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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 Form 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2008
 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 Centre2730 West Tyvola RoadCharlotte, North Carolina
    
    28217(Address of Principal Executive Offices)
    
    (Zip Code)
 Registrants telephone number, including area code: (704) 423-7000
 þ o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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TABLE OF CONTENTS  PART I. FINANCIAL INFORMATIONItem 1. Financial StatementsItem 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresPART II. OTHER INFORMATIONItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 2. Unregistered Sales of Equity Securities and Use of ProceedsItem 4. Submission of Matters to a Vote of Security HoldersItem 6. ExhibitsSIGNATUREEXHIBIT INDEXExhibit 10.1Exhibit 15Exhibit 31.1Exhibit 31.2Exhibit 32    Table of Contents  
 PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
       
 2




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CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(Dollars in millions, except per share amounts)Sales
    
    $
    1,849.3
    
    
    $
    1,576.4
    
    
    $
    3,594.3
    
    
    $
    3,122.7Operating costs and expenses:Cost of sales
    
    
    1,286.9
    
    
    
    1,096.6
    
    
    
    2,500.3
    
    
    
    2,190.5Selling and administrative costs
    
    
    273.9
    
    
    
    260.0
    
    
    
    531.0
    
    
    
    514.41,560.8
    
    
    
    1,356.6
    
    
    
    3,031.3
    
    
    
    2,704.9Operating Income
    
    
    288.5
    
    
    
    219.8
    
    
    
    563.0
    
    
    
    417.8Interest expense
    
    
    (27.7
    )
    
    
    (30.8
    )
    
    
    (58.5
    )
    
    
    (62.4
    )Interest income
    
    
    0.6
    
    
    
    1.5
    
    
    
    3.7
    
    
    
    3.3Other income (expense)  net
    
    
    (8.3
    )
    
    
    (17.4
    )
    
    
    (22.6
    )
    
    
    (33.0
    )Income from continuing operations before income taxes
    
    
    253.1
    
    
    
    173.1
    
    
    
    485.6
    
    
    
    325.7Income tax expense
    
    
    (69.5
    )
    
    
    (49.3
    )
    
    
    (148.4
    )
    
    
    (102.7
    )Income From Continuing Operations
    
    
    183.6
    
    
    
    123.8
    
    
    
    337.2
    
    
    
    223.0Income from discontinued operations  net of income
taxes
    
    
    3.0
    
    
    
    1.0
    
    
    
    7.3
    
    
    
    1.6Net Income
    
    $
    186.6
    
    
    $
    124.8
    
    
    $
    344.5
    
    
    $
    224.6Basic Earnings Per ShareContinuing operations
    
    $
    1.47
    
    
    $
    0.99
    
    
    $
    2.69
    
    
    $
    1.78Discontinued operations
    
    
    0.02
    
    
    
    0.01
    
    
    
    0.06
    
    
    
    0.01Net Income
    
    $
    1.49
    
    
    $
    1.00
    
    
    $
    2.75
    
    
    $
    1.79Diluted Earnings Per ShareContinuing operations
    
    $
    1.44
    
    
    $
    0.97
    
    
    $
    2.64
    
    
    $
    1.75Discontinued operations
    
    
    0.02
    
    
    
    0.01
    
    
    
    0.06
    
    
    
    0.01Net Income
    
    $
    1.46
    
    
    $
    0.98
    
    
    $
    2.70
    
    
    $
    1.76Dividends Declared Per Common Share
    
    $
    0.225
    
    
    $
    0.20
    
    
    $
    0.45
    
    
    $
    0.40
  3




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CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
 June 30,
    
    
    December 31,2008
    
    
    2007(Dollars in millions,except share amounts)Current AssetsCash and cash equivalents
    
    $
    265.5
    
    
    $
    406.0Accounts and notes receivable, less allowances for doubtful receivables
($20.3 at June 30, 2008 and $14.3 at December 31, 2007)
    
    
    1,191.1
    
    
    
    1,006.2Inventories  net
    
    
    1,918.9
    
    
    
    1,775.6Deferred income taxes
    
    
    181.2
    
    
    
    178.2Prepaid expenses and other assets
    
    
    106.7
    
    
    
    108.4Income taxes receivable
    
    
    5.5
    
    
    
    74.4Total Current Assets
    
    
    3,668.9
    
    
    
    3,548.8Property, plant and equipment  net
    
    
    1,420.3
    
    
    
    1,387.4Prepaid pension
    
    
    25.8
    
    
    
    16.1Goodwill
    
    
    1,421.4
    
    
    
    1,363.2Identifiable intangible assets  net
    
    
    476.6
    
    
    
    452.1Deferred income taxes
    
    
    23.8
    
    
    
    11.1Other assets
    
    
    747.5
    
    
    
    755.3Total Assets
    
    $
    7,784.3
    
    
    $
    7,534.0Current LiabilitiesShort-term debt
    
    $
    20.5
    
    
    $
    21.9Accounts payable
    
    
    703.0
    
    
    
    586.7Accrued expenses
    
    
    869.2
    
    
    
    930.8Income taxes payable
    
    
    81.5
    
    
    
    10.6Deferred income taxes
    
    
    31.2
    
    
    
    29.7Current maturities of long-term debt and capital lease obligations
    
    
    1.1
    
    
    
    162.9Total Current Liabilities
    
    
    1,706.5
    
    
    
    1,742.6Long-term debt and capital lease obligations
    
    
    1,527.5
    
    
    
    1,562.9Pension obligations
    
    
    457.4
    
    
    
    417.8Postretirement benefits other than pensions
    
    
    338.0
    
    
    
    358.9Long-term income taxes payable
    
    
    119.7
    
    
    
    146.0Deferred income taxes
    
    
    171.4
    
    
    
    170.2Other non-current liabilities
    
    
    554.3
    
    
    
    556.2Commitments and contingent liabilities
    
    
    
    
    
    
    Shareholders EquityCommon stock  $5 par valueAuthorized 200,000,000 shares; issued 143,452,884 shares at
June 30, 2008 and 142,372,162 shares at December 31, 2007
(excluding 14,000,000 shares held by a wholly owned subsidiary)
    
    
    717.3
    
    
    
    711.9Additional paid-in capital
    
    
    1,502.6
    
    
    
    1,453.1Income retained in the business
    
    
    1,342.1
    
    
    
    1,054.8Accumulated other comprehensive income (loss)
    
    
    39.7
    
    
    
    14.4Common stock held in treasury, at cost (18,347,860 shares at
June 30, 2008 and 17,761,696 shares at December 31, 2007)
    
    
    (692.2
    )
    
    
    (654.8
    )Total Shareholders Equity
    
    
    2,909.5
    
    
    
    2,579.4Total Liabilities And Shareholders Equity
    
    $
    7,784.3
    
    
    $
    7,534.0
  4




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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
 Six Months EndedJune 30,2008
    
    
    2007(Dollars in millions)Operating ActivitiesNet income
    
    $
    344.5
    
    
    $
    224.6Adjustments to reconcile net income to net cash provided by operating activities:Income from discontinued operations
    
    
    (7.3
    )
    
    
    (1.6
    )Restructuring and consolidation:Expenses
    
    
    0.6
    
    
    
    0.8Payments
    
    
    (1.1
    )
    
    
    (2.1
    )Pension and postretirement benefits:Expenses
    
    
    51.4
    
    
    
    60.2Contributions and benefit payments
    
    
    (35.2
    )
    
    
    (114.7
    )Depreciation and amortization
    
    
    127.2
    
    
    
    121.6Excess tax benefits related to share-based payment arrangements
    
    
    (8.1
    )
    
    
    (9.6
    )Share-based compensation expense
    
    
    15.7
    
    
    
    32.1Deferred income taxes
    
    
    (10.7
    )
    
    
    (20.3
    )Change in assets and liabilities, net of effects of acquisitions and divestitures:Receivables
    
    
    (175.1
    )
    
    
    (113.2
    )Inventories, net of pre-production and excess-over-average
    
    
    (70.4
    )
    
    
    (112.0
    )Pre-production and excess-over-average inventories
    
    
    (56.5
    )
    
    
    (64.3
    )Other current assets
    
    
    0.4
    
    
    
    8.7Accounts payable
    
    
    105.0
    
    
    
