##### 









SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


Form 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934


For The Quarterly Period Ended
September 30, 2002

Commission file number 1-892



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Goodrich Corporation

(Exact Name of Registrant as Specified in its
Charter)


|                                                                     |  |                                         
|-------------------------------------------------------------------- |  | ----------------------------------------
|New York                                                             |  | 34-0252680                              
|(State or other jurisdiction of
    incorporation or organization)   |  | (I.R.S. Employer
    Identification No.)
|                                                                    
|Four Coliseum Centre, 2730 West Tyvola
    Road,
    Charlotte, N.C. |  | 28217                                   
|(Address of principal executive
    offices)                         |  | (Zip Code)                              

Registrants telephone number, including
area code:

704-423-7000


Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports) and
(2) has been subject to such filing requirements for the
past
90 days.     Yes þ          No o

As of September 30, 2002, there were
102,106,452 shares of common stock outstanding (excluding
14,018,598 shares held by wholly owned subsidiaries). There is
only one class of common stock.



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##### 






PART I.     FINANCIAL
INFORMATION




Item 1.     Financial
Statements

GOODRICH CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)

|                                                   |                                           |                                                 |       |                   |  |      |         |       |  |   |         |         |   |   |         |         | 
|-------------------------------------------------- | ----------------------------------------- | ----------------------------------------------- | ----- | ----------------- |  | ---- | ------- | ----- |  | - | ------- | ------- | - | - | ------- | ------- | 
|                                                   |                                           |                                                 |       |                  
|                                                   |                                           | Three Months Ended                              |       | Nine Months Ended
|                                                   |                                           | September 30,                                   |       | September 30,    
|                                                   |                                           |                                                 |       |                  
|                                                   |                                           | 2002                                            |       | 2001              |  | 2002 |         | 2001 
|                                                   |                                           |                                                 |       |                   |  |      |         |      
|                                                   |                                           |                                                
|                                                   |                                           | (Dollars in millions, except per share amounts)
|Sales                                              |                                           | $                                               | 882.1 |                   |  | $    | 1,051.9 |       |  | $ | 2,728.8 |         |   | $ | 3,131.7 |        
|Operating Costs and Expenses:                      |                                           |                                                 |       |                   |  |      |         |       |  |   |         |         |   |   |         |        
|                                                   | Cost of sales                             |                                                 |       | 643.7             |  |      |         | 752.9 |  |   |         | 1,987.3 |   |   |         | 2,236.6 | 
|                                                   | Selling and administrative expenses       |                                                 |       | 130.5             |  |      |         | 144.4 |  |   |         | 412.6   |   |   |         | 445.8   | 
|                                                   | Merger-related and consolidation costs    |                                                 |       | 7.2               |  |      |         | 1.5   |  |   |         | 29.3    |   |   |         | 14.9    | 
|                                                   |                                           |                                                 |       |                   |  |      |         |       |  |   |         |         |   |   |         |        
|                                                   |                                           |                                                 | 781.4 |                   |  |      | 898.8   |       |  |   | 2,429.2 |         |   |   | 2,697.3 |        
|                                                   |                                           |                                                 |       |                   |  |      |         |       |  |   |         |         |   |   |         |        
|Operating income                                   |                                           |                                                 | 100.7 |                   |  |      | 153.1   |       |  |   | 299.6   |         |   |   | 434.4   |        
|Interest expense                                   |                                           |                                                 | (23.7 | )                 |  |      | (24.6   | )     |  |   | (69.9   | )       |   |   | (83.3   | )      
|Interest income                                    |                                           |                                                 | 6.8   |                   |  |      | 7.0     |       |  |   | 25.9    |         |   |   | 18.9    |        
|Other income (expense)  net                       |                                           |                                                 | (11.1 | )                 |  |      | (8.1    | )     |  |   | (13.6   | )       |   |   | (15.2   | )      
|                                                   |                                           |                                                 |       |                   |  |      |         |       |  |   |         |         |   |   |         |        
|Income before income taxes and Trust distributions |                                           |                                                 | 72.7  |                   |  |      | 127.4   |       |  |   | 242.0   |         |   |   | 354.8   |        
|Income tax expense                                 |                                           |                                                 | (24.0 | )                 |  |      | (42.8   | )     |  |   | (79.9   | )       |   |   | (118.9  | )      
|Distributions on Trust Preferred Securities        |                                           |                                                 | (2.7  | )                 |  |      | (2.7    | )     |  |   | (7.9    | )       |   |   | (7.9    | )      
|                                                   |                                           |                                                 |       |                   |  |      |         |       |  |   |         |         |   |   |         |        
|Income from Continuing Operations                  |                                           |                                                 | 46.0  |                   |  |      | 81.9    |       |  |   | 154.2   |         |   |   | 228.0   |        
|Income (Loss) from Discontinued Operations         |                                           |                                                 |      |                   |  |      | 6.1     |       |  |   | (11.9   | )       |   |   | 115.6   |        
|Cumulative Effect of Change in Accounting          |                                           |                                                 |      |                   |  |      |        |       |  |   | (36.1   | )       |   |   |        |        
|                                                   |                                           |                                                 |       |                   |  |      |         |       |  |   |         |         |   |   |         |        
|Net Income                                         |                                           | $                                               | 46.0  |                   |  | $    | 88.0    |       |  | $ | 106.2   |         |   | $ | 343.6   |        
|                                                   |                                           |                                                 |       |                   |  |      |         |       |  |   |         |         |   |   |         |        
|Basic Earnings (Loss) per Share:                   |                                           |                                                 |       |                   |  |      |         |       |  |   |         |         |   |   |         |        
|                                                   | Continuing operations                     |                                                 | $     | 0.45              |  |      | $       | 0.79  |  |   | $       | 1.51    |   |   | $       | 2.20    | 
|                                                   | Discontinued operations                   |                                                 |       |                  |  |      |         | 0.06  |  |   |         | (0.12   | ) |   |         | 1.12    | 
|                                                   | Cumulative effect of change in accounting |                                                 |       |                  |  |      |         |      |  |   |         | (0.35   | ) |   |         |        | 
|                                                   |                                           |                                                 |       |                   |  |      |         |       |  |   |         |         |   |   |         |        
|                                                   | Net Income                                |                                                 | $     | 0.45              |  |      | $       | 0.85  |  |   | $       | 1.04    |   |   | $       | 3.32    | 
|                                                   |                                           |                                                 |       |                   |  |      |         |       |  |   |         |         |   |   |         |        
|Diluted Earnings (Loss) per Share:                 |                                           |                                                 |       |                   |  |      |         |       |  |   |         |         |   |   |         |        
|                                                   | Continuing operations                     |                                                 | $     | 0.45              |  |      | $       | 0.76  |  |   | $       | 1.48    |   |   | $       | 2.12    | 
|                                                   | Discontinued operations                   |                                                 |       |                  |  |      |         | 0.07  |  |   |         | (0.09   | ) |   |         | 1.12    | 
|                                                   | Cumulative effect of change in accounting |                                                 |       |                  |  |      |         |      |  |   |         | (0.35   | ) |   |         |        | 
|                                                   |                                           |                                                 |       |                   |  |      |         |       |  |   |         |         |   |   |         |        
|                                                   | Net Income                                |                                                 | $     | 0.45              |  |      | $       | 0.83  |  |   | $       | 1.04    |   |   | $       | 3.24    | 
|                                                   |                                           |                                                 |       |                   |  |      |         |       |  |   |         |         |   |   |         |        
|Cash dividends declared per common share           |                                           | $                                               | 0.20  |                   |  | $    | 0.275   |       |  | $ | 0.675   |         |   | $ | 0.825   |        
|                                                   |                                           |                                                 |       |                   |  |      |         |       |  |   |         |         |   |   |         |        

See notes to unaudited condensed consolidated
financial statements.

1



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##### 



GOODRICH CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)

|                                                                                                                                                                                                                     |                                                                                                                                       |                            |         |              |         |   |         |        |         | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------- | ------------ | ------- | - | ------- | ------ | ------- | 
|                                                                                                                                                                                                                     |                                                                                                                                       | September 30,              |         | December 31,
|                                                                                                                                                                                                                     |                                                                                                                                       | 2002                       |         | 2001        
|                                                                                                                                                                                                                     |                                                                                                                                       |                            |         |             
|                                                                                                                                                                                                                     |                                                                                                                                       |                           
|                                                                                                                                                                                                                     |                                                                                                                                       | (Dollars in millions)     
|ASSETS                                                                                                                                                                                                               |                                                                                                                                       |                            |         |              |         |   |         |       
|Current Assets                                                                                                                                                                                                       |                                                                                                                                       |                            |         |              |         |   |         |       
|                                                                                                                                                                                                                     | Cash and cash equivalents                                                                                                             |                            | $       | 346.3        |         |   | $       | 85.8   |        
|                                                                                                                                                                                                                     | Accounts and notes receivable, less allowances
    for doubtful receivables (September 30, 2002, $29.7;
    December 31, 2001, $42.1) |                            |         | 511.3        |         |   |         | 570.4  |        
|                                                                                                                                                                                                                     | Inventories                                                                                                                           |                            |         | 821.1        |         |   |         | 841.5  |        
|                                                                                                                                                                                                                     | Deferred income taxes                                                                                                                 |                            |         | 99.2         |         |   |         | 112.9  |        
|                                                                                                                                                                                                                     | Prepaid expenses and other assets                                                                                                     |                            |         | 33.0         |         |   |         | 26.2   |        
|                                                                                                                                                                                                                     | Assets of discontinued operations                                                                                                     |                            |         |             |         |   |         | 873.9  |        
|                                                                                                                                                                                                                     |                                                                                                                                       |                            |         |              |         |   |         |       
|                                                                                                                                                                                                                     |                                                                                                                                       | Total Current Assets       |         |              | 1,810.9 |   |         |        | 2,510.7 | 
|                                                                                                                                                                                                                     |                                                                                                                                       |                            |         |              |         |   |         |       
|Property, plant and equipment                                                                                                                                                                                        |                                                                                                                                       |                            | 918.5   |              |         |   | 955.5   |       
|Prepaid pension                                                                                                                                                                                                      |                                                                                                                                       |                            | 230.7   |              |         |   | 238.7   |       
|Goodwill                                                                                                                                                                                                             |                                                                                                                                       |                            | 696.0   |              |         |   | 747.3   |       
|Identifiable intangible assets                                                                                                                                                                                       |                                                                                                                                       |                            | 148.5   |              |         |   | 138.8   |       
|Payment-in-kind notes receivable, less discount
    ($21.9 at September 30, 2002; $22.2 at December 31,
    2001)                                                                                                    |                                                                                                                                       |                            | 180.8   |              |         |   | 168.4   |       
|Other assets                                                                                                                                                                                                         |                                                                                                                                       |                            | 455.0   |              |         |   | 468.1   |       
|                                                                                                                                                                                                                     |                                                                                                                                       |                            |         |              |         |   |         |       
|                                                                                                                                                                                                                     |                                                                                                                                       | $                          | 4,440.4 |              |         | $ | 5,227.5 |       
|                                                                                                                                                                                                                     |                                                                                                                                       |                            |         |              |         |   |         |       
|LIABILITIES AND SHAREHOLDERS
    EQUITY                                                                                                                                                                             |                                                                                                                                       |                            |         |              |         |   |         |       
|Current Liabilities                                                                                                                                                                                                  |                                                                                                                                       |                            |         |              |         |   |         |       
|                                                                                                                                                                                                                     | Short-term bank debt                                                                                                                  |                            | $       | 284.0        |         |   | $       | 113.3  |        
|                                                                                                                                                                                                                     | Accounts payable                                                                                                                      |                            |         | 274.4        |         |   |         | 396.6  |        
|                                                                                                                                                                                                                     | Accrued expenses                                                                                                                      |                            |         | 486.4        |         |   |         | 523.6  |        
|                                                                                                                                                                                                                     | Income taxes payable                                                                                                                  |                            |         | 232.9        |         |   |         | 119.2  |        
|                                                                                                                                                                                                                     | Liabilities of discontinued operations                                                                                                |                            |         |             |         |   |         | 589.4  |        
|                                                                                                                                                                                                                     | Current maturities of long-term debt and capital
    lease obligations                                                                |                            |         | 3.5          |         |   |         | 5.9    |        
|                                                                                                                                                                                                                     |                                                                                                                                       |                            |         |              |         |   |         |       
|                                                                                                                                                                                                                     |                                                                                                                                       | Total Current Liabilities  |         |              | 1,281.2 |   |         |        | 1,748.0 | 
|                                                                                                                                                                                                                     |                                                                                                                                       |                            |         |              |         |   |         |       
|Long-term debt and capital lease obligations                                                                                                                                                                         |                                                                                                                                       |                            | 1,326.5 |              |         |   | 1,307.2 |       
|Pension obligations                                                                                                                                                                                                  |                                                                                                                                       |                            | 158.3   |              |         |   | 155.5   |       
|Postretirement benefits other than pensions                                                                                                                                                                          |                                                                                                                                       |                            | 309.7   |              |         |   | 320.1   |       
|Deferred income taxes                                                                                                                                                                                                |                                                                                                                                       |                            | 15.0    |              |         |   | 13.9    |       
|Other non-current liabilities                                                                                                                                                                                        |                                                                                                                                       |                            | 203.3   |              |         |   | 196.4   |       
|Commitments and contingent liabilities                                                                                                                                                                               |                                                                                                                                       |                            |        |              |         |   |        |       
|Mandatory redeemable preferred securities of trust                                                                                                                                                                   |                                                                                                                                       |                            | 125.3   |              |         |   | 125.0   |       
|Shareholders Equity                                                                                                                                                                                                 |                                                                                                                                       |                            |         |              |         |   |         |       
|Common stock  $5 par value                                                                                                                                                                                          |                                                                                                                                       |                            |         |              |         |   |         |       
|Authorized 200,000,000 shares; issued 115,620,951
    shares at September 30, 2002, and 115,144,771 shares at
    December 31, 2001 (excluding 14,018,598 shares held by
    wholly owned subsidiaries at each date) |                                                                                                                                       |                            | 578.1   |              |         |   | 575.7   |       
|                                                                                                                                                                                                                     | Additional capital                                                                                                                    |                            |         | 895.2        |         |   |         | 973.5  |        
|                                                                                                                                                                                                                     | Income retained in the business                                                                                                       |                            |         | 47.8         |         |   |         | 333.7  |        
|                                                                                                                                                                                                                     | Accumulated other comprehensive income                                                                                                |                            |         | (85.4        | )       |   |         | (110.1 | )      
|                                                                                                                                                                                                                     | Unearned portion of restricted stock awards                                                                                           |                            |         | (1.8         | )       |   |         | (0.6   | )      
|                                                                                                                                                                                                                     | Common stock held in treasury, at cost
    (13,514,499 shares at September 30, 2002, and 13,446,808
    shares at December 31, 2001)  |                            |         | (412.8       | )       |   |         | (410.8 | )      
|                                                                                                                                                                                                                     |                                                                                                                                       |                            |         |              |         |   |         |       
|                                                                                                                                                                                                                     |                                                                                                                                       | Total Shareholders Equity |         |              | 1,021.1 |   |         |        | 1,361.4 | 
|                                                                                                                                                                                                                     |                                                                                                                                       |                            |         |              |         |   |         |       
|                                                                                                                                                                                                                     |                                                                                                                                       | $                          | 4,440.4 |              |         | $ | 5,227.5 |       
|                                                                                                                                                                                                                     |                                                                                                                                       |                            |         |              |         |   |         |       

See notes to unaudited condensed consolidated
financial statements.

2



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##### 



GOODRICH CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)

|                                                                       |                                                                                                              |                                          |       |        |        |   |       |        |       |  
|---------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------ | ---------------------------------------- | ----- | ------ | ------ | - | ----- | ------ | ----- | -
|                                                                       |                                                                                                              |                                         
|                                                                       |                                                                                                              | Nine Months Ended                       
|                                                                       |                                                                                                              | September 30,                           
|                                                                       |                                                                                                              |                                         
|                                                                       |                                                                                                              | 2002                                     |       | 2001  
|                                                                       |                                                                                                              |                                          |       |       
|                                                                       |                                                                                                              |                                         
|                                                                       |                                                                                                              | (Dollars in millions)                   
|OPERATING ACTIVITIES                                                   |                                                                                                              |                                          |       |        |        |   |       |       
|                                                                       | Income from continuing operations                                                                            |                                          | $     | 154.2  |        |   | $     | 228.0  |      
|                                                                       | Adjustments to reconcile income from continuing
    operations to net cash provided by operating activities: |                                          |       |        |        |   |       |        |      
|                                                                       |                                                                                                              | Merger-related and consolidation:        |       |        |        |   |       |        |       |  
|                                                                       |                                                                                                              | Expenses                                 |       |        | 29.3   |   |       |        | 14.9  |  
|                                                                       |                                                                                                              | Payments                                 |       |        | (44.2  | ) |       |        | (22.2 | )
|                                                                       | Depreciation and amortization                                                                                |                                          |       | 120.4  |        |   |       | 129.3  |      
|                                                                       | Deferred income taxes                                                                                        |                                          |       | 0.8    |        |   |       | 17.7   |      
|                                                                       | Net gains on sales of businesses                                                                             |                                          |       | (2.5   | )      |   |       | (7.2   | )    
|                                                                       | Payment-in-kind interest income                                                                              |                                          |       | (17.4  | )      |   |       | (12.3  | )    
|                                                                       | Change in assets and liabilities, net of effects
    of acquisitions and dispositions of businesses:         |                                          |       |        |        |   |       |        |      
|                                                                       |                                                                                                              | Receivables                              |       |        | 88.9   |   |       |        | (90.4 | )
|                                                                       |                                                                                                              | Change in receivables sold, net          |       |        | (21.9  | ) |       |        | 46.3  |  
|                                                                       |                                                                                                              | Inventories                              |       |        | 19.8   |   |       |        | (87.6 | )
|                                                                       |                                                                                                              | Other current assets                     |       |        | 0.5    |   |       |        | (19.2 | )
|                                                                       |                                                                                                              | Accounts payable                         |       |        | (109.7 | ) |       |        | 17.1  |  
|                                                                       |                                                                                                              | Accrued expenses                         |       |        | (4.0   | ) |       |        | 9.6   |  
|                                                                       |                                                                                                              | Income taxes payable                     |       |        | 114.7  |   |       |        | 64.1  |  
|                                                                       |                                                                                                              | Tax benefit on non-qualified options     |       |        | 0.5    |   |       |        | 7.7   |  
|                                                                       |                                                                                                              | Other non-current assets and liabilities |       |        | 26.8   |   |       |        | (85.3 | )
|                                                                       |                                                                                                              |                                          |       |        |        |   |       |       
|Net cash provided by operating activities of
    continuing operations |                                                                                                              |                                          | 356.2 |        |        |   | 210.5 |       
|                                                                       |                                                                                                              |                                          |       |        |        |   |       |       
|INVESTING ACTIVITIES                                                   |                                                                                                              |                                          |       |        |        |   |       |       
|                                                                       | Purchases of property                                                                                        |                                          |       | (56.5  | )      |   |       | (134.6 | )    
|                                                                       | Proceeds from sale of property                                                                               |                                          |       | 5.9    |        |   |       | 0.7    |      
|                                                                       | Proceeds from sale of businesses                                                                             |                                          |       | 6.0    |        |   |       | 15.6   |      
|                                                                       | Proceeds from payment-in-kind note                                                                           |                                          |       | 4.8    |        |   |       |       |      
|                                                                       | Payments made in connection with acquisitions,
    net of cash acquired                                      |                                          |       | (0.3   | )      |   |       | (119.2 | )    
|                                                                       |                                                                                                              |                                          |       |        |        |   |       |       
|                                                                       | Net cash used by investing activities of
    continuing operations                                           |                                          |       | (40.1  | )      |   |       | (237.5 | )    
|                                                                       |                                                                                                              |                                          |       |        |        |   |       |       
|FINANCING ACTIVITIES                                                   |                                                                                                              |                                          |       |        |        |   |       |       
|                                                                       | Increase (decrease) in short-term debt                                                                       |                                          |       | 169.4  |        |   |       | (576.1 | )    
|                                                                       | Proceeds from issuance of long-term debt                                                                     |                                          |       | 0.4    |        |   |       |       |      
|                                                                       | Repayment of long-term debt and capital lease
    obligations                                                |                                          |       |       |        |   |       | (181.7 | )    
|                                                                       | Proceeds from issuance of capital stock                                                                      |                                          |       | 4.2    |        |   |       | 50.6   |      
|                                                                       | Purchases of treasury stock                                                                                  |                                          |       | (4.9   | )      |   |       | (27.8  | )    
|                                                                       | Dividends                                                                                                    |                                          |       | (76.5  | )      |   |       | (85.1  | )    
|                                                                       | Distributions on Trust preferred securities                                                                  |                                          |       | (7.9   | )      |   |       | (13.8  | )    
|                                                                       |                                                                                                              |                                          |       |        |        |   |       |       
|                                                                       | Net cash provided (used) by financing
    activities of continuing operations                                |                                          |       | 84.7   |        |   |       | (833.9 | )    
|                                                                       |                                                                                                              |                                          |       |        |        |   |       |       
|DISCONTINUED OPERATIONS                                                |                                                                                                              |                                          |       |        |        |   |       |       
|                                                                       | Net cash (used) provided by discontinued
    operations                                                      |                                          |       | (141.1 | )      |   |       | 865.2  |      
|Effect of Exchange Rate Changes on Cash and Cash
    Equivalents       |                                                                                                              |                                          | 0.8   |        |        |   | 2.5   |       
|                                                                       |                                                                                                              |                                          |       |        |        |   |       |       
|Net Increase in Cash and Cash Equivalents                              |                                                                                                              |                                          | 260.5 |        |        |   | 6.8   |       
|Cash and Cash Equivalents at Beginning of Period                       |                                                                                                              |                                          | 85.8  |        |        |   | 77.5  |       
|                                                                       |                                                                                                              |                                          |       |        |        |   |       |       
|Cash and Cash Equivalents at End of Period                             |                                                                                                              | $                                        | 346.3 |        |        | $ | 84.3  |       
|                                                                       |                                                                                                              |                                          |       |        |        |   |       |       

See notes to unaudited condensed consolidated
financial statements.

