##### 



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 March 31, 2007
 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(State of Incorporation)
    
    34-0252680(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
  þ o o
 o þ




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##### 



PART I. FINANCIAL INFORMATION
 Item 1. Financial Statements.
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
      
 2




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##### 



CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
 Three Months EndedMarch 31,2007
    
    
    2006(Dollars in millions, exceptper share amounts)Sales
    
    $
    1,588.5
    
    
    $
    1,423.8Operating costs and expenses:Cost of sales
    
    
    1,133.7
    
    
    
    1,043.9Selling and administrative costs
    
    
    255.8
    
    
    
    237.21,389.5
    
    
    
    1,281.1Operating Income
    
    
    199.0
    
    
    
    142.7Interest expense
    
    
    (31.6
    )
    
    
    (32.0
    )Interest income
    
    
    1.8
    
    
    
    1.1Other income (expense)  net
    
    
    (15.6
    )
    
    
    (10.6
    )Income from continuing operations before income taxes
    
    
    153.6
    
    
    
    101.2Income tax benefit (expense)
    
    
    (53.8
    )
    
    
    99.1Income From Continuing Operations
    
    
    99.8
    
    
    
    200.3Income from discontinued operations  net of income taxes
    
    
    
    
    
    
    0.6Cumulative effect of change in accounting
    
    
    
    
    
    
    0.6Net Income
    
    $
    99.8
    
    
    $
    201.5Basic Earnings Per ShareContinuing operations
    
    $
    0.80
    
    
    $
    1.62Discontinued operations
    
    
    
    
    
    
    Cumulative effect of change in accounting
    
    
    
    
    
    
    0.01Net Income
    
    $
    0.80
    
    
    $
    1.63Diluted Earnings Per ShareContinuing operations
    
    $
    0.78
    
    
    $
    1.59Discontinued operations
    
    
    
    
    
    
    Cumulative effect of change in accounting
    
    
    
    
    
    
    0.01Net Income
    
    $
    0.78
    
    
    $
    1.60Dividends Declared Per Common Share
    
    $
    0.20
    
    
    $
    0.20
  3




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##### 



CONSENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
 March 31,
    
    
    December 31,2007
    
    
    2006(Dollars in millions,except share amounts)Current AssetsCash and cash equivalents
    
    $
    231.9
    
    
    $
    201.3Accounts and notes receivable, less allowances for doubtful receivables
($20.5 million at March 31, 2007 and $19.8 million at December 31, 2006)
    
    
    1,009.4
    
    
    
    912.4Inventories  net
    
    
    1,647.5
    
    
    
    1,551.8Deferred income taxes
    
    
    232.1
    
    
    
    250.3Prepaid expenses and other assets
    
    
    76.9
    
    
    
    91.7Total Current Assets
    
    
    3,197.8
    
    
    
    3,007.5Property, plant and equipment  net
    
    
    1,323.7
    
    
    
    1,327.7Prepaid pension
    
    
    2.3
    
    
    
    2.3Goodwill
    
    
    1,344.3
    
    
    
    1,341.3Identifiable intangible assets  net
    
    
    468.3
    
    
    
    472.0Deferred income taxes
    
    
    32.3
    
    
    
    35.5Other assets
    
    
    707.4
    
    
    
    714.9Total Assets
    
    $
    7,076.1
    
    
    $
    6,901.2Current LiabilitiesShort-term debt
    
    $
    
    
    
    $
    11.8Accounts payable
    
    
    669.3
    
    
    
    584.6Accrued expenses
    
    
    829.5
    
    
    
    819.0Income taxes payable
    
    
    87.2
    
    
    
    212.5Deferred income taxes
    
    
    3.3
    
    
    
    3.3Current maturities of long-term debt and capital lease obligations
    
    
    1.2
    
    
    
    1.4Total Current Liabilities
    
    
    1,590.5
    
    
    
    1,632.6Long-term debt and capital lease obligations
    
    
    1,722.1
    
    
    
    1,721.7Pension obligations
    
    
    607.9
    
    
    
    612.1Postretirement benefits other than pensions
    
    
    378.5
    
    
    
    379.1Long-term income taxes payable
    
    
    143.3
    
    
    
    Deferred income taxes
    
    
    41.3
    
    
    
    57.2Other non-current liabilities
    
    
    517.1
    
    
    
    521.8Commitments and contingent liabilities
    
    
    
    
    
    
    Shareholders EquityCommon stock  $5 par valueAuthorized 200,000,000 shares; issued 140,398,499 shares at March 31,
2007 and 139,041,884 shares at December 31, 2006 (excluding
14,000,000 shares held by a wholly owned subsidiary)
    
    
    702.0
    
    
    
    695.2Additional paid-in capital
    
    
    1,358.8
    
    
    
    1,313.3Income retained in the business
    
    
    751.1
    
    
    
    666.5Accumulated other comprehensive income (loss)
    
    
    (241.1
    )
    
    
    (260.8
    )Common stock held in treasury, at cost (15,232,451 shares at
March 31, 2007 and 14,090,913 shares at December 31, 2006)
    