    67.7Accrued expenses
    
    
    (76.9
    )
    
    
    39.4Income taxes payable/receivable
    
    
    122.4
    
    
    
    76.2Other non-current assets and liabilities
    
    
    (6.4
    )
    
    
    (1.4
    )Net Cash Provided By Operating Activities
    
    
    319.5
    
    
    
    192.1Investing ActivitiesPurchases of property, plant and equipment
    
    
    (116.3
    )
    
    
    (95.0
    )Proceeds from sale of property, plant and equipment
    
    
    2.7
    
    
    
    0.7Payments made for acquisitions, net of cash acquired
    
    
    (93.6
    )
    
    
    Net Cash Used In Investing Activities
    
    
    (207.2
    )
    
    
    (94.3
    )Financing ActivitiesDecrease in short-term debt, net
    
    
    (1.6
    )
    
    
    (1.8
    )Repayment of long-term debt and capital lease obligations
    
    
    (197.7
    )
    
    
    (0.7
    )Proceeds from issuance of common stock
    
    
    24.0
    
    
    
    68.1Purchases of treasury stock
    
    
    (37.4
    )
    
    
    (113.3
    )Dividends paid
    
    
    (57.0
    )
    
    
    (50.5
    )Excess tax benefits related to share-based payment arrangements
    
    
    8.1
    
    
    
    9.6Distributions to minority interest holders
    
    
    (6.3
    )
    
    
    (2.5
    )Net Cash Used In Financing Activities
    
    
    (267.9
    )
    
    
    (91.1
    )Discontinued OperationsNet cash provided by (used in) operating activities
    
    
    (2.3
    )
    
    
    4.8Net cash provided by (used in) investing activities
    
    
    15.8
    
    
    
    (1.1
    )Net cash provided by (used in) financing activities
    
    
    
    
    
    
    Net cash provided by (used in) discontinued operations
    
    
    13.5
    
    
    
    3.7Effect of exchange rate changes on cash and cash equivalents
    
    
    1.6
    
    
    
    1.7Net increase (decrease) in cash and cash equivalents
    
    
    (140.5
    )
    
    
    12.1Cash and cash equivalents at beginning of period
    
    
    406.0
    
    
    
    201.3Cash and cash equivalents at end of period
    
    $
    265.5
    
    
    $
    213.4
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 Note 1. Basis of Interim Financial Statement Preparation and Use of Estimates
    Note 2. New Accounting Standards
 Accounting Standards Adopted on January 1, 2008
 Fair Value Measurements
  6




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Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards
  Accounting for Postretirement Benefits Associated with Split-Dollar Life Insurance
  Accounting Standards Not Yet Adopted
 Two-class Method of Computing Earnings Per Share
  Disclosures about Derivative Instruments and Hedging Activities
  7




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Business Combinations and Noncontrolling Interests
  Note 3. Business Segment Information
  
    
    The Actuation and Landing Systems segment provides systems, components and related
services pertaining to aircraft taxi, take-off, flight control, landing and stopping, and
engine components, including fuel delivery systems and rotating assemblies.
    
    The Nacelles and Interior Systems segment produces products and provides maintenance,
repair and overhaul services associated with aircraft engines, including thrust reversers,
cowlings, nozzles and their components, and aircraft interior products, including slides,
seats, cargo and lighting systems.
    
    The Electronic Systems segment produces a wide array of systems and components that
provide flight performance measurements, flight management, fuel controls, electrical
systems, and control and safety data, and reconnaissance and surveillance systems.
  8




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Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(Dollars in millions)Sales:Actuation and Landing Systems
    
    $
    689.6
    
    
    $
    589.3
    
    
    $
    1,371.7
    
    
    $
    1,156.3Nacelles and Interior Systems
    
    
    665.1
    
    
    
    533.7
    
    
    
    1,285.6
    
    
    
    1,080.5Electronic Systems
    
    
    494.6
    
    
    
    453.4
    
    
    
    937.0
    
    
    
    885.9$
    1,849.3
    
    
    $
    1,576.4
    
    
    $
    3,594.3
    
    
    $
    3,122.7Intersegment sales:Actuation and Landing Systems
    
    $
    9.3
    
    
    $
    6.7
    
    
    $
    17.9
    
    
    $
    13.2Nacelles and Interior Systems
    
    
    5.2
    
    
    
    4.8
    
    
    
    9.4
    
    
    
    9.1Electronic Systems
    
    
    6.6
    
    
    
    7.5
    
    
    
    12.7
    
    
    
    17.1$
    21.1
    
    
    $
    19.0
    
    
    $
    40.0
    
    
    $
    39.4Operating income:Actuation and Landing Systems
    
    $
    84.5
    
    
    $
    59.0
    
    
    $
    158.6
    
    
    $
    108.4Nacelles and Interior Systems
    
    
    160.7
    
    
    
    135.1
    
    
    
    339.5
    
    
    
    261.1Electronic Systems
    
    
    71.5
    
    
    
    62.4
    
    
    
    120.5
    
    
    
    117.0316.7
    
    
    
    256.5
    
    
    
    618.6
    
    
    
    486.5Corporate general and administrative expenses
    
    
    (24.1
    )
    
    
    (32.7
    )
    
    
    (46.7
    )
    
    
    (61.4
    )ERP implementation costs
    
    
    (4.1
    )
    
    
    (4.0
    )
    
    
    (8.9
    )
    
    
    (7.3
    )Total operating income
    
    $
    288.5
    
    
    $
    219.8
    
    
    $
    563.0
    
    
    $
    417.8
 Note 4. Other Income (Expense) Net
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(Dollars in millions)Retiree health care expenses related to previously owned businesses
    
    $
    (3.0
    )
    
    $
    (4.4
    )
    
    $
    (10.8
    )
    
    $
    (9.2
    )Expenses related to previously owned businesses
    
    
    (1.3
    )
    
    
    (5.6
    )
    
    
    (3.8
    )
    
    
    (11.3
    )Minority interest and equity in affiliated companies
    
    
    (5.1
    )
    
    
    (7.2
    )
    
    
    (8.8
    )
    
    
    (12.9
    )Other  net
    
    
    1.1
    
    
    
    (0.2
    )
    
    
    0.8
    
    
    
    0.4Other income (expense)  net
    
    $
    (8.3
    )
    
    $
    (17.4
    )
    
    $
    (22.6
    )
    
    $
    (33.0
    )
  Note 5. Discontinued Operations
  9




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Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(Dollars in millions)Sales  ATS
    
    $
    
    
    
    $
    46.1
    
    
    $
    
    
    
    $
    88.3Operations  ATS  net of tax for the
three and six months ended June 30, 2007
of $0.8 and $1.1, respectively
    
    $
    
    
    
    $
    1.3
    
    
    $
    
    
    
    $
    1.9Previously discontinued operations  net
of tax for the three and six months ended
June 30, 2008 of $0.6 and $1.0,
respectively; net of tax for the three
and six months ended June 30, 2007 of
$0.2 and $0.2, respectively
    
    
    3.0
    
    
    
    (0.3
    )
    
    
    7.3
    
    
    
    (0.3
    )Income (loss) from discontinued operations
    
    $
    3.0
    
    
    $
    1.0
    
    
    $
    7.3
    
    
    $
    1.6
 Note 6. Earnings Per Share
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(In millions, except per share amounts)NumeratorNumerator for basic and diluted
earnings per share  income from
continuing operations
    
    $
    183.6
    
    
    $
    123.8
    
    
    $
    337.2
    
    
    $
    223.0DenominatorDenominator for basic earnings per
share  weighted-average shares
    
    
    125.2
    
    
    
    125.3
    
    
    
    125.1
    
    
    
    125.3Effect of dilutive securities:Stock options, employee stock purchase
plan, restricted shares and restricted
share units
    
    
    2.1
    
    
    
    2.5
    
    
    
    2.3
    
    
    
    2.4Other deferred compensation shares
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.12.2
    
    
    
    2.6
    
    
    
    2.4
    
    
    
    2.5Denominator for diluted earnings per
share  adjusted weighted-average
shares and assumed conversion
    
    
    127.4
    
    
    
    127.9
    
    
    
    127.5
    
    
    