3



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##### 



GOODRICH CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

(UNAUDITED)


Note A:     Basis of
Interim Financial Statement Preparation

The accompanying unaudited condensed consolidated
financial statements of Goodrich Corporation and its
subsidiaries have been prepared in accordance with the
instructions to Form 10-Q and do not include all of the
information and footnotes required by accounting principles
generally accepted in the United States for complete financial
statements. Unless indicated otherwise or the context requires,
the terms we, our, us,
Goodrich or Company refer to Goodrich
Corporation and its subsidiaries. In our opinion, all
adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Certain
amounts in prior year financial statements have been
reclassified to conform to the current year presentation.
Operating results for the three and nine months ended
September 30, 2002 are not necessarily indicative of the
results that may be achieved for the year ending
December 31, 2002. For further information, refer to the
consolidated financial statements and footnotes included in our
Annual Report on Form 10-K for the year ended
December 31, 2001.

As discussed in Note H, our former
Performance Materials and Engineered Industrial Products
segments have been accounted for as discontinued operations.
Unless otherwise noted, disclosures herein pertain to our
continuing operations.

Note
B:     Inventories

Inventories consist of:

|                                                             |                                               |                       |       |              |   |   |       |       |  
|------------------------------------------------------------ | --------------------------------------------- | --------------------- | ----- | ------------ | - | - | ----- | ----- | -
|                                                             |                                               | September 30,         |       | December 31,
|                                                             |                                               | 2002                  |       | 2001        
|                                                             |                                               |                       |       |             
|                                                             |                                               |                      
|                                                             |                                               | (Dollars in millions)
|FIFO or average cost (which approximates current
    costs): |                                               |                       |       |              |   |   |       |      
|                                                             | Finished products                             |                       | $     | 168.8        |   |   | $     | 172.0 |  
|                                                             | In process                                    |                       |       | 539.3        |   |   |       | 538.9 |  
|                                                             | Raw materials and supplies                    |                       |       | 215.7        |   |   |       | 217.1 |  
|                                                             |                                               |                       |       |              |   |   |       |      
|                                                             |                                               |                       | 923.8 |              |   |   | 928.0 |      
|Less:                                                        |                                               |                       |       |              |   |   |       |      
|                                                             | Reserve to reduce certain inventories to LIFO |                       |       | (42.4        | ) |   |       | (42.2 | )
|                                                             | Progress payments and advances                |                       |       | (60.3        | ) |   |       | (44.3 | )
|                                                             |                                               |                       |       |              |   |   |       |      
|Total                                                        |                                               | $                     | 821.1 |              |   | $ | 841.5 |      
|                                                             |                                               |                       |       |              |   |   |       |      

The pre-production inventory balance on the
Boeing 717-200 contract was $32.0 million as of
September 30, 2002.

Note C:     Business
Segment Information

Our operations are classified into four
reportable business segments: Aerostructures and Aviation
Technical Services, Landing Systems, Engine and Safety Systems,
and Electronic Systems.

Aerostructures and Aviation Technical
Services:Aerostructures is a leading
supplier of nacelles, pylons, thrust reversers and related
aircraft engine housing components. The aviation technical
services division performs comprehensive total aircraft
maintenance, repair, overhaul and modification for many
commercial airlines, independent operations, aircraft leasing
companies and airfreight carriers.

Landing Systems:Landing Systems provides systems and components pertaining to
aircraft taxi, take-off, landing and stopping. Several divisions
within the segment are linked by their ability to contribute

4



---



##### 



GOODRICH CORPORATION


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

to the integration, design, manufacture and
service of entire aircraft undercarriage systems, including
landing gear, wheels and brakes and certain brake controls.

Engine and Safety
Systems:Engine and Safety Systems
produces engine and fuel controls, pumps, fuel delivery systems,
as well as structural and rotating components such as disks,
blisks, shafts and airfoils for both aerospace and industrial
gas turbine applications. This segment also produces aircraft
evacuation, de-icing and passenger restraint systems, as well as
ejection seats and crew and attendant seating.

Electronic Systems:Electronic Systems produces a wide array of products that
provide flight performance measurements, flight management, and
control and safety data. Included are a variety of sensors
systems that measure and manage aircraft fuel and monitor oil
debris; engine, transmission and structural health; and aircraft
motion control systems. The segments products also include
instruments and avionics, warning and detection systems, ice
detection systems, test equipment, aircraft lighting systems,
landing gear cables and harnesses, satellite control, data
management and payload systems, launch and missile telemetry
systems, airborne surveillance and reconnaissance systems and
laser warning systems.

Segment operating income is total segment revenue
reduced by operating expenses identifiable with that business
segment. Merger-related and consolidation costs are presented
separately and are discussed in Note F of these unaudited
condensed consolidated financial statements. The accounting
policies of the reportable segments are the same as those for
Goodrich consolidated. There are no significant inter-segment
sales.

|                                               |                                                |                                                          |       |                   |       |      |       |       |         |  |       |       |         |  |       |         |         | 
|---------------------------------------------- | ---------------------------------------------- | -------------------------------------------------------- | ----- | ----------------- | ----- | ---- | ----- | ----- | ------- |  | ----- | ----- | ------- |  | ----- | ------- | ------- | 
|                                               |                                                |                                                          |       |                  
|                                               |                                                | Three Months Ended                                       |       | Nine Months Ended
|                                               |                                                | September 30,                                            |       | September 30,    
|                                               |                                                |                                                          |       |                  
|                                               |                                                | 2002                                                     |       | 2001              |       | 2002 |       | 2001 
|                                               |                                                |                                                          |       |                   |       |      |       |      
|                                               |                                                |                                                         
|                                               |                                                | (Dollars in millions)                                   
|Sales                                          |                                                |                                                          |       |                   |       |      |       |       |         |  |       |       |         |  |       |        
|                                               | Aerostructures and Aviation Technical Services |                                                          | $     | 269.4             |       |      | $     | 369.0 |         |  | $     | 889.7 |         |  | $     | 1,123.0 |        
|                                               | Landing Systems                                |                                                          |       | 255.7             |       |      |       | 293.1 |         |  |       | 772.4 |         |  |       | 862.8   |        
|                                               | Engine and Safety Systems                      |                                                          |       | 158.8             |       |      |       | 190.0 |         |  |       | 486.1 |         |  |       | 576.2   |        
|                                               | Electronic Systems                             |                                                          |       | 198.2             |       |      |       | 199.8 |         |  |       | 580.6 |         |  |       | 569.7   |        
|                                               |                                                |                                                          |       |                   |       |      |       |       |         |  |       |       |         |  |       |        
|                                               |                                                | Total Sales                                              |       | $                 | 882.1 |      |       | $     | 1,051.9 |  |       | $     | 2,728.8 |  |       | $       | 3,131.7 | 
|                                               |                                                |                                                          |       |                   |       |      |       |       |         |  |       |       |         |  |       |        
|Segment Operating Income                       |                                                |                                                          |       |                   |       |      |       |       |         |  |       |       |         |  |       |        
|                                               | Aerostructures and Aviation Technical Services |                                                          | $     | 22.4              |       |      | $     | 61.5  |         |  | $     | 120.1 |         |  | $     | 177.9   |        
|                                               | Landing Systems                                |                                                          |       | 38.9              |       |      |       | 40.9  |         |  |       | 91.2  |         |  |       | 115.2   |        
|                                               | Engine and Safety Systems                      |                                                          |       | 20.8              |       |      |       | 35.3  |         |  |       | 61.5  |         |  |       | 104.3   |        
|                                               | Electronic Systems                             |                                                          |       | 35.9              |       |      |       | 29.2  |         |  |       | 96.2  |         |  |       | 93.1    |        
|                                               |                                                |                                                          |       |                   |       |      |       |       |         |  |       |       |         |  |       |        
|                                               |                                                |                                                          | 118.0 |                   |       |      | 166.9 |       |         |  | 369.0 |       |         |  | 490.5 |        
|Corporate General and Administrative Expenses  |                                                |                                                          | (10.1 | )                 |       |      | (12.3 | )     |         |  | (40.1 | )     |         |  | (41.2 | )      
|Merger-related and consolidation costs         |                                                |                                                          | (7.2  | )                 |       |      | (1.5  | )     |         |  | (29.3 | )     |         |  | (14.9 | )      
|                                               |                                                |                                                          |       |                   |       |      |       |       |         |  |       |       |         |  |       |        
|                                               |                                                | Total Operating Income                                   |       | $                 | 100.7 |      |       | $     | 153.1   |  |       | $     | 299.6   |  |       | $       | 434.4   | 
|                                               |                                                |                                                          |       |                   |       |      |       |       |         |  |       |       |         |  |       |        
|Segment Merger-related and Consolidation Costs |                                                |                                                          |       |                   |       |      |       |       |         |  |       |       |         |  |       |        
|                                               | Aerostructures and Aviation Technical Services |                                                          | $     | 1.5               |       |      | $     | 1.2   |         |  | $     | 7.2   |         |  | $     | 1.9     |        
|                                               | Landing Systems                                |                                                          |       |                  |       |      |       |      |         |  |       | 1.8   |         |  |       | 7.2     |        
|                                               | Engine and Safety Systems                      |                                                          |       | 4.5               |       |      |       |      |         |  |       | 14.8  |         |  |       | 1.4     |        
|                                               | Electronic Systems                             |                                                          |       | 1.2               |       |      |       | 0.2   |         |  |       | 5.2   |         |  |       | 2.5     |        
|                                               |                                                |                                                          |       |                   |       |      |       |       |         |  |       |       |         |  |       |        
|                                               |                                                | Total Segment Merger-related and Consolidation
    Costs |       | $                 | 7.2   |      |       | $     | 1.4     |  |       | $     | 29.0    |  |       | $       | 13.0    | 
|                                               |                                                |                                                          |       |                   |       |      |       |       |         |  |       |       |         |  |       |        

5



---



##### 



GOODRICH CORPORATION


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Segment assets include assets directly
identifiable with each segment. Corporate assets include assets
not specifically identified with a business segment, including
cash.

|       |                                                |               |   |              |         |  |   |         |         | 
|------ | ---------------------------------------------- | ------------- | - | ------------ | ------- |  | - | ------- | ------- | 
|       |                                                | September 30, |   | December 31,
|       |                                                | 2002          |   | 2001        
|       |                                                |               |   |             
|Assets |                                                |               |   |              |         |  |   |        
|       | Aerostructures and Aviation Technical Services |               | $ | 1,170.7      |         |  | $ | 1,221.0 |        
|       | Landing Systems                                |               |   | 907.4        |         |  |   | 949.0   |        
|       | Engine and Safety Systems                      |               |   | 503.2        |         |  |   | 529.7   |        
|       | Electronic Systems                             |               |   | 950.4        |         |  |   | 996.6   |        
|       | Assets of Discontinued Operations              |               |   |             |         |  |   | 873.9   |        
|       | Corporate                                      |               |   | 908.7        |         |  |   | 657.3   |        
|       |                                                |               |   |              |         |  |   |        
|       |                                                | Total Assets  |   | $            | 4,440.4 |  |   | $       | 5,227.5 | 
|       |                                                |               |   |              |         |  |   |        

Note D:     Earnings
Per Share

The computation of basic and diluted earnings per
share from continuing operations is as follows:

|                                                                                     |                                                                                                               |                                                                                           |      |               |     |      |      |       |     |   |       |       |     |   |       |       |     | 
|------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------- | ---- | ------------- | --- | ---- | ---- | ----- | --- | - | ----- | ----- | --- | - | ----- | ----- | --- | 
|                                                                                     |                                                                                                               |                                                                                           |      |              
|                                                                                     |                                                                                                               | Three Months                                                                              |      | Nine Months  
|                                                                                     |                                                                                                               | Ended                                                                                     |      | Ended        
|                                                                                     |                                                                                                               | September 30,                                                                             |      | September 30,
|                                                                                     |                                                                                                               |                                                                                           |      |              
|                                                                                     |                                                                                                               | 2002                                                                                      |      | 2001          |     | 2002 |      | 2001 
|                                                                                     |                                                                                                               |                                                                                           |      |               |     |      |      |      
|                                                                                     |                                                                                                               |                                                                                          
|                                                                                     |                                                                                                               | (In millions, except per share amounts)                                                  
|Numerator:                                                                           |                                                                                                               |                                                                                           |      |               |     |      |      |       |     |   |       |       |     |   |       |      
|Numerator for basic earnings per
    share  income available to common shareholders |                                                                                                               | $                                                                                         | 46.0 |               |     | $    | 81.9 |       |     | $ | 154.2 |       |     | $ | 228.0 |      
|Denominator:                                                                         |                                                                                                               |                                                                                           |      |               |     |      |      |       |     |   |       |       |     |   |       |      
|                                                                                     | Denominator for basic earnings per
    share  weighted-average shares                                        |                                                                                           |      | 102.1         |     |      |      | 103.9 |     |   |       | 102.0 |     |   |       | 103.5 |    
|                                                                                     |                                                                                                               |                                                                                           |      |               |     |      |      |       |     |   |       |       |     |   |       |      
|                                                                                     | Effect of dilutive securities:                                                                                |                                                                                           |      |               |     |      |      |       |     |   |       |       |     |   |       |       |    
|                                                                                     |                                                                                                               | Stock options, performance shares, restricted and
    employee stock purchase plan shares |      |               | 0.3 |      |      |       | 0.3 |   |       |       | 0.6 |   |       |       | 1.1 | 
|                                                                                     |                                                                                                               | Convertible preferred securities                                                          |      |               |    |      |      |       | 2.9 |   |       |       | 1.6 |   |       |       | 2.9 | 
|                                                                                     |                                                                                                               |                                                                                           |      |               |     |      |      |       |     |   |       |       |     |   |       |      
|                                                                                     | Dilutive potential common shares                                                                              |                                                                                           |      | 0.3           |     |      |      | 3.2   |     |   |       | 2.2   |     |   |       | 4.0   |    
|                                                                                     |                                                                                                               |                                                                                           |      |               |     |      |      |       |     |   |       |       |     |   |       |      
|                                                                                     | Denominator for diluted earnings per
    share  adjusted weighted-average shares and assumed
    conversions |                                                                                           |      | 102.4         |     |      |      | 107.1 |     |   |       | 104.2 |     |   |       | 107.5 |    
|                                                                                     |                                                                                                               |                                                                                           |      |               |     |      |      |       |     |   |       |       |     |   |       |      
|Earnings per share:                                                                  |                                                                                                               |                                                                                           |      |               |     |      |      |       |     |   |       |       |     |   |       |      
|                                                                                     | Basic                                                                                                         |                                                                                           | $    | 0.45          |     |      | $    | 0.79  |     |   | $     | 1.51  |     |   | $     | 2.20  |    
|                                                                                     |                                                                                                               |                                                                                           |      |               |     |      |      |       |     |   |       |       |     |   |       |      
|                                                                                     | Diluted                                                                                                       |                                                                                           | $    | 0.45          |     |      | $    | 0.76  |     |   | $     | 1.48  |     |   | $     | 2.12  |    
|                                                                                     |                                                                                                               |                                                                                           |      |               |     |      |      |       |     |   |       |       |     |   |       |      

6



---



##### 



GOODRICH CORPORATION


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Note E:     Comprehensive
Income

Total comprehensive income consists of the
following:

|                             |                                                  |                       |      |               |   |      |      |      |   |   |       |      |  |   |       |      |  
|---------------------------- | ------------------------------------------------ | --------------------- | ---- | ------------- | - | ---- | ---- | ---- | - | - | ----- | ---- |  | - | ----- | ---- | -
|                             |                                                  |                       |      |              
|                             |                                                  | Three Months          |      | Nine Months  
|                             |                                                  | Ended                 |      | Ended        
|                             |                                                  | September 30,         |      | September 30,
|                             |                                                  |                       |      |              
|                             |                                                  | 2002                  |      | 2001          |   | 2002 |      | 2001
|                             |                                                  |                       |      |               |   |      |      |     
|                             |                                                  |                      
|                             |                                                  | (Dollars in millions)
|Net Income                   |                                                  | $                     | 46.0 |               |   | $    | 88.0 |      |   | $ | 106.2 |      |  | $ | 343.6 |     
|Other Comprehensive Income  |                                                  |                       |      |               |   |      |      |      |   |   |       |      |  |   |       |     
|                             | Unrealized translation adjustments during period |                       |      | (1.6          | ) |      |      | (0.1 | ) |   |       | 21.9 |  |   |       | (1.5 | )
|                             | Gain (loss) on cash flow hedge                   |                       |      | (0.7          | ) |      |      |     |   |   |       | 2.8  |  |   |       |     |  
|                             |                                                  |                       |      |               |   |      |      |      |   |   |       |      |  |   |       |     
|Total Comprehensive Income   |                                                  | $                     | 43.7 |               |   | $    | 87.9 |      |   | $ | 130.9 |      |  | $ | 342.1 |     
|                             |                                                  |                       |      |               |   |      |      |      |   |   |       |      |  |   |       |     

Accumulated other comprehensive income consists
of the following (dollars in millions):

|                                              |  |               |       |              |  |   |        |  
|--------------------------------------------- |  | ------------- | ----- | ------------ |  | - | ------ | -
|                                              |  | September 30, |       | December 31,
|                                              |  | 2002          |       | 2001        
|                                              |  |               |       |             
|Cumulative unrealized translation adjustments |  | $             | (35.5 | )            |  | $ | (57.4  | )
|Minimum pension liability adjustment          |  |               | (52.7 | )            |  |   | (52.7  | )
|Accumulated gain on cash flow hedge           |  |               | 2.8   |              |  |   |       |  
|                                              |  |               |       |              |  |   |        |  
|                                              |  | $             | (85.4 | )            |  | $ | (110.1 | )
|                                              |  |               |       |              |  |   |        |  

The minimum pension liability amounts above are
net of deferred taxes of $26.8 million.

Note
F:     Merger-Related and Consolidation
Costs

Through September 30, 2002, the Company
recorded charges totaling $29.3 million. The charges were
recorded across the Companys segments as follows:

|                                               |  |                       |      | 
|---------------------------------------------- |  | --------------------- | ---- | 
|                                               |  | Nine Months Ended    
|                                               |  | September 30, 2002   
|                                               |  |                      
|                                               |  | (Dollars in millions)
|Aerostructures and Aviation Technical Services |  | $                     | 7.2  | 
|Landing Systems                                |  |                       | 1.8  | 
|Engine and Safety Systems                      |  |                       | 14.8 | 
|Electronic Systems                             |  |                       | 5.2  | 
|                                               |  |                       |      | 
|Total Segment Charges                          |  |                       | 29.0 | 
|Corporate                                      |  |                       | 0.3  | 
|                                               |  |                       |      | 
|                                               |  | $                     | 29.3 | 
|                                               |  |                       |      | 

7



---



##### 



GOODRICH CORPORATION


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Merger-related and consolidation reserves at
December 31, 2001 and September 30, 2002, as well as
activity during the nine months ended September 30, 2002,
consisted of:

|                        |  |                       |      |           |  |               |      |      |  |   |       |   |  |   |      | 
|----------------------- |  | --------------------- | ---- | --------- |  | ------------- | ---- | ---- |  | - | ----- | - |  | - | ---- | 
|                        |  |                      
|                        |  | (Dollars in millions)
|                        |  |                      
|                        |  | Balance               |      |           |  | Balance      
|                        |  | December 31,          |      |           |  | September 30,
|                        |  | 2001                  |      | Provision |  | Activity      |      | 2002
|                        |  |                       |      |           |  |               |      |     
|Personnel-related costs |  | $                     | 26.6 |           |  | $             | 23.9 |      |  | $ | (34.8 | ) |  | $ | 15.7 | 
|Consolidation           |  |                       | 18.6 |           |  |               | 5.4  |      |  |   | (14.6 | ) |  |   | 9.4  | 
|                        |  |                       |      |           |  |               |      |      |  |   |       |   |  |   |      | 
|                        |  | $                     | 45.2 |           |  | $             | 29.3 |      |  | $ | (49.4 | ) |  | $ | 25.1 | 
|                        |  |                       |      |           |  |               |      |      |  |   |       |   |  |   |      | 

The following is a description of key components
of the $29.3 million provision for merger-related and
consolidation costs in the first nine months of 2002:

Aerostructures and Aviation Technical
Services:The segment recorded $7.2
million in merger-related and consolidation costs, consisting of
$5.9 million in personnel-related costs and
$1.3 million in consolidation costs.

The personnel-related charges were for employee
severance and for voluntary termination benefits. During the
nine-month period, a total of 1,113 employees were terminated.
The consolidation costs related to machinery and equipment
relocation costs incurred in connection with a facility
consolidation or closure.

Landing Systems:The
segment recorded $1.8 million in merger-related and
consolidation costs, consisting of $1.5 million in
personnel-related costs and $0.3 million in consolidation
costs. Of the charge, $0.2 million represents non-cash
items, including $0.8 million in asset impairments and a
reserve reversal of $0.6 million related to a revision of
estimated facility closure and consolidation costs.

The personnel-related charges are for employee
severance and benefits. During the nine-month period, a total of
247 employees were terminated. Consolidation costs include asset
impairment charges of $0.8 million to write down assets
held for sale or disposal based on their estimated fair value
and facility closure costs of $0.1 million for equipment
relocation costs offset by the $0.6 million reserve reversal
noted above.

Engine and Safety
Systems:The segment recorded
$14.8 million in merger-related and consolidation costs,
consisting of $11.8 million in personnel-related costs and
$3.0 million in consolidation costs. Of the charge,
$0.6 million represents non-cash asset impairment charges.
The personnel-related charges are for employee severance and
benefits. During the nine-month period, a total of 666 employees
were terminated. Consolidation costs include $0.6 million
in accelerated depreciation and facility closure costs of
$2.4 million for machinery and equipment relocation and
other facility closure costs.

Electronic Systems:The segment recorded $5.2 million in merger-related and
consolidation costs, consisting of $4.4 million in
personnel related costs and $0.8 million in consolidation
costs. Of the charge, $0.2 million represents a non-cash
asset impairment charge.

The personnel related charges are for employee
severance and benefits. During the nine-month period, a total of
337 employees were terminated. Consolidation costs included
$0.2 million in accelerated depreciation and
$0.6 million in equipment relocation costs in connection
with facility closure or consolidation.