    
    (495.4
    )
    
    
    (437.5
    )Total Shareholders Equity
    
    
    2,075.4
    
    
    
    1,976.7Total Liabilities And Shareholders Equity
    
    $
    7,076.1
    
    
    $
    6,901.2
  4




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##### 



CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
 Three Months EndedMarch 31,2007
    
    
    2006(Dollars in millions)Operating ActivitiesNet income
    
    $
    99.8
    
    
    $
    201.5Adjustments to reconcile net income to net cash provided by operating activities:Income from discontinued operations
    
    
    
    
    
    
    (0.6
    )Cumulative effect of change in accounting
    
    
    
    
    
    
    (0.6
    )Restructuring and consolidation:Expenses
    
    
    0.2
    
    
    
    1.5Payments
    
    
    (0.6
    )
    
    
    (1.8
    )Pension and postretirement benefits:Expenses
    
    
    31.6
    
    
    
    33.6Contributions and benefit payments
    
    
    (10.4
    )
    
    
    (7.1
    )Asset impairments
    
    
    
    
    
    
    0.9Depreciation and amortization
    
    
    61.4
    
    
    
    56.3Excess tax benefits related to share-based payment arrangements
    
    
    (4.0
    )
    
    
    (1.2
    )Share-based compensation expense
    
    
    16.2
    
    
    
    21.9Deferred income taxes
    
    
    (9.0
    )
    
    
    (4.2
    )Change in assets and liabilities, net of effects of acquisitions and divestitures:Receivables
    
    
    (93.5
    )
    
    
    (96.6
    )Inventories, net of pre-production and excess-over-average
    
    
    (57.6
    )
    
    
    (54.2
    )Pre-production and excess-over-average inventories
    
    
    (32.8
    )
    
    
    (28.4
    )Other current assets
    
    
    4.2
    
    
    
    9.1Accounts payable
    
    
    81.8
    
    
    
    62.8Accrued expenses
    
    
    0.3
    
    
    
    (17.7
    )Income taxes payable
    
    
    51.4
    
    
    
    (87.7
    )Other non-current assets and liabilities
    
    
    (15.9
    )
    
    
    (21.9
    )Net Cash Provided By Operating Activities
    
    
    123.1
    
    
    
    65.6Investing ActivitiesPurchases of property, plant and equipment
    
    
    (36.9
    )
    
    
    (43.2
    )Proceeds from sale of property, plant and equipment
    
    
    0.1
    
    
    
    0.1Net Cash Used In Investing Activities
    
    
    (36.8
    )
    
    
    (43.1
    )Financing ActivitiesIncrease (decrease) in short-term debt, net
    
    
    (11.8
    )
    
    
    6.1Repayment of long-term debt and capital lease obligations
    
    
    (0.4
    )
    
    
    (0.4
    )Proceeds from issuance of common stock
    
    
    36.8
    
    
    
    18.5Purchases of treasury stock
    
    
    (57.8
    )
    
    
    (0.4
    )Dividends
    
    
    (25.1
    )
    
    
    (24.6
    )Excess tax benefits related to share-based payment arrangements
    
    
    4.0
    
    
    
    1.2Distributions to minority interest holders
    
    
    (1.7
    )
    
    
    (1.0
    )Net Cash Used In Financing Activities
    
    
    (56.0
    )
    
    
    (0.6
    )Discontinued OperationsNet cash provided by (used in) operating activities
    
    
    (0.3
    )
    
    
    9.1Net cash provided by (used in) investing activities
    
    
    
    
    
    
    Net cash provided by (used in) financing activities
    
    
    
    
    
    
    Net cash (used) provided by discontinued operations
    
    
    (0.3
    )
    
    
    9.1Effect of exchange rate changes on cash and cash equivalents
    
    
    0.6
    
    
    
    0.7Net increase in cash and cash equivalents
    
    
    30.6
    
    
    
    31.7Cash and cash equivalents at beginning of period
    
    
    201.3
    
    
    
    251.3Cash and cash equivalents at end of period
    
    $
    231.9
    
    
    $
    283.0
  5




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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 Not Yet Adopted
 Fair Value Option for Financial Assets and Financial Liabilities
  Fair Value Measurement
  6




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##### 



Accounting for Postretirement Benefits Associated with Split-Dollar Life Insurance
  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, as
well as engine components, including fuel delivery systems and rotating assemblies, and
airframe maintenance.
    
