##### 



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




---



##### 



PART I. FINANCIAL INFORMATION
 Item 1. Financial Statements.
 Report of Independent Registered Public Accounting Firm
     /s/Ernst & Young LLP
 
 2




---



##### 



CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004(Dollars in millions,
    
    
    (Dollars in millions,except per share amounts)
    
    
    except per share amounts)Sales
    
    $
    1,370.5
    
    
    $
    1,161.5
    
    
    $
    3,998.7
    
    
    $
    3,446.0Operating costs and expenses:Cost of sales
    
    
    1,009.9
    
    
    
    852.9
    
    
    
    2,930.1
    
    
    
    2,543.7Selling and administrative costs
    
    
    225.2
    
    
    
    200.6
    
    
    
    667.0
    
    
    
    593.11,235.1
    
    
    
    1,053.5
    
    
    
    3,597.1
    
    
    
    3,136.8Operating Income
    
    
    135.4
    
    
    
    108.0
    
    
    
    401.6
    
    
    
    309.2Interest expense
    
    
    (32.3
    )
    
    
    (35.7
    )
    
    
    (99.2
    )
    
    
    (108.8
    )Interest income
    
    
    1.2
    
    
    
    1.0
    
    
    
    3.1
    
    
    
    2.3Other income (expense)  net
    
    
    (11.6
    )
    
    
    (10.9
    )
    
    
    (36.0
    )
    
    
    (40.6
    )Income from continuing operations before income taxes
    
    
    92.7
    
    
    
    62.4
    
    
    
    269.5
    
    
    
    162.1Income tax expense
    
    
    (32.1
    )
    
    
    (12.5
    )
    
    
    (89.7
    )
    
    
    (43.4
    )Income From Continuing Operations
    
    
    60.6
    
    
    
    49.9
    
    
    
    179.8
    
    
    
    118.7Income from discontinued operations  net of income taxes
    
    
    0.2
    
    
    
    
    
    
    
    14.2
    
    
    
    0.6Cumulative effect of change in accounting
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16.2Net Income
    
    $
    60.8
    
    
    $
    49.9
    
    
    $
    194.0
    
    
    $
    135.5Basic Earnings Per Share:Continuing operations
    
    $
    0.50
    
    
    $
    0.42
    
    
    $
    1.49
    
    
    $
    1.00Discontinued operations
    
    
    
    
    
    
    
    
    
    
    0.11
    
    
    
    0.01Cumulative effect of change in accounting
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.13Net Income
    
    $
    0.50
    
    
    $
    0.42
    
    
    $
    1.60
    
    
    $
    1.14Diluted Earnings Per Share:Continuing operations
    
    $
    0.49
    
    
    $
    0.41
    
    
    $
    1.46
    
    
    $
    0.99Discontinued operations
    
    
    
    
    
    
    
    
    
    
    0.11
    
    
    
    0.01Cumulative effect of change in accounting
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.13Net Income
    
    $
    0.49
    
    
    $
    0.41
    
    
    $
    1.57
    
    
    $
    1.13Dividends declared per common share
    
    $
    0.20
    
    
    $
    0.20
    
    
    $
    0.60
    
    
    $
    0.60
  3




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##### 



CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
 September 30,
    
    
    December 31,2005
    
    
    2004(Dollars in millions,except share amounts)Current AssetsCash and cash equivalents
    
    $
    244.0
    
    
    $
    297.9Accounts and notes receivable, less allowances for doubtful receivables ($21.4
at September 30, 2005 and $19.5 at December 31, 2004)
    
    
    773.6
    
    
    
    649.3Inventories  net
    
    
    1,293.4
    
    
    
    1,163.5Deferred income taxes
    
    
    119.7
    
    
    
    118.9Prepaid expenses and other assets
    
    
    59.2
    
    
    
    118.8Assets of discontinued operations
    
    
    
    
    
    
    17.8Total Current Assets
    
    
    2,489.9
    
    
    
    2,366.2Property, plant and equipment  net
    
    
    1,123.6
    
    
    
    1,164.1Prepaid pension
    
    
    256.4
    
    
    
    275.5Goodwill
    
    
    1,280.7
    
    
    
    1,258.5Identifiable intangible assets  net
    
    
    458.1
    
    
    
    507.0Deferred income taxes
    
    
    44.6
    
    
    
    44.7Other assets
    
    
    583.6
    
    
    
    601.5Total Assets
    
    $
    6,236.9
    
    
    $
    6,217.5Current LiabilitiesShort-term debt
    
    $
    
    
    
    $
    1.0Accounts payable
    
    
    509.9
    
    
    
    509.5Accrued expenses
    
    
    735.9
    
    
    
    731.9Income taxes payable
    
    
    350.2
    
    
    
    294.4Deferred income taxes
    
    
    22.0
    
    
    
    22.0Current maturities of long-term debt and capital lease obligations
    
    
    1.5
    
    
    
    2.4Liabilities of discontinued operations
    
    
    
    
    
    
    4.0Total Current Liabilities
    
    
    1,619.5
    
    
    
    1,565.2Long-term debt and capital lease obligations
    
    
    1,709.1
    
    
    
    1,899.4Pension obligations
    
    
    773.9
    
    
    
    761.7Postretirement benefits other than pensions
    
    
    302.5
    
    
    
    302.7Deferred income taxes
    
    
    3.9
    
    
    
    33.7Other non-current liabilities
    
    
    336.3
    
    
    
    311.9Commitments and contingent liabilities
    
    
    
    
    
    
    Shareholders EquityCommon stock  $5 par value  Authorized 200,000,000 shares; issued 136,530,818
shares at September 30, 2005 and 132,709,310 shares at December 31, 2004
(excluding 14,000,000 shares held by a wholly owned subsidiary)
    
    
    682.7
    
    
    
    663.5Additional paid-in capital
    
    
    1,191.9
    
    
    
    1,077.9Income retained in the business
    
    
    240.5
    
    
    
    119.5Accumulated other comprehensive loss
    
    
    (207.1
    )
    
    
    (103.7
    )Common stock held in treasury, at cost (13,615,157 shares at September 30, 2005
and 13,566,071 shares at December 31, 2004)
    
    
    (416.3
    )
    
    
    (414.3
    )Total Shareholders Equity
    
    
    1,491.7
    
    
    
    1,342.9Total Liabilities And Shareholders Equity
    
    $
    6,236.9
    
    
    $
    6,217.5
  4




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##### 



CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
 Nine Months EndedSeptember 30,2005
    
    
    2004(Dollars in millions)Operating ActivitiesIncome from continuing operations
    
    $
    179.8
    
    
    $
    118.7Adjustments to reconcile income from continuing operations to net cash provided
by operating activities:Restructuring and consolidation:Expenses
    
    
    7.4
    
    
    
    8.5Payments
    
    
    (9.5
    )
    
    
    (22.6
    )Asset impairments
    
    
    
    
    
    
    0.2Depreciation and amortization
    
    
    169.9
    
    
    
    164.1Stock-based compensation expense
    
    
    16.1
    
    
    
    13.8Loss on extinguishment of debt
    
    
    9.6
    
    
    
    3.1Deferred income taxes
    
    
    (34.8
    )
    
    
    (31.0
    )Change in assets and liabilities, net of effects of acquisitions and dispositions of
businesses:Receivables
    
    
    (165.1
    )
    
    
    (74.6
    )Change in receivables sold, net
    
    
    18.8
    
    
    
    Inventories
    
    
    (147.0
    )
    
    
    (106.6
    )Other current assets
    
    
    54.9
    
    
    