Corporate:Merger-related and consolidation costs of $0.3 million
represented employee outplacement services and relocation costs.

As of September 30, 2002, we expect a
minimum of 250 employees to be terminated company-wide during
the remainder of 2002.

8



---



##### 



GOODRICH CORPORATION


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                                                      
| | -----------------------------------------------------
| | Merger-Related and Consolidation
    Costs  Activity

Of the $49.4 million in activity,
$44.2 million represented cash payments, $1.6 million
represented asset write-offs and $3.6 million represented a
reclassification of a reserve to other non-current liabilities.

Note G:     Goodwill
and Other Intangible Assets

Effective July 1, 2001, we adopted the
provisions of Statement of Financial Accounting Standards
No. 142 Goodwill and Other Intangible Assets
(SFAS 142) applicable to business combinations
completed after June 30, 2001. Effective January 1,
2002, additional provisions of SFAS 142, relating to business
combinations completed prior to June 30, 2001 became
effective and were adopted. Under the provisions of the
standard, intangible assets deemed to have indefinite lives and
goodwill are not subject to amortization. All other intangible
assets are amortized over their estimated useful lives.
Intangible assets and goodwill are subject to annual impairment
testing using the guidance and criteria described in the
standard. This testing requires comparison of carrying values to
fair values, and when appropriate, the carrying value of
impaired assets is reduced to fair value.

During the second quarter of 2002, we performed
the first of the required impairment tests of goodwill and
indefinite lived intangible assets. Based on those results, we
determined that it was likely that goodwill relating to the
Aviation Technical Services reporting unit
(ATS) had been impaired. ATS is included in the
Aerostructures and Aviation Technical Services business segment.
During the third quarter of 2002, we completed our measurement
of the goodwill impairment and recognized an impairment of
$36.1 million (representing total goodwill of this
reporting unit which was non-deductible for income tax
purposes), which was reported as a cumulative effect of an
accounting change in the first quarter of 2002. The results of
operations have been restated accordingly.

Income from continuing operations and basic and
diluted earnings per share for the three and nine months ended
September 30, 2002 and 2001, adjusted to exclude amounts no
longer being amortized, are as follows:

|                                           |              |                                         |      |                     |   |      |      |      |      |   |       |      |   |   |       |      |      |  
|------------------------------------------ | ------------ | --------------------------------------- | ---- | ------------------- | - | ---- | ---- | ---- | ---- | - | ----- | ---- | - | - | ----- | ---- | ---- | -
|                                           |              |                                         |      |                     |   |     
|                                           |              | Three Months                            |      |                    
|                                           |              | Ended                                   |      | Nine Months        
|                                           |              | September 30,                           |      | Ended September 30,
|                                           |              |                                         |      |                    
|                                           |              | 2002                                    |      | 2001                |   | 2002 |      | 2001
|                                           |              |                                         |      |                     |   |      |      |     
|                                           |              |                                        
|                                           |              | (In millions, except per share amounts)
|Reported Income from Continuing Operations |              | $                                       | 46.0 |                     |   | $    | 81.9 |      |      | $ | 154.2 |      |   | $ | 228.0 |     
|                                           | Adjustments: |                                         |      |                     |   |      |      |      |      |   |       |      |   |   |       |      |     
|                                           |              | Goodwill amortization                   |      |                     |  |      |      |      | 7.9  |   |       |      |  |   |       |      | 22.4 |  
|                                           |              | Income taxes                            |      |                     |  |      |      |      | (1.3 | ) |       |      |  |   |       |      | (4.1 | )
|                                           |              |                                         |      |                     |   |      |      |      |      |   |       |      |   |   |       |     
|Adjusted Income from Continuing Operations |              | $                                       | 46.0 |                     |   | $    | 88.5 |      |      | $ | 154.2 |      |   | $ | 246.3 |     
|                                           |              |                                         |      |                     |   |      |      |      |      |   |       |      |   |   |       |     
|Basic earnings per share:                  |              |                                         |      |                     |   |      |      |      |      |   |       |      |   |   |       |     
|                                           | Reported     |                                         | $    | 0.45                |   |      | $    | 0.79 |      |   | $     | 1.51 |   |   | $     | 2.20 |     
|                                           | Adjusted     |                                         | $    | 0.45                |   |      | $    | 0.85 |      |   | $     | 1.51 |   |   | $     | 2.38 |     
|Diluted earnings per share:                |              |                                         |      |                     |   |      |      |      |      |   |       |      |   |   |       |     
|                                           | Reported     |                                         | $    | 0.45                |   |      | $    | 0.76 |      |   | $     | 1.48 |   |   | $     | 2.12 |     
|                                           | Adjusted     |                                         | $    | 0.45                |   |      | $    | 0.83 |      |   | $     | 1.48 |   |   | $     | 2.29 |     

9



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##### 



GOODRICH CORPORATION


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The changes in the carrying amount of goodwill
for the nine months ended September 30, 2002, by segment
are as follows:

|                                               |  |                       |       |              |  |       |      |               |  |   |       |   |  |   |       | 
|---------------------------------------------- |  | --------------------- | ----- | ------------ |  | ----- | ---- | ------------- |  | - | ----- | - |  | - | ----- | 
|                                               |  |                       |       | Business     |  |       |      |              
|                                               |  | Balance               |       | Combinations |  |       |      | Balance      
|                                               |  | December 31,          |       | Completed    |  |       |      | September 30,
|                                               |  | 2001                  |       | or Finalized |  | Other |      | 2002         
|                                               |  |                       |       |              |  |       |      |              
|                                               |  |                      
|                                               |  | (Dollars in millions)
|Aerostructures and Aviation Technical Services |  | $                     | 56.7  |              |  | $     |     |               |  | $ | (36.1 | ) |  | $ | 20.6  | 
|Landing Systems                                |  |                       | 67.9  |              |  |       |     |               |  |   | (9.1  | ) |  |   | 58.8  | 
|Engine and Safety Systems                      |  |                       | 185.2 |              |  |       | (0.4 | )             |  |   |      |   |  |   | 184.8 | 
|Electronic Systems                             |  |                       | 437.5 |              |  |       | (5.7 | )             |  |   |      |   |  |   | 431.8 | 
|                                               |  |                       |       |              |  |       |      |               |  |   |       |   |  |   |       | 
|                                               |  | $                     | 747.3 |              |  | $     | (6.1 | )             |  | $ | (45.2 | ) |  | $ | 696.0 | 
|                                               |  |                       |       |              |  |       |      |               |  |   |       |   |  |   |       | 

The $36.1 million reduction in goodwill in
Aerostructures and Aviation Technical Services represents the
cumulative effect of adoption of SFAS 142, which resulted in
goodwill impairment in the ATS reporting unit.

The $9.1 million reduction in goodwill in
Landing Systems represented a reclassification of intellectual
property rights to patents, trademarks and licenses upon the
adoption of SFAS 142.

The $5.7 million reduction in goodwill in
Electronic Systems primarily represents the finalization of the
purchase price allocation relating to the acquisition of the
lighting systems business acquired in September, 2001. The
adjustment consists of additional value of $6.1 million
assigned to customer relationships and reclassified to
identifiable intangible assets offset by an adjustment to the
minority interest of that business which slightly increased
goodwill. This decrease was offset by a $0.4 million
increase associated with an adjustment to the purchase price of
an acquisition due to an earn-out agreement.

The $0.4 million reduction in goodwill in
Engine and Safety Systems represents the elimination of an
allowance that was established in the opening balance sheet
against a receivable that was subsequently collected.

Identifiable intangible assets as of
September 30, 2002 are comprised of:

|                               |                                  |        |       |              |  |   |      |      | 
|------------------------------ | -------------------------------- | ------ | ----- | ------------ |  | - | ---- | ---- | 
|                               |                                  | Gross  |       | Accumulated 
|                               |                                  | Amount |       | Amortization
|(Dollars in Millions)          |                                  |        |       |             
|Amortizable intangible assets: |                                  |        |       |              |  |   |      |     
|                               | Patents, trademarks and licenses |        | $     | 155.3        |  |   | $    | 39.5 | 
|                               | Customer relationships           |        |       | 33.2         |  |   |      | 2.9  | 
|                               | Non-compete agreements           |        |       | 7.8          |  |   |      | 5.5  | 
|                               | Other                            |        |       | 2.0          |  |   |      | 1.9  | 
|                               |                                  |        |       |              |  |   |      |     
|                               |                                  | $      | 198.3 |              |  | $ | 49.8 |     
|                               |                                  |        |       |              |  |   |      |     

There were no indefinite lived identifiable
intangible assets as of September 30, 2002. Amortization of
intangible assets for the nine months ended September 30, 2002
was $11.3 million. Amortization expense of these intangible
assets for 2002 to 2006 is estimated to be approximately
$16 million per year.

10



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##### 



GOODRICH CORPORATION


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Note
H:     Discontinued
Operations

The disposition of the former Performance
Materials and Engineered Industrial Products segments represent
the disposal of segments under APB Opinion No. 30
(APB 30) (the accounting principle effective at the
respective measurement dates). Accordingly, the revenues, costs
and expenses, assets and liabilities, and cash flows of
Performance Materials and Engineered Industrial Products have
been segregated in the accompanying unaudited condensed
consolidated statement of income, unaudited condensed
consolidated balance sheet and unaudited condensed consolidated
statement of cash flows.

The following summarizes the results of
discontinued operations:

|                                                                                               |                                |                       |   |               |  |      |       |       |  |   |       |       |   |   |       |       |  
|---------------------------------------------------------------------------------------------- | ------------------------------ | --------------------- | - | ------------- |  | ---- | ----- | ----- |  | - | ----- | ----- | - | - | ----- | ----- | -
|                                                                                               |                                |                       |   |              
|                                                                                               |                                | Three Months          |   | Nine Months  
|                                                                                               |                                | Ended                 |   | Ended        
|                                                                                               |                                | September 30,         |   | September 30,
|                                                                                               |                                |                       |   |              
|                                                                                               |                                | 2002                  |   | 2001          |  | 2002 |       | 2001 
|                                                                                               |                                |                       |   |               |  |      |       |      
|                                                                                               |                                |                      
|                                                                                               |                                | (Dollars in millions)
|Sales:                                                                                         |                                |                       |   |               |  |      |       |       |  |   |       |       |   |   |       |      
|                                                                                               | Performance Materials          |                       | $ |              |  |      | $     |      |  |   | $     |      |   |   | $     | 187.0 |  
|                                                                                               | Engineered Industrial Products |                       |   |              |  |      |       | 151.0 |  |   |       | 289.5 |   |   |       | 487.5 |  
|                                                                                               |                                |                       |   |               |  |      |       |       |  |   |       |       |   |   |       |      
|                                                                                               |                                | $                     |  |               |  | $    | 151.0 |       |  | $ | 289.5 |       |   | $ | 674.5 |      
|                                                                                               |                                |                       |   |               |  |      |       |       |  |   |       |       |   |   |       |      
|Pretax income (loss) from operations:                                                          |                                |                       |   |               |  |      |       |       |  |   |       |       |   |   |       |      
|                                                                                               | Performance Materials          |                       | $ |              |  |      | $     |      |  |   | $     |      |   |   | $     | (3.6  | )
|                                                                                               | Engineered Industrial Products |                       |   |              |  |      |       | 12.9  |  |   |       | (13.5 | ) |   |       | 48.2  |  
|                                                                                               |                                |                       |   |               |  |      |       |       |  |   |       |       |   |   |       |      
|                                                                                               |                                |                       |  |               |  |      | 12.9  |       |  |   | (13.5 | )     |   |   | 44.6  |      
|Income tax (expense) benefit                                                                   |                                |                       |  |               |  |      | (4.9  | )     |  |   | 4.9   |       |   |   | (16.6 | )    
|Distributions on Trust preferred securities                                                    |                                |                       |  |               |  |      | (1.9  | )     |  |   | (3.3  | )     |   |   | (5.9  | )    
|Gain on sale of Performance Materials (net of
    income tax expense of $54.9 million in 2001) |                                |                       |  |               |  |      |      |       |  |   |      |       |   |   | 93.5  |      
|                                                                                               |                                |                       |   |               |  |      |       |       |  |   |       |       |   |   |       |      
|Income (loss) from discontinued operations                                                     |                                | $                     |  |               |  | $    | 6.1   |       |  | $ | (11.9 | )     |   | $ | 115.6 |      
|                                                                                               |                                |                       |   |               |  |      |       |       |  |   |       |       |   |   |       |      



| |                      
| | ---------------------
| | Performance Materials

On February 28, 2001, we completed the sale
of the Performance Materials segment to an investor group led by
AEA Investors, Inc. for approximately $1.4 billion. Total net
proceeds, after anticipated tax payments and transaction costs,
included approximately $1 billion in cash and
$172 million in payment-in-kind securities (PIK
notes) issued by the buyer. The transaction resulted in an
after-tax gain of $93.5 million. Our former Performance
Materials business now operates as an independent company known
as Noveon International Inc. (Noveon). During the
second quarter of 2002, we and Noveon resolved a dispute over
the computation of a working capital adjustment. The resolution
of this matter had no effect on the previously reported gain.

In July 2002, we entered into an agreement with
Noveon to amend certain provisions of the PIK notes held by us
to give Noveon the option to prepay the securities at a discount
greater than the original discount if they are prepaid on or
before February 28, 2003. As a result of prepayments made
in June and October 2002, Noveon has prepaid a total of
$62.5 million of the outstanding principal of the PIK notes
for $49.8 million in cash. Because these prepayments did
not exceed the original discount recorded at the inception of
the note, no gain or loss was required to be recognized. Should
Noveon prepay the securities in full on or before
February 28, 2003, the cash received could be less than the
then recorded amount of the securities by approximately $4
million.

11



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##### 



GOODRICH CORPORATION


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                                   
| | ----------------------------------
| | Engineered Industrial
    Products

On May 31, 2002, we completed the tax-free
spin-off of our Engineered Industrial Products (EIP)
segment. The spin-off was effected through a tax-free
distribution to our shareholders of all of the capital stock of
EnPro Industries, Inc. (EnPro), then a wholly owned
subsidiary of Goodrich. In the spin-off, our shareholders
received one share of EnPro common stock for every five shares
of our common stock owned on the record date, May 28, 2002.

At the time of the spin-off, EnPros only
material asset was all of the capital stock and certain
indebtedness of Coltec Industries Inc (Coltec).
Coltec and its subsidiaries own substantially all of the assets
and liabilities of the EIP segment, including the associated
asbestos liabilities and related insurance.

Prior to the spin-off, Coltec also owned and
operated an aerospace business. Before completing the spin-off,
Coltecs aerospace business assumed all intercompany
balances outstanding between Coltec and Goodrich and Coltec then
transferred to us by way of a dividend all of the assets,
liabilities and operations of Coltecs aerospace business,
including these assumed balances. Following this transfer and
prior to the spin-off, all of the capital stock of Coltec was
contributed to EnPro, with the result that at the time of the
spin-off Coltec was a wholly owned subsidiary of EnPro.

In connection with the spin-off, we and EnPro
entered into a Distribution Agreement, a Tax Matters Agreement,
a Transition Services Agreement, an Employee Matters Agreement
and an Indemnification Agreement, which govern the relationship
between us and EnPro after the spin-off and provide for the
allocation of employee benefits, tax and other liabilities and
obligations attributable to periods prior to the spin-off.

The spin-off was recorded as a dividend and
resulted in a reduction in Shareholders Equity of
$399.9 million representing the recorded value of net
assets of the business distributed (including cash of
$56.0 million). The Distribution Agreement provides for
certain post-distribution adjustments relating to the amount of
cash to be included in the net assets distributed. At
September 30, 2002, we had recorded an account receivable
for $16.6 million from EnPro with respect to these
adjustments; however, the final adjustment amount has not been
determined. The difference, if any, between the adjustment
amount and the account receivable will be recorded as an
adjustment to the dividend.

Prior to the spin-off, $150 million of
convertible trust preferred securities (TIDES) were
outstanding as an obligation of Coltec Capital Trust and were
reflected in liabilities of discontinued operations. The
securities bear interest at a rate of 5 1/4% and are
convertible into shares of both Goodrich and EnPro common stock
until April 15, 2028. Prior to the spin-off, Coltec
acquired certain call options for Goodrich common stock in order
to partially hedge its exposure to fluctuations in the market
price of Goodrich stock subsequent to the spin-off. The TIDES
and the call options belong to EnPro (through its wholly-owned
subsidiary Coltec) following the spin-off; however, certain
payments with respect to the TIDES remain guaranteed by us.

Note I:     Financing
Arrangements

In May 2002, we issued $296.9 million
aggregate principal amount of 7 1/2% Notes due 2008 in
exchange for a like principal amount of Coltecs
7 1/2% Senior Notes due 2008. All $296.9 million of
Coltec Senior Notes acquired by us in the exchange offer were
sold to Coltec and thereafter cancelled. The remaining
$3.1 million of outstanding Coltec Senior Notes remain
outstanding as the obligation of Coltec, which is now a wholly
owned subsidiary of EnPro.

We have entered into a 364-day credit facility
with a syndicate of financial institutions that provided
$1.5 billion in bridge financing for the acquisition of
TRWs Aeronautical Systems businesses (see Note N).
This facility expires on July 29, 2003. We expect the
bridge financing to be repaid using the net

12



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##### 



GOODRICH CORPORATION


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

proceeds from the proposed sale of approximately
$200 million of our common stock, the net proceeds from the
proposed sale of approximately $900 million principal
amount of our senior notes and the net proceeds of approximately
$400 million from the sale of non-core operating and
non-operating assets. The credit facility provides for mandatory
prepayment of the loan from the proceeds of certain
dispositions, equity issuances or debt incurrences.

During the third quarter of 2002, we renewed our
$325 million 364-day syndicated revolving credit facility.
In total, our syndicated revolving credit facilities now consist
of a $425 million three-year agreement expiring in December
2004 and the new $325 million 364-day agreement expiring in
September 2003. We intend to renew the $325 million 364-day
credit facility prior to its expiration date. At
September 30, 2002, $495 million was unused and
available under these committed revolving credit facilities.

Borrowing under the $1.5 billion 364-day
credit facility and our syndicated revolving credit facilities
is conditioned upon compliance with financial and other
covenants set forth in the related agreements, including
covenants relating to leverage (measured as the ratio of debt to
adjusted earnings) and consolidated net worth. We currently are
in compliance with all such covenants. These credit facilities
do not contain any rating downgrade triggers that would
accelerate the maturity of our indebtedness thereunder. However,
a ratings downgrade would result in an increase in the interest
rate and fees payable under the credit facilities. Such a
downgrade also could adversely affect our ability to renew
existing, or obtain access to new credit facilities in the
future and could increase the cost of such new facilities.

In addition to the above, we had committed
foreign lines of credit and overdraft facilities at
September 30, 2002 of $7.8 million, all of which was
available at that date.

We also maintain $100 million of uncommitted
domestic money market facilities with various banks to meet
short-term borrowing requirements. As of September 30, 2002,
$71 million of these facilities was unused and available.
These uncommitted credit facilities are provided by a small
number of commercial banks that also provide us with committed
credit through the syndicated revolving credit facilities and
with various trust, foreign exchange and other services. As a
result of these established relationships, we believe that our
uncommitted facilities are a reliable and cost-effective source
of liquidity.

We have an effective shelf registration statement
that would permit us to sell up to $2.4 billion of debt
securities, series preferred stock, common stock, stock purchase
contracts and stock purchase units. Net proceeds from the
proposed sale of shares of common stock and the proposed
issuance of senior notes will be used to repay a portion of the
amounts outstanding under our $1.5 billion, 364-day credit
facility. The net proceeds from any other securities issued
pursuant to the shelf registration statement are expected to be
used for general corporate purposes unless such proceeds are
required to be applied to repayment of borrowings under our
$1.5 billion, 364-day credit facility.

Note
J:     Off-Balance Sheet
Arrangements

Lease
Agreements

We financed our use of certain equipment,
including corporate aircraft, under committed lease arrangements
provided by financial institutions. These arrangements allow us
to claim a deduction for the tax depreciation on the assets,
rather than the lessor, and allowed us to lease up to a maximum
of $95.0 million at September 30, 2002. Since the
terms of these arrangements meet the accounting definition of
operating lease arrangements, the aggregate sum of future
minimum lease payments is not reflected on our consolidated
balance sheet. At September 30, 2002, future minimum lease
payments under these arrangements approximated
$59.6 million. We also have various other operating lease

13



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##### 



GOODRICH CORPORATION


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

agreements whose future minimum lease payments
approximated $106.2 million at September 30, 2002. For
additional information, see Note I of our 2001 consolidated
financial statements.

Sale of
Receivables

At September 30, 2002, we had in place a
trade receivables securitization program pursuant to which we
may sell trade receivables up to a maximum of $110 million.
Accounts receivable sold under this program were
$75.4 million at September 30, 2002.

Continued availability of the securitization
program is conditioned upon compliance with covenants, related
primarily to operation of the securitization, set forth in the
related agreements. We currently are in compliance with all such
covenants. The securitization agreement includes a rating
downgrade trigger pursuant to which the agreement may be
terminated upon a downgrade of our debt ratings below BB- by
Standard & Poors or Ba3 by Moodys Investor
Services. If such an event were to occur, we expect that we
would have sufficient capital resources through our existing
revolving credit facilities to meet our needs.

During 2000, we entered into an agreement to sell
certain long-term receivables. This agreement contained recourse
provisions under which we were required to repurchase
receivables in certain events. In August 2002, we repurchased
$20.4 million of receivables as a result of a payment
default by the primary obligor and terminated this agreement.

Note
K:     Derivatives and Hedging
Activities

Cash Flow
Hedge

One of our subsidiaries conducts a substantial
portion of its business in Euros but has significant sales
contracts that are denominated in US dollars. In March 2002, we
entered into 21 individual forward contracts to exchange US
dollars for Euros. A contract will mature each month between
April 2002 and December 2003. The forward contracts are used to
mitigate the potential volatility to cash flow arising from
changes in the currency exchange rates.

The hedges are being accounted for as cash flow
hedges. The derivatives are recorded at fair value with the
offset reflected in accumulated other comprehensive income. The
fair value of the hedges at September 30, 2002 was an asset
of $2.8 million.