    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, as well as reconnaissance and surveillance systems.
 7




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##### 



Three Months EndedMarch 31,2007
    
    
    2006(Dollars in millions)Sales:Actuation and Landing Systems
    
    $
    609.2
    
    
    $
    538.4Nacelles and Interior Systems
    
    
    546.9
    
    
    
    493.8Electronic Systems
    
    
    432.4
    
    
    
    391.6$
    1,588.5
    
    
    $
    1,423.8Intersegment sales:Actuation and Landing Systems
    
    $
    6.7
    
    
    $
    6.1Nacelles and Interior Systems
    
    
    4.4
    
    
    
    3.6Electronic Systems
    
    
    9.6
    
    
    
    9.7$
    20.7
    
    
    $
    19.4Operating income:Actuation and Landing Systems
    
    $
    49.9
    
    
    $
    23.3Nacelles and Interior Systems
    
    
    126.3
    
    
    
    104.8Electronic Systems
    
    
    54.8
    
    
    
    42.9231.0
    
    
    
    171.0Corporate general and administrative expenses
    
    
    (28.7
    )
    
    
    (27.2
    )ERP implementation costs
    
    
    (3.3
    )
    
    
    (1.1
    )Total operating income
    
    $
    199.0
    
    
    $
    142.7
 March 31,
    
    
    December 31,2007
    
    
    2006Total assets:Actuation and Landing Systems
    
    $
    2,241.9
    
    
    $
    2,182.0Nacelles and Interior Systems
    
    
    2,236.4
    
    
    
    2,150.1Electronic Systems
    
    
    1,925.9
    
    
    
    1,904.7Corporate
    
    
    671.9
    
    
    
    664.4$
    7,076.1
    
    
    $
    6,901.2
 Note 4. Other Income (Expense)  Net
  Three Months EndedMarch 31,2007
    
    
    2006(Dollars in millions)Retiree health care expenses related to previously owned businesses
    
    $
    (4.8
    )
    
    $
    (4.8
    )Expenses related to previously owned businesses
    
    
    (5.7
    )
    
    
    (1.4
    )Minority interest and equity in affiliated companies
    
    
    (5.6
    )
    
    
    (3.8
    )Other  net
    
    
    0.5
    
    
    
    (0.6
    )Other income (expense)  net
    
    $
    (15.6
    )
    
    $
    (10.6
    )
  8




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##### 



Note 5. Discontinued Operations
  Three Months EndedMarch 31,2007
    
    
    2006(Dollars in millions)Sales
    
    $
    
    
    
    $
    Operating income
    
    $
    
    
    
    $
    1.0Income tax expense
    
    $
    
    
    
    
    (0.4
    )Income from discontinued operations
    
    $
    
    
    
    $
    0.6
  Note 6. Earnings Per Share
  Three Months EndedMarch 31,2007
    
    
    2006(In millions, exceptper share amounts)NumeratorNumerator for basic and diluted earnings per share  income from continuing operations
    
    $
    99.8
    
    
    $
    200.3DenominatorDenominator for basic earnings per share  weighted-average shares
    
    
    125.2
    
    
    
    123.5Effect of dilutive securities:Stock options, employee stock purchase plan, restricted shares and restricted share units
    
    
    2.5
    
    
    
    2.0Other deferred compensation shares
    
    
    0.1
    
    
    
    0.12.6
    
    
    
    2.1Denominator for diluted earnings per share  adjusted weighted-average shares and
assumed conversion
    
    
    127.8
    
    
    
    125.6Per share income from continuing operationsBasic
    
    $
    0.80
    
    
    $
    1.62Diluted
    
    $
    0.78
    
    
    $
    1.59
   9




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##### 



Note 7. Sale of Receivables
   Note 8. Inventories
  March 31,
    
    
    December 31,2007
    
    
    2006(Dollars in millions)FIFO or average cost (which approximates current costs):Finished products
    
    $
    328.1
    
    
    $
    334.9In-process
    
    
    953.4
    
    
    
    880.9Raw materials and supplies
    
    
    445.1
    
    
    
    416.01,726.6
    
    
    
    1,631.8Less:Reserve to reduce certain inventories to LIFO basis
    
    
    (49.0
    )
    
    
    (48.5
    )Progress payments and advances
    
    
    (30.1
    )
    
    
    (31.5
    )Total
    
    $
    1,647.5
    
    
    $
    1,551.8
   Note 9. Goodwill and Identifiable Intangible Assets
  BusinessBalance
    
    
    Combinations
    
    
    Foreign
    
    
    BalanceDecember 31,
    
    
    Completed or
    
    
    Currency
    
    
    March 31,2006
    
    
    Finalized
    
    
    Translation
    
    
    2007(Dollars in millions)Actuation and Landing Systems
    
    $
    326.3
    
    
    $
    
    
    
    $
    1.4
    
    
    $
    327.7Nacelles and Interior Systems
    
    
    422.9
    
    
    
    
    
    
    
    1.3
    
    
    
    424.2Electronic Systems
    
    
    592.1
    
    
    
    
    
    
    
    0.3
    
    
    
    592.4$
    1,341.3
    
    
    $
    
    
    
    $
    3.0
    
    
    $
    1,344.3
 10




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##### 



Note 10. Financing Arrangements
    Lease Commitments
   11




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##### 



Note 11. Pensions and Postretirement Benefits
 Pensions
  U.S. Plans
    
    
    U.K. Plans
    
    
    Other Non-U.S. PlansThree Months
    
    
    Three Months
    
    
    Three MonthsEnded
    
    
    Ended
    
    
    EndedMarch 31,
    
    
    March 31,
    
    
    March 31,2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006(Dollars in millions)Service cost
    