    127.8Per share income from continuing operationsBasic
    
    $
    1.47
    
    
    $
    0.99
    
    
    $
    2.69
    
    
    $
    1.78Diluted
    
    $
    1.44
    
    
    $
    0.97
    
    
    $
    2.64
    
    
    $
    1.75
   10




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Note 7. Fair Value Measurements
  Level 1 -
    
    quoted prices in active markets for identical assets and liabilities.Level 2 -
    
    observable inputs other than quoted prices in active markets for identical assets
and liabilities.Level 3 -
    
    unobservable inputs in which there is little or no market data available, which
require the reporting entity to develop its own assumptions.
  BalanceJune 30,2008
    
    Level 1
    
    Level 2
    
    Level 3(Dollars in millions)Cash Equivalents
    
    $
    49.3
    
    
    $
    49.3
    
    
    $
    
    
    
    $
    Derivative Financial Instruments (1)Cash Flow Hedges
    
    
    133.1
    
    
    
    
    
    
    
    133.1
    
    
    
    Fair Value Hedges
    
    
    2.6
    
    
    
    
    
    
    
    2.6
    
    
    
    Other Forward Contracts
    
    
    0.2
    
    
    
    
    
    
    
    0.2
    
    
    
    Rabbi Trust Assets (2)
    
    
    43.6
    
    
    
    43.6
    
    
    
    
    
    
    
    
 
 (1)
    
    See Note 16, Derivatives and Hedging Activities.(2)
    
    Rabbi trust assets include mutual funds and cash equivalents for payment of certain
non-qualified benefits for retired, terminated and active employees. 11




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Note 8. Inventories
  June 30,
    
    
    December 31,2008
    
    
    2007(Dollars in millions)FIFO or average cost (which approximates current costs):Finished products
    
    $
    230.4
    
    
    $
    252.9In-process
    
    
    1,197.8
    
    
    
    1,067.0Raw materials and supplies
    
    
    573.1
    
    
    
    533.32,001.3
    
    
    
    1,853.2Less:Reserve to reduce certain inventories to LIFO basis
    
    
    (51.9
    )
    
    
    (49.5
    )Progress payments and advances
    
    
    (30.5
    )
    
    
    (28.1
    )Total
    
    $
    1,918.9
    
    
    $
    1,775.6
   Note 9. Goodwill
  BusinessBalance
    
    
    Combinations
    
    
    Foreign
    
    
    BalanceDecember 31,
    
    
    Completed or
    
    
    Currency
    
    
    June 30,2007
    
    
    Finalized (3)
    
    
    Translation
    
    
    2008(Dollars in millions)Actuation and Landing Systems
    
    $
    331.5
    
    
    $
    
    
    
    $
    3.4
    
    
    $
    334.9Nacelles and Interior Systems
    
    
    433.1
    
    
    
    1.5
    (1)
    
    
    8.7
    
    
    
    443.3Electronic Systems
    
    
    598.6
    
    
    
    44.8
    (2)
    
    
    (0.2
    )
    
    
    643.2$
    1,363.2
    
    
    $
    46.3
    
    
    $
    11.9
    
    
    $
    1,421.4
 
 (1)
    
    On January 18, 2008, the Company acquired Skyline Industries, Inc. (Skyline) for $9.5
million in cash. Based upon an independent valuation, identifiable intangibles were $4.1
million and will be amortized over a weighted-average useful life of 20 years.(2)
    
    On April 17, 2008, the Company acquired TEAC Aerospace Holdings, Inc. (TEAC) for $84
million in cash, net of cash acquired. Based upon an independent valuation, identifiable
intangibles were $30.9 million and will be amortized over a weighted-average useful life of
11 years.(3)
    
    Goodwill amounts are preliminary and may be adjusted when certain preacquisition
contingencies are resolved. 12




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Note 10. Financing Arrangements
  
    
    The amount borrowed;
    
    The Companys public debt rating by Standard & Poors, Moodys and Fitch; and
    
    At the Companys option, rates tied to the agent banks prime rate or, for U.S. Dollar
and Great Britain Pounds Sterling borrowings, the London Interbank Offered Rate and for Euro
Dollar borrowings, the Euro Interbank Offered Rate.
    Long-term Debt Repayments
  
    
    $119 million principal amount of the 7.5% notes; and
    
    $43 million principal amount of the 6.45% notes.
 13




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##### Table of Contents



Lease Commitments
    Note 11. Pensions and Postretirement Benefits Other Than Pensions
 Pensions
  U.S. Plans
    
    
    U.K. Plans
    
    
    Other PlansThree Months Ended
    
    
    Three Months Ended
    
    
    Three Months EndedJune 30,
    
    
    June 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007(Dollars in millions)Service cost
    
    $
    11.1
    
    
    $
    12.2
    
    
    $
    7.8
    
    
    $
    7.0
    
    
    $
    1.7
    
    
    $
    1.2Interest cost
    
    
    42.4
    
    
    
    40.5
    
    
    
    11.1
    
    
    
    9.5
    
    
    
    1.5
    
    
    
    1.3Expected return on plan
assets
    
    
    (50.1
    )
    
    
    (49.8
    )
    
    
    (17.0
    )
    
    
    (15.0
    )
    
    
    (1.7
    )
    
    
    (1.5
    )Amortization of prior
service cost
    
    
    1.3
    
    
    
    1.9
    
    
    
    (0.3
    )
    
    
    (0.2
    )
    
    
    0.1
    
    
    
    Amortization of
actuarial loss
    
    
    12.6
    
    
    
    17.1
    
    
    
    
    
    
    
    
    
    
    
    0.2
    
    
    
    0.2Net periodic benefit cost
    
    $
    17.3
    
    
    $
    21.9
    
    
    $
    1.6
    
    
    $
    1.3
    
    
    $
    1.8
    
    
    $
    1.2
 14




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##### Table of Contents



U.S. Plans
    
    
    U.K. Plans
    
    
    Other PlansSix Months Ended
    
    
    Six Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007(Dollars in millions)Service cost
    
    $
    21.4
    
    
    $
    23.5
    
    
    $
    15.0
    
    
    $
    14.5
    
    
    $
    2.9
    
    
    $
    2.3Interest cost
    
    
    83.8
    
    
    
    80.5
    
    
    
    22.1
    
    
    
    19.5
    
    
    
    3.2
    
    
    
    2.6Expected return on plan
assets
    
    
    (100.1
    )
    
    
    (98.6
    )
    
    
    (33.9
    )
    
    
    (29.8
    )
    
    
    (3.5
    )
    
    
    (2.9
    )Amortization of prior
service cost
    
    
    2.8
    
    
    
    3.8
    
    
    
    (0.5
    )
    
    
    (0.5
    )
    
    
    0.1
    
    
    
    Amortization of
actuarial loss
    
    
    24.4
    
    
    
    32.7
    
    
    
    
    
    
    
    
    
    
    
    0.5
    
    
    
    0.5Net periodic benefit cost
    
    $
    32.3
    
    
    $
    41.9
    
    
    $
    2.7
    
    
    $
    3.7
    
    
    $
    3.2
    
    
    $
    2.5
  U.S. Plans
    
    U.K. Plans
    
    Other PlansThree and Six Months
    
    Three and Six Months
    
    Three and Six MonthsEnded June 30,
    
    Ended June 30,
    
    Ended June 30,2008
    
    2007
    
    2008
    
    2007
    
    2008
    
    2007Discount rate
    
    
    6.30
    %
    
    
    5.89
    %
    
    
    5.50
    %
    
    
    5.00
    %
    
    
    5.28
    %
    
    
    4.88
    %Expected long-term
rate of return on
assets
    
    
    9.00
    %
    
    
    9.00
    %
    
    
    8.50
    %
    
    
    8.50
    %
    
    
    8.24
    %
    
    
    8.28
    %Rate of
compensation
increase
    
    
    4.10
    %
    
    
    3.86
    %
    
    
    3.75
    %
    
    
    3.50
    %
    
    
    3.38
    %
    
    
    3.36
    %
 Postretirement Benefits Other Than Pensions
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(Dollars in millions)Service cost
    
    $
    0.4
    
    
    $
    0.5
    
    
    $
    0.9
    
    
    $
    1.0Interest cost
    
    
    5.1
    
    
    
    5.6
    
    
    
    11.0
    
    
    
    11.5Amortization of prior service cost
    
    
    