    (2.1
    )Accounts payable
    
    
    14.9
    
    
    
    13.3Accrued expenses
    
    
    19.9
    
    
    
    109.8Income taxes payable
    
    
    78.9
    
    
    
    41.0Tax benefit on non-qualified options
    
    
    14.3
    
    
    
    2.9Other non-current assets and liabilities
    
    
    (32.8
    )
    
    
    (2.0
    )Net Cash Provided By Operating Activities
    
    
    195.3
    
    
    
    236.5Investing ActivitiesPurchases of property, plant and equipment
    
    
    (103.4
    )
    
    
    (82.2
    )Proceeds from sale of property, plant and equipment
    
    
    10.4
    
    
    
    9.7Payments made in connection with acquisitions, net of cash acquired
    
    
    (9.3
    )
    
    
    (0.5
    )Net Cash Used By Investing Activities
    
    
    (102.3
    )
    
    
    (73.0
    )Financing ActivitiesDecrease in short-term debt, net
    
    
    (1.0
    )
    
    
    (2.8
    )Repayment of long-term debt and capital lease obligations
    
    
    (191.8
    )
    
    
    (149.2
    )Proceeds from issuance of common stock
    
    
    101.2
    
    
    
    23.0Purchases of treasury stock
    
    
    (1.1
    )
    
    
    (0.2
    )Dividends
    
    
    (72.2
    )
    
    
    (70.9
    )Distributions to minority interest holders
    
    
    (2.4
    )
    
    
    Net Cash Used By Financing Activities
    
    
    (167.3
    )
    
    
    (200.1
    )Discontinued OperationsNet cash provided by discontinued operations
    
    
    26.0
    
    
    
    3.2Effect of exchange rate changes on cash and cash equivalents
    
    
    (5.6
    )
    
    
    0.5Net decrease in cash and cash equivalents
    
    
    (53.9
    )
    
    
    (32.9
    )Cash and cash equivalents at beginning of year
    
    
    297.9
    
    
    
    378.4Cash and cash equivalents at end of period
    
    $
    244.0
    
    
    $
    345.5
  5




---



##### 



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 Note 1. Basis of Interim Financial Statement Preparation
  Note 2. New Accounting Standards
 Accounting Changes and Error Corrections
  6




---



##### 



Inventory Costs
  Share-Based Payments
  7




---



##### 



Accounting for Conditional Asset Retirement Obligations
  8




---



##### 



Accounting for Purchased or Acquired Leasehold Improvements
  FASB Staff Position 109-1 (FSP 109-1) and 109-2 (FSP 109-2)
    9




---



##### 



Note 3. Restructuring and Consolidation Costs
   Restructuring and Consolidation Costs Excluding Aeronautical Systems Business Restructuring
Programs
  10




---



##### 



Personnel-
    
    
    FacilityRelated
    
    
    ClosureCosts
    
    
    Costs
    
    
    Total(Dollars in millions)Airframe SystemsReserve balance  December 31, 2004
    
    $
    0.6
    
    
    $
    0.2
    
    
    $
    0.8Restructuring charges
    
    
    4.8
    
    
    
    0.4
    
    
    
    5.2Used as Intended
    
    
    (4.1
    )
    
    
    (0.4
    )
    
    
    (4.5
    )Return to Profit
    
    
    
    
    
    
    (0.1
    )
    
    
    (0.1
    )Reserve balance at September 30, 2005
    
    $
    1.3
    
    
    $
    0.1
    
    
    $
    1.4Engine SystemsReserve balance  December 31, 2004
    
    $
    0.2
    
    
    $
    0.8
    
    
    $
    1.0Restructuring charges
    
    
    0.5
    
    
    
    0.6
    
    
    
    1.1Used as Intended
    
    
    (0.4
    )
    
    
    (1.1
    )
    
    
    (1.5
    )Return to Profit
    
    
    
    
    
    
    
    
    
    
    Reserve balance at September 30, 2005
    
    $
    0.3
    
    
    $
    0.3
    
    
    $
    0.6Electronic SystemsReserve balance  December 31, 2004
    
    $
    
    
    
    $
    1.6
    
    
    $
    1.6Restructuring charges
    
    
    0.5
    
    
    
    0.9
    
    
    
    1.4Used as Intended
    
    
    (0.5
    )
    
    
    (1.7
    )
    
    
    (2.2
    )Return to Profit
    
    
    
    
    
    
    (0.2
    )
    
    
    (0.2
    )Reserve balance at September 30, 2005
    
    $
    
    
    
    $
    0.6
    
    
    $
    0.6TotalReserve balance  December 31, 2004
    
    $
    0.8
    
    
    $
    2.6
    
    
    $
    3.4Restructuring charges
    
    
    5.8
    
    
    
    1.9
    
    
    
    7.7Used as Intended
    
    
    (5.0
    )
    
    
    (3.2
    )
    
    
    (8.2
    )Return to Profit
    
    
    
    
    
    
    (0.3
    )
    
    
    (0.3
    )Reserve balance at September 30, 2005
    
    $
    1.6
    
    
    $
    1.0
    
    
    $
    2.6
 Future Restructuring and Consolidation Costs for Programs Announced and Initiated
  FacilityPersonnel-
    
    
    ClosureRelated Costs
    
    
    Costs
    
    
    Total(Dollars in millions)Airframe Systems
    
    $
    0.6
    
    
    $
    
    
    
    $
    0.6Engine Systems
    
    
    0.7
    
    
    
    
    
    
    
    0.7Electronic Systems
    
    
    0.3
    
    
    
    0.3
    
    
    
    0.6Total
    
    $
    1.6
    
    
    $
    0.3
    
    
    $
    1.9
 11




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##### 



Opening Balance Sheet  Aeronautical Systems Business Restructuring Programs
   Personnel-
    
    
    
    
    
    
    ForeignRelated
    
    
    
    
    
    
    CurrencyCosts
    
    
    Facility
    
    
    Translation
    
    
    Total(Dollars in millions)Airframe SystemsReserve balance at December 31, 2004
    
    $
    0.3
    
    
    $
    
    
    
    $
    
    
    
    $
    0.3Used as Intended
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Foreign Currency Translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Reserve balance at September 30, 2005
    
    $
    0.3
    
    
    $
    
    
    
    $
    
    
    
    $
    0.3Engine SystemsReserve balance at December 31, 2004
    
    $
    3.5
    
    
    $
    
    
    
    $
    
    
    
    $
    3.5Used as Intended
    
    
    (2.0
    )
    
    
    
    
    
    
    
    
    
    
    (2.0
    )Foreign Currency Translation
    
    
    
    
    
    
    
    
    
    
    (0.3
    )
    
    
    (0.3
    )Reserve balance at September 30, 2005
    
    $
    1.5
    
    
    $
    
    
    
    $
    (0.3
    )
    
    $
    1.2Electronic SystemsReserve balance at December 31, 2004
    
    $
    0.1
    
    
    $
    0.8
    
    
    $
    
    
    
    $
    0.9Used as Intended
    
    
    (0.1
    )
    
    
    (0.7
    )
    
    
    
    
    
    
    (0.8
    )Foreign Currency Translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Reserve balance at September 30, 2005
    
    $
    
    
    
    $
    0.1
    
    
    $
    
    
    
    $
    0.1TotalReserve balance at December 31, 2004
    
    $
    3.9
    
    
    $
    0.8
    
    
    $
    
    
    
    $
    4.7Used as Intended
    
    
    (2.1
    )
    
    
    (0.7
    )
    