    $
    11.3
    
    
    $
    13.7
    
    
    $
    7.5
    
    
    $
    7.2
    
    
    $
    1.1
    
    
    $
    1.1Interest cost
    
    
    40.0
    
    
    
    38.3
    
    
    
    10.0
    
    
    
    8.1
    
    
    
    1.3
    
    
    
    1.2Expected rate of return on plan assets
    
    
    (48.8
    )
    
    
    (45.9
    )
    
    
    (14.8
    )
    
    
    (11.8
    )
    
    
    (1.4
    )
    
    
    (1.4
    )Amortization of prior service cost
    
    
    1.9
    
    
    
    2.2
    
    
    
    (0.3
    )
    
    
    
    
    
    
    
    
    
    
    Amortization of actuarial (gain) loss
    
    
    15.6
    
    
    
    16.0
    
    
    
    
    
    
    
    0.3
    
    
    
    0.3
    
    
    
    0.3Periodic benefit cost (income)
    
    
    20.0
    
    
    
    24.3
    
    
    
    2.4
    
    
    
    3.8
    
    
    
    1.3
    
    
    
    1.2Settlements and curtailments (gain) loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Special termination benefit charge (credit)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net benefit cost (income)
    
    $
    20.0
    
    
    $
    24.3
    
    
    $
    2.4
    
    
    $
    3.8
    
    
    $
    1.3
    
    
    $
    1.2
  U.S. Plans
    
    U.K. Plans
    
    Other Non-U.S. PlansThree Months Ended
    
    Three Months Ended
    
    Three Months EndedMarch 31,
    
    March 31,
    
    March 31,2007
    
    2006
    
    2007
    
    2006
    
    2007
    
    2006Discount rate
    
    
    5.89
    %
    
    
    5.64
    %
    
    
    5.00
    %
    
    
    4.75
    %
    
    
    4.88
    %
    
    
    4.76
    %Expected long-term return on assets
    
    
    9.00
    %
    
    
    9.00
    %
    
    
    8.50
    %
    
    
    8.50
    %
    
    
    8.28
    %
    
    
    8.34
    %Rate of compensation increase
    
    
    3.86
    %
    
    
    3.63
    %
    
    
    3.50
    %
    
    
    3.50
    %
    
    
    3.36
    %
    
    
    3.34
    %
 Postretirement Benefits Other Than Pensions
  Three Months EndedMarch 31,2007
    
    
    2006(Dollars in millions)Service cost
    
    $
    0.5
    
    
    $
    Interest cost
    
    
    5.9
    
    
    
    4.6Amortization of prior service cost
    
    
    
    
    
    
    (0.1
    )Amortization of actuarial (gain) loss
    
    
    1.5
    
    
    
    (0.2
    )Periodic benefit cost
    
    
    7.9
    
    
    
    4.3Settlements and curtailments (gain) loss
    
    
    
    
    
    
    Special termination benefit charge (credit)
    
    
    
    
    
    
    Net periodic benefit cost
    
    $
    7.9
    
    
    $
    4.3
 12




---



##### 



Three Months EndedMarch 31,2007
    
    2006Discount rate
    
    5.79%
    
    5.55%Healthcare trend rate
    
    9% in 2007 to 5% in 2013
    
    9% in 2006 to 5% in 2010
 Note 12. Comprehensive Income/(Loss)
  Three Months EndedMarch 31,2007
    
    
    2006(Dollars in millions)Comprehensive Income/(Loss)Net income
    
    $
    99.8
    
    
    $
    201.5Other comprehensive income/(loss):Unrealized foreign currency translation gains (losses) during period
    
    
    11.4
    
    
    
    11.8Pension/OPEB liability adjustments during the period
    
    
    16.6
    
    
    
    Gain (loss) on cash flow hedges
    
    
    (8.3
    )
    
    
    3.6Total
    
    $
    119.5
    
    
    $
    216.9
  March 31,
    
    
    December 31,2007
    
    
    2006(Dollars in millions)Accumulated Other Comprehensive Income/(Loss)Cumulative unrealized foreign currency translation gains (losses)
    
    $
    259.8
    
    
    $
    248.4Pension/OPEB liability adjustments
    
    
    (547.0
    )
    
    
    (563.6
    )Accumulated gains (losses) on cash flow hedges
    
    
    46.1
    
    
    
    54.4Total
    
    $
    (241.1
    )
    
    $
    (260.8
    )
  13




---



##### 



Note 13. Income Taxes
      14




---



##### 



Note 14. Contingencies
 General
  Environmental
    15




---



##### 



Asbestos
  Insurance Coverage
  16




---



##### 



Liabilities of Divested Businesses
 Asbestos
   17




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##### 



Other
  Aerostructures Long-Term Contracts
  Tax
    Coltec Industries Inc and Subsidiaries
    
    December, 1997  July, 1999 (through date of acquisition)Goodrich Corporation and Subsidiaries
    
    1998  1999 (including Rohr and Coltec)
  18




---



##### 



Note 15. Guarantees
  Maximum
    
    CarryingPotential
    
    Amount ofPayment
    
    LiabilityEnvironmental remediation indemnification (Note 14)
    
