure and other costs
    
    
    0.3
    
    
    
    0.9
    
    
    
    1.0
    
    
    
    1.3$
    0.5
    
    
    $
    3.1
    
    
    $
    3.7
    
    
    $
    4.9
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004(Dollars in millions)
    
    (Dollars in millions)Airframe Systems
    
    $
    0.2
    
    
    $
    0.1
    
    
    $
    2.4
    
    
    $
    0.1Engine Systems
    
    
    0.2
    
    
    
    0.8
    
    
    
    0.4
    
    
    
    1.1Electronic Systems
    
    
    0.1
    
    
    
    2.2
    
    
    
    0.9
    
    
    
    3.7$
    0.5
    
    
    $
    3.1
    
    
    $
    3.7
    
    
    $
    4.9
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004(Dollars in millions)
    
    (Dollars in millions)Cost of sales
    
    $
    0.3
    
    
    $
    1.8
    
    
    $
    3.3
    
    
    $
    2.8Selling and administrative costs
    
    
    0.2
    
    
    
    1.3
    
    
    
    0.4
    
    
    
    2.1$
    0.5
    
    
    $
    3.1
    
    
    $
    3.7
    
    
    $
    4.9
 8




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Balance
    
    
    
    
    
    
    
    
    
    
    
    
    
    BalanceDecember 31,
    
    
    
    
    
    Return to
    
    Cash
    
    June 30,2004
    
    Provision
    
    Profit
    
    Payments
    
    2005(Dollars in millions)Personnel-related costs
    
    $
    0.8
    
    
    $
    3.2
    
    
    $
    (0.5
    )
    
    $
    (2.9
    )
    
    $
    0.6Facility closure and other costs
    
    
    2.6
    
    
    
    1.2
    
    
    
    (0.2
    )
    
    
    (1.7
    )
    
    
    1.9$
    3.4
    
    
    $
    4.4
    
    
    $
    (0.7
    )
    
    $
    (4.6
    )
    
    $
    2.5
    Balance
    
    
    
    
    
    
    
    
    
    Employee
    
    Facility
    
    BalanceDecember 31,
    
    
    
    
    
    Return to
    
    Termination
    
    Closure
    
    June 30,2004
    
    Provision
    
    Profit
    
    Benefits
    
    Costs
    
    2005(Dollars in millions)Airframe Systems
    
    $
    0.8
    
    
    $
    2.9
    
    
    $
    (0.5
    )
    
    $
    (1.7
    )
    
    $
    (0.5
    )
    
    $
    1.0Engine Systems
    
    
    1.0
    
    
    
    0.4
    
    
    
    
    
    
    
    (0.2
    )
    
    
    (0.7
    )
    
    
    0.5Electronic Systems
    
    
    1.6
    
    
    
    1.1
    
    
    
    (0.2
    )
    
    
    (1.0
    )
    
    
    (0.5
    )
    
    
    1.0$
    3.4
    
    
    $
    4.4
    
    
    $
    (0.7
    )
    
    $
    (2.9
    )
    
    $
    (1.7
    )
    
    $
    2.5
 Restructuring and Consolidation Costs  Provision
  Airframe Systems:
 Engine Systems:
 Electronic Systems:
 Future
Restructuring and Consolidation Costs for Programs Announced and
Initiated by January 1, 2005
  9




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Opening Balance Sheet  Aeronautical Systems Business Restructuring Programs
   Balance
    
    
    
    
    
    Foreign
    
    BalanceDecember 31,
    
    Cash
    
    Currency
    
    June 30,2004
    
    Payments
    
    Translation
    
    2005(Dollars in millions)Personnel-related costs
    
    $
    3.9
    
    
    $
    (0.8
    )
    
    $
    (0.3
    )
    
    $
    2.8Facility closure and other costs
    
    
    0.8
    
    
    
    (0.4
    )
    
    
    
    
    
    
    0.4$
    4.7
    
    
    $
    (1.2
    )
    
    $
    (0.3
    )
    
    $
    3.2
  Balance
    
    Employee
    
    Facility
    
    Foreign
    
    BalanceDecember 31,
    
    Termination
    
    Closure
    
    Currency
    
    June 30,2004
    
    Benefits
    
    Costs
    
    Translation
    
    2005(Dollars in millions)Airframe Systems
    
    $
    0.3
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    0.3Engine Systems
    
    
    3.5
    
    
    
    (0.5
    )
    
    
    
    
    
    
    (0.3
    )
    
    
    2.7Electronic Systems
    
    
    0.9
    
    
    
    (0.3
    )
    
    
    (0.4
    )
    
    
    
    
    
    
    0.2$
    4.7
    
    
    $
    (0.8
    )
    
    $
    (0.4
    )
    
    $
    (0.3
    )
    
    $
    3.2
  Note 4. Other Income (Expense)  Net
  Three Months Ended June 30,
    
    Six Months Ended June 30,2005
    
    2004
    
    2005
    
    2004(Dollars in millions)
    
    (Dollars in millions)Retiree health care expenses related to divested businesses
    
    $
    (3.8
    )
    
    $
    (4.1
    )
    
    $
    (8.5
    )
    
    $
    (9.4
    )Loss on extinguishment of debt
    
    
    (5.7
    )
    
    
    
    
    
    
    (5.7
    )
    
    
    Expenses related to divested businesses
    
    
    (0.1
    )
    
    
    (3.0
    )
    
    
    (1.5
    )
    
    
    (6.4
    )Minority interest and equity in affiliated companies
    
    
    (3.9
    )
    
    
    (3.3
    )
    
    
    (6.7
    )
    
    
    (5.3
    )Impairment of a note receivable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7.0
    )Other  net
    
    
    (0.8
    )
    