The $2.8 million gain recorded in
accumulated other comprehensive income will be reflected in
income as the individual contracts mature, and the hedged item
impacts earnings. As of September 30, 2002, the portion of
the $2.8 million gain that would be reclassified into
earnings as an increase in sales in the next 12 months is a
gain of $2.4 million.

Fair Value
Hedge

In September 2002, we terminated an interest rate
swap which was accounted for as a fair value hedge of our fixed
interest rate exposure on our $200 million principal amount
of 6.60% Notes due 2009. At termination, we received
$29.4 million, comprised of a $2.6 million receivable
representing the amount owed on the interest rate swap from the
previous settlement date and $26.8 million representing the
fair value of the interest rate swap at the time of termination.

The carrying amount of the $200 million of
6.60% Notes due 2009 has been increased by $26.8 million
representing the change in fair value of the debt due to changes
in interest rates for the period hedged. This amount will be
amortized as a reduction to interest expense over the remaining
term of the debt.

14



---



##### 



GOODRICH CORPORATION


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Note L:     New
Accounting Standards

In June 2001, the FASB issued Statement
No. 143 Accounting for Asset Retirement
Obligations (SFAS 143). SFAS 143
addresses financial accounting and reporting for obligations
associated with the retirement of tangible long-lived assets and
the associated asset retirement costs. It applies to legal
obligations associated with the retirement of long-lived assets
that result from the acquisition, construction, development
and/or the normal operation of a long-lived asset, except for
certain obligations of lessees. SFAS 143 is effective for
financial statements issued for fiscal years beginning after
June 15, 2002. We are currently reviewing SFAS 143 and
intend to implement it no later than January 1, 2003.

In October 2001, the FASB issued Statement
No. 144 Accounting for the Impairment or Disposal of
Long-Lived Assets (SFAS 144). SFAS 144
supersedes FASB Statement No. 121 Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of (SFAS 121); however it
retains the fundamental provisions of that statement related to
the recognition and measurement of the impairment of long-lived
assets to be held and used. In addition,
SFAS 144 provides more guidance on estimating cash flows
when performing a recoverability test, requires that a
long-lived asset (group) to be disposed of other than by
sale (e.g. abandoned) be classified as held and used
until it is disposed of, and establishes more restrictive
criteria to classify an asset (group) as held for
sale. SFAS 144 is effective for fiscal years
beginning after December 15, 2001. The adoption of
SFAS 144 did not have a material impact on our consolidated
financial condition or results of operations.

In April 2002, the FASB issued Statement of
Financial Accounting Standards No. 145 Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement
No. 13, and Technical Corrections
(SFAS 145). SFAS 145 will require gains and
losses on extinguishments of debt to be classified as income or
loss from continuing operations rather than as extraordinary
items as previously required under Statement of Financial
Accounting Standards No. 4 (SFAS 4).
Extraordinary treatment will be required for certain
extinguishments as provided in APB Opinion No. 30.
SFAS 145 also amends Statement of Financial Accounting
Standards No. 13 to require certain modifications to
capital leases be treated as a sale-leaseback and modifies the
accounting for sub-leases when the original lessee remains a
secondary obligor (or guarantor). SFAS 145 is effective for
financial statements issued after May 15, 2002, and with
respect to the impact of the reporting requirements of changes
made to SFAS 4 for fiscal years beginning after
May 15, 2002. The adoption of the applicable provisions of
SFAS 145 did not have an effect on our financial statements.

In June 2002, the FASB issued Statement of
Financial Accounting Standards No. 146, Accounting
for Costs Associated with Exit or Disposal Activities
(SFAS 146). This Statement nullifies Emerging Issues
Task Force Issue No. 94-3 Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a
Restructuring). SFAS 146 applies to costs associated
with an exit activity that does not involve an entity newly
acquired in a business combination or with a disposal activity
covered by SFAS 144. SFAS 146 is effective for exit or
disposal activities that are initiated after December 31,
2002, with earlier application encouraged. We are currently
reviewing SFAS 146 and intend to implement it no later than
January 1, 2003.

Note
M:     Contingencies



| |        
| | -------
| | General

There are pending or threatened against us or
subsidiaries various claims, lawsuits and administrative
proceedings, all arising from the ordinary course of business
with respect to commercial, product liability, asbestos and
environmental matters, which seek remedies or damages. We
believe that any liability that may finally be determined with
respect to commercial and non-asbestos product liability claims
should not

15



---



##### 



GOODRICH CORPORATION


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

have a material effect on our consolidated
financial position or results of operations. From time to time,
we are also involved in legal proceedings as a plaintiff
involving contract, patent protection, environmental and other
matters. Gain contingencies, if any, are recognized when they
are realized.



| |              
| | -------------
| | Environmental

Environmental liabilities are recorded when our
liability is probable and the costs are reasonably estimable,
which generally is not later than at completion of a feasibility
study or when we have recommended a remedy or have committed to
an appropriate plan of action. The liabilities are reviewed
periodically and, as investigations and remediation proceed,
adjustments are made as necessary. Liabilities for losses from
environmental remediation obligations do not consider the
effects of inflation, and anticipated expenditures are not
discounted to their present value. The liabilities are not
reduced by possible recoveries from insurance carriers or other
third parties, but do reflect anticipated allocations among
potentially responsible parties at federal Superfund sites or
similar state-managed sites and an assessment of the likelihood
that such parties will fulfill their obligations at such sites.
The measurement of environmental liabilities by us is based on
currently available facts, present laws and regulations, and
current technology. Such estimates take into consideration our
prior experience in site investigation and remediation, the data
concerning cleanup costs available from other companies and
regulatory authorities, and the professional judgment of our
environmental specialists in consultation with outside
environmental specialists, when necessary.

We are subject to various domestic and
international environmental laws and regulations which may
require that we investigate and remediate the effects of the
release or disposal of materials at sites associated with past
and present operations, including sites at which we have been
identified as a potentially responsible party under the federal
Superfund laws and comparable state laws. We are currently
involved in the investigation and remediation of a number of
sites under these laws. Estimates of our liability are further
subject to uncertainties regarding the nature and extent of site
contamination, the range of remediation alternatives available,
evolving remediation standards, imprecise engineering
evaluations and estimates of appropriate cleanup technology,
methodology and cost, the extent of corrective actions that may
be required, and the number and financial condition of other
potentially responsible parties, as well as the extent of their
responsibility for the remediation. Accordingly, as
investigation and remediation of these sites proceed, it is
likely that adjustments in our accruals will be necessary to
reflect new information. The amounts of any such adjustments
could have a material adverse effect on our results of
operations in a given period, but the amounts, and the possible
range of loss in excess of the amounts accrued, are not
reasonably estimable. Based on currently available information,
however, we do not believe that future environmental costs in
excess of those accrued with respect to sites with which we have
been identified as a potentially responsible party are likely to
have a material adverse effect on our financial condition. There
can be no assurance, however, that additional future
developments, administrative actions or liabilities relating to
environmental matters will not have a material adverse effect on
our results of operations in a given period.

At September 30, 2002, our liabilities for
environmental remediation obligations totaled
$84.0 million, of which $9.1 million was included in
current liabilities as Accrued Liabilities. Of the
$84.0 million, $12.3 million is associated with
ongoing operations and $71.7 million is associated with
businesses previously disposed of or discontinued.

The timing of expenditures depends on a number of
factors that vary by site, including the nature and extent of
contamination, the number of potentially responsible parties,
the timing of regulatory approvals, the complexity of the
investigation and remediation, and the standards for
remediation. We expect that we will expend present accruals over
many years, and will complete remediation of all sites with
which we

16



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##### 



GOODRICH CORPORATION


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

have been identified in up to thirty years. This
period includes operation and monitoring costs which are
generally incurred over 15 to 25 years.

Tolo
Litigation

In May 2000, we and our subsidiary Rohr, Inc.
(Rohr), were served with complaints in a lawsuit
filed in the Superior Court of Orange County, California, by
former shareholders and certain former employees of Tolo, Inc.
Tolo, Inc. is a subsidiary of Rohr that was acquired in 1997.
The former shareholders alleged that we and Rohr breached the
stock purchase agreement by failing to pay $2.4 million
under the terms of the agreement. In September 2001, a jury
found that we were liable to the shareholders for the
$2.4 million retained by Rohr under the stock purchase
agreement and were also assessed punitive damages of
$48 million. The court subsequently reduced the punitive
damage award to $24 million. We and Rohr have appealed the
judgment.

At the time of the purchase, we established a
liability of $2.4 million relating to the amount withheld
by Rohr pursuant to the stock purchase agreement. We have not
established a liability for the punitive damages award of
$24 million, which was based on the plaintiffs
fraudulent concealment claim, for the reasons set forth below.

We and our legal counsel believe that there were
numerous points of reversible error in the trial that make it
more likely than not that the judgment will be reversed or
vacated on appeal. First, we believe the plaintiffs fraud
claim is legally deficient under California law and should be
reversed. If the fraud claim is not reversed, we should, at a
minimum, be granted a new trial on the fraudulent concealment
claim because the trial court permitted plaintiffs to add this
claim late in the trial but did not allow us to introduce
evidence to defend against it. We also believe that the trial
court made numerous prejudicial errors regarding the admission
and exclusion of evidence relating to the fraud claims, which
further supports the grant of a new trial. And finally, we
believe that the trial courts directed verdict on
plaintiffs breach of contract claim should be set aside
and a new trial granted because, among other things, there was
sufficient evidence for the jury to find for us on this claim.

Asbestos

We and certain of our subsidiaries have also been
named as defendants in various actions by plaintiffs alleging
injury or death as a result of exposure to asbestos fibers.
These actions primarily relate to previously owned businesses
(other than asbestos-related claims of EIP discussed above). We
believe that we have substantial insurance coverage available to
us related to any remaining claims. As a result, we believe that
these pending and reasonably anticipated future actions are not
likely to have a material adverse effect on our financial
condition or results of operations.

We and certain of our subsidiaries are also
defendants in other asbestos-related lawsuits or claims
involving maritime workers, medical monitoring claimants,
co-defendants and property damage claimants. Based on our past
experience, we believe that these categories of claims are not
likely to have a material adverse effect on our financial
condition or results of operations.

Discontinued
Operations

At the time of the EIP spin-off, two subsidiaries
of Coltec were defendants in a significant number of personal
injury claims relating to alleged exposure to
asbestos-containing products sold by those subsidiaries. It is
possible that asbestos-related claims might be asserted against
us on the theory that we have some responsibility for the
asbestos-related liabilities of EnPro, Coltec or its
subsidiaries, even though the activities that led to those
claims occurred prior to our ownership of any of those
subsidiaries. Also, it is possible that a claim could be
asserted against us that Coltecs dividend of its aerospace
business to us

17



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GOODRICH CORPORATION


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

prior to the spin-off was made at a time when
Coltec was insolvent or caused Coltec to become insolvent. Such
a claim could seek recovery from us on behalf of Coltec of the
fair market value of the dividend.

No such claims have been asserted against us to
date. We believe that we would have substantial legal defenses
against any such claims. In addition, the agreement between
EnPro and us that was used to effectuate the spin-off provides
us with an indemnification from EnPro covering, among other
things, these liabilities. Any such asbestos-related claims
would likely require, as a practical matter, that Coltecs
subsidiaries were unable to satisfy their asbestos-related
liabilities and that Coltec was found to be responsible for
these liabilities and was unable to meet its financial
obligations. We believe any such claims would be without merit
and that Coltec was solvent both before and after the dividend.
If we are ultimately found to be responsible for the
asbestos-related liabilities of Coltecs subsidiaries, we
believe it would not have a material adverse effect on our
financial condition, but could have a material adverse effect on
our results of operations and cash flows in a particular period.
However, because of the uncertainty as to the number, timing and
payments related to future asbestos-related claims, there can be
no assurance that any such claims will not have a material
adverse effect on our financial condition, results of operations
and cash flows. If a claim related to the dividend of
Coltecs aerospace business were successful, it could have
a material adverse impact on our financial condition, results of
operations and cash flows.

Guarantees

We have guaranteed amounts owed by Coltec Capital
Trust with respect to the $150 million of outstanding TIDES
and have guaranteed Coltecs performance of its obligations
with respect to the TIDES and the underlying Coltec convertible
subordinated debentures. Following the spin-off of the EIP
segment, the TIDES remained outstanding as an obligation of
Coltec Capital Trust and our guarantee with respect to the TIDES
remains an obligation of ours. EnPro, Coltec and Coltec Capital
Trust have agreed to indemnify us from any costs and liabilities
arising under or related to the TIDES after the spin-off.

In addition to our guarantee of the TIDES, we
have an outstanding contingent liability for guaranteed debt and
lease payments of $4.6 million and for letters of credit of
$30.6 million at September 30, 2002.

US
Airways

On August 11, 2002, US Airways announced
that it had filed for protection under Chapter 11 of the
United States Bankruptcy Code. As of September 30, 2002, we
had accounts receivable from US Airways of approximately
$2.6 million against which a valuation reserve of
$1.9 million has been recorded in the third quarter of
2002. In addition, as of September 30, 2002, we had
approximately $3.4 million of unamortized sales incentives
recorded as Other Assets and a 50 percent-owned investee had
unamortized sales incentives recorded of approximately
$1.6 million. We continue to provide US Airways components
under post-bankruptcy protection and to assess the realization
of the above pre-bankruptcy assets as more information becomes
available.

Certain
Aerospace Contracts

Our Aerostructures business also re-engines 727
aircraft (the Super 27 program). The re-engining
enables these aircraft to meet sound attenuation requirements as
well as improve their fuel efficiency. At September 30,
2002, we had $45.2 million of inventory on our balance
sheet, as well as accounts and notes receivable of
$61.8 million with respect to the Super 27 program. At June
30, 2002, $20.4 million of these notes receivable had been
sold to a financial institution. The agreement relating to the
sale contained recourse provisions. Due to a default by the
primary obligor, we repurchased the notes receivable in August
2002 and the agreement was terminated. We believe that the
recorded value of the notes receivable is less than the fair
value of the underlying collateral. Collection of this
receivable, as well as

18



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##### 



GOODRICH CORPORATION


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

the recovery of some portion of our investment in
existing inventory balances, may be negatively affected should
the overall deterioration in the commercial aerospace market
continue or if the market for re-engined Super 27 program
aircraft does not strengthen. Because of these conditions, we
will continue to assess the value of these assets and their
ultimate recovery.

Our Aerostructures business has a contract with
Boeing on the B717-200 program that is subject to certain risks
and uncertainties. Recovery of pre-production inventory balances
of $32.0 million as of September 30, 2002 is subject to
Boeings future production rate and delivery schedule as
well as our future cost structure and learning curve assumptions.

Note N:     Event
Subsequent to September 30, 2002

On October 1, 2002, we completed our
acquisition of TRW Inc.s Aeronautical Systems businesses
for approximately $1.5 billion in cash. The acquisition
included the purchase of substantially all of the Aeronautical
Systems businesses assets and the assumption of certain
liabilities as defined in the Master Agreement of Purchase and
Sale. The acquisition will be accounted for using the purchase
method in accordance with Financial Accounting Standard No. 141
Business Combinations. The acquired businesses
design and manufacture commercial and military aerospace systems
and equipment, including engine controls, flight controls, power
systems, cargo systems, hoists and winches and actuation
systems. The businesses will enhance our global operations with
approximately 6,200 employees in 22 facilities in nine
countries, including manufacturing and service operations in the
United Kingdom, France, Germany, Canada, the United States and
several Asia/ Pacific countries. The acquired businesses will
expand the number of products, systems and services that we can
deliver to aircraft manufacturers and operators. Because the
businesses have previously been operated as one business
segment, we will continue to report the results of operations as
a separate business segment until our integration plan is
completed in 2003. The accompanying condensed consolidated
financial statements do not include assets, liabilities or
operations related to these businesses as the acquisition was
not completed until after September 30, 2002.

The purchase price payable by us to TRW Inc. for
the acquisition of the Aeronautical Systems businesses is
subject to potential upward or downward adjustment after the
closing based on the difference between the net assets of the
businesses on October 1, 2002 and the net assets of the
businesses on May 31, 2002, both calculated in the manner
set forth in the Master Agreement of Purchase and Sale. The
purchase price will also be adjusted based on the funding status
of certain pension plans and other employee benefit arrangements.

The allocation of the purchase price will be
performed based on the assignment of fair values to assets
acquired and liabilities assumed. Fair values will be based, in
part, on appraisals of certain fixed assets and intangible
assets. We believe that the fair values to be assigned to
identifiable intangible assets, including those that have
definite lives, may be significant.

19



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##### 



Item 2.     Managements
Discussion and Analysis of Financial Position and Results of
Operations

THIS MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS CONTAINS
FORWARD-LOOKING STATEMENTS. SEE FORWARD-LOOKING
STATEMENTS FOR A DISCUSSION OF THE UNCERTAINTIES, RISKS
AND ASSUMPTIONS ASSOCIATED WITH THESE STATEMENTS.

AS DISCUSSED BELOW, THE COMPANYS FORMER
ENGINEERED INDUSTRIAL PRODUCTS AND PERFORMANCE MATERIALS
SEGMENTS HAVE BEEN ACCOUNTED FOR AS DISCONTINUED OPERATIONS.
UNLESS OTHERWISE NOTED HEREIN, DISCLOSURES PERTAIN ONLY TO THE
COMPANYS CONTINUING OPERATIONS.

Overview

We are one of the largest worldwide suppliers of
aerospace components, systems and services to the large
commercial, regional, business and general aviation markets. We
are also a leading supplier of aircraft and satellite systems
products to the global military and space markets. Our business
is conducted on a global basis with manufacturing, service and
sales undertaken in various locations throughout the world.

Due to the sale of our Performance Materials
segment in 2001, as well as the spin-off of our Engineered
Industrial Products segment in 2002, we have redefined our
segments. Our operations are now classified into four reportable
business segments: Aerostructures and Aviation Technical
Services, Landing Systems, Engine and Safety Systems, and
Electronic Systems.

Aerostructures and Aviation Technical
Services:Aerostructures is a leading
supplier of nacelles, pylons, thrust reversers and related
aircraft engine housing components. The aviation technical
services division performs comprehensive total aircraft
maintenance, repair, overhaul and modification services for many
commercial airlines, independent operators, aircraft leasing
companies and airfreight carriers.

Landing Systems:Landing Systems provides systems and components pertaining to
aircraft taxi, take-off, landing and stopping. Several divisions
within the segment are linked by their ability to contribute to
the integration, design, manufacture and service of entire
aircraft undercarriage systems, including landing gear, wheels
and brakes and certain brake controls.

Engine and Safety
Systems:Engine and Safety Systems
produces engine and fuel controls, pumps, fuel delivery systems,
as well as structural and rotating components such as discs,
blisks, shafts and airfoils for both aerospace and industrial
gas turbine applications. This segment also produces aircraft
evacuation, de-icing and passenger restraint systems, as well as
ejection seats and crew and attendant seating.

Electronic Systems:Electronic Systems produces a wide array of products that
provide flight performance measurements, flight management, and
control and safety data. Included are a variety of sensors
systems that measure and manage aircraft fuel and monitor oil
debris; engine, transmission and structural health; and aircraft
motion control systems. The groups products also include
instruments and avionics, warning and detection systems, ice
detection systems, test equipment, aircraft lighting systems,
landing gear cables and harnesses, satellite control, data
management and payload systems, launch and missile telemetry
systems, airborne surveillance and reconnaissance systems and
laser warning systems.