    No limit
    
    $
    13.2Debt and lease payments
    
    $
    2.0
    
    
    $
    Residual value on leases
    
    $
    32.3
    
    
    $
    Letter of credit and bank guarantees
    
    $
    54.1
    
    
    $
    
  Service and Product Warranties
  19




---



##### 



(Dollars in millions)Balance at December 31, 2006
    
    $
    160.3Net provisions for warranties issued during the year
    
    
    11.3Net (benefit) provisions for warranties existing at the beginning of the year
    
    
    (0.6
    )Payments
    
    
    (9.0
    )Foreign currency translation
    
    
    0.8Balance at March 31, 2007
    
    $
    162.8
  March 31,
    
    
    December 31,2007
    
    
    2006(Dollars in millions)Short-term liabilities
    
    $
    66.4
    
    
    $
    57.5Long-term liabilities
    
    
    96.4
    
    
    
    102.8Total
    
    $
    162.8
    
    
    $
    160.3
 Note 16. Derivatives and Hedging Activities
  Foreign Currency Contracts
    Interest Rate Swaps
  20




---



##### 



Note 17. Share-Based Compensation
  Share-Based Compensation Expense
  Three Months EndedMarch 31,2007
    
    
    2006(In millions, except pershare amount)Share-based compensation expense before income taxes
    
    $
    16.2
    
    
    $
    21.9Share-based compensation expense after income taxes
    
    $
    9.9
    
    
    $
    14.2Basic earnings per share
    
    $
    0.08
    
    
    $
    0.11Diluted earnings per share
    
    $
    0.08
    
    
    $
    0.11
  Grants
  Stock Options
    
    Restricted Stock Units
    
    Performance UnitsWeighted Average
    
    
    
    
    
    Weighted Average
    
    
    
    
    
    Weighted AverageThree months ended:
    
    Shares
    
    Fair Value
    
    Shares
    
    Fair Value
    
    Shares
    
    Fair ValueMarch 31, 2007
    
    
    1,346,350
    (a)
    
    $
    13.29
    
    
    
    555,900
    
    
    $
    46.08
    
    
    
    149,700
    
    
    $
    51.46March 31, 2006
    
    
    696,300
    
    
    $
    13.43
    
    
    
    586,400
    
    
    $
    40.44
    
    
    
    189,100
    
    
    $
    46.21
 
 (a)
    
    Includes 715,000 of stock options that vest solely based upon a market condition. 21




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##### 



Stock Options
  
    
    Granted in 2007 and 2006:stock options that have a three-year service condition.
    
    Granted in 2007 only:special stock options with a seven-year term that include a market
condition whereby the options vest when the price per share of the Companys stock closes at
or above $65.00 per share for any 5 business days during a 20
consecutive-business-day-period.
  
    
    2007 grants:risk-free rate of 4.5%, dividend yield of 1.7%, volatility factor of 34.6%
and weighted-average expected life of 5.5 years.
    
    2006 grants:risk-free rate of 4.3%, dividend yield of 2%, volatility factor of 36.1% and
weighted-average expected life of 5.5 years.
  Restricted Stock Units
  Performance Units
    22




---



##### 



Share-Based Compensation Benefits Realized
  
    
    Stock Option Exercises:During the three months ended March 31, 2007 and 2006,
approximately 878,400 and 522,300 stock options were exercised, respectively. The cash
received by the Company from the exercise of stock options totaled $29 million and $11.6
million during the three months ended March 31, 2007 and 2006, respectively.
    
    Restricted Stock Units Paid in Common Stock:Approximately 253,300 and 16,600 shares of
common stock were issued during the three months ended March 31, 2007 and 2006,
respectively.
    
    Performance Units Paid in Cash:The total cash payments during the three months ended
March 31, 2007 and 2006, approximated $11.9 million and $10.1 million, respectively.
    
    Employee Stock Purchase Plan Shares Issued:Approximately 225,000 and 251,200 shares of
common stock were issued during the three months ended March 31, 2007 and 2006,
respectively. Employee contributions of $7.8 million and $6.9 million during the years ended
December 31, 2006 and 2005, respectively, were used to purchase stock during the three
months ended March 31, 2007 and 2006, respectively.
 23




---



##### 



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 and General Aviation Airplane OE
    24




---



##### 



Commercial and General Aviation Airplane Aftermarket
     Defense and Space
    25




---



##### 



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 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 opportunities for our systems and
components, particularly in Europe, Asia and the Middle East, where we are expanding our
capacity; and
    
    Expansion of our product offerings in support of high growth areas in the defense and
space market channel, such as intelligence, surveillance and reconnaissance products.
 First Quarter 2007 Sales Content by Market Channel
  Airbus Commercial OE
    