    
    
    
    
    
    (2.8
    )Foreign Currency Translation
    
    
    
    
    
    
    
    
    
    
    (0.3
    )
    
    
    (0.3
    )Reserve balance at September 30, 2005
    
    $
    1.8
    
    
    $
    0.1
    
    
    $
    (0.3
    )
    
    $
    1.6
  12




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##### 



Note 4. Other Income (Expense)  Net
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004(Dollars in millions)
    
    
    (Dollars in millions)Retiree health care expenses related to
divested businesses
    
    $
    (4.1
    )
    
    $
    (4.8
    )
    
    $
    (12.6
    )
    
    $
    (14.2
    )Debt redemption premiums and related expenses
    
    
    (5.6
    )
    
    
    (3.1
    )
    
    
    (11.6
    )
    
    
    (3.5
    )Expenses related to divested businesses
    
    
    (2.3
    )
    
    
    (2.4
    )
    
    
    (3.8
    )
    
    
    (8.8
    )Minority interest and equity in affiliated companies
    
    
    (0.1
    )
    
    
    (2.0
    )
    
    
    (6.8
    )
    
    
    (7.3
    )Impairment of a note receivable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7.0
    )Other  net
    
    
    0.5
    
    
    
    1.4
    
    
    
    (1.2
    )
    
    
    0.2Other income (expense)  net
    
    $
    (11.6
    )
    
    $
    (10.9
    )
    
    $
    (36.0
    )
    
    $
    (40.6
    )
 Note 5. Asset Impairments
  Note 6. Cumulative Effect of Change in Accounting
   13




---



##### 



Note 7. Earnings Per Share
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004(In millions, except
    
    
    (In millions, exceptper share amounts)
    
    
    per share amounts)Numerator:Numerator for basic and diluted earnings
per share  income from continuing
operations
    
    $
    60.6
    
    
    $
    49.9
    
    
    $
    179.8
    
    
    $
    118.7Denominator:Denominator for basic earnings per share
 weighted- average shares
    
    
    122.4
    
    
    
    118.8
    
    
    
    121.1
    
    
    
    118.5Effect of dilutive securities:Stock options, employee stock purchase
plan, restricted shares and restricted
share units
    
    
    2.6
    
    
    
    1.7
    
    
    
    2.4
    
    
    
    1.6Other deferred compensation shares
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.12.7
    
    
    
    1.8
    
    
    
    2.5
    
    
    
    1.7Denominator for diluted earnings per
share  adjusted weighted- average shares
and assumed conversion
    
    
    125.1
    
    
    
    120.6
    
    
    
    123.6
    
    
    
    120.2Per share income from continuing operations:Basic
    
    $
    0.50
    
    
    $
    0.42
    
    
    $
    1.49
    
    
    $
    1.00Diluted
    
    $
    0.49
    
    
    $
    0.41
    
    
    $
    1.46
    
    
    $
    0.99
 14




---



##### 



Note 8. Inventories
  September 30,
    
    
    December 31,2005
    
    
    2004(Dollars in millions)FIFO or average cost (which approximates current costs):Finished products
    
    $
    206.1
    
    
    $
    185.3In process
    
    
    883.8
    
    
    
    773.7Raw materials and supplies
    
    
    298.2
    
    
    
    290.7Total
    
    
    1,388.1
    
    
    
    1,249.7Less:Reserve to reduce certain inventories to LIFO basis
    
    
    (40.6
    )
    
    
    (40.3
    )Progress payments and advances
    
    
    (54.1
    )
    
    
    (45.9
    )Total
    
    $
    1,293.4
    
    
    $
    1,163.5
  15




---



##### 



Note 9. Goodwill
  BusinessBalance
    
    
    Combinations
    
    
    Foreign
    
    
    BalanceDecember 31,
    
    
    Completed or
    
    
    Currency
    
    
    September 30,2004
    
    
    Finalized
    
    
    Translation
    
    
    2005(Dollars in millions)Airframe Systems
    
    $
    260.2
    
    
    $
    
    
    
    $
    (16.2
    )
    
    $
    244.0Engine Systems
    
    
    509.4
    
    
    
    
    
    
    
    (19.9
    )
    
    
    489.5Electronic Systems
    
    
    488.9
    
    
    
    8.8
    (a)
    
    
    49.5
    (b)
    
    
    547.2$
    1,258.5
    
    
    $
    8.8
    
    
    $
    13.4
    
    
    $
    1,280.7
 
 (a)
    
    During the nine months ended September 30, 2005, the Company completed its acquisition of the
remaining five percent interest in Goodrich Hella Aerospace Lighting Systems Holding GmbH from
Hella Hueck & Co. KG. At the time of the transaction, the Company increased Goodwill by $8.8
million.(b)
    
    Included in the $49.5 million of foreign currency translation was an adjustment related to
the foreign currency translation of certain goodwill amounts that resulted in a $27.3 million
increase in Goodwill and Accumulated Other Comprehensive Income/(Loss). Note 10. Financing Arrangements
 Credit Facilities
  16




---



##### 



Long-Term Debt
  17




---



##### 



Note 11. Off Balance Sheet Arrangements
 Lease Commitments
  Sale of Receivables
  18




---



##### 



Note 12. Pensions and Postretirement Benefits
 Pensions
  U.S. Plans
    
    
    U.K. Plans
    
    

Other Non-U.S. PlansThree Months
    
    
    Three Months
    
    
    Three MonthsEnded
    
    
    Ended
    
    
    EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004(Dollars in millions)Service cost
    
    $
    11.9
    
    
    $
    9.6
    
    
    $
    5.9
    
    
    $
    4.9
    
    
    $
    0.8
    
    
    $
    0.6Interest cost
    
    
    37.0
    
    
    
    37.1
    
    
    
    7.3
    
    
    
    6.3
    
    
    
    1.2
    
    
    
    1.0Expected rate of return on plan assets
    
    
    (42.7
    )
    
    
    (40.6
    )
    
    
    (10.3
    )
    
    
    (9.5
    )
    
    
    (1.1
    )
    
    
    (1.0
    )Amortization of transition obligation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of prior service cost
    
    
    2.2
    
    
    
    2.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of actuarial (gain) loss
    
    
    12.1
    
    
    
    11.7
    
    
    
    0.1
    
    
    
    
    
    
    
    0.1
    
    
    
    0.2Periodic benefit cost (income)
    
    
    20.5
    
    
    
    20.3
    
    
    
    3.0
    
    
    
    1.7
    
    
    
    1.0
    
    
    
    0.8Settlements and curtailments (gain) loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.1Special termination benefit charge
(credit)
    
    
    
    
    
    
    
    
    
    
    1.3
    
    
    
    
    
    
    
    
    
    
    
    Net benefit cost (income)
    
    $
    20.5
    
    
    $
    20.3
    
    
    $
    4.3
    
    
    $
    1.7
    
    
    $
    1.0
    
    
    $
    0.9
 Other Non-U.S.U.S. Plans
    
    
    U.K. Plans
    
    
    PlansNine Months
    
    
    Nine Months
    
    
    Nine MonthsEnded
    
    
    Ended
    
    
    EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004(Dollars in millions)Service cost
    
    $
    35.8
    
    
    $
    28.9
    
    
    $
    18.2
    
    
    $
    14.9
    
    
    $
    2.3
    
    
    $
    1.8Interest cost
    
    
    111.1
    
    
    
    111.1
    
    
    
    22.8
    
    
    
    18.9
    
    
    
    3.4
    
    
    