20



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##### 



2002 Third Quarter and Year-To-Date
Results

The following table summarizes the Companys
results of operations for the three and nine months ended
September 30, 2002 and 2001.

|                                           |  |                                      |       |          |  |      |       |          |  |   |         |  |  |   |         | 
|------------------------------------------ |  | ------------------------------------ | ----- | -------- |  | ---- | ----- | -------- |  | - | ------- |  |  | - | ------- | 
|                                           |  |                                     
|                                           |  | Three Months Ended September 30,    
|                                           |  |                                     
|                                           |  |                                      |       | 2002(A)  |  |      |       | 2001(B) 
|                                           |  | 2002                                 |       | Adjusted |  | 2001 |       | Adjusted
|                                           |  |                                      |       |          |  |      |       |         
|                                           |  |                                     
|                                           |  | (In millions, except per share data)
|Sales                                      |  | $                                    | 882.1 |          |  | $    | 882.1 |          |  | $ | 1,051.9 |  |  | $ | 1,051.9 | 
|                                           |  |                                      |       |          |  |      |       |          |  |   |         |  |  |   |         | 
|Segment Operating Income                   |  | $                                    | 110.8 |          |  | $    | 118.0 |          |  | $ | 165.5   |  |  | $ | 166.9   | 
|                                           |  |                                      |       |          |  |      |       |          |  |   |         |  |  |   |         | 
|Income from Continuing Operations          |  | $                                    | 46.0  |          |  | $    | 50.9  |          |  | $ | 81.9    |  |  | $ | 83.0    | 
|Income (Loss) from Discontinued Operations |  |                                      |      |          |  |      |      |          |  |   | 6.1     |  |  |   |        | 
|                                           |  |                                      |       |          |  |      |       |          |  |   |         |  |  |   |         | 
|Net Income                                 |  | $                                    | 46.0  |          |  | $    | 50.9  |          |  | $ | 88.0    |  |  | $ | 83.0    | 
|                                           |  |                                      |       |          |  |      |       |          |  |   |         |  |  |   |         | 
|Diluted EPS                                |  | $                                    | 0.45  |          |  | $    | 0.50  |          |  | $ | 0.83    |  |  | $ | 0.77    | 
|                                           |  |                                      |       |          |  |      |       |          |  |   |         |  |  |   |         | 
|Net Cash Provided by Operating Activities  |  | $                                    | 193.1 |          |  |      |       |          |  | $ | 156.9   |  |  |   |         | 
|                                           |  |                                      |       |          |  |      |       |          |  |   |         |  |  |   |         | 
|Free Cash Flow(E)                          |  | $                                    | 184.6 |          |  |      |       |          |  | $ | 114.1   |  |  |   |         | 
|                                           |  |                                      |       |          |  |      |       |          |  |   |         |  |  |   |         | 

|                                           |  |                                      |         |          |  |      |         |          |  |   |         |  |  |   |         | 
|------------------------------------------ |  | ------------------------------------ | ------- | -------- |  | ---- | ------- | -------- |  | - | ------- |  |  | - | ------- | 
|                                           |  |                                     
|                                           |  | Nine Months Ended September 30,     
|                                           |  |                                     
|                                           |  |                                      |         | 2002(C)  |  |      |         | 2001(D) 
|                                           |  | 2002                                 |         | Adjusted |  | 2001 |         | Adjusted
|                                           |  |                                      |         |          |  |      |         |         
|                                           |  |                                     
|                                           |  | (In millions, except per share data)
|Sales                                      |  | $                                    | 2,728.8 |          |  | $    | 2,728.8 |          |  | $ | 3,131.7 |  |  | $ | 3,131.7 | 
|                                           |  |                                      |         |          |  |      |         |          |  |   |         |  |  |   |         | 
|Segment Operating Income                   |  | $                                    | 340.0   |          |  | $    | 369.0   |          |  | $ | 477.5   |  |  | $ | 490.5   | 
|                                           |  |                                      |         |          |  |      |         |          |  |   |         |  |  |   |         | 
|Income from Continuing Operations          |  | $                                    | 154.2   |          |  | $    | 172.3   |          |  | $ | 228.0   |  |  | $ | 233.2   | 
|Income (Loss) from Discontinued Operations |  |                                      | (11.9   | )        |  |      |        |          |  |   | 115.6   |  |  |   |        | 
|Cumulative Effect of Change in Accounting  |  |                                      | (36.1   | )        |  |      |        |          |  |   |        |  |  |   |        | 
|                                           |  |                                      |         |          |  |      |         |          |  |   |         |  |  |   |         | 
|Net Income                                 |  | $                                    | 106.2   |          |  | $    | 172.3   |          |  | $ | 343.6   |  |  | $ | 233.2   | 
|                                           |  |                                      |         |          |  |      |         |          |  |   |         |  |  |   |         | 
|Diluted EPS                                |  | $                                    | 1.04    |          |  | $    | 1.65    |          |  | $ | 3.24    |  |  | $ | 2.17    | 
|                                           |  |                                      |         |          |  |      |         |          |  |   |         |  |  |   |         | 
|Net Cash Provided by Operating Activities  |  | $                                    | 356.2   |          |  |      |         |          |  | $ | 210.5   |  |  |   |         | 
|                                           |  |                                      |         |          |  |      |         |          |  |   |         |  |  |   |         | 
|Free Cash Flow(E)                          |  | $                                    | 343.9   |          |  |      |         |          |  | $ | 98.1    |  |  |   |         | 
|                                           |  |                                      |         |          |  |      |         |          |  |   |         |  |  |   |         | 



|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(A) |  | Results exclude the effect of a $7.2 million
    charge ($4.9 million after-tax), or $0.05 a diluted share
    for merger-related and consolidation costs.                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|(B) |  | Results exclude the effect of a $1.5 million
    charge ($1.1 million after-tax), or $0.01 a diluted share
    for merger-related and consolidation costs. Results also exclude
    the after-tax effect of income from discontinued operations
    ($6.1 million, or $0.07 a diluted share).                                                                                                                                                                                                                                                                                                 
|   
|(C) |  | Results exclude the effect of a
    $29.3 million charge ($19.7 million after-tax), or
    $0.19 a diluted share for merger-related and consolidation costs
    and a $2.4 million pre-tax gain ($1.6 million
    after-tax), or $0.02 a diluted share in other income
    (expense) from the sale of a portion of the Companys
    interest in a business. Results also exclude the after-tax
    effect of loss from discontinued operations ($11.9 million,
    or $0.09 a diluted share) and the cumulative effect of change in
    accounting ($36.1 million, or $0.35 a diluted share).
|   
|(D) |  | Results exclude the effect of a
    $14.9 million charge ($9.9 million after-tax), or
    $0.09 a diluted share for merger-related and consolidation costs
    and a $7.2 million pre-tax gain ($4.7 million
    after-tax), or $0.04 a diluted share in other income
    (expense) from the sale of a portion of the Companys
    interest in a business. Results also exclude the after-tax
    effect of income from discontinued operations
    ($115.6 million, or $1.12 a diluted share).                                                                                              

21



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##### 





|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(E) |  | Free cash flow is defined as operating cash flow
    from continuing operations adjusted for cash payments related to
    special items less capital expenditures. We believe free cash
    flow provides meaningful additional information on our operating
    results and on our ability to service our long-term debt and
    other fixed obligations and to fund our continued growth. Free
    cash flow should not be construed as an alternative to operating
    income(loss) as determined in accordance with generally accepted
    accounting principles in the United States (GAAP),
    as an alternative to cash flow from operating activities (as
    determined in accordance with GAAP), or as a measure of
    liquidity. Because free cash flow is not calculated in the same
    manner by all companies, our presentation may not be comparable
    to other similarly titled measures reported by other companies.

Special items, as used throughout this document,
include merger-related and consolidation costs, certain gains or
losses on the sale of businesses, results of discontinued
operations, asset impairment charges and other restructuring
costs.

Outlook

Goodrich, as well as the entire aerospace
industry, continues to experience weak market conditions in
commercial aerospace that have negatively impacted our customers
and demand for our products. We have proactively addressed these
issues by taking actions to realign our capacity and cost
structure with anticipated market demand.

Including the contributions of the TRW
Aeronautical Systems businesses for the fourth quarter, we
expect the full-year 2002 sales to be $3.90 to
$3.95 billion. Diluted earnings per share, excluding
special items, are expected to be in excess of $2.30.

Looking forward to 2003, we expect that while the
airline industry will continue to experience a challenging
environment, overall available seat miles, which are generally
correlated with aftermarket sales, should be flat, compared to
2002. Production of commercial transport aircraft (including
regional jets) is expected to be lower than 2002, in line with
public guidance from the manufacturers. Military and space sales
are expected to increase 5% to 10% in 2003.

Our expectations for Goodrich in 2003 are
dependent on a large number of factors. These factors include:
(a) the timing and net proceeds of the expected sale of
non-core assets; (b) the timing and number of shares issued
in the expected equity offering; (c) the timing and terms
of the expected debt offering; (d) the amount of increase
in non-cash pension expense; and (e) the payment of all, or
only a portion, of the Noveon payment-in-kind notes held by us.

We continue to realize significant savings from
our previously announced restructuring activities, and now
expect to exceed our prior expectations for headcount reductions
and annual savings. These activities are expected to be largely
complete by the end of 2002. Upon completion, it is expected
that these actions will result in reductions in total headcount
in excess of 3,200 personnel and annual pre-tax savings in
excess of $170 million. Additional restructuring
activities, including activities related to the TRW Aeronautical
Systems acquisition and the achievement of the synergy savings,
may be considered due to the continuing weak environment for
commercial aircraft production and lower expectations for the
air travel industry.

Acquisition of TRWs Aeronautical Systems
Businesses

On October 1, 2002, we completed our
acquisition of TRW Inc.s Aeronautical Systems businesses
for approximately $1.5 billion in cash. The acquired
businesses design and manufacture commercial and military
aerospace systems and equipment, including engine controls,
flight controls, power systems, cargo systems, hoists and
winches, and actuation systems. These businesses employ
approximately 6,200 employees in 22 facilities in nine
countries, including manufacturing and service operations in the
United Kingdom, France, Germany, Canada, the United States and
several Asia/ Pacific countries.

22



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##### 



We financed the acquisition through a
$1.5 billion, 364-day credit facility provided by of our
existing lenders. This facility expires on July 29, 2003.
We expect to repay amounts outstanding under the credit facility
from:



| |   |                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------
| |  | the net proceeds from the proposed sale of
    approximately $200 million of our common stock;                               
|
| |  | the net proceeds from the proposed sale of
    approximately $900 million of our debt securities; and                        
|
| |  | the net proceeds of approximately
    $400 million from the proposed sale of non-core operating
    and non-operating assets.

We expect to market the new equity and debt
securities during the fourth quarter of 2002.

As a result of integration activities with
respect to the TRW Aeronautical Systems businesses, we expect to
realize annual cost savings of approximately
$30-$40 million, net of anticipated incremental costs, by
the beginning of 2005. These cost savings are expected to result
from consolidation of duplicate facilities, reduction of
personnel, reduction of expenditures, expansion of procurement
initiatives, and the use of best practices across the combined
businesses.



| |                                                       
| | ------------------------------------------------------
| | Spin-Off of Engineered Industrial Products
    Segment

On May 31, 2002, we completed the tax-free
spin-off of our Engineered Industrial Products (EIP)
segment. The spin-off was effected through a tax-free
distribution to our shareholders of all of the capital stock of
EnPro Industries, Inc., then a wholly owned subsidiary of
Goodrich. In the spin-off, our shareholders received one share
of EnPro common stock for every five shares of our common stock
owned on the record date, May 28, 2002.

At the time of the spin-off, EnPros only
material asset was all of the capital stock and certain
indebtedness of Coltec Industries Inc (Coltec).
Coltec and its subsidiaries own substantially all of the assets
and liabilities of the EIP segment, including the associated
asbestos liabilities and related insurance.

Prior to the spin-off, Coltec also owned and
operated an aerospace business. Before completing the spin-off,
Coltecs aerospace business assumed all intercompany
balances outstanding between Coltec and us and Coltec then
transferred to us by way of a dividend all of the assets,
liabilities and operations of Coltecs aerospace business,
including these assumed balances. Following this transfer and
prior to the spin-off, all of the capital stock of Coltec was
contributed to EnPro, with the result that at the time of the
spin-off Coltec was a wholly owned subsidiary of EnPro.

In connection with the spin-off, we and EnPro
entered into a Distribution Agreement, a Tax Matters Agreement,
a Transition Services Agreement, and Employee Matters Agreement
and an Indemnification Agreement, which govern the relationship
between us and EnPro after the spin-off and provide for the
allocation of employee benefits, tax and other liabilities and
obligations attributable to periods prior to the spin-off.

The spin-off was recorded as a dividend and
resulted in a reduction in shareholders equity of
$399.9 million representing the recorded value of net
assets of the business distributed (including cash of
$56.0 million). The Distribution Agreement provides for
certain post-distribution adjustments relating to the amount of
cash to be included in the net assets distributed. At
September 30, 2002, we had recorded an account receivable
for $16.6 million from EnPro with respect to these
adjustments; however, the final adjustment amount has not been
determined. The difference, if any, between the final adjustment
amount and the account receivable will be recorded as an
adjustment to the dividend.

The $150 million of outstanding Coltec
Capital Trust 5 1/4% convertible trust preferred securities
(TIDES) that were reflected in liabilities of
discontinued operations remain outstanding as part of the EnPro
capital structure following the spin-off. The TIDES are
convertible into shares of both Goodrich and EnPro common stock
until April 15, 2028. We have guaranteed amounts owed by
Coltec Capital Trust with respect to the TIDES and have
guaranteed Coltecs performance of its obligations with
respect to the TIDES and the underlying Coltec convertible
subordinated debentures. EnPro, Coltec and Coltec

23



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##### 



Capital Trust have agreed to indemnify us form
any costs and liabilities arising under or related to the TIDES
after the spin-off.


Prior to the spin-off, Coltec acquired certain
call options on our common stock in order to partially hedge its
exposure to fluctuations in the market price of Goodrich stock
resulting from the TIDES. These call options remain an asset of
Coltec following the spin-off.



| |                          
| | -------------------------
| | Change in Dividend Policy

On May 17, 2002, we announced that our Board
of Directors had approved a change in our dividend policy to
achieve a net income payout ratio that we believe is consistent
with other leading aerospace companies. Specifically, our
quarterly dividend was reduced to 20 cents per share from
the previous level of 27.5 cents per share on its common
stock, effective with the regular quarterly dividend payable
July 1, 2002, to shareholders of record as of June 10,
2002.



| |                
| | ---------------
| | Noveon PIK Note

In July 2002, we entered into an agreement with
Noveon to amend certain provisions of the PIK notes held by us
to give Noveon the option to prepay the securities at a discount
greater than the original discount if they are prepaid on or
before February 28, 2003. As a result of prepayments made
in June and October 2002, Noveon has prepaid a total of
$62.5 million of the outstanding principal of the PIK notes
for $49.8 million in cash. Because these prepayments did
not exceed the original discount recorded at the inception of
the note, no gain or loss was required to be recognized. Should
Noveon prepay the securities in full on or before
February 28, 2003, the cash received could be less than the
then recorded amount of the securities by approximately $4
million.

Results of Operations



| |              
| | -------------
| | Total Company

Third Quarter of 2002 Compared With Third
Quarter of 2001

|                                           |                        |                       |       |       |  |   |         |       | 
|------------------------------------------ | ---------------------- | --------------------- | ----- | ----- |  | - | ------- | ----- | 
|                                           |                        |                      
|                                           |                        | Three Months Ended   
|                                           |                        | September 30,        
|                                           |                        |                      
|                                           |                        | 2002                  |       | 2001 
|                                           |                        |                       |       |      
|                                           |                        |                      
|                                           |                        | (Dollars in millions)
|Sales                                      |                        | $                     | 882.1 |       |  | $ | 1,051.9 |      
|                                           |                        |                       |       |       |  |   |         |      
|Segment Operating Income                   |                        |                       | 118.0 |       |  |   | 166.9   |      
|Corporate General and Administrative Costs |                        |                       | (10.1 | )     |  |   | (12.3   | )    
|Merger-related and Consolidation Costs     |                        |                       | (7.2  | )     |  |   | (1.5    | )    
|                                           |                        |                       |       |       |  |   |         |      
|                                           | Total Operating Income |                       |       | 100.7 |  |   |         | 153.1 | 
|Net Interest Expense                       |                        |                       | (16.9 | )     |  |   | (17.6   | )    
|Other Income (Expense)  net               |                        |                       | (11.1 | )     |  |   | (8.1    | )    
|Income Tax Expense                         |                        |                       | (24.0 | )     |  |   | (42.8   | )    
|Distribution on Trust Preferred Securities |                        |                       | (2.7  | )     |  |   | (2.7    | )    
|                                           |                        |                       |       |       |  |   |         |      
|Income from Continuing Operations          |                        |                       | 46.0  |       |  |   | 81.9    |      
|Income from Discontinued Operations        |                        |                       |      |       |  |   | 6.1     |      
|                                           |                        |                       |       |       |  |   |         |      
|                                           | Net Income             |                       | $     | 46.0  |  |   | $       | 88.0  | 
|                                           |                        |                       |       |       |  |   |         |      

Changes in sales and segment operating income are
discussed within the Business Segment Performance section below.

Corporate General and Administrative Costs of
$10.1 million during the third quarter were lower by
$2.2 million, or 17.9 percent, from the
$12.3 million recorded during the third quarter of 2001. The

24



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##### 



decrease was principally a result of lower
accruals for incentive compensation plans during the third
quarter of 2002 as compared to the same period of 2001.


Merger-related and consolidation costs of
$7.2 million and $1.5 million were recorded during the
third quarter of 2002 and 2001, respectively (see further
discussion in Note F of the accompanying unaudited condensed
consolidated financial statements). We expect to incur
additional merger-related and consolidation costs during the
remainder of 2002. The timing of these costs (accruable or
period costs) is dependent on the nature of the costs. These
charges will consist primarily of costs associated with the
reorganization of operating facilities and for employee
relocation and severance costs.

Interest expense  net decreased
$0.7 million from $17.6 million in 2001 to
$16.9 million during the third quarter of 2002. The
decrease was primarily attributable to lower interest expense.
Improved cash flow from operations, lower capital expenditures
and significantly lower interest rates reduced total interest
expense.

Other income (expense)  net
increased by $3.0 million from expense of $8.1 million
in the third quarter of 2001 to expense of $11.1 million in
the third quarter of 2002. During the third quarter of 2002, we
recorded expense of approximately $1.2 million relating to
the settlement of litigation. In addition, we sold certain real
estate of a previously discontinued business at a loss of
$0.3 million. The third quarter of 2002 also includes
approximately $0.7 million of legal costs related to litigation
monitoring.

Our estimated effective tax rate from continuing
operations during the third quarter of 2002 was
33.0 percent. This compares to an estimated effective tax
rate from continuing operations of 33.6 percent during the
third quarter of 2001. The estimated effective tax rate in the
third quarter of 2002 is consistent with the rate expected for
all of 2002.

Income from discontinued operations was
$6.1 million during the third quarter of 2001. On
May 31, 2002, we completed the tax-free spin-off of our
Engineered Industrial Products segment. As a result, there were
no discontinued operations during the third quarter of 2002.

First Nine Months of 2002 as Compared to the
First Nine Months of 2001

|                                           |                        |                       |         |       |  |   |         |       | 
|------------------------------------------ | ---------------------- | --------------------- | ------- | ----- |  | - | ------- | ----- | 
|                                           |                        |                      
|                                           |                        | Nine Months Ended    
|                                           |                        | September 30,        
|                                           |                        |                      
|                                           |                        | 2002                  |         | 2001 
|                                           |                        |                       |         |      
|                                           |                        |                      
|                                           |                        | (Dollars in millions)
|Sales                                      |                        | $                     | 2,728.8 |       |  | $ | 3,131.7 |      
|                                           |                        |                       |         |       |  |   |         |      
|Segment Operating Income                   |                        |                       | 369.0   |       |  |   | 490.5   |      
|Corporate General and Administrative Costs |                        |                       | (40.1   | )     |  |   | (41.2   | )    
|Merger-related and Consolidation Costs     |                        |                       | (29.3   | )     |  |   | (14.9   | )    
|                                           |                        |                       |         |       |  |   |         |      
|                                           | Total Operating Income |                       |         | 299.6 |  |   |         | 434.4 | 
|Net Interest Expense                       |                        |                       | (44.0   | )     |  |   | (64.4   | )    
|Other Income (Expense)  net               |                        |                       | (13.6   | )     |  |   | (15.2   | )    
|Income Tax Expense                         |                        |                       | (79.9   | )     |  |   | (118.9  | )    
|Distribution on Trust Preferred Securities |                        |                       | (7.9    | )     |  |   | (7.9    | )    
|                                           |                        |                       |         |       |  |   |         |      
|Income from Continuing Operations          |                        |                       | 154.2   |       |  |   | 228.0   |      
|Income (loss) from Discontinued Operations |                        |                       | (11.9   | )     |  |   | 115.6   |      
|Cumulative Effect of Change in Accounting  |                        |                       | (36.1   | )     |  |   |        |      
|                                           |                        |                       |         |       |  |   |         |      
|                                           | Net Income             |                       | $       | 106.2 |  |   | $       | 343.6 | 
|                                           |                        |                       |         |       |  |   |         |      

Changes in sales and segment operating income are
discussed within the Business Segment Performance section below.

Merger-related and consolidation costs of
$29.3 million and $14.9 million were recorded during
the first nine months of 2002 and 2001, respectively (see
further discussion in Note F of the accompanying

25



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##### 



unaudited condensed consolidated financial
statements). We expect to incur additional merger-related and
consolidation costs during the remainder of 2002. The timing of
these costs (accruable or period costs) is dependent on the
nature of the costs. These charges will consist primarily of
costs associated with the reorganization of operating facilities
and employee relocation and severance costs.


Interest expense  net decreased
$20.4 million from $64.4 million during the first nine
months of 2001 to $44.0 million during the first nine
months of 2002. Interest expense decreased approximately
$13.4 million during the first nine months of 2002 as
compared to the same period last year principally due to
significantly lower interest rates in 2002 as compared to 2001.
Interest income increased approximately $7.0 million over
the same period. The increase in interest income was due
primarily to interest on the Noveon PIK note for the full nine
months of 2002 and interest income of $5.4 million on the
F-14 claim settlement.

Other income (expense)  net
decreased $1.6 million from expense of $15.2 million
during the first nine months of 2001 to $13.6 million
during the first nine months of 2002. During the first nine
months of 2002 we recorded gains from the sale of an intangible
asset, including the resolution of certain prior claims,
amounting to $11.8 million and a gain from the sale of a
portion of an investment in a subsidiary of $2.4 million.
Offsetting these gains were losses related to the settlement of
litigation for approximately $1.2 million; the sale of
certain real estate of a previously discontinued business at a
loss of $0.3 million and approximately $0.7 of legal costs
related to litigation monitoring. During the first nine months
of 2001, we recorded a gain from the sale of a portion of an
investment in a subsidiary of $7.2 million.

Our estimated effective tax rate from continuing
operations during the first nine months of 2002 was
33.0 percent. This compares to an estimated effective tax
rate of 33.5 percent during the first nine months of 2001.
The estimated tax rate during the first nine months of 2002 is
consistent with the rate expected for all of 2002.

Income from discontinued operations decreased
$127.5 million from income during the first nine months of
2001 of $115.6 million to a loss of $11.9 million
during the first nine months of 2002. Sales from discontinued
operations declined from $674.5 million during the first
nine months of 2001 to $289.5 million during the first nine
months of 2002. The 2001 sales included two months of
Performance Material sales of $187.0 million which did not
recur in 2002. In addition, the first nine months of 2002
include only five months of EIP sales due to the EnPro spin-off,
which occurred on May 31, 2002. Also, the decrease results
from lower earnings from operations of the EIP segment,
discontinued in 2001, compared to the first nine months of 2002
resulting, in part, to a $11.0 million pre-tax charge for a
court ruling relating to an employee benefit matter of a
previously discontinued business. Fees and expenses related to
the spin-off recorded during the second quarter of 2002 also
contributed to the loss. Also, discontinued operations for the
first nine months of 2001 include the operations of the
Performance Materials segment for two months and the gain on
sale of that segment of $93.5 million.

During the second quarter of 2002, we performed
the first of the required impairment tests of goodwill and
indefinite lived intangible assets. Based on those results, we
determined that it was likely that goodwill relating to the
Aviation Technical Services reporting unit
(ATS) had been impaired. ATS is included in the
Aerostructures and Aviation Technical Services business segment.
During the third quarter of 2002, we completed our measurement
of the goodwill impairment and recognized an impairment of
$36.1 million (representing total goodwill of this
reporting unit), which was reported as a cumulative effect of an
accounting change in the first quarter of 2002. The results of
operations have been restated accordingly.