    
    16
    %Boeing Commercial OE
    
    
    10
    %Regional and General Aviation Airplane OE
    
    
    7
    %Total Commercial and General Aviation Airplane OE
    
    
    33
    %Large Commercial Airplane Aftermarket
    
    
    29
    %Regional and General Aviation Airplane Aftermarket
    
    
    7
    %Heavy Airplane Maintenance
    
    
    3
    %Total Commercial and General Aviation Airplane Aftermarket
    
    
    39
    %Total Defense and Space
    
    
    23
    %Other
    
    
    5
    %Total
    
    
    100
    %
 26




---



##### 



Summary Performance  First Quarter 2007 as Compared to First Quarter 2006
 First Quarter2007
    
    
    2006
    
    
    % Change(Dollars in millions, except diluted EPS)Sales
    
    $
    1,588.5
    
    
    $
    1,423.8
    
    
    
    11.6Segment operating income(1)
    
    $
    231.0
    
    
    $
    171.0
    
    
    
    35.1Percent of sales
    
    
    14.5
    %
    
    
    12.0
    %Income from continuing operations before income taxes
    
    $
    153.6
    
    
    $
    101.2
    
    
    
    54.4Income from continuing operations
    
    $
    99.8
    
    
    $
    200.3
    
    
    
    (50.2
    )Net income
    
    $
    99.8
    
    
    $
    201.5
    
    
    
    (50.5
    )Effective tax rate (benefit)(2)
    
    
    35
    %
    
    
    (98
    )%Diluted EPS:Continuing operations
    
    $
    0.78
    
    
    $
    1.59
    
    
    
    (50.9
    )Net income
    
    $
    0.78
    
    
    $
    1.60
    
    
    
    (51.3
    )
 
 (1)
    
    Segment operating income is total segment revenue reduced by operating
expenses directly identifiable with our business segments. 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.(2)
    
    The change in our effective tax rate resulted primarily from the
reversal of tax reserves in connection with the favorable Rohr and
Coltec tax settlements, which reduced the tax rate by approximately
130 percentage points, or $1.05 per diluted share, for the first
quarter 2006.  
    
    Large commercial airplane original equipment sales increased by approximately 4%;
    
    Regional, business and general aviation airplane original equipment sales increased by
approximately 7%;
    
    Large commercial, regional and general aviation airplane aftermarket sales increased by
approximately 21%; and
    
    Defense and space sales of both original equipment and aftermarket products and services
increased by approximately 8%.
   Increase (Decrease)Before
    
    
    After
    
    
    DilutedTax
    
    
    Tax
    
    
    EPS(Dollars in millions, except diluted EPS)Foreign exchange rate impact, including net monetary asset remeasurement
    
    $
    (10.7
    )
    
    $
    (6.7
    )
    
    $
    (0.05
    )Lower share-based compensation
    
    $
    5.7
    
    
    $
    4.3
    
    
    $
    0.03Lower pension expense
    
    $
    5.6
    
    
    $
    3.5
    
    
    $
    0.03
 27




---



##### 



2007 Outlook
  2007 Outlook
    
    2006 ActualSales
    
    $6.3-$6.5 billion
    
    $5.9 billionDiluted EPS  Net Income
    
    $3.20-$3.35 per share
    
    $3.81 per share*Capital Expenditures
    
    $270-$290 million
    
    $256.8 millionOperating Cash Flow net of Capital Expenditures
    
    60%-75% of income from continuing operations
    
    4% of income from continuing operations
 
 *
    
    includes a tax benefit of $1.15 related primarily to the Rohr and Coltec tax settlements in 2006. ,
     28




---



##### 




    
    Our deliveries of Airbus and Boeing large commercial aircraft is expected to increase by
approximately 8% to 10% in 2007 compared to 2006. Our sales of large commercial aircraft
original equipment products are projected to grow by about the same rate as the increase in
deliveries in 2007.
    
    Capacity in the global airline system, as measured by available seat miles (ASMs), is
expected to grow at approximately 4% to 5% in 2007. Our sales to airlines and package
carriers for large commercial and regional aircraft aftermarket parts and services are
expected to grow by more than 10% in 2007 compared to 2006.
    
    Total regional and business aircraft production is expected to increase slightly in 2007
compared to 2006. Deliveries to Embraer in support of its Embraer 190 aircraft, which
includes a significant amount of our content, are expected to enable us to increase sales in
this market channel by more than 10% in 2007 compared to 2006.
    
    Defense and space sales (original equipment and aftermarket) are expected to grow by
approximately 7% in 2007 compared to 2006. Growth is expected in all three segments.
 RESULTS OF OPERATIONS
 First quarter 2007 Compared to First quarter 2006
 First Quarter
    
    
    $2007
    
    
    2006
    
    
    Change(Dollars in millions)Sales
    
    $
    1,588.5
    
    
    $
    1,423.8
    
    
    $
    164.7Segment Operating Income
    
    $
    231.0
    
    
    $
    171.0
    
    
    $
    60.0Corporate General and Administrative Costs
    
    
    (28.7
    )
    
    
    (27.2
    )
    
    
    (1.5
    )ERP Implementation Costs
    
    
    (3.3
    )
    
    
    (1.1
    )
    
    
    (2.2
    )Total Operating Income
    
    
    199.0
    
    
    
    142.7
    
    
    
    56.3Net Interest Expense
    
    
    (29.8
    )
    