    
    
    
    (0.1
    )
    
    
    (0.1
    )
    
    
    (0.1
    )Amortization of actuarial (gain) loss
    
    
    (0.5
    )
    
    
    (0.7
    )
    
    
    1.4
    
    
    
    0.8Net periodic benefit cost
    
    $
    5.0
    
    
    $
    5.3
    
    
    $
    13.2
    
    
    $
    13.2
  Three and Six Months Ended June 30,2008
    
    2007Discount rate
    
    
    6.12
    %
    
    
    5.79
    %Healthcare trend rate
    
    8.3% in 2008 to 5% in 2015
    
    9% in 2007 to 5% in 2013
 15




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Note 12. Comprehensive Income
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(Dollars in millions)Net income
    
    $
    186.6
    
    
    $
    124.8
    
    
    $
    344.5
    
    
    $
    224.6Other comprehensive income (loss):Unrealized foreign currency translation gains (losses) during period
    
    
    4.8
    
    
    
    46.8
    
    
    
    30.4
    
    
    
    58.2Pension/OPEB liability adjustments during the period, net of tax
for the three and six months ended June 30, 2008 of $2.2 and
($6.1), respectively; net of tax for the three and six months ended
June 30, 2007 of ($2.4) and ($4.1), respectively
    
    
    (1.6
    )
    
    
    9.9
    
    
    
    6.9
    
    
    
    26.5Gain (loss) on cash flow hedges, net of tax for the three and six
months ended June 30, 2008 of $0.5 and $6.3, respectively; net of
tax for the three and six months ended June 30, 2007 of ($16.3) and
($11.9), respectively
    
    
    (1.0
    )
    
    
    32.6
    
    
    
    (12.0
    )
    
    
    24.3Total comprehensive income
    
    $
    188.8
    
    
    $
    214.1
    
    
    $
    369.8
    
    
    $
    333.6
  June 30,
    
    
    December 31,2008
    
    
    2007(Dollars in millions)Cumulative unrealized foreign currency translation gains
    
    $
    380.0
    
    
    $
    349.6Pension/OPEB liability adjustments, net of deferred
taxes of $279.5 and $285.6, respectively
    
    
    (425.9
    )
    
    
    (432.8
    )Accumulated gains on cash flow hedges, net of deferred
taxes of $(47.1) and $(53.4), respectively
    
    
    85.6
    
    
    
    97.6Total accumulated other comprehensive income
    
    $
    39.7
    
    
    $
    14.4
  Note 13. Income Taxes
  16




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Note 14. Contingencies
 General
  Environmental
  17




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18




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##### Table of Contents



Asbestos
  Insurance Coverage
    Liabilities of Divested Businesses
 Asbestos
  19




---



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Other
  Aerostructures Long-term Contracts
     
    
    Ability to recover costs incurred for change orders and claims;
    
    Costs, including material and labor costs and related escalation;
    
    Labor improvements due to the learning curve experience;
    
    Anticipated cost productivity improvements related to new manufacturing methods and
processes;
 20




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##### Table of Contents




    
    Supplier pricing, including escalation where applicable, and the suppliers ability to
perform;
    
    The cost impact of product design changes that frequently occur during the flight test
and certification phases of a program; and
    
    Effect of foreign currency exchange fluctuations.
   Tax
  21




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##### Table of Contents



Tax Years 2000 to 2004
  Tax Years Prior to 2000
  Coltec Industries Inc. and Subsidiaries
    
    December, 1997  July, 1999 (through date of acquisition)Goodrich Corporation and Subsidiaries
    
    1998  1999 (including Rohr and Coltec)
   22




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Note 15. Guarantees
  Maximum
    
    CarryingPotential
    
    Amount ofPayment
    
    LiabilityEnvironmental remediation and other indemnifications (Note 14)
    
    No limit
    
    $
    20.1Guarantees of residual value on leases (Note 10)
    
    $
    24.8

    
    $
    
 Service and Product Warranties
   Balance at December 31, 2007
    
    $
    164.3Net provisions for warranties issued during the period
    
    
    26.2Net provisions for warranties existing at the beginning of the year
    
    
    (1.3
    )Payments
    
    
    (33.4
    )Foreign currency translation
    
    
    2.3Balance at June 30, 2008
    
    $
    158.1
  June 30, 2008
    
    
    December 31, 2007(Dollars in millions)Short-term liabilities
    
    $
    61.8
    
    
    $
    66.3Long-term liabilities
    
    
    96.3
    
    
    
    98.0Total
    
    $
    158.1
    
    
    $
    164.3
 Note 16. Derivatives and Hedging Activities
  23




---



##### Table of Contents



Cash Flow Hedges
  Fair Value Hedges
  Other Forward Contracts
  Note 17. Share-Based Compensation
    24




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
    OVERVIEW
  Key Market Channels for Products and Services, Growth Drivers and Industry and our Highlights
  Commercial, Regional, Business and General Aviation Airplane OE
   25




---



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Commercial, Regional, Business and General Aviation Airplane Aftermarket
     Defense and Space
   26




---



##### Table of Contents



Long-term Sustainable Growth
  
    
    Awards for key products on important new and expected programs, including the Airbus A380
and A350 XWB, the Boeing 787 and 747-8, the Embraer 190, the Pratt & Whitney Geared Turbofan
engine, the Dassault Falcon 7X and the Lockheed Martin F-35 Lightning II and F-22 Raptor;
    
    Growing commercial airplane fleet, which should fuel sustained aftermarket strength;
    
    Balance in the large commercial airplane market, with strong sales to both Airbus and
Boeing;
    
    Aging of the existing large commercial and regional airplane fleets, which should result
in increased aftermarket support;
    
    Increased number of long-term agreements for product sales on new and existing commercial
airplanes;
    
    Increased opportunities for aftermarket growth due to airline outsourcing;
    
    Growth in global maintenance, repair and overhaul (MRO) opportunities for our systems and
components, particularly in Europe, Asia and the Middle East, where we have expanded our
capacity; and
    
    Expansion of our product offerings in support of high growth areas in the defense and
space market channel, such as helicopter products and systems and intelligence, surveillance
and reconnaissance products.
 27




---



##### Table of Contents



Second Quarter 2008 Sales Content by Market Channel
  Airbus Commercial OE
    
    
    17
    %Boeing Commercial OE
    
    
    10
    %Regional, Business and General Aviation Airplane OE
    
    
    9
    %Total Commercial, Regional, Business and General Aviation Airplane OE
    
    
    36
    %Large Commercial Airplane Aftermarket
    
    
    29
    %Regional, Business and General Aviation Airplane Aftermarket
    
    
    6
    %Total Commercial, Regional, Business and General Aviation Airplane Aftermarket
    
    
    35
    %Total Defense and Space
    
    
    24
    %Other
    
    
    5
    %Total
    
    
    100
    %
 Summary Performance Second Quarter 2008 as Compared to Second Quarter 2007
 Second Quarter2008
    
    
    2007
    
    
    % Change(Dollars in millions, except diluted EPS)Sales
    
    $
    1,849.3
    
    
    $
    1,576.4
    
    
    
    17.3Segment operating income (1)
    
    $
    316.7
    
    
    $
    256.5
    
    
    
    23.5Percent of sales
    
    
    17.1
    %
    
    
    16.3
    %Income from continuing operations before income taxes
    
    $
    253.1
    
    
    $
    173.1
    
    
    
    46.2Income from continuing operations
    
    $
    183.6
    
    
    $
    123.8
    
    
    
    48.3Net income
    
    $
    186.6
    
    
    $
    124.8
    
    
    
    49.5Effective tax rate
    
    
    27.5
    %
    
    
    28.5
    %Diluted EPS:Continuing operations
    
    $
    1.44
    
    
    $
    0.97
    
    
    
    48.5Discontinued operations
    
    $
    0.02
    
    
    $
    0.01
    
    
    
    100.0Net income
    
    $
    1.46
    
    
    $
    0.98
    
    
    
    49.0
 
 (1)
    
    Segment operating income is total segment revenue reduced by operating expenses directly
identifiable with our business segments, excluding the indirect costs related to the
company-wide Enterprise Resource Planning (ERP) system implementation. Segment operating
income is used by management to assess the operating performance of the segments. For a
reconciliation of total segment operating income to total operating income, see Note 3,
Business Segment Information to our Condensed Consolidated Financial Statements.  
    