Business Segment Performance

Segment
Analysis

Our operations are classified into four
reportable business segments: Aerostructures and Aviation
Technical Services; Landing Systems; Engine and Safety Systems;
and Electronic Systems.

An expanded analysis of sales and operating
income by business segment follows.

26



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##### 



In the following tables, segment operating
income, as recorded, is total segment revenue reduced by
operating expenses directly identifiable with that business
segment. Segment operating income, as adjusted, is total segment
revenue reduced by operating expenses directly identifiable with
that business segment, except for merger-related and
consolidation costs which are presented separately (see further
discussion of merger-related and consolidation costs in Note C
and Note F of the accompanying unaudited condensed consolidated
financial statements).

Third Quarter 2002 Compared with Third Quarter
2001

|                                       |                                                |                                  |   |            |       |          |   |       |         |      |  |       |       |   |  |      |      |  |  |      |      | 
|-------------------------------------- | ---------------------------------------------- | -------------------------------- | - | ---------- | ----- | -------- | - | ----- | ------- | ---- |  | ----- | ----- | - |  | ---- | ---- |  |  | ---- | ---- | 
|                                       |                                                |                                 
|                                       |                                                | Three Months Ended September 30,
|                                       |                                                |                                 
|                                       |                                                |                                  |   |           
|                                       |                                                |                                  |   | % of Sales
|                                       |                                                |                                  |   |           
|                                       |                                                | 2002                             |   | 2001       |       | % Change |   | 2002  |         | 2001
|                                       |                                                |                                  |   |            |       |          |   |       |         |     
|                                       |                                                |                                 
|                                       |                                                | (Dollars in millions)           
|SALES:                                 |                                                |                                  |   |            |       |          |   |       |         |      |  |       |       |   |  |      |      |  |  |     
|                                       | Aerostructures and Aviation Technical Services |                                  | $ | 269.4      |       |          | $ | 369.0 |         |      |  | (27.0 | )     |   |  |      |      |  |  |      |     
|                                       | Landing Systems                                |                                  |   | 255.7      |       |          |   | 293.1 |         |      |  | (12.8 | )     |   |  |      |      |  |  |      |     
|                                       | Engine and Safety Systems                      |                                  |   | 158.8      |       |          |   | 190.0 |         |      |  | (16.4 | )     |   |  |      |      |  |  |      |     
|                                       | Electronic Systems                             |                                  |   | 198.2      |       |          |   | 199.8 |         |      |  | (0.8  | )     |   |  |      |      |  |  |      |     
|                                       |                                                |                                  |   |            |       |          |   |       |         |      |  |       |       |   |  |      |      |  |  |     
|                                       |                                                | Total Sales                      |   | $          | 882.1 |          |   | $     | 1,051.9 |      |  |       | (16.1 | ) |  |      |      |  |  |      |      | 
|                                       |                                                |                                  |   |            |       |          |   |       |         |      |  |       |       |   |  |      |      |  |  |     
|SEGMENT OPERATING INCOME, as recorded: |                                                |                                  |   |            |       |          |   |       |         |      |  |       |       |   |  |      |      |  |  |     
|                                       | Aerostructures and Aviation Technical Services |                                  | $ | 20.9       |       |          | $ | 60.3  |         |      |  | (65.3 | )     |   |  | 7.8  |      |  |  | 16.3 |     
|                                       | Landing Systems                                |                                  |   | 38.9       |       |          |   | 40.9  |         |      |  | (4.9  | )     |   |  | 15.2 |      |  |  | 14.0 |     
|                                       | Engine and Safety Systems                      |                                  |   | 16.3       |       |          |   | 35.3  |         |      |  | (53.8 | )     |   |  | 10.3 |      |  |  | 18.6 |     
|                                       | Electronic Systems                             |                                  |   | 34.7       |       |          |   | 29.0  |         |      |  | 19.7  |       |   |  | 17.5 |      |  |  | 14.5 |     
|                                       |                                                |                                  |   |            |       |          |   |       |         |      |  |       |       |   |  |      |      |  |  |     
|                                       |                                                | Segment Operating Income         |   | $          | 110.8 |          |   | $     | 165.5   |      |  |       | (33.1 | ) |  |      | 12.6 |  |  |      | 15.7 | 
|                                       |                                                |                                  |   |            |       |          |   |       |         |      |  |       |       |   |  |      |      |  |  |     
|SEGMENT OPERATING INCOME, as adjusted: |                                                |                                  |   |            |       |          |   |       |         |      |  |       |       |   |  |      |      |  |  |     
|                                       | Aerostructures and Aviation Technical Services |                                  | $ | 22.4       |       |          | $ | 61.5  |         |      |  | (63.6 | )     |   |  | 8.3  |      |  |  | 16.7 |     
|                                       | Landing Systems                                |                                  |   | 38.9       |       |          |   | 40.9  |         |      |  | (4.9  | )     |   |  | 15.2 |      |  |  | 14.0 |     
|                                       | Engine and Safety Systems                      |                                  |   | 20.8       |       |          |   | 35.3  |         |      |  | (41.1 | )     |   |  | 13.1 |      |  |  | 18.6 |     
|                                       | Electronic Systems                             |                                  |   | 35.9       |       |          |   | 29.2  |         |      |  | 22.9  |       |   |  | 18.1 |      |  |  | 14.6 |     
|                                       |                                                |                                  |   |            |       |          |   |       |         |      |  |       |       |   |  |      |      |  |  |     
|                                       |                                                | Segment Operating Income         |   | $          | 118.0 |          |   | $     | 166.9   |      |  |       | (29.3 | ) |  |      | 13.4 |  |  |      | 15.9 | 
|                                       |                                                |                                  |   |            |       |          |   |       |         |      |  |       |       |   |  |      |      |  |  |     

Aerostructures and Aviation Technical
Services:Sales decreased
$99.6 million, or 27.0 percent, from
$369.0 million during the third quarter of 2001 to $269.4
million during the third quarter of 2002. The decrease was
primarily due to a decline in original equipment sales coupled
with a slight decline in overall aftermarket sales. There was
also a slight decline in Aviation Technical Services sales (i.e.
airframe maintenance and modification services, component
overhauls, etc.). The decrease in Aerostructures original
equipment sales was primarily driven by declines in the B757,
B717 and the RB211-535 programs with Boeing and declines in the
A330 program with Airbus resulting from the industry-wide
reduction in aircraft deliveries.

Operating income as adjusted, decreased
$39.1 million, or 63.6 percent, from
$61.5 million during the third quarter of 2001 to
$22.4 million during the third quarter of 2002. The
decrease was primarily due to contract loss provisions on five
contracts amounting to $26.8 million. These loss provisions
resulted from increased overhead rates due, in part, to a lower
manufacturing base as volume declined consistent with the lower
level of aircraft production rates. The increased overhead rates
also resulted from projected cost increases in fringe benefit
rates, in part resulting from expected future increases in
pension expense. Also,

27



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##### 



higher than anticipated spending on
pre-certification costs on one contract and program warranty
costs on another contract added to the loss. Also in the quarter
adjustments of $6.6 million were made to specific reserves
resulting from improved costing data from the implementation of
a new enterprise resource planning system in early 2002.


Landing Systems:Sales decreased $37.4 million, or 12.8 percent, from
$293.1 million during the third quarter of 2001 to
$255.7 million during the third quarter of 2002. The
decrease in sales was primarily attributable to decreased
original equipment sales and decreased wheel and brake
commercial aftermarket sales compared to the same period a year
ago. The reduced sales resulted from decreased demand for new
aircraft original equipment as well as decreased airline
utilization, lowering demand for landing gear original equipment
and aftermarket wheel and brake replacements. Landing Gear sales
decreased primarily in the commercial market due to decreased
sales of original equipment to Boeing primarily on the B737 next
generation and B777 aircraft programs. Wheel and Brake sales
were reduced from the third quarter of 2001 due to reduced
airline utilization in the commercial market primarily on B727
and B737 classic programs. Military sales for both landing gear
original equipment and aftermarket wheels and brakes increased
for the comparable period primarily due to additional volume on
the C17, F14, and F16 programs.

Operating income, as adjusted, decreased
$2.0 million, or 4.9 percent, from $40.9 million
in the third quarter of 2001 to $38.9 million in the third
quarter of 2002. The decrease in operating income over the same
period a year ago was primarily attributable to the decreased
sales discussed above for landing gear original equipment in the
commercial market, and commercial aftermarket sales of wheels
and brakes, primarily on the B727 and B737 classics programs.
The improvement in operating margins during the third quarter of
2002 as compared to 2001 is principally a result of the
implementation of productivity initiatives at our Landing Gear
Services division and reduced deliveries of free of charge wheel
and brake original equipment.

Engine and Safety
Systems:Sales decreased
$31.2 million, or 16.4 percent, from
$190.0 million during the third quarter of 2001 to
$158.8 million during the third quarter of 2002. Sales
declined in virtually all of the product lines caused by less
demand in OE shipments and lower sales of aftermarket spares and
services activities due to generally weaker conditions in the
aerospace and power generation markets. An increase in military
aftermarket product sales over the same period of 2001 was not
enough to overcome the declines in commercial, regional,
business and general aviation markets.

Operating income as adjusted, decreased
$14.5 million, or 41.1 percent, from
$35.3 million during the third quarter of 2001 to
$20.8 million during the third quarter of 2002. Operating
income results declined at a faster rate than the sales declines
due to significantly lower volume, weaker product mix with less
sales in the aftermarket and not yet realizing full cost
reduction benefits associated with the restructuring programs
that have been initiated. The segment continued its R&D
spending associated with passenger restraint systems but at a
lower rate than the third quarter last year.

Electronic Systems:Sales decreased $1.6 million, or 0.8 percent, from
$199.8 million during the third quarter of 2001 to
$198.2 million during the third quarter of 2002. Sales in
the third quarter include $8.0 million of incremental sales
related to an acquisition completed in September 2001. Excluding
the effect of this acquisition, segment sales declined quarter
over quarter by $ 9.6 million or 4.9 percent. The
decreases were a result of lower commercial aircraft production
and a general slowdown of aftermarket demand partially offset by
increased fuel and utility systems retrofit sales, increased
military and space. Improved sales also occurred as a result of
strong performance in the Optical and Space Systems business and
by increases in military aftermarket sales, primarily
helicopters.

Operating income as adjusted, increased
$6.7 million, or 22.9 percent, from $29.2 million
during the third quarter of 2001 to $35.9 million during
the third quarter of 2002. The impact of sales volume decreases
was more than offset by margin improvements at the optical
systems business, costs related to new business proposal
activity that occurred during 2001 but not in 2002, and a
reduction in goodwill amortization.

28



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First Nine Months of 2002 Compared with First
Nine Months of 2001

|                                       |                                                |                                 |   |            |         |          |   |         |         |      |  |       |       |   |  |      |      |  |  |      |      | 
|-------------------------------------- | ---------------------------------------------- | ------------------------------- | - | ---------- | ------- | -------- | - | ------- | ------- | ---- |  | ----- | ----- | - |  | ---- | ---- |  |  | ---- | ---- | 
|                                       |                                                |                                
|                                       |                                                | Nine Months Ended September 30,
|                                       |                                                |                                
|                                       |                                                |                                 |   |           
|                                       |                                                |                                 |   | % of Sales
|                                       |                                                |                                 |   |           
|                                       |                                                | 2002                            |   | 2001       |         | % Change |   | 2002    |         | 2001
|                                       |                                                |                                 |   |            |         |          |   |         |         |     
|                                       |                                                |                                
|                                       |                                                | (Dollars in millions)          
|SALES:                                 |                                                |                                 |   |            |         |          |   |         |         |      |  |       |       |   |  |      |      |  |  |     
|                                       | Aerostructures and Aviation Technical Services |                                 | $ | 889.7      |         |          | $ | 1,123.0 |         |      |  | (20.8 | )     |   |  |      |      |  |  |      |     
|                                       | Landing Systems                                |                                 |   | 772.4      |         |          |   | 862.8   |         |      |  | (10.5 | )     |   |  |      |      |  |  |      |     
|                                       | Engine and Safety Systems                      |                                 |   | 486.1      |         |          |   | 576.2   |         |      |  | (15.6 | )     |   |  |      |      |  |  |      |     
|                                       | Electronic Systems                             |                                 |   | 580.6      |         |          |   | 569.7   |         |      |  | 1.9   |       |   |  |      |      |  |  |      |     
|                                       |                                                |                                 |   |            |         |          |   |         |         |      |  |       |       |   |  |      |      |  |  |     
|                                       |                                                | Total Sales                     |   | $          | 2,728.8 |          |   | $       | 3,131.7 |      |  |       | (12.9 | ) |  |      |      |  |  |      |      | 
|                                       |                                                |                                 |   |            |         |          |   |         |         |      |  |       |       |   |  |      |      |  |  |     
|SEGMENT OPERATING INCOME, as recorded: |                                                |                                 |   |            |         |          |   |         |         |      |  |       |       |   |  |      |      |  |  |     
|                                       | Aerostructures and Aviation Technical Services |                                 | $ | 112.9      |         |          | $ | 176.0   |         |      |  | (35.9 | )     |   |  | 12.7 |      |  |  | 15.7 |     
|                                       | Landing Systems                                |                                 |   | 89.4       |         |          |   | 108.0   |         |      |  | (17.2 | )     |   |  | 11.6 |      |  |  | 12.5 |     
|                                       | Engine and Safety Systems                      |                                 |   | 46.7       |         |          |   | 102.9   |         |      |  | (54.6 | )     |   |  | 9.6  |      |  |  | 17.9 |     
|                                       | Electronic Systems                             |                                 |   | 91.0       |         |          |   | 90.6    |         |      |  | 0.4   |       |   |  | 15.7 |      |  |  | 15.9 |     
|                                       |                                                |                                 |   |            |         |          |   |         |         |      |  |       |       |   |  |      |      |  |  |     
|                                       |                                                | Segment Operating Income        |   | $          | 340.0   |          |   | $       | 477.5   |      |  |       | (28.8 | ) |  |      | 12.5 |  |  |      | 15.2 | 
|                                       |                                                |                                 |   |            |         |          |   |         |         |      |  |       |       |   |  |      |      |  |  |     
|SEGMENT OPERATING INCOME, as adjusted: |                                                |                                 |   |            |         |          |   |         |         |      |  |       |       |   |  |      |      |  |  |     
|                                       | Aerostructures and Aviation Technical Services |                                 | $ | 120.1      |         |          | $ | 177.9   |         |      |  | (32.5 | )     |   |  | 13.5 |      |  |  | 15.8 |     
|                                       | Landing Systems                                |                                 |   | 91.2       |         |          |   | 115.2   |         |      |  | (20.8 | )     |   |  | 11.8 |      |  |  | 13.4 |     
|                                       | Engine and Safety Systems                      |                                 |   | 61.5       |         |          |   | 104.3   |         |      |  | (41.0 | )     |   |  | 12.7 |      |  |  | 18.1 |     
|                                       | Electronic Systems                             |                                 |   | 96.2       |         |          |   | 93.1    |         |      |  | 3.3   |       |   |  | 16.6 |      |  |  | 16.3 |     
|                                       |                                                |                                 |   |            |         |          |   |         |         |      |  |       |       |   |  |      |      |  |  |     
|                                       |                                                | Segment Operating Income        |   | $          | 369.0   |          |   | $       | 490.5   |      |  |       | (24.8 | ) |  |      | 13.5 |  |  |      | 15.7 | 
|                                       |                                                |                                 |   |            |         |          |   |         |         |      |  |       |       |   |  |      |      |  |  |     

Aerostructures and Aviation Technical
Services:Sales decreased
$233.3 million, or 20.8 percent, from
$1,123.0 million during the first nine months of 2001 to
$889.7 million during the first nine months of 2002. The
decrease in sales was primarily due to original equipment sales
declines on most Boeing and Airbus programs. Aftermarket spares
sales on in-production aircraft increased slightly year over
year. Sales in the Aviation Technical Services business
decreased slightly for the nine months of 2002 compared to the
same period of 2001.

Operating income as adjusted, decreased
$57.8 million, or 32.5 percent, from
$177.9 million during the first nine months of 2001 to
$120.1 million during the first nine months of 2002. The
decrease was primarily due to the third quarter contract loss
provisions on five contracts amounting to $26.8 million.
These loss provisions resulted from increased overhead rates
due, in part, to a lower manufacturing base as volume declined
consistent with the lower level of aircraft production rates.
The increased overhead rates also resulted from projected cost
increases in fringe benefit rates, in part resulting from
expected future increases in pension expense. Also, higher than
anticipated spending on pre-certification costs on another
contract and program warranty costs on one contract added to the
loss. During the third quarter, adjustments of $6.6 million were
made to specific reserves resulting from improved costing data
from the implementation of a new enterprise resource planning
system in early 2002. In addition, during the second quarter of
2002, Aerostructures wrote off $3.4 million of an account
receivable relating to the F-14 claim settlement. Operating
losses for the Aviation Technical Services business for the nine
months of 2002 increased slightly over 2001.

29



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Landing Systems:Sales decreased $90.4 million, or 10.5 percent, from
$862.8 million during the first nine months of 2001 to
$772.4 million during the first nine months of 2002. The
decrease was primarily attributable to a decrease in original
equipment and aftermarket sales on the programs discussed for
the third quarter of 2002 above. Sales in our Landing Gear
Services division also declined year over year due to reduced
aftermarket demand. The overall sales decrease was partially
offset by increased military sales for both landing gear
original equipment and aftermarket wheels and brakes for the
comparable prior year period primarily due to additional volume
on the C17, F14, and F16 programs.

Operating Income, as adjusted, decreased
$24.0 million, or 20.8 percent, from
$115.2 million for the first nine months of 2001 to
$91.2 million for the first nine months of 2002. The
decrease in operating income over the same period a year ago was
primarily attributable to the decreased sales noted above for
landing gear original equipment in the commercial market, and
commercial aftermarket sales of wheels and brakes, primarily on
the B727 and B737 classics programs. Operating margins declined
slightly during the nine-month period of 2002 as compared to
2001 principally as a result of the second quarter write-off of
inventory, capitalized sales incentive and supplier termination
costs of $16.6 million relating to the Fairchild Dornier
728 and 928 programs. The implementation of productivity
initiatives at our Landing Gear Services division, reduced wheel
and brake sale incentives and a June 2002 settlement with an
insurance company on prior claims and coverage of
$8.9 million partially offset the overall margin decline.

Engine and Safety
Systems:Sales decreased
$90.1 million, or 15.6 percent, from
$576.2 million during the first nine months of 2001 to
$486.1 million during the first nine months of 2002. Sales
were lower than the first nine months of last year throughout
the product lines in both OE and aftermarket. Propulsion
products and pump and engine controls both supporting the
military sector showed stronger sales than during the same
period of last year.

Operating income as adjusted, decreased
$42.8 million, or 41.0 percent, from
$104.3 million during the first nine months of 2001 to
$61.5 million during the first nine months of 2002.
Operating income results declined at a faster rate than sales
due to lower volume and weaker product mix with less sales in
the aftermarket. We continued our R&D spending associated
with passenger restraint systems at a higher rate than during
the first nine months of last year.

Electronic Systems:Sales increased $10.9 million, or 1.9 percent, from
$569.7 million during the first nine months of 2001 to
$580.6 million during the first nine months of 2002. Sales
in the first nine months of 2002 include $30.1 million in
incremental sales related to an acquisition completed in
September 2001. Excluding the effect of this acquisition,
segment sales decreased $19.2 million or 3.4 percent. The
decrease in sales occurred in most of the businesses and most
commercial and regional OE markets. The decreases were a result
of lower aircraft manufacturing rates and a general slowdown of
aftermarket demand. These decreases were somewhat offset by
increased deliveries of military sensor products. Sales
increases also occurred in the optical systems business as a
result of new contract awards.

Operating income as adjusted, increased
$3.1 million, or 3.3 percent, from $93.1 million
during the first nine months of 2001 to $96.2 million
during the first nine months of 2002. Excluding the effect of
the acquisition referred to above, operating income increased
$2.1 million due to margin improvements at the optical
systems business and the reduction of goodwill amortization
offset by decreased volume at most of the groups
businesses. Improvements at the optical systems business had the
effect of slightly increasing margins.

Capital Resources and Liquidity

Capital Resources

We currently expect to fund expenditures for
capital requirements as well as liquidity needs from a
combination of internally generated funds and financing
arrangements. We believe that our internally generated
liquidity, together with access to external capital resources,
will be sufficient to satisfy existing commitments and plans.

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| |                                                     
| | ----------------------------------------------------
| | Funding of TRW Acquisition and Credit
    Facilities

We have entered into a 364-day credit facility
with a syndicate of financial institutions that provided
$1.5 billion in bridge financing for the acquisition of
TRWs Aeronautical Systems businesses (see Note N).
This facility expires on July 29, 2003. We expect the
bridge financing to be repaid using the net proceeds from the
proposed sale of approximately $200 million of our common
stock, the net proceeds from the proposed sale of approximately
$900 million of our senior notes and net proceeds of
approximately $400 million from the sale of non-core
operating and non-operating assets. The credit facility provides
for mandatory prepayment of the loan from the proceeds of
certain dispositions, equity issuances or debt incurrences.



| |                     
| | --------------------
| | Short-Term Financing

During the third quarter of 2002, we renewed our
$325 million 364-day syndicated revolving credit facility.
In total, our syndicated revolving credit facilities now consist
of a $425 million three-year agreement expiring in December
2004 and the new $325 million 364-day agreement expiring in
September 2003. We intend to renew the $325 million 364-day
credit facility prior to its expiration date. At
September 30, 2002, $495 million was unused and
available under these committed revolving credit facilities.

Borrowing under the $1.5 billion facility
and our syndicated revolving credit facilities is conditioned
upon compliance with financial and other covenants set forth in
the related agreements, including covenants relating to leverage
(measured as the ratio of debt to adjusted earnings) and
consolidated net worth. We currently are in compliance with all
such covenants. The credit facilities do not contain any rating
downgrade triggers that would accelerate the maturity of our
indebtedness thereunder. However, a ratings downgrade would
result in an increase in the interest rate and fees payable
under the credit facilities. Such a downgrade also could
adversely affect our ability to renew existing, or obtain access
to new credit facilities in the future and could increase the
cost of such new facilities.