    
    (1.3
    )
    
    
    (2.0
    )
    
    
    (1.6
    )Other income (expense)  net
    
    $
    (14.3
    )
    
    $
    (11.7
    )
    
    $
    (24.4
    )
    
    $
    (29.7
    )
 10




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Note 5. Asset Impairments
  Note 6. Cumulative Effect of Change in Accounting
     11




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Note 7. Earnings Per Share
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004(In millions, except
    
    (In millions, exceptper share amounts)
    
    per share amounts)Numerator:Numerator for basic and diluted earnings per share  income from
continuing operations
    
    $
    62.4
    
    
    $
    38.4
    
    
    $
    119.2
    
    
    $
    68.8Denominator:Denominator
for basic earnings per share  weighted-average shares
    
    
    121.1
    
    
    
    118.5
    
    
    
    120.4
    
    
    
    118.3Effect of dilutive securities:Stock options, employee stock purchase plan, restricted
shares and restricted share units
    
    
    2.4
    
    
    
    1.5
    
    
    
    2.4
    
    
    
    1.6Other deferred compensation shares
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.12.5
    
    
    
    1.6
    
    
    
    2.5
    
    
    
    1.7Denominator
for diluted earnings per share  adjusted
weighted-average shares and assumed conversion
    
    
    123.6
    
    
    
    120.1
    
    
    
    122.9
    
    
    
    120.0Per share income from continuing operations:Basic
    
    $
    0.52
    
    
    $
    0.33
    
    
    $
    0.99
    
    
    $
    0.58Diluted
    
    $
    0.51
    
    
    $
    0.32
    
    
    $
    0.97
    
    
    $
    0.57
   Note 8. Inventories
  June 30,
    
    December 31,2005
    
    2004(Dollars in millions)FIFO or average cost (which approximates current costs):Finished products
    
    $
    197.3
    
    
    $
    185.3In process
    
    
    853.3
    
    
    
    773.7Raw materials and supplies
    
    
    300.7
    
    
    
    290.7Total
    
    
    1,351.3
    
    
    
    1,249.7Less:Reserve to reduce certain inventories to LIFO basis
    
    
    (40.5
    )
    
    
    (40.3
    )Progress payments and advances
    
    
    (54.8
    )
    
    
    (45.9
    )Total
    
    $
    1,256.0
    
    
    $
    1,163.5
  12




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Note 9. Goodwill
  BusinessBalance
    
    Combinations
    
    Foreign
    
    BalanceDecember 31,
    
    Completed or
    
    Currency
    
    June 30,2004
    
    Finalized
    
    Translation
    
    2005(Dollars in millions)Airframe Systems
    
    $
    260.2
    
    
    $
    
    
    
    $
    (12.4
    )
    
    $
    247.8Engine Systems
    
    
    509.4
    
    
    
    
    
    
    
    (14.8
    )
    
    
    494.6Electronic Systems
    
    
    488.9
    
    
    
    8.8
    (a)
    
    
    40.2
    (b)
    
    
    537.9$
    1,258.5
    
    
    $
    8.8
    
    
    $
    13.0
    
    
    $
    1,280.3
 
 (a)
    
    During the six months ended June 30, 2005, the Company completed its acquisition of the
remaining five percent interest in Goodrich Hella Aerospace Lighting Systems Holding GmbH from
Hella Hueck & Co. KG. At the time of the transaction, the Company increased Goodwill by $8.8
million.(b)
    
    Included in the $40.2 million of foreign currency translation was an adjustment related to
the foreign currency translation of certain goodwill amounts that resulted in a $27.3 million
increase in Goodwill and Accumulated Other Comprehensive Income/(Loss).
 Note 10. Financing Arrangements
 Credit Facilities
    13




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##### Table of Contents



Long-Term Debt
   Note 11. Off Balance Sheet Arrangements
 Lease Commitments
  Sale of Receivables
  14




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##### Table of Contents



Note 12. Pensions and Postretirement Benefits
 Pensions
  Other Non-U.S.U.S. Plans
    
    U.K. Plans
    
    PlansThree Months
    
    Three Months
    
    Three MonthsEnded
    
    Ended
    
    EndedJune 30,
    
    June 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004
    
    2005
    
    2004(Dollars in millions)Service cost
    
    $
    13.1
    
    
    $
    8.9
    
    
    $
    6.2
    
    
    $
    5.0
    
    
    $
    0.7
    
    
    $
    0.6Interest cost
    
    
    37.7
    
    
    
    38.1
    
    
    
    7.8
    
    
    
    6.5
    
    
    
    1.1
    
    
    
    1.0Expected rate of return on plan assets
    
    
    (43.0
    )
    
    
    (40.9
    )
    
    
    (10.7
    )
    
    
    (10.1
    )
    
    
    (1.1
    )
    
    
    (0.9
    )Amortization of transition obligation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of prior service cost
    
    
    2.2
    
    
    
    2.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of actuarial (gain) loss
    
    
    13.0
    
    
    
    12.7
    
    
    
    (0.1
    )
    
    
    
    
    
    
    0.3
    
    
    
    Periodic benefit cost (income)
    
    
    23.0
    
    
    
    21.2
    
    
    
    3.2
    
    
    
    1.4
    
    
    
    1.0
    
    
    
    0.7Settlements and curtailments (gain) loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Special termination benefit charge (credit)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net benefit cost (income)
    
    $
    23.0
    
    
    $
    21.2
    
    
    $
    3.2
    
    
    $
    1.4
    
    
    $
    1.0
    
    
    $
    0.7
 Other Non-U.S.U.S. Plans
    
    U.K. Plans
    
    PlansSix Months Ended
    
    Six Months Ended
    
    Six Months EndedJune 30,
    
    June 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004
    
    2005
    
    2004(Dollars in millions)Service cost
    
    $
    23.9
    
    
    $
    19.3
    
    
    $
    12.3
    
    
    $
    10.0
    
    
    $
    1.5
    
    
    $
    1.2Interest cost
    
    
    74.1
    
    
    