    2.9Expected rate of return on plan assets
    
    
    (128.3
    )
    
    
    (121.9
    )
    
    
    (31.9
    )
    
    
    (28.6
    )
    
    
    (3.1
    )
    
    
    (2.7
    )Amortization of prior service cost
    
    
    6.6
    
    
    
    7.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of actuarial (gain) loss
    
    
    36.3
    
    
    
    33.4
    
    
    
    
    
    
    
    
    
    
    
    0.4
    
    
    
    0.2Periodic benefit cost (income)
    
    
    61.5
    
    
    
    58.8
    
    
    
    9.1
    
    
    
    5.2
    
    
    
    3.0
    
    
    
    2.2Settlements and curtailments (gain) loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.1Special termination benefit charge
(credit)
    
    
    
    
    
    
    
    
    
    
    1.3
    
    
    
    
    
    
    
    
    
    
    
    Net benefit cost (income)
    
    $
    61.5
    
    
    $
    58.8
    
    
    $
    10.4
    
    
    $
    5.2
    
    
    $
    3.0
    
    
    $
    2.3
  19




---



##### 



U.S. Plans
    
    U.K. Plans
    
    Other Non-U.S. PlansThree and Nine Months Ended
    
    Three and Nine Months Ended
    
    Three and Nine Months EndedSeptember 30,
    
    September 30,
    
    September 30,2005
    
    2004
    
    2005
    
    2004
    
    2005
    
    2004Discount rate
    
    
    5.875
    %
    
    
    6.25
    %
    
    
    5.50
    %
    
    
    5.75
    %
    
    
    5.75
    %
    
    
    6.25
    %Expected long-term
return on assets
    
    
    9.00
    %
    
    
    9.00
    %
    
    
    8.50
    %
    
    
    8.50
    %
    
    
    8.50
    %
    
    
    8.50
    %Rate of
compensation
increase
    
    
    3.63
    %
    
    
    3.63
    %
    
    
    3.50
    %
    
    
    3.25
    %
    
    
    3.50
    %
    
    
    3.25
    %
 Postretirement Benefits Other Than Pensions
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004(Dollars in millions)
    
    
    (Dollars in millions)Service cost
    
    $
    0.4
    
    
    $
    0.3
    
    
    $
    1.2
    
    
    $
    1.0Interest cost
    
    
    5.7
    
    
    
    6.3
    
    
    
    17.0
    
    
    
    18.8Amortization of prior service cost
    
    
    
    
    
    
    (0.1
    )
    
    
    (0.1
    )
    
    
    (0.1
    )Amortization of actuarial (gain) loss
    
    
    0.3
    
    
    
    0.5
    
    
    
    1.1
    
    
    
    1.4Periodic benefit cost (income)
    
    
    6.4
    
    
    
    7.0
    
    
    
    19.2
    
    
    
    21.1Settlements and curtailments (gain) loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Special termination benefit charge (credit)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net benefit cost (income)
    
    $
    6.4
    
    
    $
    7.0
    
    
    $
    19.2
    
    
    $
    21.1
  Three and Nine Months EndedSeptember 30,2005
    
    2004Discount rate
    
    5.875%
    
    6.25%Healthcare trend rate
    
    9% in 2005 to 5% in 2008
    
    10% in 2004 to 5% in 2008
 20




---



##### 



Note 13. Comprehensive Income/(Loss)
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004(Dollars in millions)
    
    
    (Dollars in millions)Comprehensive Income/(Loss)Net income
    
    $
    60.8
    
    
    $
    49.9
    
    
    $
    194.0
    
    
    $
    135.5Other comprehensive income/(loss):Unrealized foreign currency
translation gains (losses) during
period
    
    
    (9.2
    )
    
    
    7.9
    
    
    
    (56.5
    )
    
    
    11.5Gains (losses) on cash flow hedges
    
    
    
    
    
    
    (2.8
    )
    
    
    (46.9
    )
    
    
    (13.9
    )Gains (losses) on certain investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.1
    )Total
    
    $
    51.6
    
    
    $
    55.0
    
    
    $
    90.6
    
    
    $
    133.0
  September 30,
    
    
    December 31,2005
    
    
    2004(Dollars in millions)Accumulated Other Comprehensive Income/(Loss)Cumulative unrealized foreign currency translation gains (losses)
    
    $
    156.2
    
    
    $
    212.7Minimum pension liability adjustments
    
    
    (388.1
    )
    
    
    (388.1
    )Accumulated gains (losses) on cash flow hedges
    
    
    24.8
    
    
    
    71.7Total
    
    $
    (207.1
    )
    
    $
    (103.7
    )
  Note 14. Income Taxes
  21




---



##### 



22




---



##### 



Note 15. Business Segment Information
  Airframe Systems
  Engine Systems
  23




---



##### 



Electronic Systems
   Three Months Ended
    
    
    Nine Months EndedSeptember 30
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004(Dollars in millions)
    
    
    (Dollars in millions)Net customer sales:Airframe Systems
    
    $
    475.2
    
    
    $
    399.5
    
    
    $
    1,381.9
    
    
    $
    1,205.9Engine Systems
    
    
    567.3
    
    
    
    474.5
    
    
    
    1,661.2
    
    
    
    1,422.2Electronic Systems
    
    
    328.0
    
    
    
    287.5
    
    
    
    955.6
    
    
    
    817.9$
    1,370.5
    
    
    $
    1,161.5
    
    
    $
    3,998.7
    
    
    $
    3,446.0Intersegment sales:Airframe Systems
    
    $
    14.3
    
    
    $
    11.4
    
    
    $
    40.2
    
    
    $
    39.3Engine Systems
    
    
    5.2
    
    
    
    5.3
    
    
    
    21.6
    
    
    
    15.1Electronic Systems
    
    
    8.8
    
    
    
    8.7
    
    
    
    25.8
    
    
    
    24.6Total intersegment sales
    
    $
    28.3
    
    
    $
    25.4
    
    
    $
    87.6
    
    
    $
    79.0Segment operating income:Airframe Systems
    
    $
    16.1
    
    
    $
    27.6
    
    
    $
    54.7
    
    
    $
    74.0Engine Systems
    
    
    104.1
    
    
    
    65.2
    
    
    
    303.4
    
    
    
    209.0Electronic Systems
    
    
    37.2
    
    
    
    38.8
    
    
    
    107.2
    
    
    
    92.7157.4
    
    
    
    131.6
    
    
    
    465.3
    
    
    
    375.7Corporate general and administrative expenses
    
    
    (22.0
    )
    
    
    (23.6
    )
    
    
    (63.7
    )
    
    
    (66.5
    )Total operating income
    
    $
    135.4
    
    
    $
    108.0
    
    
    $
    401.6
    
    
    $
    309.2
 24




---



##### 



September 30,
    
    
    December 31,2005
    
    
    2004(Dollars in millions)Assets:Airframe Systems
    
    $
    1,784.0
    
    
    $
    1,796.1Engine Systems
    
    
    2,331.8
    
    
    
    2,266.7Electronic Systems
    
    
    1,448.1
    
    
    
    1,401.2Assets from Discontinued Operations
    
    
    
    
    
    
    17.8Corporate
    
    
    673.0
    
    
    
    735.7Total assets
    
    $
    6,236.9
    
    
    $
    6,217.5
 Note 16. Derivatives and Hedging Activities
 Cash Flow Hedges
    25