In addition to the above, we had committed
foreign lines of credit and overdraft facilities at
September 30, 2002 of $7.8 million, all of which was
available at that date.

We also maintain $100 million of uncommitted
domestic money market facilities with various banks to meet
short-term borrowing requirements. As of September 30, 2002,
$71 million of these facilities was unused and available.
These uncommitted credit facilities are provided by a small
number of commercial banks that also provide us with committed
credit through the syndicated revolving credit facilities and
with various trust, foreign exchange and other services. As a
result of these established relationships, we believe that our
uncommitted facilities are a reliable and cost-effective source
of liquidity.



| |                    
| | -------------------
| | Long-Term Financing

At September 30, 2002, we had long-term debt
of $1,326.5 million, with maturities ranging from 2003 to
2046. Reflected as current maturities of long-term debt at
September 30, 2002 was $3.5 million of miscellaneous
debt maturing throughout 2002.

In May 2002, we issued $296.9 million
aggregate principal amount of 7 1/2% Notes due 2008 in
exchange for a like principal amount of Coltecs
7 1/2% Senior Notes due 2008. All $296.9 million of
Coltec Senior Notes acquired by us in the exchange offer were
sold to Coltec and thereafter cancelled. The remaining
$3.1 million of outstanding Coltec Senior Notes remain
outstanding as the obligation of Coltec, which is now a wholly
owned subsidiary of EnPro.

We have an effective shelf registration statement
that would permit us to sell up to $2.4 billion of debt
securities, series preferred stock, common stock, stock purchase
contracts and stock purchase units. During the fourth quarter of
2002, we expect to offer for sale approximately
$200 million of common stock and approximately
$900 million of debt securities pursuant to this
registration statement. The net proceeds of those offerings will
be used to repay a portion of the amounts outstanding under our
$1.5 billion, 364-day credit facility. The net proceeds
from any other securities issued pursuant to the shelf
registration

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statement are expected to be used for general
corporate purposes unless such proceeds are required to be
applied to repayment of borrowings under our $1.5 billion,
364-day credit facility.




| |      
| | -----
| | Quips

At September 30, 2002, there was outstanding
$125.2 million of 8.3 percent Cumulative Quarterly
Income Preferred Securities, Series A (QUIPS)
issued by BFGoodrich Capital, a Delaware business trust all of
the common equity of which is owned by us (the
Trust). The QUIPS are supported by 8.3 percent
Junior Subordinated Debentures, Series A, due 2025
(QUIPS Debentures) issued by us. We have
unconditionally guaranteed all distributions required to be made
by the Trust, but only to the extent the Trust has funds legally
available for such distributions.



| |      
| | -----
| | Tides

The $150 million of Coltec Capital Trust
convertible trust preferred securities (TIDES) that
were reflected in liabilities of discontinued operations at
December 31, 2001, remain outstanding as part of the EnPro
capital structure following the spin-off. The TIDES are
convertible into shares of both Goodrich and EnPro common stock
until April 15, 2028. We have guaranteed amounts owed by
Coltec Capital Trust with respect to the TIDES and have
guaranteed Coltecs performance of its obligations with
respect to the TIDES and the underlying Coltec convertible
debentures. EnPro, Coltec and Coltec Capital Trust have agreed
to indemnify us from any costs and liabilities arising under or
related to the TIDES after the spin-off.

Off-Balance Sheet Arrangements



| |                 
| | ----------------
| | Lease Agreements

We financed our use of certain equipment,
including corporate aircraft, under committed lease arrangements
provided by financial institutions. These arrangements allow us
to claim a deduction for the tax depreciation on the assets,
rather than the lessor, and allowed us to lease up to a maximum
of $95.0 million at September 30, 2002. Since the
terms of these arrangements meet the accounting definition of
operating lease arrangements, the aggregate sum of future
minimum lease payments is not reflected on our consolidated
balance sheet. At September 30, 2002, future minimum lease
payments under these arrangements approximated
$59.6 million. We also have various other operating lease
agreements whose future minimum lease payments approximated
$106.2 million at September 30, 2002. For additional
information, see Note I of our 2001 consolidated financial
statements.



| |                    
| | -------------------
| | Sale of Receivables

At September 30, 2002, we had in place a
trade receivables securitization program pursuant to which we
may sell trade receivables up to a maximum of $110 million.
Accounts receivable sold under this program were
$75.4 million at September 30, 2002.

Continued availability of the securitization
program is conditioned upon compliance with covenants, related
primarily to operation of the securitization, set forth in the
related agreements. We currently are in compliance with all such
covenants. The securitization agreement includes a rating
downgrade trigger pursuant to which the agreement may be
terminated upon a downgrade of our debt ratings below BB- by
Standard & Poors or Ba3 by Moodys Investor
Services. If such an event were to occur, we expect that we
would have sufficient capital resources through our existing
revolving credit facilities to meet our needs.

During 2000, we entered into an agreement to sell
certain long-term receivables. This agreement contained recourse
provisions under which we were required to repurchase
receivables in certain events. In August 2002, we repurchased
$20.4 million of receivables as a result of a payment
default by the primary obligor and terminated this agreement.

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Cash Flows

The following table summarizes our cash flow
activities for the periods indicated:

|                 |                                               |                       |   |        |   |        |   |        |   |  |   |          |  
|---------------- | --------------------------------------------- | --------------------- | - | ------ | - | ------ | - | ------ | - |  | - | -------- | -
|                 |                                               |                       |   |       
|                 |                                               | Nine Months Ended     |   |       
|                 |                                               | September 30,         |   |       
|                 |                                               |                       |   |       
|                 |                                               | 2002                  |   | 2001   |   | Change
|                 |                                               |                       |   |        |   |       
|                 |                                               |                      
|                 |                                               | (Dollars in millions)
|Cash flows from: |                                               |                       |   |        |   |        |   |        |   |  |   |         
|                 | Operating activities of continuing operations |                       | $ | 356.2  |   |        | $ | 210.5  |   |  | $ | 145.7    |  
|                 | Investing activities of continuing operations |                       | $ | (40.1  | ) |        | $ | (237.5 | ) |  | $ | 197.4    |  
|                 | Financing activities of continuing operations |                       | $ | 84.7   |   |        | $ | (833.9 | ) |  | $ | 918.6    |  
|                 | Discontinued operations                       |                       | $ | (141.1 | ) |        | $ | 865.2  |   |  | $ | (1,006.3 | )

Cash flow from operating activities of continuing
operations increased $145.7 million from $210.5 million
during the first nine months of 2001 to $356.2 million during
the first nine months of 2002. Compared to the prior year
period, a decrease in accounts receivable (net of receivables
sold) improved cash flow by $111.1 million. An overall
decrease in inventory of $19.8 million compared to an
inventory increase of $87.6 million also contributed $107.4
million of the change. During the third quarter of 2002, we also
terminated an interest rate swap on $200 million of our
long-term debt, increasing cash flow by $29.4 million. Also
in the first nine months of 2002, estimated income tax payments
were less than in the first nine months of the preceding year.
These cash flow improvements were somewhat offset by an increase
in accounts receivable compared to the prior year period and a
$22.0 million in cash usage related to restructuring
charges.

Cash used in investing activities of continuing
operations improved by $197.4 million between periods mainly due
to the 2001 expansion of our carbon producing capabilities and a
large enterprise resource planning project at our Aerostructures
business that was substantially completed in 2001. In addition,
the change in cash used in business acquisitions declined by
$118.8 due to the acquisition of our lighting business in
September 2001.

The significant decrease in cash used in
financing activities between periods was attributable to the
repayment of short-term indebtedness with the proceeds from the
Performance Materials sale in the first quarter of 2001 and the
repayment of $175 million of long-term debt in July 2001.

Cash used by discontinued operations of
$141.1 million during the first nine months of 2002,
includes approximately $56.0 million of cash included in
the net assets of the EIP business distributed to shareholders,
approximately $47.0 million paid (net of insurance receipts) for
asbestos-related matters and approximately $15.6 million
relating to capital expenditures and debt repayments. Cash
provided by discontinued operations during the first nine months
of 2001 of $865.2 million includes approximately
$960 million attributable to the sale of the Performance
Materials business in February 2001.

The increase in cash balances to
$346.3 million at September 30, 2002, compared to
$85.8 million at December 31, 2001 was a result of
borrowings under the revolving credit facilities to pre-position
cash in various foreign subsidiaries in connection with the
October 1, 2002 acquisition of TRWs Aeronautical
Systems businesses. These borrowings were repaid with funds
borrowed under the $1.5 billion, 364-day credit facility.
We expect to have adequate cash flow from operations and our
credit facilities to satisfy operating requirements and capital
spending programs.

Our net debt-to-capitalization ratio (net of cash
and cash equivalents) was 52.1 percent at
September 30, 2002 as compared to 47.2 percent at
December 31, 2001. For purposes of this ratio, the trust
preferred securities are treated as capital. We expect this
ratio to increase significantly as a result of the debt to be
incurred to finance the acquisition of TRWs Aeronautical
Systems businesses.

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Contingencies

General

There are pending or threatened against us or our
subsidiaries various claims, lawsuits and administrative
proceedings, all arising from the ordinary course of business
with respect to commercial, product liability, asbestos and
environmental matters, which seek remedies or damages. We
believe that any liability that may finally be determined with
respect to commercial and non-asbestos product liability claims
should not have a material effect on our consolidated financial
position or results of operations. From time to time, we are
also involved in legal proceedings as a plaintiff involving
contract, patent protection, environmental and other matters.
Gain contingencies, if any, are recognized when they are
realized.

Environmental

Environmental liabilities are recorded when our
liability is probable and the costs are reasonably estimable,
which generally is not later than at completion of a feasibility
study or when we have recommended a remedy or have committed to
an appropriate plan of action. The liabilities are reviewed
periodically and, as investigations and remediation proceed,
adjustments are made as necessary. Liabilities for losses from
environmental remediation obligations do not consider the
effects of inflation, and anticipated expenditures are not
discounted to their present value. The liabilities are not
reduced by possible recoveries from insurance carriers or other
third parties, but do reflect anticipated allocations among
potentially responsible parties at federal Superfund sites or
similar state-managed sites and an assessment of the likelihood
that such parties will fulfill their obligations at such sites.
The measurement of environmental liabilities by us is based on
currently available facts, present laws and regulations, and
current technology. Such estimates take into consideration our
prior experience in site investigation and remediation, the data
concerning cleanup costs available from other companies and
regulatory authorities, and the professional judgment of our
environmental specialists in consultation with outside
environmental specialists, when necessary.

We are subject to various domestic and
international environmental laws and regulations which may
require that it investigate and remediate the effects of the
release or disposal of materials at sites associated with past
and present operations, including sites at which we have been
identified as a potentially responsible party under the federal
Superfund laws and comparable state laws. We are currently
involved in the investigation and remediation of a number of
sites under these laws. Estimates of our liability are further
subject to uncertainties regarding the nature and extent of site
contamination, the range of remediation alternatives available,
evolving remediation standards, imprecise engineering
evaluations and estimates of appropriate cleanup technology,
methodology and cost, the extent of corrective actions that may
be required, and the number and financial condition of other
potentially responsible parties, as well as the extent of their
responsibility for the remediation. Accordingly, as
investigation and remediation of these sites proceed, it is
likely that adjustments in our accruals will be necessary to
reflect new information. The amounts of any such adjustments
could have a material adverse effect on our results of
operations in a given period, but the amounts, and the possible
range of loss in excess of the amounts accrued, are not
reasonably estimable. Based on currently available information,
however, we do not believe that future environmental costs in
excess of those accrued with respect to sites with which we have
been identified as a potentially responsible party are likely to
have a material adverse effect on our financial condition. There
can be no assurance, however, that additional future
developments, administrative actions or liabilities relating to
environmental matters will not have a material adverse effect on
our results of operations in a given period.

At September 30, 2002, our liabilities for
environmental remediation obligations totaled
$84.0 million, of which $9.1 million was included in
current liabilities as Accrued Liabilities. Of the
$84.0 million, $12.3 million is associated with
ongoing operations and $71.7 million is associated with
businesses previously disposed of or discontinued.

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The timing of expenditures depends on a number of
factors that vary by site, including the nature and extent of
contamination, the number of potentially responsible parties,
the timing of regulatory approvals, the complexity of the
investigation and remediation, and the standards for
remediation. We expect that we will expend present accruals over
many years, and will complete remediation of all sites with
which we have been identified in up to thirty years. This period
includes operation and monitoring costs which are generally
incurred over 15 to 25 years.

Tolo
Litigation

In May 2000, we and our subsidiary Rohr, Inc.
(Rohr), were served with complaints in a lawsuit
filed in the Superior Court of Orange County, California, by
former shareholders and certain former employees of Tolo, Inc.
Tolo, Inc. is a subsidiary of Rohr that was acquired in 1997.
The former shareholders alleged that we and Rohr breached the
stock purchase agreement by failing to pay $2.4 million
under the terms of the agreement. In September 2001, a jury
found that we were liable to the shareholders for the
$2.4 million retained by Rohr under the stock purchase
agreement and were also assessed punitive damages of
$48 million. The court subsequently reduced the punitive
damage award to $24 million. We and Rohr have appealed the
judgment.

At the time of the purchase, we established a
liability of $2.4 million relating to the amount withheld
by Rohr pursuant to the stock purchase agreement. We have not
established a liability for the punitive damages award of
$24 million, which was based on the plaintiffs
fraudulent concealment claim, for the reasons set forth below.

We and our legal counsel believe that there were
numerous points of reversible error in the trial that make it
more likely than not that the judgment will be reversed or
vacated on appeal. First, we believe the plaintiffs fraud
claim is legally deficient under California law and should be
reversed. If the fraud claim is not reversed, we should, at a
minimum, be granted a new trial on the fraudulent concealment
claim because the trial court permitted plaintiffs to add this
claim late in the trial but did not allow us to introduce
evidence believe that the trial court made numerous prejudicial
errors regarding the admission and exclusion of evidence
relating to the fraud claims, which further supports the grant
of a new trial. And finally, we believe that the trial
courts directed verdict on plaintiffs breach of
contract claim should be set aside and a new trial granted
because, among other things, there was sufficient evidence for
the jury to find for us on this claim.

Asbestos

We and certain of our subsidiaries have also been
named as defendants in various actions by plaintiffs alleging
injury or death as a result of exposure to asbestos fibers.
These actions primarily relate to previously owned businesses
(other than asbestos-related claims of EIP discussed above). We
believe that we have substantial insurance coverage available to
us related to any remaining claims. As a result, we believe that
these pending and reasonably anticipated future actions are not
likely to have a material adverse effect on our financial
condition or results of operations.

We and certain of our subsidiaries are also
defendants in other asbestos-related lawsuits or claims
involving maritime workers, medical monitoring claimants,
co-defendants and property damage claimants. Based on our past
experience, we believe that these categories of claims are not
likely to have a material adverse effect on our financial
condition or results of operations.

Discontinued
Operations

At the time of the EIP spin-off, two subsidiaries
of Coltec were defendants in a significant number of personal
injury claims relating to alleged exposure to
asbestoscontaining products sold by those subsidiaries. It
is possible that asbestos-related claims might be asserted
against us on the theory that we have some responsibility for
the asbestos-related liabilities of EnPro, Coltec or its
subsidiaries, even though the activities that led to those
claims occurred prior to our ownership of any of those
subsidiaries. Also, it is possible that a claim might be
asserted against us that Coltecs dividend of its aerospace
business to us

35



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##### 



prior to the spin-off was made at a time when
Coltec was insolvent or caused Coltec to become insolvent. Such
a claim could seek recovery from us on behalf of Coltec of the
fair market value of the dividend.


No such claims have been asserted against us to
date. We believe that we would have substantial legal defenses
against any such claims. In addition, the agreement between
EnPro and us that was used to effectuate the spin-off provides
us with an indemnification from EnPro covering, among other
things, these liabilities. Any such asbestos-related claims
would likely require, as a practical matter, that Coltecs
subsidiaries were unable to satisfy their asbestos-related
liabilities and that Coltec was found to be responsible for
these liabilities and was unable to meet its financial
obligations. We believe any such claims would be without merit
and that Coltec was solvent both before and after the dividend.
If we are ultimately found to be responsible for the
asbestos-related liabilities of Coltecs subsidiaries, we
believe it would not have a material adverse effect on our
financial condition, but could have a material adverse effect on
our results of operations and cash flows in a particular period.
However, because of the uncertainty as to the number, timing and
payments related to future asbestos-related claims, there can be
no assurance that any such claims will not have a material
adverse effect on our financial condition, results of operations
and cash flows. If a claim related to the dividend of
Coltecs aerospace business were successful, it could have
a material adverse impact on our financial condition, results of
operations and cash flows.

Guarantees

We have guaranteed amounts owed by Coltec Capital
Trust with respect to the $150 million of outstanding TIDES
and have guaranteed Coltecs performance of its obligations
with respect to the TIDES and the underlying Coltec convertible
subordinated debentures. Following the spin-off of the EIP
segment, the TIDES remained outstanding as an obligation of
Coltec Capital Trust and our guarantee with respect to the TIDES
remains an obligation ours. EnPro, Coltec and Coltec Capital
Trust have agreed to indemnify us from any costs and liabilities
arising under or related to the TIDES after the spin-off.

In addition to our guarantee of the TIDES, we
have an outstanding contingent liability for guaranteed debt and
lease payments of $4.6 million and for letters of credit of
$30.6 million at September 30, 2002.

US
Airways

On August 11, 2002, US Airways announced
that it had filed for protection under Chapter 11 of the
United States Bankruptcy Code. As of September 30, 2002, we
had accounts receivable from US Airways of approximately
$2.6 million against which a valuation reserve of
$1.9 million has been recorded in the third quarter of
2002. In addition, as of September 30, 2002, we had
approximately $3.4 million of unamortized sales incentives
recorded as Other Assets and a 50 percent-owned investee had
unamortized sales incentives recorded of approximately
$1.6 million. We continue to provide US Airways components
under post-bankruptcy protection and to assess the realization
of the above pre-bankruptcy assets as more information becomes
available.

Pension
Plans

We measure our pension plan using a
December 31 year end for financial accounting
purposes. The significant declines experienced in the financial
markets have unfavorably impacted plan asset performance. This,
coupled with historically low interest rates, is likely to cause
us to recognize a significant non-cash charge to equity in the
fourth quarter of 2002. If measured at mid-October, this charge
would be approximately $285 million after tax. This charge
would not affect reported earnings, and would be reversible if
either interest rates increase or market performance and plan
returns improved or contributions cause the pension plans to
return to fully funded status. Additionally, as a result of the
potential underfunded status of the pension plans, pension
expense will be significantly higher in 2003 than in 2002. Based
on the asset values and market conditions as of mid-October
2002, the increase in pension expense in 2003 over 2002 would
have been approximately $40 million. This amount is highly
variable and is dependent on investment returns through
December 31, 2002. We do not expect to be required to make

36



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##### 



any cash contributions to our pension plans in
2002 or 2003. However we may choose to make voluntary
contributions during those periods.


Certain
Aerospace Contracts

Our Aerostructures business has a contract with
Boeing on the B717-200 program that is subject to certain risks
and uncertainties. Recovery of pre-production inventory balances
of $32.0 million as of September 30, 2002 is subject
to Boeings future production rate and delivery schedule as
well as our future cost structure and learning curve assumptions.

Our Aerostructures business also re-engines
727 aircraft (the Super 27 program). The
re-engining enables these aircraft to meet sound attenuation
requirements as well as improve their fuel efficiency. At
September 30, 2002, we had $45.2 million of inventory
on our balance sheet, as well as accounts and notes receivable
of $61.8 million with respect to the Super 27 program.
At June 30, 2002, $20.4 million of these notes
receivable had been sold to a financial institution. The
agreement relating to the sale contained recourse provisions.
Due to a default by the primary obligor, we were required to
repurchase the notes receivable in August 2002 and the agreement
was terminated. We believe that the recorded value of the notes
receivable is less than the fair value of the underlying
collateral. Collection of this receivable, as well as the
recovery of some portion of our investment in existing inventory
balances, may be negatively affected should the overall
deterioration in the commercial aerospace market continue or if
the market for re-engined Super 27 program aircraft does
not strengthen. Because of these conditions, we will continue to
assess the value of these assets and their ultimate recovery.

New Accounting Standards

In June 2001, the FASB issued Statement
No. 143 Accounting for Asset Retirement
Obligations (SFAS 143). SFAS 143
addresses financial accounting and reporting for obligations
associated with the retirement of tangible long-lived assets and
the associated asset retirement costs. It applies to legal
obligations associated with the retirement of long-lived assets
that result from the acquisition, construction, development
and/or the normal operation of a long-lived asset, except for
certain obligations of lessees. SFAS 143 is effective for
financial statements issued for fiscal years beginning after
June 15, 2002. We are currently reviewing SFAS 143 and
intend to implement it no later than January 1, 2003.

In October 2001, the FASB issued Statement
No. 144 Accounting for the Impairment or Disposal of
Long-Lived Assets (SFAS 144).
SFAS 144 supersedes FASB Statement No. 121
Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of
(SFAS 121); however it retains the fundamental
provisions of that statement related to the recognition and
measurement of the impairment of long-lived assets to be
held and used. In addition, SFAS 144 provides
more guidance on estimating cash flows when performing a
recoverability test, requires that a long-lived asset
(group) to be disposed of other than by sale (e.g.
abandoned) be classified as held and used until it
is disposed of, and establishes more restrictive criteria to
classify an asset (group) as held for sale.
SFAS 144 is effective for fiscal years beginning after
December 15, 2001. The adoption of SFAS 144 did not
have a material impact on our consolidated financial condition
or results of operations.