    
    (30.9
    )
    
    
    1.1Other Income (Expense)  Net
    
    
    (15.6
    )
    
    
    (10.6
    )
    
    
    (5.0
    )Income Tax (Expense) Benefit
    
    
    (53.8
    )
    
    
    99.1
    
    
    
    (152.9
    )Income from Continuing Operations
    
    
    99.8
    
    
    
    200.3
    
    
    
    (100.5
    )Income from Discontinued Operations
    
    
    
    
    
    
    0.6
    
    
    
    (0.6
    )Cumulative Effect of Change in Accounting
    
    
    
    
    
    
    0.6
    
    
    
    (0.6
    )Net Income
    
    $
    99.8
    
    
    $
    201.5
    
    
    $
    (101.7
    )
    29




---



##### 



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, as
well as engine components, including fuel delivery systems and rotating assemblies, and
airframe maintenance.
    
    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.
 30




---



##### 



First quarter 2007 Compared to First quarter 2006
 First QuarterIncrease/
    
    
    %
    
    
    % of Sales2007
    
    
    2006
    
    
    (Decrease)
    
    
    Change
    
    
    2007
    
    
    2006NET CUSTOMER SALESActuation and Landing Systems
    
    $
    609.2
    
    
    $
    538.4
    
    
    $
    70.8
    
    
    
    13.2Nacelles and Interior Systems
    
    
    546.9
    
    
    
    493.8
    
    
    
    53.1
    
    
    
    10.8Electronic Systems
    
    
    432.4
    
    
    
    391.6
    
    
    
    40.8
    
    
    
    10.4$
    1,588.5
    
    
    $
    1,423.8
    
    
    $
    164.7
    
    
    
    11.6SEGMENT OPERATING INCOMEActuation and Landing Systems
    
    $
    49.9
    
    
    $
    23.3
    
    
    $
    26.6
    
    
    
    114.2
    
    
    
    8.2
    
    
    
    4.3Nacelles and Interior Systems
    
    
    126.3
    
    
    
    104.8
    
    
    
    21.5
    
    
    
    20.5
    
    
    
    23.1
    
    
    
    21.2Electronic Systems
    
    
    54.8
    
    
    
    42.9
    
    
    
    11.9
    
    
    
    27.7
    
    
    
    12.7
    
    
    
    11.0$
    231.0
    
    
    $
    171.0
    
    
    $
    60.0
    
    
    
    35.1
    
    
    
    14.5
    
    
    
    12.0
 Actuation and Landing Systems:
 
    
    Higher large commercial airplane aftermarket sales of approximately $26 million,
primarily in our landing gear, aircraft wheel and brake and actuation systems business
units;
    
    Higher large commercial airplane OE sales of approximately $16 million, primarily in our
landing gear business unit;
    
    Higher regional and business OE and aftermarket sales of approximately $17 million,
primarily in our aircraft wheel and brake, landing gear and actuation systems business
units; and
    
    Higher airframe heavy maintenance sales of approximately $5 million.
  
    
    Higher sales volume and favorable product mix across all businesses, which generated
income of approximately $17 million; and
    
    Higher operating income of approximately $16 million, driven primarily by improved
brake-life performance in the aircraft wheel and brake business unit and higher pricing
across all business units, including landing gear. These margin improvements are net of
increased operating costs, including raw material price escalation and higher labor and
overhead expenses in the landing gear business unit.
  31




---



##### 



Nacelles and Interior Systems:
 
    
    Higher large commercial airplane aftermarket sales, including spare parts and MRO volume
of approximately $44 million, primarily in our aerostructures and interior systems business
units; and
    
    Higher defense OE and aftermarket sales of approximately $8 million, primarily in our
interior systems business unit.
  Electronic Systems:
 
    
    Higher defense and space OE and aftermarket sales of approximately $16 million across all
of our business units;
    
    Higher regional and general aviation airplane OE and aftermarket sales of approximately
$16 million in nearly all of our business units; and
    
    Higher sales of products to the helicopter market of approximately $9 million in our
sensors and integrated systems and engine controls and power business units.
  LIQUIDITY AND CAPITAL RESOURCES
  Cash
  32




---



##### 



Credit Facilities
  
    
    $500 million committed global revolving credit facility that expires in May 2011, of
which $444.7 million was available, as of March 31, 2007;and
    
    $75 million of uncommitted domestic money market facilities and $148 million of
uncommitted and committed foreign working capital facilities with various banks to meet
short-term borrowing requirements, all of which was available as of March 31, 2007.
 Off-Balance Sheet Arrangements
 Lease Commitments
   Sale of Receivables
  Derivatives
  
    
    Foreign Currency Contracts Designated as Cash Flow Hedges:Our contracts had a notional
amount of $1,765.6 million, fair value of $73.9 million and maturity dates ranging from
April 2007 to December 2011. The amount of accumulated other comprehensive income that would
be reclassified into earnings in the next 12 months is a gain of $37.7 million. During the
first quarter of 2007 and 2006, we realized net gains of $15.5 million and $7.8 million,
respectively, related to contracts that settled.
 33




---



##### 




    
    Foreign Currency Contracts not Designated as Hedges:Our contracts, most of which mature
monthly, had a notional amount of $252 million and a fair value of a net liability/loss of
$0.2 million. During the first quarter of 2007, we realized a net loss of $1 million related
to contracts that settled. During the first quarter of 2006, we realized a net gain of $1.9
million related to contracts that settled.
    