---



##### 



Fair Value Hedges
    26




---



##### 



Other Forward Contracts
  Note 17. Contingencies
 General
  Environmental
   27




---



##### 



28




---



##### 



Asbestos
   Liabilities of Divested Businesses
 Asbestos
  29




---



##### 



Other
  Guarantees
   30




---



##### 



Commercial Airline Customers
  Tax
   31




---



##### 



Rohr, Inc. and Subsidiaries
    
    July, 1995  December, 1997 (through date of acquisition)Coltec Industries Inc and Subsidiaries
    
    December, 1997  July, 1999 (through date of acquisition)Goodrich Corporation and Subsidiaries
    
    19981999 (including Rohr and Coltec)
  32




---



##### 



Note 18. Guarantees
  Maximum
    
    
    CarryingPotential
    
    
    Amount ofPayment
    
    
    Liability(Dollars in millions)Environmental remediation indemnification (Note 17, Contingencies)
    
    No limit
    
    $
    16.0Financial Guarantees:TIDES
    
    $
    150.0
    
    
    $
    Debt and lease payments
    
    $
    2.5
    
    
    $
    Residual value on leases
    
    $
    50.6
    
    
    $
    
 TIDES
  33




---



##### 



Debt and Lease Payments
  Residual Value on Leases
  Service and Product Warranties
  34




---



##### 



(Dollars in millions)Balance at December 31, 2004
    
    $
    165.8Service and product warranty provision
    
    
    58.2Return to profit
    
    
    (13.1
    )Payments
    
    
    (44.0
    )Foreign currency translation
    
    
    (4.9
    )Balance at September 30, 2005
    
    $
    162.0
  September 30,
    
    
    December 31,2005
    
    
    2004(Dollars in millions)Short-term liabilities
    
    $
    65.2
    
    
    $
    69.0Long-term liabilities
    
    
    96.8
    
    
    
    96.8Total
    
    $
    162.0
    
    
    $
    165.8
 Note 19. Discontinued Operations
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004(Dollars in millions)
    
    
    (Dollars in millions)Sales
    
    $
    
    
    
    $
    5.0
    
    
    $
    8.0
    
    
    $
    16.6Operating income
    
    $
    
    
    
    $
    
    
    
    $
    1.3
    
    
    $
    0.8Gain on sale
    
    
    0.2
    
    
    
    
    
    
    
    20.4
    
    
    
    Income tax expense
    
    
    
    
    
    
    
    
    
    
    (7.5
    )
    
    
    (0.2
    )Income from discontinued operations
    
    $
    0.2
    
    
    $
    
    
    
    $
    14.2
    
    
    $
    0.6
  35




---



##### 



Note 20. Subsequent Events
 Acquisition of Sensors Unlimited, Inc.
  Notice of Redemption of TIDES
  36




---



##### 



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
    OVERVIEW
   
    
    Delta and Northwest bankruptcy filings  We recognized a charge of
approximately $2 million after tax ($0.02 per diluted share) associated with the Chapter 11
bankruptcy filings of Delta Air Lines and Northwest Airlines. There were no comparable
charges in the quarter ended September 30, 2004.
    
    Debt retirement  We recorded a charge of approximately $4 million after tax
($0.03 per diluted share) for premiums and costs associated with the early retirement of
$82 million of long-term debt in August 2005 as compared to a charge of approximately $2
million after tax ($0.02 per diluted share) for premiums and costs associated with the
early retirement of debt during the quarter ended September 30, 2004.
 37




---



##### 




    
    Effective tax rate  For the third quarter 2005, we reported an effective tax
rate of 34.6 percent as compared to 20 percent during the third quarter 2004. During the
third quarter 2005, we finalized plans for dividend repatriation under the American Jobs
Creation Act, which increased our plan for dividend repatriation from $100 million to
approximately $122 million. As a result, we recognized additional taxes in the third
quarter 2005 of approximately $1 million ($0.01 per diluted share). Additionally, the
increase in our effective tax rate resulted from growth in before tax book income relative
to our significant permanent items and the absence in 2005 of a favorable state tax
settlement that generated approximately $6.8 million of income in the quarter ended
September 30, 2004.
  
    
    Gain on the sale of Test Systems  The sale to Aeroflex was completed in April
2005 and resulted in an after tax gain of $13.3 million, or $0.10 per diluted share. All
prior periods have been reclassified to reflect the business as a discontinued operation.
    
    Charges associated with the A380 Actuation program  In the nine months ended
September 30, 2005, we recorded a charge of approximately $10 million after tax ($0.08 per
diluted share) to reserve for costs associated with the retrofit of actuators on the A380
aircraft, including reserves for related obsolete inventory, supplier claims and impaired
assets.
    
    Effective tax rate  For the nine months ended September 30, 2005, our
effective tax rate was 33.3 percent, as compared to an effective rate of 26.8 percent for
the nine months ended September 30, 2004. The increase in our effective tax rate resulted
from U.S. income tax associated with anticipated dividends from certain foreign
subsidiaries under the American Jobs Creation Act, growth in before tax book income
relative to our significant permanent items, and the absence of a favorable state tax
settlement that generated approximately $6.8 million of income in the quarter ended
September 30, 2004, offset in part by the partial reversal of a valuation allowance
previously recorded against certain foreign losses.
 38




---



##### 




    
    Debt retirement  We recorded premiums and other costs of approximately $7
million after tax ($0.06 per diluted share) associated with the early retirement of $100
million of long-term debt in April 2005 and an additional $82 million in August 2005 as
compared to a charge of approximately $2 million after tax ($0.02 per diluted share) for
premiums and costs associated with the early retirement of debt during the nine months
ended September 30, 2004.
    
    Notes and accounts receivable  During the nine months ended September 30,
2004, we recognized impairment on notes and accounts receivable of approximately $5 million
after tax ($0.04 per diluted share). During the nine months ended September 30, 2005, we
recognized a charge of approximately $2 million after tax ($0.02 per diluted share)
associated with the Chapter 11 bankruptcy filings of Delta Air
Lines and Northwest Airlines.
    
    Cumulative Effect of Change in Accounting  Effective January 1, 2004, we
changed two aspects of the application of contract accounting for our aerostructures
business which resulted in a $16.2 million after tax gain ($23.3 million before tax gain or
$0.13 per diluted share) that was recorded as a Cumulative Effect of Change in Accounting
in the nine months ended September 30, 2004. There were no similar changes in the nine
months ended September 30, 2005.
   39




---



##### 



40




---



##### 



OUTLOOK
 2005 Outlook
  41




---



##### 




    
    Deliveries of Airbus and Boeing large commercial aircraft are now expected to increase
by approximately 10 percent in 2005, based on the announced plans by Airbus and Boeing.
This is compared to our prior expectation of an increase by 10 to 15 percent which was
previously reported in our Form 10-Q for the quarter ended June 30, 2005. Our sales of
commercial aircraft OE are now projected to increase by approximately 20 percent in 2005,
compared to 2004.
    
    Capacity in the global airline system, as measured by available seat miles (ASMs), is
expected to continue to grow. Our sales to airlines for large commercial and regional
aircraft aftermarket parts and services are now expected to grow more than 10 percent in
2005, compared to 2004, somewhat above expectations for global ASM increases due to the
continuing strong demand for aftermarket components and services. This is compared to our
prior expectation of Goodrich sales growth of approximately 10 percent in 2005, compared to
2004 which was previously reported in our Form 10-Q for the quarter ended June 30, 2005.
    
    Total regional and business aircraft production is expected to be relatively flat in
2005, compared to 2004, as deliveries of business jets are expected to increase, offsetting
the expected decrease in regional aircraft deliveries. Deliveries to Embraer in support of
its EMBRAER 190 aircraft, which includes significant Goodrich content, are expected to
enable us to increase our OE sales in this market channel for the full year 2005, compared
to 2004.
    