    74.0
    
    
    
    15.5
    
    
    
    12.6
    
    
    
    2.2
    
    
    
    1.9Expected rate of return on plan assets
    
    
    (85.6
    )
    
    
    (81.3
    )
    
    
    (21.6
    )
    
    
    (19.1
    )
    
    
    (2.0
    )
    
    
    (1.7
    )Amortization of transition obligation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of prior service cost
    
    
    4.4
    
    
    
    4.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of actuarial (gain) loss
    
    
    24.2
    
    
    
    21.7
    
    
    
    (0.1
    )
    
    
    
    
    
    
    0.3
    
    
    
    Periodic benefit cost (income)
    
    
    41.0
    
    
    
    38.5
    
    
    
    6.1
    
    
    
    3.5
    
    
    
    2.0
    
    
    
    1.4Settlements and curtailments (gain) loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Special termination benefit charge (credit)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net benefit cost (income)
    
    $
    41.0
    
    
    $
    38.5
    
    
    $
    6.1
    
    
    $
    3.5
    
    
    $
    2.0
    
    
    $
    1.4
  U.S. Plans
    
    U.K. Plans
    
    Other Non-U.S. PlansThree Months Ended
    
    Three Months Ended
    
    Three Months EndedJune 30,
    
    June 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004
    
    2005
    
    2004Discount rate
    
    
    5.875
    %
    
    
    6.25
    %
    
    
    5.50
    %
    
    
    5.75
    %
    
    
    5.75
    %
    
    
    6.25
    %Expected long-term return on assets
    
    
    9.00
    %
    
    
    9.00
    %
    
    
    8.50
    %
    
    
    8.50
    %
    
    
    8.50
    %
    
    
    8.50
    %Rate of compensation increase
    
    
    3.63
    %
    
    
    3.63
    %
    
    
    3.50
    %
    
    
    3.25
    %
    
    
    3.50
    %
    
    
    3.25
    %
 15




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Postretirement Benefits Other Than Pensions
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004(Dollars in millions)
    
    (Dollars in millions)Service cost
    
    $
    0.5
    
    
    $
    0.4
    
    
    $
    0.8
    
    
    $
    0.7Interest cost
    
    
    5.0
    
    
    
    5.7
    
    
    
    11.3
    
    
    
    12.5Expected rate of return on plan assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of transition obligation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of prior service cost
    
    
    (0.1
    )
    
    
    
    
    
    
    (0.1
    )
    
    
    Amortization of actuarial (gain) loss
    
    
    0.3
    
    
    
    
    
    
    
    0.8
    
    
    
    0.9Periodic benefit cost (income)
    
    
    5.7
    
    
    
    6.1
    
    
    
    12.8
    
    
    
    14.1Settlements and curtailments (gain) loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Special termination benefit charge (credit)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net benefit cost (income)
    
    $
    5.7
    
    
    $
    6.1
    
    
    $
    12.8
    
    
    $
    14.1
  Three Months EndedJune 30,2005
    
    2004Discount rate
    
    5.875%
    
    6.25%Healthcare trend rate
    
    9% in 2005 to 5% in 2008
    
    10% in 2004 to 5% in 2008
 Note 13. Comprehensive Income/(Loss)
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004(Dollars in millions)
    
    (Dollars in millions)Comprehensive Income/(Loss)Net income
    
    $
    75.7
    
    
    $
    38.8
    
    
    $
    133.2
    
    
    $
    85.6Other comprehensive income/(loss):Unrealized foreign currency translation gains (losses) during period
    
    
    (48.0
    )
    
    
    (11.7
    )
    
    
    (47.3
    )
    
    
    3.6Gains (losses) on cash flow hedges
    
    
    (28.7
    )
    
    
    (8.6
    )
    
    
    (46.9
    )
    
    
    (11.2
    )Total
    
    $
    (1.0
    )
    
    $
    18.5
    
    
    $
    39.0
    
    
    $
    78.0
  June 30,
    
    December 31,2005
    
    2004(Dollars in millions)Accumulated Other Comprehensive Income/(Loss)Cumulative unrealized foreign currency translation gains (losses)
    
    $
    165.4
    
    
    $
    212.7Minimum pension liability adjustments
    
    
    (388.1
    )
    
    
    (388.1
    )Accumulated gains (losses) on cash flow hedges
    
    
    24.8
    
    
    
    71.7Total
    
    $
    (197.9
    )
    
    $
    (103.7
    )
  16




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##### Table of Contents



Note 14. Income Taxes
      17




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##### Table of Contents



Note 15. Business Segment Information
  Airframe Systems
  Engine Systems
  Electronic Systems
  18




---



##### Table of Contents



Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004(Dollars in millions)
    
    (Dollars in millions)Net customer sales:Airframe Systems
    
    $
    464.0
    
    
    $
    403.8
    
    
    $
    906.7
    
    
    $
    806.4Engine Systems
    
    
    565.8
    
    
    
    449.2
    
    
    
    1,093.9
    
    
    
    947.7Electronic Systems
    
    
    322.9
    
    
    
    275.0
    
    
    
    627.6
    
    
    
    530.4Total sales
    
    $
    1,352.7
    
    
    $
    1,128.0
    
    
    $
    2,628.2
    
    
    $
    2,284.5Intersegment sales:Airframe Systems
    
    $
    13.0
    
    
    $
    12.3
    
    
    $
    25.9
    
    
    $
    27.9Engine Systems
    
    
    7.3
    
    
    