    Large commercial airplane original equipment sales increased by approximately 28%;
    
    Regional, business and general aviation airplane original equipment sales increased by
approximately 26%;
    
    Large commercial, regional, business and general aviation airplane aftermarket sales
increased by approximately 12%; and
 28




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
    
    Defense and space sales of both original equipment and aftermarket products and services
increased by approximately 11%.
   Increase (Decrease)Before
    
    
    After
    
    
    DilutedTax
    
    
    Tax
    
    
    EPS(Dollars in millions, except diluted EPS)Lower share-based compensation
    
    $
    8.0
    
    
    $
    4.9
    
    
    $
    0.04Foreign exchange rate impact, including net monetary asset remeasurement
    
    $
    (8.4
    )
    
    $
    (5.3
    )
    
    $
    (0.04
    )Changes in estimates on long-term contracts
    
    $
    (11.7
    )
    
    $
    (7.1
    )
    
    $
    (0.06
    )
 Share-based compensation
  Foreign exchange rate impact
  Changes in estimates on long-term contracts
  29




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##### Table of Contents



Summary Performance  Six Months Ended June 30, 2008 as Compared to Six Months Ended June 30, 2007
 Six Months Ended,June 30,2008
    
    
    2007
    
    
    % Change(Dollars in millions, except diluted EPS)Sales
    
    $
    3,594.3
    
    
    $
    3,122.7
    
    
    
    15.1Segment operating income (1)
    
    $
    618.6
    
    
    $
    486.5
    
    
    
    27.2Percent of sales
    
    
    17.2
    %
    
    
    15.6
    %Income from continuing operations before income taxes
    
    $
    485.6
    
    
    $
    325.7
    
    
    
    49.1Income from continuing operations
    
    $
    337.2
    
    
    $
    223.0
    
    
    
    51.2Net income
    
    $
    344.5
    
    
    $
    224.6
    
    
    
    53.4Effective tax rate
    
    
    30.6
    %
    
    
    31.6
    %Diluted EPS:Continuing operations
    
    $
    2.64
    
    
    $
    1.75
    
    
    
    50.9Discontinued operations
    
    $
    0.06
    
    
    $
    0.01
    
    
    
    500.0Net income
    
    $
    2.70
    
    
    $
    1.76
    
    
    
    53.4
 
 (1)
    
    Segment operating income is total segment revenue reduced by operating expenses directly
identifiable with our business segments, excluding the indirect costs related to the
company-wide ERP system implementation. Segment operating income is used by management to
assess the operating performance of the segments. For a reconciliation of total segment
operating income to total operating income, see Note 3, Business Segment Information to our
Condensed Consolidated Financial Statements.  
    
    Large commercial airplane original equipment sales increased by approximately 20%;
    
    Regional, business and general aviation airplane original equipment sales increased by
approximately 25%;
    
    Large commercial, regional, business and general aviation airplane aftermarket sales
increased by approximately 11%; and
    
    Defense and space sales of both original equipment and aftermarket products and services
increased by approximately 12%.
  30




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##### Table of Contents



Increase (Decrease)Before
    
    
    After
    
    
    DilutedTax
    
    
    Tax
    
    
    EPS(Dollars in millions, except diluted EPS)Lower share-based compensation
    
    $
    16.4
    
    
    $
    10.0
    
    
    $
    0.07Changes in estimates on long-term contracts
    
    $
    12.1
    
    
    $
    7.5
    
    
    $
    0.06Foreign exchange rate impact, including net monetary asset remeasurement
    
    $
    (23.9
    )
    
    $
    (14.6
    )
    
    $
    (0.12
    )
 Share-based compensation
  Changes in estimates on long-term contracts
  Foreign exchange rate impact
  2008 Outlook
  2008 Outlook
    
    2007 ActualSales
    
    $7.3 billion
    
    $6.4 billionDiluted EPS  Net Income
    
    $4.80 to $4.95 per share
    
    $3.78 per shareCapital Expenditures
    
    $275 to $325 million
    
    $282.6 millionOperating Cash Flow net of Capital Expenditures
    
    Exceed 75% of net income
    
    64% of net income
  31




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##### Table of Contents




    
    Large commercial airplane OE sales are expected to increase by approximately 20%;
    
    Regional, business and general aviation airplane OE sales are expected to increase by
approximately 20%;
    
    Large commercial, regional, business and general aviation airplane aftermarket sales are
expected to increase by approximately 8% to 11%; and
    
    Defense and space sales of both OE and aftermarket products and services are expected to
increase by approximately 13%, including sales resulting from the acquisition of TEAC
Aerospace Holdings, Inc. (TEAC).
 RESULTS OF OPERATIONS
 Second Quarter 2008 Compared with Second Quarter 2007
 Second Quarter
    
    
    $2008
    
    
    2007
    
    
    Change(Dollars in millions)Sales
    
    $
    1,849.3
    
    
    $
    1,576.4
    
    
    $
    272.9Segment Operating Income
    
    $
    316.7
    
    
    $
    256.5
    
    
    $
    60.2Corporate General and Administrative Costs
    
    
    (24.1
    )
    
    
    (32.7
    )
    
    
    8.6ERP Implementation Costs
    
    
    (4.1
    )
    
    
    (4.0
    )
    
    
    (0.1
    )Total Operating Income
    
    
    288.5
    
    
    
    219.8
    
    
    
    68.7Net Interest Expense
    
    
    (27.1
    )
    
    
    (29.3
    )
    
    
    2.2Other Income (Expense)  Net
    
    
    (8.3
    )
    
    
    (17.4
    )
    
    
    9.1Income Tax Expense
    
    
    (69.5
    )
    
    
    (49.3
    )
    
    
    (20.2
    )Income from Continuing Operations
    
    
    183.6
    
    
    
    123.8
    
    
    
    59.8Income from Discontinued Operations
    
    
    3.0
    
    
    
    1.0
    
    
    
    2.0Net Income
    
    $
    186.6
    
    
    $
    124.8
    
    
    $
    61.8Effective Tax Rate
    
    
    27.5
    %
    
    
    28.5
    %
 32




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##### Table of Contents




    
    Lower expenses related to previously owned businesses of approximately $4 million,
primarily for environmental litigation and remediation costs; and
    
    Higher income from equity in affiliated companies and lower minority interest expense of
approximately $2 million.
  Six Months Ended June 30, 2008 Compared with Six Months Ended June 30, 2007
 Six Months EndedJune 30,
    
    
    $2008
    
    
    2007
    
    
    Change(Dollars in millions)Sales
    
    $
    3,549.3
    
    
    $
    3,122.7
    
    
    $
    426.6Segment Operating Income
    
    $
    618.6
    
    
    $
    486.5
    
    
    $
    132.1Corporate General and Administrative Costs
    
    
    (46.7
    )
    
    
    (61.4
    )
    
    
    14.7ERP Implementation Costs
    
    
    (8.9
    )
    
    
    (7.3
    )
    
    
    (1.6
    )Total Operating Income
    
    
    563.0
    
    
    
    417.8
    
    
    
    145.2Net Interest Expense
    
    
    (54.8
    )
    
    
    (59.1
    )
    
    
    4.3Other Income (Expense)  Net
    
    
    (22.6
    )
    
    
    (33.0
    )
    
    
    10.4Income Tax Expense Benefit
    
    
    (148.4
    )
    
    
    (102.7
    )
    
    
    (45.7
    )Income from Continuing Operations
    
    
    337.2
    
    
    
    223.0
    
    
    
    114.2Income from Discontinued Operations
    
    
    7.3
    
    
    
    1.6
    
    
    
    5.7Net Income
    
    $
    344.5
    
    
    $
    224.6
    
    
    $
    119.9Effective Tax Rate
    
    
    30.6
    %
    
    
    31.6
    %
 33




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##### Table of Contents




    
    Lower expenses related to previously owned businesses of approximately $8 million,
primarily for environmental litigation and remediation costs; and
    
    Higher income from equity in affiliated companies of approximately $3 million; offset by
    
    Higher retiree health care expenses related to previously owned businesses of
approximately $2 million.
  34




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BUSINESS SEGMENT PERFORMANCE
  
    
    The Actuation and Landing Systems segment provides systems, components and related
services pertaining to aircraft taxi, take-off, flight control, landing and stopping, and
engine components, including fuel delivery systems and rotating assemblies.
    