In April 2002, the FASB issued Statement
No. 145 Rescission of FASB Statements No. 4, 44,
and 64, Amendment of FASB Statement No. 13, and Technical
Corrections (SFAS 145). SFAS 145 will
require gains and losses on extinguishments of debt to be
classified as income or loss from continuing operations rather
than as extraordinary items as previously required under
Statement of Financial Accounting Standards No. 4
(SFAS 4). Extraordinary treatment will be
required for certain extinguishments as provided in APB Opinion
No. 30. SFAS 145 also amends Statement of Financial
Accounting Standards No. 13 to require certain
modifications to capital leases be treated as a sale- leaseback
and modifies the accounting for sub-leases when the original
lessee remains a secondary obligor (or guarantor). SFAS 145 is
effective for financial statements issued after May 15,
2002, and with respect to the impact of the reporting
requirements of changes made to SFAS 4 for fiscal years
beginning after

37



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May 15, 2002. The adoption of the applicable
provisions of SFAS 145 did not have an effect on our financial
statements.


In June 2002, the FASB issued Statement
No. 146, Accounting for Costs Associated with Exit or
Disposal Activities. SFAS 146 nullifies Emerging Issues
Task Force Issue No. 94-3 Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a
Restructuring). SFAS 146 applies to costs associated with
an exit activity that does not involve an entity newly acquired
in a business combination or with a disposal activity covered by
SFAS 144. SFAS 146 is effective for exit or disposal activities
that are initiated after December 31, 2002, with earlier
application encouraged. We are currently reviewing SFAS 146 and
intend to implement it no later than January 1, 2003.

Critical Accounting Policies

Our discussion and analysis of our financial
condition and results of operations is based upon our
consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the
United States. The preparation of these financial statements
requires us to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses,
and related disclosure of contingent assets and liabilities. On
an on-going basis, we evaluate our estimates, including those
related to customer programs and incentives, product returns,
bad debts, inventories, investments, intangible assets, income
taxes, financing operations, warranty obligations, excess
component order cancellation costs, restructuring, long-term
service contracts, pensions and other post-retirement benefits,
and contingencies and litigation. We base our estimates on
historical experience and on various other assumptions that are
believed to be reasonable under the circumstances, the results
of which form the basis for making judgments about the carrying
values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these
estimates under different assumptions or conditions.

We believe the following critical accounting
policies relating to continuing operations affect our more
significant judgments and estimates used in the preparation of
our consolidated financial statements.



| |                    
| | -------------------
| | Revenue Recognition

For revenues not recognized under the contract
method of accounting, we recognize revenues from the sale of
products at the point of passage of title, which is at the time
of shipment. Revenues earned from providing maintenance service
are recognized when the service is complete.

Contract
Accounting  Percentage of Completion



| |                    
| | -------------------
| | Revenue Recognition

We also have sales under long-term, fixed-priced
contracts, many of which contain escalation clauses, requiring
delivery of products over several years and frequently providing
the buyer with option pricing on follow-on orders. Sales and
profits on each contract are recognized in accordance with the
percentage-of-completion method of accounting, using the
units-of-delivery method. We follow the guidelines of Statement
of Position 81-1 (SOP 81-1), Accounting for
Performance of Construction-Type and Certain Production-Type
Contracts (the contract method of accounting), except that
our contract accounting policies differ from the recommendations
of SOP 81-1 in that revisions of estimated profits on contracts
are included in earnings under the reallocation method rather
than the cumulative catch-up method. Under the reallocation
method, the impact of revisions in estimates is recognized
ratably over the remaining life of the contract, while under the
cumulative catch-up method such impact would be recognized
immediately. To the extent we were to make a significant
acquisition that used the cumulative catch-up method to record
revisions in estimated profits on contracts, we would be
required to change its current method of accounting. Such a
change would be recorded as a change in accounting principle and
would most likely result in the restatement of prior periods in
accordance with APB 20.

38



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Profit is estimated based on the difference
between total estimated revenue and total estimated cost of a
contract, excluding that reported in prior periods, and is
recognized evenly in the current and future periods as a uniform
percentage of sales value on all remaining units to be
delivered. Current revenue does not anticipate higher or lower
future prices but includes units delivered at actual sales
prices. Cost includes the estimated cost of the pre-production
effort (primarily tooling and design), plus the estimated cost
of manufacturing a specified number of production units. The
specified number of production units used to establish the
profit margin is predicated upon contractual terms adjusted for
market forecasts and does not exceed the lesser of those
quantities assumed in original contract pricing, or those
quantities which we now expect to deliver in the
timeframe/periods assumed in the original contract pricing. Our
policies only allow the estimated number of production units to
be delivered to exceed the quantity assumed within the original
contract pricing when we receive firm orders for additional
units. The timeframe/period assumed in the original contract
pricing is generally equal to the period specified in the
contract. If the contract is a life of program
contract, then such period is equal to the time period used in
the original pricing model which generally equals the time
period required to recover our pre-production costs. Option
quantities are combined with prior orders when follow-on orders
are released.

The contract method of accounting involves the
use of various estimating techniques to project costs at
completion and includes estimates of recoveries asserted against
the customer for changes in specifications. These estimates
involve various assumptions and projections relative to the
outcome of future events, including the quantity and timing of
product deliveries. Also included are assumptions relative to
future labor performance and rates, and projections relative to
material and overhead costs. These assumptions involve various
levels of expected performance improvements. We reevaluate our
contract estimates periodically and reflect changes in estimates
in the current and future periods under the reallocation method.

Included in sales are amounts arising from
contract terms that provide for invoicing a portion of the
contract price at a date after delivery. Also included are
negotiated values for units delivered and anticipated price
adjustments for contract changes, claims, escalation and
estimated earnings in excess of billing provisions, resulting
from the percentage-of-completion method of accounting. Certain
contract costs are estimated based on the learning curve concept
discussed below.



| |          
| | ---------
| | Inventory

Inventoried costs on long-term contracts include
certain pre-production costs, consisting primarily of tooling
and design costs and production costs, including applicable
overhead. The costs attributed to units delivered under
long-term commercial contracts are based on the estimated
average cost of all units expected to be produced and are
determined under the learning curve concept, which anticipates a
predictable decrease in unit costs as tasks and production
techniques become more efficient through repetition. This
usually results in an increase in inventory (referred to as
excess-over average) during the early years of a
contract.

If in-process inventory plus estimated costs to
complete a specific contract exceeds the anticipated remaining
sales value of such contract, such excess is charged to current
earnings, thus reducing inventory to estimated realizable value.



| |                 
| | ----------------
| | Sales Incentives

We offer sales incentives to certain commercial
customers in connection with sales contracts. These incentives
may consist of upfront cash payments, merchandise credits and/or
free products. The cost of these incentives is recognized in the
period incurred unless it is specifically guaranteed of recovery
within the contract by the customer. If the contract contains
such a guarantee, then the cost of the sales incentive is
capitalized and amortized over the contract period.

39



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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,
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 include, but are not limited to:



| |   |                                                                                                                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the extent to which we are successful in
    integrating TRWs Aeronautical Systems businesses and
    achieving operating synergies;                                                                                                           
|
| |  | the extent to which we are successful in
    implementing our plan to repay the amounts borrowed to fund the
    acquisition of TRWs Aeronautical Systems businesses;                                                                          
|
| |  | the prepayment of the Noveon International, Inc.
    payment-in-kind notes held by us;                                                                                                                                                          
|
| |  | global demand for aircraft spare parts and
    aftermarket services;                                                                                                                                                                            
|
| |  | the impact of the terrorist attacks on
    September 11, 2001 and their aftermath;                                                                                                                                                              
|
| |  | the timing related to restoring consumer
    confidence in air travel;                                                                                                                                                                          
|
| |  | the health of the commercial aerospace industry,
    including the impact of bankruptcies in the airline industry;                                                                                                                              
|
| |  | the effect of current stock market conditions on
    pension plan assets, including 2002 year-end plan asset
    valuations, and the effect of those valuations on
    shareholders equity and 2003 pension expense and plan
    contributions.
|
| |  | the solvency of Coltec Industries Inc at the time
    of and subsequent to the spin-off of EnPro Industries Inc. and
    the ability of Coltecs subsidiaries to satisfy their
    asbestos-related liabilities following the spin-off;         
|
| |  | demand for and market acceptance of new and
    existing products;                                                                                                                                                                              
|
| |  | potential cancellation of orders by customers;                                                                                                                                                                                                  
|
| |  | successful development of products and advanced
    technologies;                                                                                                                                                                               
|
| |  | competitive product and pricing pressures;                                                                                                                                                                                                      
|
| |  | 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 rates, recession and other external factors
    over which we have no control;                          
|
| |  | the outcome of contingencies (including
    completion of acquisitions, divestitures, litigation and
    environmental remediation efforts); and                                                                                                

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 were 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.

40



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Item 3.     Quantitative
and Qualitative Disclosures About Market Risk

We are exposed to certain market risks as part of
our ongoing business operations, including risks from changes in
interest rates and foreign currency exchange rates that could
impact our financial condition, results of operations and cash
flows. We manage our exposure to these and other market risks
through regular operating and financing activities, and on a
limited basis, through the use of derivative financial
instruments. We intend to use such derivative financial
instruments as risk management tools and not for speculative
investment purposes. Our discussion of Market Risk in our 2001
Annual Report on Form 10-K provides more discussion as to
the types of instruments used to manage risk. The following
provides a discussion of significant changes during 2002:

Interest Rate
Exposure

In September 2002, we terminated an interest rate
swap relating to the fair value hedge of our fixed interest rate
exposure on our $200 million principal amount of 6.60% Notes due
2009.

During the fourth quarter of 2002, we expect to
offer for sale approximately $900 million of long-term debt
securities.

Foreign
Currency Exposure

One of our subsidiaries conducts a substantial
portion of its business in Euros but has significant sales
contracts that are denominated in US dollars. In June 2002, we
entered into 21 individual forward contracts to exchange US
dollars for Euros. A contract will mature each month between
April 2002 and December 2003. The forward contracts are used to
mitigate the potential volatility to cash flow arising from
changes in currency exchange rates.

At September 30, 2002, a hypothetical
unfavorable change in exchange rates of 10 percent would
decrease the value of these forward contracts by approximately
$2.8 million.

Upon the purchase of the Aeronautical Systems
businesses, we entered into foreign exchange forward contracts
to sell U.S. dollars for pounds sterling and for Euros. These
newly acquired businesses conduct a substantial portion of their
business in pounds sterling and Euros but have significant sales
contracts that are denominated in U.S. dollars. The forward
contracts are used to mitigate the potential volatility to cash
flows arising from changes in currency exchange rates. In
October 2002, we entered into forward contracts with an
aggregate notational amount of $706.8 million to buy pounds
sterling and contracts with an aggregate notational amount of
$89.4 million to buy Euros. These forward contracts mature on a
monthly basis with maturity dates that range from October 2002
to April 2007.

Item 4.     Controls
and Procedures



|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Evaluation of Disclosure Controls and Procedures.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|    |  | We maintain disclosure controls and procedures
    that are designed to ensure that information required to be
    disclosed in our Exchange Act reports is recorded, processed,
    summarized and reported within the time periods specified in the
    SECs rules and forms, and that such information is
    accumulated and communicated to our management, including our
    Chairman and Chief Executive Officer and Executive Vice
    President and Chief Financial Officer, as appropriate, to allow
    timely decisions regarding required disclosure. Management
    necessarily applied its judgment in assessing the costs and
    benefits of such controls and procedures, which, by their
    nature, can provide only reasonable assurance regarding
    managements control objectives.
|   
|    |  | We have carried out an evaluation, under the
    supervision and with the participation of our management,
    including our Chairman and Chief Executive Officer and Executive
    Vice President and Chief Financial Officer, of the effectiveness
    of the design and operation of our disclosure controls and
    procedures as of a date within 90 days prior to the filing date
    of this Quarterly Report (the Evaluation Date).                                                                                                                                                                                                                                                                                                                                                                

41



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|    |  |                                                                                                                                                                                                                                                                                                                
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |  | Based upon that evaluation, the Chairman and
    Chief Executive Officer and Executive Vice President and Chief
    Financial Officer concluded that our disclosure controls and
    procedures were effective as of the Evaluation Date.                                                                      
|   
|(b) |  | Changes in Internal Controls.                                                                                                                                                                                                                                                                                  
|   
|    |  | On October 1, 2002, we completed the
    acquisition of TRWs Aeronautical Systems businesses. The
    acquired businesses design and manufacture commercial and
    military aerospace systems and equipment with approximately
    6,200 employees located in 22 facilities located throughout the
    world.
|   
|    |  | Except as noted above, there were no significant
    changes in our internal controls or in other factors that could
    significantly affect these controls subsequent to the Evaluation
    Date.                                                                                                            

PART II.     OTHER
INFORMATION

Item 1.     Legal
Proceedings

We and certain of our subsidiaries are defendants
in various claims, lawsuits and administrative proceedings. In
addition, we have been notified that it we are among potentially
responsible parties under federal environmental laws, or similar
state laws, relative to the cost of investigating and in some
cases remediating contamination by hazardous materials at
several sites. See Note M to the accompanying unaudited
condensed consolidated financial statements, which is
incorporated herein by reference.

Item 6.     Exhibits
and Reports on Form 8-K



|    |  |              |  |                                                                                                                                                                                                                                                                                                                                                                       
|--- |  | ------------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Exhibits.    |  |                                                                                                                                                                                                                                                                                                                                                                       
|    |  | Exhibit 2.2  |  | Amendment No. 1 dated as of October 1,
    2002 to Master Agreement of Purchase and Sale dated as of
    June 18, 2002 between Goodrich Corporation and TRW Inc.
    (incorporated by reference to Exhibit 2.2 to Goodrich
    Corporations Current Report on Form 8-K filed
    October 16, 2002).                                                                  
|    |  | Exhibit 10.1 |  | 364-Day Credit Agreement dated as of
    September 16, 2002 among Goodrich Corporation, the lenders
    parties thereto and Citibank, N.A., as paying agent for such
    lenders.                                                                                                                                                                                     
|    |  | Exhibit 10.2 |  | Amended and Restated Three Year Credit Agreement
    dated as of September 23, 2002 among Goodrich Corporation,
    the lenders parties thereto and Citibank, N.A., as paying agent
    for such lenders.                                                                                                                                                             
|    |  | Exhibit 10.3 |  | 364-Day Credit Agreement dated as of
    July 30, 2002 among Goodrich Corporation, the lenders
    parties thereto and Citibank, N.A., as paying agent for such
    lenders (incorporated by reference to Exhibit 10(TT) to
    Goodrich Corporations Quarterly Report on Form 10-Q
    for the quarter ended June 30, 2002).                                        
|    |  | Exhibit 10.4 |  | Amendment No. 1 dated as of
    September 13, 2002 to the 364-Day Credit Agreement dated as
    of July 30, 2002 among Goodrich Corporation, the lenders
    parties thereto and Citibank, N.A., as paying agent for such
    lenders (incorporated by reference to Exhibit 10.2 to
    Goodrich Corporations Current Report on Form 8-K
    filed October 16, 2002).
|    |  | Exhibit 99.1 |  | Certification Pursuant to 18 U.S.C.
    Section 1350, as Adopted Pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                       



| |     |                     
| | --- | --------------------
| | (b) | Reports on Form 8-K.



| |                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Current Report on Form 8-K furnished
    July 24, 2002 (Item 9) (relating to the announcement
    of the Companys earnings for the six months ended
    June 30, 2002).                                                                                                                       
|
| | Current Report on Form 8-K furnished
    August 12, 2002 (Item 9) (relating to the filing or
    furnishing of certifications to the SEC pursuant to (a) SEC
    Order No. 4-460 and (b) 18 U.S.C. Section 1350,
    as adopted pursuant to Section 906 of the Sarbanes-Oxley
    Act of 2002).

42



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SIGNATURE

Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned thereunto duly
authorized.

|                 |  |                     
|---------------- |  | --------------------
|November 5, 2002 |  | GOODRICH CORPORATION



| |                             
| | ----------------------------
| | /s/ ULRICH SCHMIDT          
| |                             
| | Ulrich Schmidt              
| | Executive Vice President and
| | Chief Financial Officer     
|
| | /s/ ROBERT D. KONEY, JR.    
| |                             
| | Robert D. Koney, Jr.        
| | Vice President & Controller 
| | (Chief Accounting Officer)  

43



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CERTIFICATIONS

I, David L. Burner, Chairman and Chief Executive
Officer of Goodrich Corporation, certify that:



| |                                                                                                                                                                                                                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. I have reviewed this quarterly report on
    Form 10-Q of Goodrich Corporation;                                                                                                                                                                                                                                                                   
|
| | 2. Based on my knowledge, this quarterly
    report does not contain any untrue statement of a material fact
    or omit to state a material fact necessary to make the
    statements made, in light of the circumstances under which such
    statements were made, not misleading with respect to the period
    covered by this quarterly report;
|
| | 3. Based on my knowledge, the financial
    statements, and other financial information included in this
    quarterly report, fairly present in all material respects the
    financial condition, results of operations and cash flows of the
    registrant as of, and for, the periods presented in this
    quarterly report;                   
|
| | 4. The registrants other certifying
    officers and I are responsible for establishing and maintaining
    disclosure controls and procedures (as defined in Exchange Act
    Rules 13a-14 and 15d-14) for the registrant and we have:                                                                                                             



| |                                                                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) designed such disclosure controls and
    procedures to ensure that material information relating to the
    registrant, including its consolidated subsidiaries, is made
    known to us by others within those entities, particularly during
    the period in which this quarterly report is being prepared;
|
| | b) evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this
    quarterly report (the Evaluation Date); and                                                                                                      
|
| | c) presented in this quarterly report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                



| |                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 5. The registrants other certifying
    officers and I have disclosed, based on our most recent
    evaluation, to the registrants auditors and the audit
    committee of registrants board of directors (or persons
    performing the equivalent function):



| |                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) all significant deficiencies in the
    design or operation of internal controls which could adversely
    affect the registrants ability to record, process,
    summarize and report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | b) any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the registrants internal controls; and                                                                                                                                                    



| |                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 6. The registrants other certifying
    officers and I have indicated in this quarterly report whether
    or not there were significant changes in internal controls or in
    other factors that could significantly affect internal controls
    subsequent to the date of our most recent evaluation, including
    any corrective actions with regard to significant deficiencies
    and material weaknesses.

Date: November 5, 2002



| |                                     
| | ------------------------------------
| | /s/ DAVID L. BURNER                 
| |                                     
| | David L. Burner                     
| | Chairman and Chief Executive Officer

44



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##### 



I, Ulrich Schmidt, Executive Vice President and
Chief Financial Officer of Goodrich Corporation, certify that:



| |                                                                                                                                                                                                                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. I have reviewed this quarterly report on
    Form 10-Q of Goodrich Corporation;                                                                                                                                                                                                                                                                   
|
| | 2. Based on my knowledge, this quarterly
    report does not contain any untrue statement of a material fact
    or omit to state a material fact necessary to make the
    statements made, in light of the circumstances under which such
    statements were made, not misleading with respect to the period
    covered by this quarterly report;
|
| | 3. Based on my knowledge, the financial
    statements, and other financial information included in this
    quarterly report, fairly present in all material respects the
    financial condition, results of operations and cash flows of the
    registrant as of, and for, the periods presented in this
    quarterly report;                   
|
| | 4. The registrants other certifying
    officers and I are responsible for establishing and maintaining
    disclosure controls and procedures (as defined in Exchange Act
    Rules 13a-14 and 15d-14) for the registrant and we have:                                                                                                             



| |                                                                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) designed such disclosure controls and
    procedures to ensure that material information relating to the
    registrant, including its consolidated subsidiaries, is made
    known to us by others within those entities, particularly during
    the period in which this quarterly report is being prepared;
|
| | b) evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this
    quarterly report (the Evaluation Date); and                                                                                                      
|
| | c) presented in this quarterly report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                



| |                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 5. The registrants other certifying
    officers and I have disclosed, based on our most recent
    evaluation, to the registrants auditors and the audit
    committee of registrants board of directors (or persons
    performing the equivalent function):



| |                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) all significant deficiencies in the
    design or operation of internal controls which could adversely
    affect the registrants ability to record, process,
    summarize and report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | b) any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the registrants internal controls; and                                                                                                                                                    



| |                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 6. The registrants other certifying
    officers and I have indicated in this quarterly report whether
    or not there were significant changes in internal controls or in
    other factors that could significantly affect internal controls
    subsequent to the date of our most recent evaluation, including
    any corrective actions with regard to significant deficiencies
    and material weaknesses.

Date: November 5, 2002



| |                             
| | ----------------------------
| | /s/ ULRICH SCHMIDT          
| |                             
| | Ulrich Schmidt              
| | Executive Vice President and
| | Chief Financial Officer     

45



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##### 



EXHIBIT INDEX

|             |  |                                                                                                                                                                                                                                                                                                                                                                       
|------------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit 2.2  |  | Amendment No. 1 dated as of October 1,
    2002 to Master Agreement of Purchase and Sale dated as of
    June 18, 2002 between Goodrich Corporation and TRW Inc.
    (incorporated by reference to Exhibit 2.2 to Goodrich
    Corporations Current Report on Form 8-K filed
    October 16, 2002).                                                                  
|Exhibit 10.1 |  | 364-Day Credit Agreement dated as of
    September 16, 2002 among Goodrich Corporation, the lenders
    parties thereto and Citibank, N.A., as paying agent for such
    lenders.                                                                                                                                                                                     
|Exhibit 10.2 |  | Amended and Restated Three Year Credit Agreement
    dated as of September 23, 2002 among Goodrich Corporation,
    the lenders parties thereto and Citibank, N.A., as paying agent
    for such lenders.                                                                                                                                                             
|Exhibit 10.3 |  | 364-Day Credit Agreement dated as of
    July 30, 2002 among Goodrich Corporation, the lenders
    parties thereto and Citibank, N.A., as paying agent for such
    lenders (incorporated by reference to Exhibit 10(TT) to
    Goodrich Corporations Quarterly Report on Form 10-Q
    for the quarter ended June 30, 2002).                                        
|Exhibit 10.4 |  | Amendment No. 1 dated as of
    September 13, 2002 to the 364-Day Credit Agreement dated as
    of July 30, 2002 among Goodrich Corporation, the lenders
    parties thereto and Citibank, N.A., as paying agent for such
    lenders (incorporated by reference to Exhibit 10.2 to
    Goodrich Corporations Current Report on Form 8-K
    filed October 16, 2002).
|Exhibit 99.1 |  | Certification Pursuant to 18 U.S.C.
    Section 1350, as Adopted Pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002.