    4.7
    
    
    
    16.4
    
    
    
    9.8Electronic Systems
    
    
    9.1
    
    
    
    7.8
    
    
    
    17.0
    
    
    
    15.9Total intersegment sales
    
    $
    29.4
    
    
    $
    24.8
    
    
    $
    59.3
    
    
    $
    53.6Segment operating income:Airframe Systems
    
    $
    10.8
    
    
    $
    25.3
    
    
    $
    38.6
    
    
    $
    46.4Engine Systems
    
    
    108.8
    
    
    
    69.4
    
    
    
    199.3
    
    
    
    143.8Electronic Systems
    
    
    37.7
    
    
    
    31.2
    
    
    
    70.0
    
    
    
    53.9157.3
    
    
    
    125.9
    
    
    
    307.9
    
    
    
    244.1Corporate general and administrative expenses
    
    
    (21.2
    )
    
    
    (23.4
    )
    
    
    (41.7
    )
    
    
    (42.9
    )Total operating income
    
    $
    136.1
    
    
    $
    102.5
    
    
    $
    266.2
    
    
    $
    201.2
  June 30,
    
    December 31,2005
    
    2004(Dollars in millions)Assets:Airframe Systems
    
    $
    1,783.3
    
    
    $
    1,796.1Engine Systems
    
    
    2,298.6
    
    
    
    2,266.7Electronic Systems
    
    
    1,440.4
    
    
    
    1,401.2Assets from Discontinued Operations
    
    
    
    
    
    
    17.8Corporate
    
    
    655.7
    
    
    
    735.7Total assets
    
    $
    6,178.0
    
    
    $
    6,217.5
 Note 16. Derivatives and Hedging Activities
 Cash Flow Hedges
   19




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##### Table of Contents



Fair Value Hedges
    Other Forward Contracts
  Note 17. Contingencies
 General
  20




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##### Table of Contents



Environmental
       Asbestos
  21




---



##### Table of Contents



Liabilities of Divested Businesses
 Asbestos
   Other
  Guarantees
   22




---



##### Table of Contents



Commercial Airline Customers
  Tax
     Rohr, Inc. and Subsidiaries
    
    July, 1995  December, 1997 (through date of acquisition)Coltec Industries Inc and Subsidiaries
    
    December, 1997  July, 1999 (through date of acquisition)Goodrich Corporation and Subsidiaries
    
    1998-1999 (including Rohr and Coltec)
 23




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##### Table of Contents



Note 18. Guarantees
  Maximum
    
    CarryingPotential
    
    Amount ofPayment
    
    Liability(Dollars in millions)Environmental remediation indemnification (Note 17, Contingencies)
    
    No limit
    
    $
    17.4Financial Guarantees:TIDES
    
    $
    145.0
    
    
    $
    Debt and lease payments
    
    $
    2.6
    
    
    $
    Residual value on leases
    
    $
    51.2
    
    
    $
    
 TIDES
    Debt and Lease Payments
  24




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##### Table of Contents



Residual Value on Leases
  Service and Product Warranties
   (Dollars in millions)Balance at December 31, 2004
    
    $
    165.8Service and product warranty provision
    
    
    37.4Return to profit
    
    
    (5.6
    )Payments
    
    
    (35.8
    )Foreign currency translation
    
    
    (5.5
    )Balance at June 30, 2005
    
    $
    156.3
  June 30,
    
    December 31,2005
    
    2004(Dollars in millions)Short-term liabilities
    
    $
    66.4
    
    
    $
    69.0Long-term liabilities
    
    
    89.9
    
    
    
    96.8Total
    
    $
    156.3
    
    
    $
    165.8
 Note 19. Discontinued Operations
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004(Dollars in millions)
    
    (Dollars in millions)Sales
    
    $
    1.5
    
    
    $
    6.0
    
    
    $
    8.0
    
    
    $
    11.6Operating income
    
    $
    0.2
    
    
    $
    0.6
    
    
    $
    1.3
    
    
    $
    0.8Gain on sale
    
    
    20.2
    
    
    
    
    
    
    
    20.2
    
    
    
    Income tax expense
    
    
    (7.1
    )
    
    
    (0.2
    )
    
    
    (7.5
    )
    
    
    (0.2
    )Income from discontinued operations
    
    $
    13.3
    
    
    $
    0.4
    
    
    $
    14.0
    
    
    $
    0.6
  25




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##### Table of Contents



Note 20. Subsequent Events
 Redemption of Outstanding 6.45% Notes due 2007
  26




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    OVERVIEW
   
    
    Gain on the sale of our JcAIR Test Systems business (Test Systems)  The sale to
Aeroflex Incorporated (Aeroflex) was completed in April 2005 and resulted in an after tax
gain of $13.1 million, or $0.10 per diluted share. All prior periods have been reclassified
to reflect the business as a discontinued operation.
    
    Charges associated with the A380 Actuation program  In the quarter ended June 30, 2005,
we recorded a charge of approximately $10 million after tax ($0.08 per diluted share) to
reserve for costs associated with the retrofit of actuators on the A380 aircraft.
    
    Debt retirement  We recorded a charge of $4 million after tax ($0.03 per diluted share)
for premiums and costs associated with the early retirement of $100 million of long-term
debt in April 2005.
  
    
    Gain on the sale of Test Systems  The sale to Aeroflex was completed in April 2005 and
resulted in an after tax gain of $13.1 million, or $0.10 per diluted share. All prior
periods have been reclassified to reflect the business as a discontinued operation.
    
    Charges associated with the A380 Actuation program  In the six months ended June 30,
2005, we recorded a charge of approximately $10 million after tax ($0.08 per diluted share)
to reserve for costs associated with the retrofit of actuators on the A380 aircraft.
    