    The Nacelles and Interior Systems segment produces products and provides maintenance,
repair and overhaul services associated with aircraft engines, including thrust reversers,
cowlings, nozzles and their components, and aircraft interior products, including slides,
seats, cargo and lighting systems.
    
    The Electronic Systems segment produces a broad array of systems and components that
provide flight performance measurements, flight management information, engine controls,
fuel controls, electrical power systems, safety data, and reconnaissance and surveillance
systems.
  Second Quarter 2008 Compared with Second Quarter 2007
 Second Quarter
    
    
    Increase/
    
    
    %
    
    
    % of Sales2008
    
    
    2007
    
    
    (Decrease)
    
    
    Change
    
    
    2008
    
    
    2007NET CUSTOMER SALESActuation and Landing Systems
    
    $
    689.6
    
    
    $
    589.3
    
    
    $
    100.3
    
    
    
    17.0Nacelles and Interior Systems
    
    
    665.1
    
    
    
    533.7
    
    
    
    131.4
    
    
    
    24.6Electronic Systems
    
    
    494.6
    
    
    
    453.4
    
    
    
    41.2
    
    
    
    9.1$
    1,849.3
    
    
    $
    1,576.4
    
    
    $
    272.9
    
    
    
    17.3SEGMENT OPERATING INCOMEActuation and Landing Systems
    
    $
    84.5
    
    
    $
    59.0
    
    
    $
    25.5
    
    
    
    43.2
    
    
    
    12.3
    
    
    
    10.0Nacelles and Interior Systems
    
    
    160.7
    
    
    
    135.1
    
    
    
    25.6
    
    
    
    18.9
    
    
    
    24.2
    
    
    
    25.3Electronic Systems
    
    
    71.5
    
    
    
    62.4
    
    
    
    9.1
    
    
    
   14.6
    
    
    
    14.5
    
    
    
    13.8$
    316.7
    
    
    $
    256.5
    
    
    $
    60.2
    
    
    
    23.5
    
    
    
    17.1
    
    
    
    16.3
 Actuation and Landing Systems:
 
    
    Higher large commercial airplane OE sales of approximately $34 million, primarily in our
landing gear and actuation systems business units;
    
    Higher defense and space OE and aftermarket sales of approximately $20 million, primarily
in our landing gear, aircraft wheels and brakes and actuation systems business units;
 35




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##### Table of Contents




    
    Higher large commercial, regional, business and general aviation airplane aftermarket
sales of approximately $16 million, primarily in our landing gear and actuation systems
business units;
    
    Higher regional, business and general aviation airplane OE sales of approximately $15
million, primarily in our landing gear and actuation systems business units; and
    
    Higher non-aerospace sales of approximately $14 million, primarily in our engine
components business unit.
  
    
    Higher sales volume and favorable product mix across all of our business units, which
resulted in higher income of approximately $26 million; and
    
    Higher pricing across all of our business units, partially offset by increased operating
costs across most of our business units, which resulted in higher income of approximately
$10 million; partially offset by
    
    Unfavorable foreign exchange of approximately $6 million; and
    
    Lower income resulting from changes in estimates on certain long-term contracts of
approximately $4 million.
 Nacelles and Interior Systems:
 
    
    Higher large commercial airplane OE sales of approximately $70 million, primarily in our
aerostructures business unit;
    
    Higher large commercial airplane aftermarket sales, including spare parts and MRO volume
of approximately $31 million, primarily in our aerostructures business unit;
    
    Higher regional, business, and general aviation airplane OE sales of approximately $16
million, primarily in our aerostructures business unit; and
    
    Higher defense and space OE and aftermarket sales of approximately $11 million, primarily
in our interiors and aerostructures business units.
 36




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##### Table of Contents




    
    Higher sales volume, primarily in our aerostructures business unit, which resulted in
higher income of approximately $35 million; partially offset by
    
    Lower income resulting from changes in estimates for certain long-term contracts at our
aerostructures business unit of approximately $8 million; and
    
    Unfavorable foreign exchange of approximately $3 million.
 Electronic Systems:
 
    
    Higher large commercial airplane aftermarket sales of approximately $16 million,
primarily in our engine control and electrical power and sensors and integrated systems
business units, including sales associated with the acquisition of TEAC of approximately $6
million;
    
    Higher defense and space OE and aftermarket sales of approximately $13 million, primarily
in our engine control and electrical power and sensors and integrated systems business
units, including sales associated with the acquisition of TEAC of approximately $6 million;
    
    Higher non-aerospace sales of approximately $5 million, primarily in our engine control
and electrical power business unit;
    
    Higher regional, business and general aviation airplane OE sales of approximately $3
million, primarily in our sensors and integrated systems and engine control and electrical
power business units; and
    
    Higher large commercial airplane OE sales of approximately $3 million, primarily in our
sensors and integrated systems business units.
  
    
    Higher sales volume partially offset by unfavorable product mix and pricing, across most
of our business units, which resulted in higher income of approximately $16 million;
partially offset by
    
    Higher operating costs of approximately $6 million, primarily in our sensors and
integrated systems and engine control and electrical power business units.
 37




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Six Months Ended June 30, 2008 Compared with Six Months Ended June 30, 2007
 Six Months EndedJune 30,
    
    
    Increase/
    
    
    %
    
    
    % of Sales2008
    
    
    2007
    
    
    (Decrease)
    
    
    Change
    
    
    2008
    
    
    2007NET CUSTOMER SALESActuation and Landing Systems
    
    $
    1,371.7
    
    
    $
    1,156.3
    
    
    $
    215.4
    
    
    
    18.6Nacelles and Interior Systems
    
    
    1,285.6
    
    
    
    1,080.5
    
    
    
    205.1
    
    
    
    19.0Electronic Systems
    
    
    937.0
    
    
    
    885.9
    
    
    
    51.1
    
    
    
    5.8$
    3,594.3
    
    
    $
    3,122.7
    
    
    $
    471.6
    
    
    
    15.1SEGMENT OPERATING INCOMEActuation and Landing Systems
    
    $
    158.6
    
    
    $
    108.4
    
    
    $
    50.2
    
    
    
    46.3
    
    
    
    11.6
    
    
    
    9.4Nacelles and Interior Systems
    
    
    339.5
    
    
    
    261.1
    
    
    
    78.4
    
    
    
    30.0
    
    
    
    26.4
    
    
    
    24.2Electronic Systems
    
    
    120.5
    
    
    
    117.0
    
    
    
    3.5
    
    
    
    3.0
    
    
    
    12.9
    
    
    
    13.2$
    618.6
    
    
    $
    486.5
    
    
    $
    132.1
    
    
    
    27.2
    
    
    
    17.2
    
    
    
    15.6
 Actuation and Landing Systems:
 
    
    Higher large commercial airplane OE sales of approximately $76 million, primarily in our
landing gear and actuation systems business units;
    
    Higher defense and space OE and aftermarket sales of approximately $54 million, primarily
in our landing gear, actuation systems and aircraft wheels and brakes business units;
    
    Higher regional, business and general aviation airplane OE and aftermarket sales of
approximately $40 million, primarily in our landing gear and actuation systems business
units;
    
    Higher non-aerospace sales of approximately $29 million, primarily in our engine
components business unit; and
    
    Higher large commercial airplane aftermarket sales of approximately $12 million,
primarily in our landing gear and actuation systems business units.
  
    
    Higher sales volume and favorable product mix across all business units, which resulted
in higher income of approximately $39 million;
    
    Higher operating income of approximately $25 million, driven primarily by higher pricing
across most of our business units, partially offset by increased operating costs across all
business units; and
    
    Unfavorable foreign exchange of approximately $14 million.
 38




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Nacelles and Interior Systems:
 
    
    Higher large commercial airplane aftermarket sales, including spare parts and MRO volume
of approximately $77 million, primarily in our aerostructures business unit;
    
    Higher large commercial airplane OE sales of approximately $75 million, primarily in our
aerostructures business unit;
    
    Higher regional, business, and general aviation airplane OE sales, primarily in our
aerostructures business unit, of approximately $27 million; and
    
    Higher defense OE and aftermarket sales of approximately $23 million, primarily in our
interiors business unit.
  