    Our military sales (OE and aftermarket) are now expected to increase 6 to 8 percent in
2005, compared to 2004, representing a growth rate slightly greater than global military
budgets. This is compared to our expectation of an increase of 5 to 6 percent in 2005,
compared to 2004, which was previously reported in our Form 10-Q for the quarter ended June
30, 2005.
 .
  42




---



##### 



2006 Outlook Timing and Headwinds
   
    
    Pension expense  We will set the discount rate, actuarial assumptions and expected
long-term rate of return for 2006 on December 31, 2005. Based on expected actuarial
assumptions and interest rates and asset values as of September 30, 2005, we expect to
incur additional pension expense of approximately $29 million before tax ($18 million after
tax, or $0.14 per diluted share) during 2006, compared to 2005.
    
    Foreign exchange  We are currently about 90 percent hedged for our expected 2006
foreign exchange exposure. Based on these hedges and current market conditions, we expect
that foreign currency translation related to sales and expenses denominated in currencies
other than the U.S. dollar will have an unfavorable impact of approximately $27 million
before tax ($17 million after tax, or $0.13 per diluted share) during 2006, compared to
2005.
    
    Stock-based compensation  We implemented FAS 123, prospectively, and a new stock option
and restricted stock unit program on January 1, 2004. The cost of each annual grant of
restricted stock units is amortized over a five-year vesting period. Consequently, expense
increases year-over-year as each new restricted stock unit grant is added and then
stabilizes after the fifth year (2008). Also, under the provisions of FAS 123 and FAS
123(R), beginning in 2006 we will recognize the value of stock options and restricted stock
units granted to all employees who are, or who become, eligible for retirement on an
accelerated basis. In total, these items are expected to result in an increase in
stock-based compensation expense of approximately $14 million before tax ($9 million after
tax, or $0.07 per diluted share) during 2006 as compared to 2005.
 43




---



##### 



RESULTS OF OPERATIONS
 Changes in Accounting Method
  Discontinued Operations
  Quarter Ended September 30, 2005 Compared with Quarter Ended September 30, 2004
 Quarter EndedSeptember 30,2005
    
    
    2004(Dollars in millions)Sales
    
    $
    1,370.5
    
    
    $
    1,161.5Segment Operating Income
    
    $
    157.4
    
    
    $
    131.6Corporate General and Administrative Costs
    
    
    (22.0
    )
    
    
    (23.6
    )Total Operating Income
    
    
    135.4
    
    
    
    108.0Net Interest Expense
    
    
    (31.1
    )
    
    
    (34.7
    )Other Income (Expense)  Net
    
    
    (11.6
    )
    
    
    (10.9
    )Income from Continuing Operations Before Income Taxes
    
    
    92.7
    
    
    
    62.4Income Tax Expense
    
    
    (32.1
    )
    
    
    (12.5
    )Income from Continuing Operations
    
    
    60.6
    
    
    
    49.9Discontinued Operations
    
    
    0.2
    
    
    
    Cumulative Effect of Change in Accounting
    
    
    
    
    
    
    Net Income
    
    $
    60.8
    
    
    $
    49.9
  44




---



##### 



45




---



##### 



Nine Months Ended September 30, 2005 Compared with Nine Months Ended September 30, 2004
 Nine Months EndedSeptember 30,2005
    
    
    2004(Dollars in millions)Sales
    
    $
    3,998.7
    
    
    $
    3,446.0Segment Operating Income
    
    $
    465.3
    
    
    $
    375.7Corporate General and Administrative Costs
    
    
    (63.7
    )
    
    
    (66.5
    )Total Operating Income
    
    
    401.6
    
    
    
    309.2Net Interest Expense
    
    
    (96.1
    )
    
    
    (106.5
    )Other Income (Expense)  Net
    
    
    (36.0
    )
    
    
    (40.6
    )Income from Continuing Operations Before Income Taxes
    
    
    269.5
    
    
    
    162.1Income Tax Expense
    
    
    (89.7
    )
    
    
    (43.4
    )Income from Continuing Operations
    
    
    179.8
    
    
    
    118.7Discontinued Operations
    
    
    14.2
    
    
    
    0.6Cumulative Effect of Change in Accounting
    
    
    
    
    
    
    16.2Net Income
    
    $
    194.0
    
    
    $
    135.5
     46




---



##### 



BUSINESS SEGMENT PERFORMANCE
   Quarter Ended September 30, 2005 Compared with the Quarter Ended September 30, 2004
 Quarter Ended September 30,%
    
    
    % of Sales2005
    
    
    2004
    
    
    Change
    
    
    2005
    
    
    2004(Dollars in millions)NET CUSTOMER SALESAirframe Systems
    
    $
    475.2
    
    
    $
    399.5
    
    
    
    18.9Engine Systems
    
    
    567.3
    
    
    
    474.5
    
    
    
    19.6Electronic Systems
    
    
    328.0
    
    
    
    287.5
    
    
    
    14.1Total Sales
    
    $
    1,370.5
    
    
    $
    1,161.5
    
    
    
    18.0SEGMENT OPERATING INCOMEAirframe Systems
    
    $
    16.1
    
    
    $
    27.6
    
    
    
    (41.7
    )
    
    
    3.4
    
    
    
    6.9Engine Systems
    
    
    104.1
    
    
    
    65.2
    
    
    
    59.7
    
    
    
    18.4
    
    
    
    13.7Electronic Systems
    
    
    37.2
    
    
    
    38.8
    
    
    
    (4.1
    )
    
    
    11.3
    
    
    
    13.5Segment Operating Income
    
    $
    157.4
    
    
    $
    131.6
    
    
    
    19.6
    
    
    
    11.5
    
    
    
    11.3
 47




---



##### 



Airframe Systems :
 
    
    Higher landing gear commercial and military OE sales volume;
    
    Higher large commercial aftermarket and regional and military aircraft wheel
and brake sales volume;
    
    Higher actuation systems sales volume; and
    
    Higher sales volume for airframe heavy maintenance services.
  
    
    Substantially higher operating costs including product upgrade expenditures
in the wheel and brake business, higher warranty costs in the landing gear and actuation
businesses and premium freight costs in the landing gear business;
    
    The absence of a $6 million benefit from the revision of the accounting
treatment of a technology grant from a non-U.S. government entity, which was recognized
during 2004;
    
    Unfavorable impacts from foreign currency translation primarily in the
landing gear business of approximately $2 million; and
    
    Restructuring expenses, which increased by approximately $2 million.
 Engine Systems :
 
    
    Higher aerostructures OE sales volume for large commercial and regional
aircraft, commercial spare parts and maintenance, repair and overhaul (MRO);
    
    Higher sales volume from military customers for aftermarket support from our
customer services business;
    
    Higher sales volume of turbomachinery products for U.S. military and regional
aircraft applications and in the power generation market; and
 48




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##### 




    
    Higher sales volume of engine control units for military, regional and
commercial applications.
  