    Effective tax rate  For the six months ended June 30, 2005, our effective tax rate was
32.6 percent, as compared to an effective rate of 31 percent for the six months ended June
30, 2004.
 27




---



##### Table of Contents




    
    Debt retirement  We recorded premiums and other costs of $4 million after tax ($0.03
per diluted share) associated with the early retirement of $100 million of long-term debt
in April 2005.
    
    Absence of write-off of notes and accounts receivable  During the six months ended June
30, 2004, we wrote off notes and accounts receivable of $5 million after tax ($0.04 per
diluted share). There were no similar charges in the six months ended June 30, 2005.
    
    Cumulative Effect of Change in Accounting  Effective January 1, 2004, we changed two
aspects of the application of contract accounting for our aerostructures business which
resulted in a $16.2 million after tax gain ($23.3 million before tax gain) that was
recorded as a Cumulative Effect of Change in Accounting in the six months ended June 30,
2004. There were no similar changes in the six months ended June 30, 2005.
       28




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##### Table of Contents



.
  OUTLOOK
   
    
    Deliveries of Airbus and Boeing large commercial aircraft are expected to increase by 10
to 15 percent annually in both 2005 and 2006, based on the announced plans by Airbus and
Boeing. Our sales of commercial aircraft OE are now projected to increase by approximately
20 percent in 2005, compared to 2004.
    
    Capacity in the global airline system, as measured by available seat miles (ASMs), is
expected to continue to grow. Our sales to airlines for large commercial and regional
aircraft aftermarket parts and services are now expected to grow approximately 10 percent
in 2005, compared to 2004, somewhat above expectations for global ASM increases due to the
continuing strong demand for aftermarket components and services.
    
    Total regional and business aircraft production is expected to be relatively flat in
2005, compared to 2004, as deliveries of business jets are expected to increase, offsetting
the expected decrease in regional aircraft deliveries. Deliveries to Embraer in support of
its EMBRAER 190 aircraft, which includes significant Goodrich content, are expected to
enable us to increase our OE sales in this market channel for the full year 2005, compared
to 2004.
    
    Our military sales (OE and aftermarket) are expected to increase 5 to 6 percent in 2005,
compared to 2004, representing a growth rate slightly greater than global military budgets.
 .
  29




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RESULTS OF OPERATIONS
 Changes in Accounting Method
  Discontinued Operations
  Quarter Ended June 30, 2005 Compared with Quarter Ended June 30, 2004
 Quarter EndedJune 30,2005
    
    
    2004(Dollars in millions)Sales
    
    $
    1,352.7
    
    
    $
    1,128.0Segment Operating Incomemm
    
    $
    157.3
    
    
    $
    125.9Corporate General and Administrative Costs
    
    
    (21.2
    )
    
    
    (23.4
    )Total Operating Income
    
    
    136.1
    
    
    
    102.5Net Interest Expense
    
    
    (32.0
    )
    
    
    (35.2
    )Other Income (Expense)  Net
    
    
    (14.3
    )
    
    
    (11.7
    )Income from Continuing Operations Before Income Taxes
    
    
    89.8
    
    
    
    55.6Income Tax Expense
    
    
    (27.4
    )
    
    
    (17.2
    )Income from Continuing Operations
    
    
    62.4
    
    
    
    38.4Discontinued Operations
    
    
    13.3
    
    
    
    0.4Cumulative Effect of Change in Accounting
    
    
    
    
    
    

    Net Income
    
    $
    75.7
    
    
    $
    38.8
      30




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Six Months Ended June 30, 2005 Compared with Six Months Ended June 30, 2004
 Six Months EndedJune 30,2005
    
    2004(Dollars in millions)Sales
    
    $
    2,628.2
    
    
    $
    2,284.5Segment Operating Income
    
    $
    307.9
    
    
    $
    244.1Corporate General and Administrative Costs
    
    
    (41.7
    )
    
    
    (42.9
    )Total Operating Income
    
    
    266.2
    
    
    
    201.2Net Interest Expense
    
    
    (65.0
    )
    
    
    (71.8
    )Other Income (Expense)  Net
    
    
    (24.4
    )
    
    
    (29.7
    )Income from Continuing Operations Before Income Taxes
    
    
    176.8
    
    
    
    99.7Income Tax Expense
    
    
    (57.6
    )
    
    
    (30.9
    )Income from Continuing Operations
    
    
    119.2
    
    
    
    68.8Discontinued Operations
    
    
    14.0
    
    
    
    0.6Cumulative Effect of Change in Accounting
    
    
    
    
    
    
    16.2Net Income
    
    $
    133.2
    
    
    $
    85.6
        31




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BUSINESS SEGMENT PERFORMANCE
   Quarter Ended June 30, 2005 Compared with the Quarter Ended June 30, 2004
 Quarter Ended June 30,%
    
    % of Sales2005
    
    2004
    
    Change
    
    2005
    
    2004(Dollars in millions)NET CUSTOMER SALESAirframe Systems
    
    $
    464.0
    
    
    $
    403.8
    
    
    
    14.9Engine Systems
    
    
    565.8
    
    
    
    449.2
    
    
    
    26.0Electronic Systems
    
    
    322.9
    
    
    
    275.0
    
    
    
    17.4Total Sales
    
    $
    1,352.7
    
    
    $
    1,128.0
    
    
    
    19.9SEGMENT OPERATING INCOMEAirframe Systems
    
    $
    10.8
    
    
    $
    25.3
    
    
    
    (57.3
    )
    
    
    2.3
    
    
    
    6.3Engine Systems
    
    
    108.8
    
    
    
    69.4
    
    
    
    56.8
    
    
    
    19.2
    
    
    
    15.5Electronic Systems
    
    
    37.7
    
    
    
    31.2
    
    
    
    20.8
    
    
    
    11.7
    
    
    
    11.3Segment Operating Income
    
    $
    157.3
    
    
    $
    125.9
    
    
    
    24.9
    
    
    
    11.6
    
    
    
    11.2
 Airframe Systems :
 
    
    Higher landing gear commercial and regional OE sales volume;
    
    Higher large commercial, regional and military aircraft wheel and brake sales volume;
    
    Higher actuation systems sales volume;
    
    Higher sales of airframe heavy maintenance services; and
    
    Favorable currency translation on non-U.S. dollar sales, primarily in the actuation systems and landing gear businesses.
  