    
    Increased sales volume, primarily in our aerostructures and interiors business units,
which resulted in increased income of approximately $68 million;
    
    Favorable changes in estimates for certain long-term contracts at our aerostructures
business unit of approximately $12 million, primarily due to changes in cost and operational
performance; and
    
    Settlement of a claim with a customer at our interiors business unit which resulted in
higher income of approximately $4 million; partially offset by
    
    Unfavorable foreign exchange of approximately $6 million.
 Electronic Systems:
 
    
    Higher large commercial airplane aftermarket sales of approximately $18 million,
primarily in our engine control and electrical power and sensors and integrated systems
business units, including sales associated with the acquisition of TEAC of approximately $6
million;
    
    Higher defense and space OE and aftermarket sales of approximately $15 million across
most of our business units, including sales associated with the acquisition of TEAC of
approximately $6 million;
    
    Higher large commercial OE sales of approximately $8 million, primarily in our engine
control and electrical power business unit;
 39




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
    
    Higher regional and general aviation airplane OE and aftermarket sales of approximately
$6 million, primarily in our sensors and integrated systems and engine control and
electrical power business units; and
    
    Higher non-aerospace sales of approximately $5 million, primarily in our sensors and
integrated systems and engine control and electrical power business units.
  
    
    Higher sales volume, partially offset by unfavorable product mix, primarily in our engine
control and electrical power business unit, resulted in higher income of approximately $15
million; partially offset by
    
    Higher operating costs of approximately $5 million, primarily in our engine control and
electrical power and sensors and integrated systems business units; and
    
    Unfavorable foreign exchange of approximately $5 million.
 LIQUIDITY AND CAPITAL RESOURCES
     Cash
  40




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Credit Facilities
  
    
    $500 million committed global revolving credit facility that expires in May 2012, of
which $477.7 million was available at June 30, 2008; and
    
    $75 million of uncommitted domestic money market facilities and $181.5 million of
uncommitted and committed foreign working capital facilities with various banks to meet
short-term borrowing requirements, of which $235.9 million was available at June 30, 2008.
 Off-Balance Sheet Arrangements
 Lease Commitments
    Derivatives
  
    
    Foreign Currency Contracts Designated as Cash Flow Hedges:At June 30, 2008, our
contracts had a notional amount of $1,637.7 million, fair value of a $133.1 million net
asset and maturity dates ranging from July 2008 to December 2012. The amount of accumulated
other comprehensive income that would be reclassified into earnings in the next 12 months
was a gain of $71.3 million. During the second quarter of 2008 and 2007, we realized net
gains of $21 million and $15.1 million respectively, related to contracts that settled.
During the six months ended June 30, 2008 and 2007, we realized net gains of $41.3 million
and $30.6 million respectively, related to contracts that settled.
 41




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
    
    Interest Rate Swap Designated as a Fair Value Hedge:At June 30, 2008, our contract had
a notional amount of $50 million, a fair value of a $2.6 million net asset and maturity date
of July 2016. An additional interest rate swap with a notional amount of $50 million and a
maturity date of December 2012 was entered into on July 8, 2008.
    
    Foreign Currency Contracts not Designated as Hedges:At June 30, 2008, our contracts had
a notional amount of $20.7 million with maturity dates ranging from January 2009 to February
2011. During the second quarter of 2008 and 2007, we realized a net loss of $0.1 million and
a net gain of $1.4 million, respectively. During the six months ended June 30, 2008 and June
30, 2007, we realized net gains of $8.3 million and $0.5 million, respectively, related to
contracts that settled. The fair value of these contracts was a net liability of $0.2
million at June 30, 2008.
  Contractual Obligations and Other Commercial Commitments
  Long-term Debt Repayments
  
    
    $119 million principal amount of the 7.5% notes; and
    
    $43 million principal amount of the 6.45% notes.
  42




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CASH FLOW
  2008
    
    2007
    
    $ Change(Dollars in millions)Operating activities of continuing operations
    
    $
    319.5
    
    
    $
    192.1
    
    
    $
    127.4Investing activities of continuing operations
    
    $
    (207.2
    )
    
    $
    (94.3
    )
    
    $
    (112.9
    )Financing activities of continuing operations
    
    $
    (267.9
    )
    
    $
    (91.1
    )
    
    $
    (176.8
    )Discontinued operations
    
    $
    13.5
    
    
    $
    3.7
    
    
    $
    9.8
 Operating Activities of Continuing Operations
  
    
    Higher before tax income of approximately $160 million;
    
    Lower pension and other postretirement benefit plan contributions of approximately $80
million; and
    
    Lower net tax payments of approximately $11 million; partially offset by
    
    Working capital requirements of approximately $99 million.
 Investing Activities of Continuing Operations
   43




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Financing Activities of Continuing Operations
  
    
    Long-term debt repayments of approximately $197 million primarily in connection with the
repayment of notes which matured in April 2008 and the repayment of approximately $35
million of debt that was previously classified as long-term; and
    
    A decrease of proceeds from the issuance of our common stock, primarily for stock
compensation programs, of approximately $44 million; partially offset by
    
    Lower purchases of our common stock in connection with our share repurchase program of
approximately $76 million.
   Discontinued Operations
  CONTINGENCIES
 General
  44




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Environmental
      45




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Asbestos
  Insurance Coverage
    46




---



##### Table of Contents



Liabilities of Divested Businesses
 Asbestos
  Other
  Guarantees
  Aerostructures Long-term Contracts
   47




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
    
    Ability to recover costs incurred for change orders and claims;
    
    Costs, including material and labor costs and related escalation;
    
    Labor improvements due to the learning curve experience;
    
    Anticipated cost productivity improvements related to new manufacturing methods and
processes;
    
    Supplier pricing including escalation where applicable and the suppliers ability to
perform;
    
    The cost impact of product design changes that frequently occur during the flight test
and certification phases of a program; and
    
    Effect of foreign currency exchange fluctuations.
   Tax
  Tax Years 2000 to 2004
  48




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Tax Years Prior to 2000
  Coltec Industries Inc. and Subsidiaries
    
    December, 1997  July, 1999 (through date of acquisition)Goodrich Corporation and Subsidiaries
    
    1998  1999 (including Rohr and Coltec)
   NEW ACCOUNTING STANDARDS NOT YET ADOPTED
  
    
    Financial Accounting Standards Board (FASB) Staff Position No. EITF 03-6-1, Determining
Whether Instruments Granted in Share-Based Payment Transactions are Participating
Securities.
    
    Statement of Financial Accounting Standards No. 161, Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133.
    
    Statement of Financial Accounting Standards No. 141(R), Business Combinations.
 49




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##### Table of Contents




    
    Statement of Financial Accounting Standards No. 160 Accounting and Reporting of
Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51.
  CRITICAL ACCOUNTING POLICIES
   50




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##### Table of Contents



Contract Accounting-Percentage of Completion
 Revenue Recognition
   
    
    Escalation of future sales prices under the contracts;
    
    Ability to recover costs incurred for change orders and claims;
    
    Costs, including material and labor costs and related escalation;
    
    Labor improvements due to the learning curve experience;
    
    Anticipated cost productivity improvements related to new manufacturing methods and
processes;
    
    Supplier pricing including escalation where applicable and the suppliers ability to
perform;
    
    The cost impact of product design changes that frequently occur during the flight test
and certification phases of a program; and
    
    Effect of foreign currency exchange fluctuations.
 51




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Inventory
   Income Taxes
  Goodwill and Identifiable Intangible Assets
  52




---



##### Table of Contents



Other Assets
  
    
    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 OE manufacturers (OEM) and other
program suppliers or the aircraft customer; and
    
    Availability of specialized raw materials in the marketplace.
 Participation Payments
  53




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Entry Fees
  Sales Incentives
  Flight Certification Costs
  54




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Service and Product Warranties
   
    
    The historical performance of our products and changes in performance of newer products;
    
    The mix and volumes of products being sold; and
    
    The impact of product changes.
 Share-Based Compensation
  Stock Options
  2008
    
    2007Risk-free interest rate %
    
    
    3.3
    
    
    
    4.5Expected dividend yield %
    
    
    1.3
    
    
    