    
    Higher sales volume as described above;
    
    Non-recurrence of an unfavorable cumulative catch-up charge of $6.4 million in
the quarter ended September 30, 2004, coupled with a favorable cumulative catch-up benefit
of $0.7 million in the quarter ended September 30, 2005; and
    
    Improved margins due to higher aftermarket sales primarily for aerostructures
products.
  Electronic Systems :
 
    
    Higher sales volume of military OE sales in our optical and space systems,
sensors systems and fuel and utility systems business units;
    
    Higher sales volume of non-aerospace products in our aircraft interior products
and sensors systems businesses;
    
    Higher sales volume of commercial aircraft aftermarket in our aircraft interior
products, fuel and utility systems and lighting businesses; and
    
    Higher sales volume of regional and business jet aircraft OE and aftermarket
products in our aircraft interior products and power systems businesses.
 49




---



##### 




    
    Unfavorable sales mix from aftermarket towards proportionately more OE sales in
military and commercial markets;
    
    Increased research and development costs for new programs that have already
been awarded; and
    
    Unfavorable impacts from foreign currency translation, primarily in the
lighting systems business, of approximately $2 million.
 Nine Months Ended September 30, 2005 Compared with the Nine Months Ended September 30, 2004
 Nine Months Ended September 30,%
    
    
    % of Sales2005
    
    
    2004
    
    
    Change
    
    
    2005
    
    
    2004(Dollars in millions)NET CUSTOMER SALESAirframe Systems
    
    $
    1,381.9
    
    
    $
    1,205.9
    
    
    
    14.6Engine Systems
    
    
    1,661.2
    
    
    
    1,422.2
    
    
    
    16.8Electronic Systems
    
    
    955.6
    
    
    
    817.9
    
    
    
    16.8Total Sales
    
    $
    3,998.7
    
    
    $
    3,446.0
    
    
    
    16.0SEGMENT OPERATING INCOMEAirframe Systems
    
    $
    54.7
    
    
    $
    74.0
    
    
    
    (26.1
    )
    
    
    4.0
    
    
    
    6.1Engine Systems
    
    
    303.4
    
    
    
    209.0
    
    
    
    45.2
    
    
    
    18.3
    
    
    
    14.7Electronic Systems
    
    
    107.2
    
    
    
    92.7
    
    
    
    15.6
    
    
    
    11.2
    
    
    
    11.3Segment Operating Income
    
    $
    465.3
    
    
    $
    375.7
    
    
    
    23.8
    
    
    
    11.6
    
    
    
    10.9
 Airframe Systems :
 
    
    Higher landing gear commercial, regional and military aircraft OE sales
volume;
    
    Higher large commercial aftermarket, regional and military aircraft wheel
and brake sales volume;
    
    Higher actuation systems commercial and military OE sales volume;
    
    Higher sales volume for airframe heavy maintenance services; and
    
    Favorable impacts from foreign currency translation on non-U.S. dollar
sales primarily in the landing gear business of approximately $7 million.
 50




---



##### 




    
    Substantially higher operating costs including product upgrade expenditures
in the wheel and brake business, higher warranty costs in the landing gear and
actuation businesses and premium freight costs in the landing gear business;
    
    A $16 million charge for the retrofit of redesigned parts for the A380
actuation system, including reserves for related obsolete inventory, supplier claims
and impaired assets;
    
    The absence of a $6 million benefit from the revision of the accounting
treatment of a technology grant from a non-U.S. government entity, which was recognized
during 2004; and
    
    Restructuring expenses, which increased by approximately $5 million.
 Engine Systems :
 
    
    Higher aerostructures engine OE for large commercial and regional
aircraft-components platforms, U.S. military and commercial spare parts and MRO sales
volume;
    
    Higher revenues from military customers for aftermarket support from our
customer services business;
    
    Higher sales volume of turbomachinery products for U.S. military and regional
aircraft applications and industrial gas turbine products;
    
    Higher sales volumes of engine control units for military, regional and
commercial applications; and
    
    Favorable foreign currency translation on non-U.S. dollar sales primarily in
the engine controls business of approximately $5 million.
  
    
    Higher sales volume as described above; and
    
    Improved margins due to higher aftermarket sales primarily for aerostructures
products.
 51




---



##### 



Electronic Systems :
 
    
    Higher sales volume of regional and business jet aircraft OE and aftermarket
products for aircraft interior products, de-icing and specialty systems, sensor systems,
and power systems businesses;
    
    Higher sales volume of military OE sales primarily for optical and space
systems and sensor systems; and
    
    Higher sales volume of commercial OE and aftermarket products in nearly all of
the segments business units.
   
    
    Unfavorable sales mix from aftermarket towards proportionately more OE sales in
military and commercial markets;
    
    Increased research and development costs for new programs that have already
been awarded;
    
    Increases in warranty costs of approximately $3 million as a result of
increased sales volume; and
    
    Unfavorable impacts from foreign currency translation, primarily in the
lighting systems business, of approximately $2 million.
  52




---



##### 



LIQUIDITY AND CAPITAL RESOURCES
  Cash
  Credit Facilities
     53




---



##### 



Long-Term Financing
    Off-Balance Sheet Arrangements
  Undiscounted MinimumFuture Lease Payments
    
    
    Receivables Sold(Dollars in millions)Tax Advantaged Operating Leases
    
    $
    21.2Standard Operating Leases
    
    
    142.8$
    164.0Short-term Receivables Securitization Program
    
    
    
    
    
    $
    91.1
 54




---



##### 



Lease Agreements
    Sale of Receivables
  Cash Flow Hedges
  55




---



##### 



Fair Value Hedges
  56




---



##### 



Other Forward Contracts
  CASH FLOW
  Nine Months Ended September 30,Net Cash Provided by (Used by):
    
    2005
    
    
    2004(Dollars in millions)Operating activities
    
    $
    195.3
    
    
    $
    236.5Investing activities
    
    $
    (102.3
    )
    
    $
    (73.0
    )Financing activities
    
    $
    (167.3
    )
    
    $
    (200.1
    )Discontinued operations
    
    $
    26.0
    
    
    $
    3.2
 57




---



##### 



Operating Activities
  Investing Activities
   Financing Activities
  58




---



##### 



Discontinued Operations
  CONTINGENCIES
 General
  Environmental
   59




---



##### 



60




---



##### 



Asbestos
   Liabilities of Divested Businesses
 Asbestos
   61




---



##### 



Other
  Guarantees
    62




---



##### 



Commercial Airline Customers
  Tax
    63




---



##### 



Rohr, Inc. and Subsidiaries
    
    July, 1995  December, 1997 (through date of acquisition)Coltec Industries Inc and Subsidiaries
    
    December, 1997  July, 1999 (through date of acquisition)Goodrich Corporation and Subsidiaries
    
    1998  1999 (including Rohr and Coltec)
   64




---



##### 



NEW ACCOUNTING STANDARDS
 Accounting Changes and Error Corrections
  Inventory Costs
  65




---



##### 



Share-Based Payments
    66




---



##### 



Accounting for Conditional Asset Retirement Obligations
  FASB Staff Position 109-1 (FSP 109-1) and 109-2 (FSP 109-2)
   67




---



##### 



CRITICAL ACCOUNTING POLICIES
   68




---



##### 



Revenue Recognition
  Contract Accounting-Percentage of Completion
 Revenue Recognition
   69




---



##### 



Inventory
   Income Taxes
  70




---



##### 



Identifiable Intangible Assets
   71




---



##### 



Sales Incentives
  Entry Fees-Investment in Risk and Revenue Sharing Programs
     72




---



##### 




    
    Changes in market conditions that may affect product sales under the program, including
market acceptance and competition from others;
    
    Performance of subcontract suppliers and other production risks;
    
    Bankruptcy or other less significant financial difficulties of other program
participants, including the aircraft manufacturer, the OEM and other program suppliers or
the aircraft customer; and
    