    
    A $15 million charge for the retrofit of redesigned parts for the A380 actuation system,
including reserves for related obsolete inventory, supplier claims and impaired assets; and
    
    Higher operating costs in the landing gear and actuation businesses.
 32




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Engine Systems :
 
    
    Higher aerostructures engine OE, U.S. military and commercial spare parts and
maintenance, repair and overhaul (MRO) sales volume;
    
    Higher sales volume of turbomachinery products for U.S. military and regional aircraft
applications and in the power generation market;
    
    Higher revenues from military customers for aftermarket support from our customer services business; and
    
    Favorable currency translation on non-U.S. dollar sales, primarily in the engine controls business.
  
    
    Higher sales volume as described above; and
    
    Improved margins due to higher aftermarket sales, primarily for aerostructures products.
  Electronic Systems :
 
    
    Higher sales volume of regional and business jet aircraft OE and aftermarket products
for the power systems, de-icing and specialty systems and sensor systems businesses;
    
    Higher sales volume of military OE and aftermarket sales in nearly all of the segments
business units; and
    
    Higher sales volume of commercial aircraft OE products for the aircraft interior
products, de-icing and specialty systems, and fuel and utility systems businesses.
   
    
    Unfavorable sales mix from aftermarket towards proportionately more OE sales in military
and commercial markets; and
    
    Increased research and development costs for new programs that have already been
awarded.
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Six Months Ended June 30, 2005 Compared with the Six Months Ended June 30, 2004
 Six Months Ended June 30,%
    
    % of Sales2005
    
    2004
    
    Change
    
    2005
    
    2004(Dollars in millions)NET CUSTOMER SALESAirframe Systems
    
    $
    906.7
    
    
    $
    806.4
    
    
    
    12.4Engine Systems
    
    
    1,093.9
    
    
    
    947.7
    
    
    
    15.4Electronic Systems
    
    
    627.6
    
    
    
    530.4
    
    
    
    18.3Total Sales
    
    $
    2,628.2
    
    
    $
    2,284.5
    
    
    
    15.0SEGMENT OPERATING INCOMEAirframe Systems
    
    $
    38.6
    
    
    $
    46.4
    
    
    
    (16.8
    )
    
    
    4.3
    
    
    
    5.8Engine Systems
    
    
    199.3
    
    
    
    143.8
    
    
    
    38.6
    
    
    
    18.2
    
    
    
    15.2Electronic Systems
    
    
    70.0
    
    
    
    53.9
    
    
    
    29.9
    
    
    
    11.2
    
    
    
    10.2Segment Operating Income
    
    $
    307.9
    
    
    $
    244.1
    
    
    
    26.1
    
    
    
    11.7
    
    
    
    10.7
 Airframe Systems :
 
    
    Higher commercial, regional and military aircraft wheel and brake sales volume;
    
    Higher sales of airframe heavy maintenance services;
    
    Higher landing gear commercial and regional OE sales volume;
    
    Higher actuation systems commercial OE sales volume; and
    
    Favorable currency translation on non-U.S. dollar sales, primarily in the actuation systems and landing gear businesses.
  
    
    A $15 million charge for the retrofit of redesigned parts for the A380 actuation system,
including reserves for related obsolete inventory, supplier claims and impaired assets; and
    
    Higher operating costs in the landing gear and actuation businesses.
 Engine Systems :
 
    
    Higher aerostructures engine OE, U.S. military and commercial spare parts and MRO sales
volume;
    
    Higher sales volume of turbo-machinery products for U.S. military and regional aircraft
applications and industrial gas turbine products;
    
    Higher revenues from military and commercial customers for aftermarket support from our
customer services business; and
    
    Favorable currency translation on non-U.S. dollar sales, primarily in the engine
controls business.
  34




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
    
    Higher sales volume as described above;
    
    Favorable currency translation on non-U.S. dollar costs, primarily in the aerostructures
and engine controls businesses; and
    
    Improved margins due to higher aftermarket sales, primarily for aerostructures products.
  Electronic Systems :
 
    
    Higher sales volume of military OE sales, primarily in the optical and space systems,
sensor systems and fuel and utility systems businesses;
    
    Higher sales volume of regional and business jet aircraft OE and aftermarket products
for the power systems, de-icing and specialty systems and sensor systems businesses; and
    
    Higher sales volume of commercial OE and aftermarket products in nearly all of the
segments business units.
   