    1.7Historical volatility factor %
    
    
    31.2
    
    
    
    34.6Weighted-average expected life of the options (years)
    
    
    5.6
    
    
    
    5.5
  55




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##### Table of Contents



Restricted Stock Units
  Performance Units
  Pension and Postretirement Benefits Other Than Pensions
  FORWARD-LOOKING INFORMATION IS SUBJECT TO RISK AND UNCERTAINTY
  56




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##### Table of Contents




    
    demand for and market acceptance of new and existing products, such as the Airbus A350
XWB and A380, the Boeing 787 Dreamliner, the EMBRAER 190, the Mistubishi Regional Jet (MRJ),
the Bombardier CSeries, the Dassault Falcon 7X and the Lockheed Martin F-35 Lightning II and
F-22 Raptor;
    
    our ability to extend our commercial OE contracts beyond the initial contract periods;
    
    cancellation or delays of orders or contracts by customers or with suppliers, including
delays or cancellations associated with the Boeing 787 Dreamliner, the Airbus A380 and A350
XWB aircraft programs, and major military programs;
    
    the financial viability of key suppliers and the ability of our suppliers to perform
under existing contracts;
    
    successful development of products and advanced technologies;
    
    the health of the commercial aerospace industry, including the impact of bankruptcies
and/or consolidations in the airline industry;
    
    global demand for aircraft spare parts and aftermarket services;
    
    changing priorities or reductions in the defense budgets in the U.S. and other countries,
U.S. foreign policy and the level of activity in military flight operations;
    
    the possibility of restructuring and consolidation actions;
    
    threats and events associated with and efforts to combat terrorism;
    
    the extent to which expenses relating to employee and retiree medical and pension
benefits change;
    
    competitive product and pricing pressures;
    
    our ability to recover 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;
    
    the effect of changes in accounting policies or tax legislation;
 57




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##### Table of Contents




    
    cumulative catch-up adjustments or loss contract reserves on long-term contracts
accounted for under the percentage of completion method of accounting;
    
    domestic and foreign government spending, budgetary and trade policies;
    
    economic and political changes in international markets where we compete, such as changes
in currency exchange rates, inflation, fuel prices, deflation, recession and other external
factors over which we have no control; and
    
    the outcome of contingencies including completion of acquisitions, divestitures, tax
audits, litigation and environmental remediation efforts.
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk.
   58




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Item 4. Controls and Procedures.
 Evaluation of Disclosure Controls and Procedures
   Changes in Internal Control
  
 PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  59




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##### Table of Contents



Item 1A. Risk Factors.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  ISSUER PURCHASES OF EQUITY SECURITIES
 (d) Maximum Number(or ApproximateDollarValue) of Shares(c) Total Number of
    
    
    that MayShares Purchased as
    
    
    Yet Be Purchased(a) Total Number
    
    
    
    
    
    
    Part of Publicly
    
    
    Underof Shares
    
    
    (b) Average Price
    
    
    Announced Plans or
    
    
    the Plans orPeriod
    
    Purchased (1)
    
    
    Paid Per Share
    
    
    Programs (2)
    
    
    Programs (3)April 2008
    
    
    35,245
    
    
    $
    66.76
    
    
    
    30,000May 2008
    
    
    236,959
    
    
    
    64.22
    
    
    
    226,500June 2008
    
    
    51,065
    
    
    
    59.43
    
    
    
    50,000Total
    
    
    323,269
    
    
    
    63.74
    
    
    
    306,500
    
    
    $
    346 million
 
 (1)
    
    The category includes 16,769 shares delivered to us by employees to pay withholding taxes due
upon vesting of a restricted unit award and to pay the exercise price of employee stock
options.(2)
    
    This balance represents the number of shares that were repurchased under the Companys
repurchase program (the Program). The Program was initially announced on October 24, 2006. On
February 19, 2008, the Company announced that its Board of Directors had increased the dollar
amount of shares that could be purchased under the Program from $300 million to $600 million.
Unless terminated earlier by resolution of the Companys Board of Directors, the Program will
expire when the Company has purchased all shares authorized for repurchase. The Program does
not obligate the Company to repurchase any particular amount of common stock, and may be
suspended or discontinued at any time without notice.(3)
    
    This balance represents the value of shares that can be repurchased under the Program. 60




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Item 4. Submission of Matters to a Vote of Security Holders
  
    
    The eleven nominees for director were elected;
    
    The appointment of Ernst & Young LLP as independent registered public accounting firm for
the year 2008 was ratified;
    
    The Amendment and Restatement of the Goodrich Corporation 2001 Equity Compensation Plan
was approved; and
    
    The Goodrich Corporation 2008 Global Employee Stock Purchase Plan was approved.
  Election of Directors:
 Number of Shares Voted For
    
    Number of Shares Vote WithheldDiane C. Creel
    
    
    107,853,827
    
    
    
    6,768,573George A. Davidson, Jr.
    
    
    108,003,574
    
    
    
    6,618,827Harris E. DeLoach, Jr.
    
    
    110,165,059
    
    
    
    4,457,341James W. Griffith
    
    
    109,795,669
    
    
    
    4,826,731William R. Holland
    
    
    110,200,050
    
    
    
    4,442,351John P. Jumper
    
    
    110,086,865
    
    
    
    4,535,536Marshall O. Larsen
    
    
    108,123,705
    
    
    
    6,498,695Lloyd W. Newton
    
    
    109,921,863
    
    
    
    4,700,538Douglas E. Olesen
    
    
    108,447,804
    
    
    
    6,174,597Alfred M. Rankin, Jr.
    
    
    108,424,799
    
    
    
    6,197,602A. Thomas Young
    
    
    108,004,284
    
    
    
    6,618,117
 Appointment of Independent Registered Public Accounting Firm:
 Amendment and Restatement of the Goodrich Corporation 2001 Equity Compensation Plan:
 Approve the Goodrich Corporation 2008 Global Employee Stock Purchase Plan:
 61




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Item 6. Exhibits.
  Exhibit 3.1
    
    Restated Certificate of Incorporation of Goodrich Corporation,
filed as Exhibit 3.1 to Goodrich Corporations Quarterly Report
on Form 10-Q for the quarter ended September 30, 2003 (File No.
1-892), is incorporated herein by reference.Exhibit 3.2
    
    By-Laws of Goodrich Corporation, as amended, filed as Exhibit
3.1 to Goodrich Corporations Current Report on Form 8-K dated
July 26, 2007, is incorporated herein by reference. In
accordance with Item 601(b)(4)(iii)(A) of Regulation S-K,
Goodrich Corporation hereby undertakes to furnish to the
Securities and Exchange Commission upon request, a copy of all
instruments defining the rights of holders of long-term debt.Exhibit 10.1
    
    Amendment Number 4 to the Goodrich Corporation Severance Program.Exhibit 15
    
    Letter Re: Unaudited Interim Financial Information.Exhibit 31.1
    
    Rule 13a-14(a)/15d-14(a) Certification.Exhibit 31.2
    
    Rule 13a-14(a)/15d-14(a) Certification.Exhibit 32
    
    Section 1350 Certifications.
 62




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##### Table of Contents



SIGNATURE
  July 28, 2008
    GOODRICH CORPORATION/s/ SCOTT E. KUECHLEScott E. KuechleExecutive Vice President and Chief Financial Officer/s/ SCOTT A. COTTRILLScott A. CottrillVice President and Controller
(Principal Accounting Officer) 63




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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 3.1
to Goodrich Corporations Current Report on Form 8-K dated July
26, 2007, is incorporated herein by reference. In accordance with
Item 601(b)(4)(iii)(A) of Regulation S-K, Goodrich Corporation
hereby undertakes to furnish to the Securities and Exchange
Commission upon request, a copy of all instruments defining the
rights of holders of long-term debt.Exhibit 10.1
    
    Amendment Number 4 to the Goodrich Corporation Severance Program.*Exhibit 15
    
    Letter Re: Unaudited Interim Financial Information.*Exhibit 31.1
    
    Rule 13a-14(a)/15d-14(a) Certification.*Exhibit 31.2
    
    Rule 13a-14(a)/15d-14(a) Certification.*Exhibit 32
    
    Section 1350 Certifications.*
 
 *
    
    Submitted electronically herewith. 64