    Availability of specialized raw materials in the marketplace.
  Pension and Postretirement Benefits Other Than Pensions
  73




---



##### 



FORWARD-LOOKING INFORMATION IS SUBJECT TO RISK AND UNCERTAINTY
   
    
    demand for and market acceptance of new and existing products, such as the Airbus A350
and A380, the Boeing 787 Dreamliner, the EMBRAER 190, and the Lockheed Martin F-35 Joint
Strike Fighter and F-22 Raptor;
    
    our ability to extend our contracts with Boeing relating to the 787 Dreamliner beyond the
initial contract period;
    
    potential cancellation of orders by customers;
    
    successful development of products and advanced technologies;
    
    the health of the commercial aerospace industry, including the impact of bankruptcies in
the airline industry;
    
    changing priorities or reductions in the defense budgets in the U.S. and other countries,
U.S. foreign policy and the level of activity in military flight operations;
    
    global demand for aircraft spare parts and aftermarket services;
    
    the actual amount of future liabilities assumed by us pursuant to the partial settlement
with Northrop Grumman related to the purchase of Aeronautical Systems;
    
    the possibility of additional contractual disputes with Northrop Grumman related to the
purchase of Aeronautical Systems;
    
    the resolution of tax litigation involving Coltec Industries Inc and Rohr, Inc. and the
resolution of the IRS examination cycle for our tax years through 1999;
    
    the possibility of restructuring and consolidation actions beyond those previously
announced by us;
 74




---



##### 




    
    threats and events associated with and efforts to combat terrorism, including the current
situation in Iraq;
    
    the extent to which expenses relating to employee and retiree medical and pension
benefits continue to rise;
    
    competitive product and pricing pressures;
    
    our ability to recover from third parties under contractual rights of indemnification for
environmental and other claims arising out of the divestiture of our tire, vinyl and other
businesses;
    
    possible assertion of claims against us on the theory that we, as the former corporate
parent of Coltec Industries Inc, bear some responsibility for the asbestos-related
liabilities of Coltec and its subsidiaries, or that Coltecs dividend of its aerospace
business to us prior to the EnPro spin-off was made at a time when Coltec was insolvent or
caused Coltec to become insolvent;
    
    the effect of changes in accounting policies;
    
    domestic and foreign government spending, budgetary and trade policies;
    
    economic and political changes in international markets where we compete, such as changes
in currency exchange rates, inflation, deflation, recession and other external factors over
which we have no control; and
    
    the outcome of contingencies (including completion of acquisitions, divestitures, tax
audits, litigation and environmental remediation efforts).
  75




---



##### 



Item 3. Quantitative and Qualitative Disclosures About Market Risk.
  Item 4. Controls and Procedures.
    76




---



##### 



Item 1. Legal Proceedings.
  77




---



##### 



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  ISSUER PURCHASES OF EQUITY SECURITIES
 (c) Total Number of
    
    
    (d) Maximum NumberShares Purchased as
    
    
    (or Approximate Dollar(a) Total Number
    
    
    
    
    
    
    Part of Publicly
    
    
    Value) of Shares that Mayof Shares
    
    
    (b) Average Price
    
    
    Announced Plans or
    
    
    Yet Be Purchased UnderPeriod
    
    Purchased (1)
    
    
    Paid Per Share
    
    
    Programs (2)
    
    
    the Plans or Programs (2)July 2005
    
    
    
    
    
    $
    
    
    
    
    N/A
    
    
    
    N/AAugust 2005
    
    
    18,690
    
    
    
    44.89
    
    
    
    N/A
    
    
    
    N/ASeptember 2005
    
    
    7,329
    
    
    
    45.24
    
    
    
    N/A
    
    
    
    N/ATotal
    
    
    26,019
    
    
    $
    45.06
    
    
    
    N/A
    
    
    
    N/A
 
 (1)
    
    The issuer purchases during the period covered by this report represent shares delivered to
us by employees to pay withholding taxes due upon the vesting of restricted stock units and to
pay the exercise price of employee stock options.(2)
    
    In connection with the exercise of employee stock options and vesting of restricted stock
awards, restricted stock unit awards and deferred long-term incentive plan awards, we from
time to time accept delivery of shares to pay the exercise price of employee stock options or
to pay withholding taxes due upon the exercise of employee stock options or the vesting of
restricted stock awards, restricted stock unit awards or deferred long-term incentive plan
awards. We do not otherwise have any plan or program to purchase our common stock. 78




---



##### 



Item 3. Exhibits
 Exhibit 3.1
    
    Restated Certificate of Incorporation of Goodrich
Corporation, filed as Exhibit 3.1 to Goodrich Corporations
Quarterly Report on Form 10-Q for the quarter ended September
30, 2003 (File No. 1-892), is incorporated herein by
reference.Exhibit 3.2
    
    By-Laws of Goodrich Corporation, as amended, filed as Exhibit
4(B) to Goodrich Corporations Registration Statement on Form
S-3 (File No. 333-98165), is incorporated herein by
reference.Exhibit 10.1
    
    Form of nonqualified stock option award agreement.Exhibit 10.2
    
    Form of restricted stock award agreement.Exhibit 10.3
    
    Form of restricted stock unit award agreement.Exhibit 10.4
    
    Form of restricted stock unit special award agreement.Exhibit 10.5
    
    Form of performance unit award agreement.Exhibit 10.6
    
    Goodrich Corporation Pension
Benefit Restoration Plan,
amended and restated
effective January 1, 2002.Exhibit 10.7
    
    Goodrich Corporation Savings
Benefit Restoration Plan,
amended and restated
effective January 1, 2002.Exhibit 15
    
    Letter Re: Unaudited Interim Financial Information.Exhibit 31
    
    Rule 13a-14(a)/15d-14(a) Certifications.Exhibit 32
    
    Section 1350 Certifications.
 79




---



##### 



SIGNATURE
  November 3, 2005
    GOODRICH CORPORATION/s/ SCOTT E. KUECHLEScott E. KuechleSenior Vice President and Chief Financial Officer/s/ SCOTT A. COTTRILLScott A. CottrillVice President and Controller
(Principal Accounting Officer) 80




---



##### 



EXHIBIT INDEX
 Exhibit 3.1
    
    Restated Certificate of Incorporation of Goodrich
Corporation, filed as Exhibit 3.1 to Goodrich Corporations
Quarterly Report on Form 10-Q for the quarter ended September
30, 2003 (File No. 1-892), is incorporated herein by
reference.Exhibit 3.2
    
    By-Laws of Goodrich Corporation, as amended, filed as Exhibit
4(B) to Goodrich Corporations Registration Statement on Form
S-3 (File No. 333-98165), is incorporated herein by
reference.Exhibit 10.1
    
    Form of nonqualified stock option award agreement.*Exhibit 10.2
    
    Form of restricted stock award agreement.*Exhibit 10.3
    
    Form of restricted stock unit award agreement.*Exhibit 10.4
    
    Form of restricted stock unit special award agreement.*Exhibit 10.5
    
    Form of performance unit award agreement.*Exhibit 10.6
    
    Goodrich Corporation Pension Benefit Restoration Plan,
amended and restated effective January 1, 2002.*Exhibit 10.7
    
    Goodrich Corporation Savings Benefit Restoration Plan,
amended and restated effective January 1, 2002.*Exhibit 15
    
    Letter Re: Unaudited Interim Financial Information.*Exhibit 31
    
    Rule 13a-14(a)/15d-14(a) Certifications.*Exhibit 32
    
    Section 1350 Certifications.*
 
 *
    
    Filed herewith. 81