    
    Unfavorable sales mix from aftermarket towards proportionately more OE sales in military and commercial markets; and
    
    Increased research and development costs for new programs that have already been awarded.
 LIQUIDITY AND CAPITAL RESOURCES
  Cash
  Credit Facilities
  35




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Long-Term Financing
    36




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Off-Balance Sheet Arrangements
  Undiscounted MinimumFuture Lease Payments
    
    Receivables Sold(Dollars in millions)Tax Advantaged Operating Leases
    
    $
    22.1Standard Operating Leases
    
    
    143.8$
    165.9Short-term Receivables Securitization Program
    
    
    
    
    
    $
    101.1
 Lease Agreements
   Sale of Receivables
  Cash Flow Hedges
    37




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##### Table of Contents



Fair Value Hedges
    Other Forward Contracts
  CASH FLOW
  Six Months Ended June 30,Net Cash Provided by (Used by):
    
    2005
    
    2004(Dollars in millions)Operating activities
    
    $
    107.4
    
    
    $
    126.8Investing activities
    
    $
    (70.4
    )
    
    $
    (51.6
    )Financing activities
    
    $
    (106.7
    )
    
    $
    (100.9
    )Discontinued operations
    
    $
    27.2
    
    
    $
    3.0
 38




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Operating Activities
   Investing Activities
  Financing Activities
   Discontinued Operations
  CONTINGENCIES
 General
  Environmental
  39




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Asbestos
   40




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Liabilities of Divested Businesses
 Asbestos
   Other
  Guarantees
   Commercial Airline Customers
  41




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##### Table of Contents



Tax
     Rohr, Inc. and Subsidiaries
    
    July, 1995  December, 1997 (through date of acquisition)Coltec Industries Inc and Subsidiaries
    
    December, 1997  July, 1999 (through date of acquisition)Goodrich Corporation and Subsidiaries
    
    1998-1999 (including Rohr and Coltec)
  42




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##### Table of Contents



NEW ACCOUNTING STANDARDS
 Accounting Changes and Error Corrections
  Inventory Costs
  Share-Based Payment
  43




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Accounting for Conditional Asset Retirement Obligations
 conditional asset retirement obligation
 FASB Staff Position 109-1 (FSP 109-1) and 109-2 (FSP 109-2)
  44




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##### Table of Contents



CRITICAL ACCOUNTING POLICIES
   Revenue Recognition
  Contract Accounting-Percentage of Completion
 Revenue Recognition
    45




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Inventory
   Income Taxes
    Identifiable Intangible Assets
  46




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Sales Incentives
  Entry Fees-Investment in Risk and Revenue Sharing Programs
      
    
    Changes in market conditions that may affect product sales under the program, including
market acceptance and competition from others;
    
    Performance of subcontract suppliers and other production risks;
    
    Bankruptcy or other less significant financial difficulties of other program
participants, including the aircraft manufacturer, the OEM and other program suppliers or
the aircraft customer; and
    
    Availability of specialized raw materials in the marketplace.
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##### Table of Contents



Pension and Postretirement Benefits Other Than Pensions
  FORWARD-LOOKING INFORMATION IS SUBJECT TO RISK AND UNCERTAINTY
   
    
    demand for and market acceptance of new and existing products, such as the Airbus A350
and A380, the Boeing 787 Dreamliner, the EMBRAER 190, and the Lockheed Martin F-35 Joint
Strike Fighter and F-22 Raptor;
    
    our ability to extend our contracts with Boeing relating to the 787 Dreamliner beyond the initial contract period;
    
    potential cancellation of orders by customers;
    
    successful development of products and advanced technologies;
    
    the health of the commercial aerospace industry, including the impact of bankruptcies in the airline industry;
    
    global demand for aircraft spare parts and aftermarket services;
    
    the actual amount of future liabilities assumed by us pursuant to the partial settlement
with Northrop Grumman related to the purchase of Aeronautical Systems;
    
    the possibility of additional contractual disputes with Northrop Grumman related to the
purchase of Aeronautical Systems;
    
    the resolution of tax litigation involving Coltec Industries Inc and Rohr, Inc.;
    
    the possibility of restructuring and consolidation actions beyond those previously announced by us;
    
    threats and events associated with and efforts to combat terrorism, including the current situation in Iraq;
    
    the extent to which expenses relating to employee and retiree medical and pension benefits continue to rise;
 48




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##### Table of Contents




    
    competitive product and pricing pressures;
    
    our ability to recover from third parties under contractual rights of indemnification
for environmental and other claims arising out of the divestiture of our tire, vinyl and
other businesses;
    
    possible assertion of claims against us on the theory that we, as the former corporate
parent of Coltec Industries Inc, bear some responsibility for the asbestos-related
liabilities of Coltec and its subsidiaries, or that Coltecs dividend of its aerospace
business to us prior to the EnPro spin-off was made at a time when Coltec was insolvent or
caused Coltec to become insolvent;
    
    the effect of changes in accounting policies;
    
    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, inflation, deflation, recession and other external
factors over which we have no control; and
    
    the outcome of contingencies (including completion of acquisitions, divestitures, tax
audits, litigation and environmental remediation efforts).
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk.
   
 Item 4. Controls and Procedures.
   49




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Item 1. Legal Proceedings.
  
 Item 2. Unregistered Sales of Equity Securities and Use Of Proceeds.
  ISSUER PURCHASES OF EQUITY SECURITIES
 (c) Total Number of
    
    (d) Maximum NumberShares Purchased
    
    (or Approximate Dollar Value)(a) Total Number
    
    
    
    
    
    as Part of Publicly
    
    of Shares that Mayof Shares
    
    (b) Average Price
    
    Announced Plans or
    
    Yet Be Purchased Under thePeriod
    
    Purchased (1)
    
    Paid Per Share
    
    Programs (2)
    

Plans or Programs (2)April 2005
    
    
    585
    
    
    $
    35.75
    
    
    
    N/A
    
    
    
    N/AMay 2005
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    N/AJune 2005
    
    
    5,044
    
    
    
    41.29
    
    
    
    N/A
    
    
    
    N/ATotal
    
    
    5,629
    
    
    $
    39.90
    
    
    
    N/A
    
    
    
    N/A
 
 (1)
    
    The issuer purchases during the period covered by this report represent shares delivered to
us by employees to pay withholding taxes due upon the vesting of restricted stock units and to
pay the exercise price of a stock option.(2)
    
    In connection with the exercise and vesting of stock options, restricted stock awards,
restricted stock unit awards and long-term incentive plan awards, we from time to time accept
delivery of shares to pay the exercise price of employee stock options or to pay withholding
taxes due upon the exercise of employee stock options or the vesting of restricted stock
awards, restricted stock unit awards or deferred long-term incentive plan awards. We do not
otherwise have any plan or program to purchase our common stock. 50




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##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holders.
  
    
    The ten nominees for director were elected.
    
    The appointment of Ernst & Young LLP as independent auditors for the year 2005 was ratified.
    
    The amendment and restatement of the 2001 Stock Option Plan was approved.
    
    The amendment and restatement of the Senior Executive Management Incentive Plan was approved.
  Election of Directors:
 Number of Shares Voted For
    
    
    Number of Shares Vote WithheldDiane C. Creel
    
    
    103,277,832
    
    
    
    4,823,516George A. Davidson, Jr.
    
    
    104,526,258
    
    
    
    3,575,090Harris E. DeLoach, Jr.
    
    
    107,174,725
    
    
    
    926,623James W. Griffith
    
    
    106,542,780
    
    
    
    1,558,568William R. Holland
    
    
    105,678,043
    
    
    
    2,423,305Marshall O. Larsen
    
    
    105,310,876
    
    
    
    2,790,472Douglas E. Olesen
    
    
    107,162,709
    
    
    
    938,639Alfred M. Rankin, Jr.
    
    
    105,185,395
    
    
    
    2,915,953James R. Wilson
    
    
    106,541,607
    
    
    
    1,559,741A. Thomas Young
    
    
    107,132,205
    
    
    
    969,143
 Appointment of Independent Auditors:
  Amendment and Restatement of the 2001 Stock Option Plan:
  Amendment and Restatement of the Senior Executive Management Incentive Plan:
  
 Item 5. Other Information.
 Resignation of Principal Financial Officer
  Election of New Principal Financial Officer
    51




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Item 6. Exhibits
 Exhibit 3.1
    
    Restated Certificate of Incorporation of Goodrich
Corporation, filed as Exhibit 3.1 to Goodrich Corporations
Quarterly Report on Form 10-Q for the quarter ended September
30, 2003 (File No. 1-892), is incorporated herein by
reference.Exhibit 3.2
    
    By-Laws of Goodrich Corporation, as amended, filed as Exhibit
4(B) to Goodrich Corporations Registration Statement on Form
S-3 (File No. 333-98165), is incorporated herein by
reference.Exhibit 10.1
    
    Goodrich Corporation 2001 Equity Compensation Plan, filed as
Appendix B to Goodrich Corporations 2005 proxy statement
dated March 7, 2005, is incorporated herein by reference.Exhibit 10.2
    
    Goodrich Corporation Senior Executive Management Incentive
Plan, filed as Appendix C to Goodrich Corporations 2005
proxy statement dated March 7, 2005, is incorporated herein
by reference.Exhibit 10.3
    
    Five Year Credit Agreement dated as of May 25, 2005 among
Goodrich Corporation, the lenders parties thereto and
Citibank, N.A., as agent for such lenders, filed as Exhibit
10.1 to Goodrich Corporations Current Report on Form 8-K
filed June 1, 2005, is incorporated herein by reference.Exhibit 15
    
    Letter Re: Unaudited Interim Financial Information.Exhibit 31
    
    Rule 13a-14(a)/15d-14(a) Certifications.Exhibit 32
    
    Section 1350 Certifications.Exhibit 99.1
    
    Compensation Arrangements for Scott E. Kuechle.
 52




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##### Table of Contents



SIGNATURE
  August 8, 2005
    
    GOODRICH CORPORATION/s/ ULRICH SCHMIDTUlrich SchmidtExecutive Vice President and Chief Financial Officer/s/ SCOTT E. KUECHLEScott E. KuechleVice President & Controller (Chief Accounting Officer)
 53




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##### Table of Contents



EXHIBIT INDEX
 Exhibit 3.1
    
    Restated Certificate of Incorporation of Goodrich
Corporation, filed as Exhibit 3.1 to Goodrich Corporations
Quarterly Report on Form 10-Q for the quarter ended September
30, 2003 (File No. 1-892), is incorporated herein by
reference.Exhibit 3.2
    
    By-Laws of Goodrich Corporation, as amended, filed as Exhibit
4(B) to Goodrich Corporations Registration Statement on Form
S-3 (File No. 333-98165), is incorporated herein by
reference.Exhibit 10.1
    
    Goodrich Corporation 2001 Equity Compensation Plan, filed as
Appendix B to Goodrich Corporations 2005 proxy statement
dated March 7, 2005, is incorporated herein by reference.Exhibit 10.2
    
    Goodrich Corporation Senior Executive Management Incentive
Plan, filed as Appendix C to Goodrich Corporations 2005
proxy statement dated March 7, 2005, is incorporated herein
by reference.Exhibit 10.3
    
    Five Year Credit Agreement dated as of May 25, 2005 among
Goodrich Corporation, the lenders parties thereto and
Citibank, N.A., as agent for such lenders, filed as Exhibit
10.1 to Goodrich Corporations Current Report on Form 8-K
filed June 1, 2005, is incorporated herein by reference.Exhibit 15
    
    Letter Re: Unaudited Interim Financial Information.Exhibit 31
    
    Rule 13a-14(a)/15d-14(a) Certifications.Exhibit 32
    
    Section 1350 Certifications.Exhibit 99.1
    
    Compensation Arrangements for Scott E. Kuechle.
 54