    Interest Rate Swaps Designated as Fair Value Hedges:Our contracts had a notional amount
of $193 million, fair value of $1.9 million net liability/loss and maturity dates ranging
from April 2008 to July 2016.
 Contractual Obligations and Other Commercial Commitments
  CASH FLOW
  First Quarter
    
    
    $2007
    
    
    2006
    
    
    Change(Dollars in millions)Operating activities of continuing operations
    
    $
    123.1
    
    
    $
    65.6
    
    
    $
    57.5Investing activities of continuing operations
    
    $
    (36.8
    )
    
    $
    (43.1
    )
    
    $
    6.3Financing activities of continuing operations
    
    $
    (56.0
    )
    
    $
    (0.6
    )
    
    $
    (55.4
    )Discontinued operations
    
    $
    (0.3
    )
    
    $
    9.1
    
    
    $
    (9.4
    )
 First quarter 2007 as Compared to First quarter 2006
 Operating Activities of Continuing Operations
  
    
    Increased before tax income of approximately $52 million; and
    
    Improved working capital management of approximately $14 million; partially offset by
    
    Increased net tax payments of approximately $13 million.
  34




---



##### 



Investing Activities of Continuing Operations
   Financing Activities of Continuing Operations
  
    
    Purchases of our common stock during first quarter 2007 totaling $57.8 million, primarily
in conjunction with the share repurchase program announced on October 24, 2006;
    
    Repayments of short-term debt totaling $11.8 million during first quarter 2007, as
compared to increased short-term debt of $6.1 million during first quarter 2006; and
    
    An increase of $18.3 million of proceeds from the issuance of common stock, primarily for
share-based compensation awards, to $36.8 million during first quarter 2007, as compared to
$18.5 million during first quarter 2006.
   Discontinued Operations
  35




---



##### 



CONTINGENCIES
 General
  Environmental
    36




---



##### 



Asbestos
  Insurance Coverage
  37




---



##### 



Liabilities of Divested Businesses
 Asbestos
   38




---



##### 



Other
  Guarantees
  Aerostructures Long-Term Contracts
  Tax
    Coltec Industries Inc and Subsidiaries
    
    December, 1997  July, 1999 (through date of acquisition)Goodrich Corporation and Subsidiaries
    
    1998  1999 (including Rohr and Coltec)
 39




---



##### 



NEW ACCOUNTING STANDARDS NOT YET ADOPTED
 Fair Value Option for Financial Assets and Financial Liabilities
  Fair Value Measurement
  40




---



##### 



Accounting for Postretirement Benefits Associated with Split-Dollar Life Insurance
  CRITICAL ACCOUNTING POLICIES
   Contract Accounting-Percentage of Completion
 Revenue Recognition
  41




---



##### 




    
    Projected number of units to be delivered under the contracts;
    
    Escalation of future sales prices under the contracts;
    
    Costs, including material and labor costs and related escalation;
    
    Labor improvements due to the learning curve experience; and
    
    Supplier pricing including escalation where applicable.
 Inventory
   Income Taxes
  42




---



##### 



Identifiable Intangible Assets
  Participation Payments
  Entry Fees
   
    
    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.
 
 43




---



##### 



Sales Incentives
  Flight Certification Costs
  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.
 
 44




---



##### 



Pension and Postretirement Benefits Other Than Pensions
  FORWARD-LOOKING INFORMATION IS SUBJECT TO RISK AND UNCERTAINTY
   
    
    demand for and market acceptance of new and existing products, such as the Airbus A350
XWB and A380, the Boeing 787 Dreamliner, the EMBRAER 190, the Dassault Falcon 7X and the
Lockheed Martin F-35 Lightning II and F-22 Raptor;
    
    our ability to extend our commercial original equipment contracts beyond the initial
contract periods;
    
    cancellation or delays of orders or contracts by customers or with suppliers;
    
    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 resolution of contractual disputes with Northrop Grumman related to the purchase of
aeronautical systems;
    
    the resolution of items in IRS examination cycles;
    
    the possibility of restructuring and consolidation actions beyond those previously
announced by us;
    
    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;
 45




---



##### 




    
    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;
    
    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, 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.
  46




---



##### 



Item 4. Controls and Procedures.
 Evaluation of Disclosure Controls and Procedures
   Changes in Internal Control
  PART II. OTHER INFORMATION
 Item 1. Legal Proceedings.
  Item 1A. Risk Factors.
  47




---



##### 



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)January 2007
    
    
    38,429
    
    
    $
    45.29
    
    
    
    37,300February 2007
    
    
    892,227
    
    
    
    50.95
    
    
    
    803,800March 2007
    
    
    210,882
    
    
    
    50.75
    
    
    
    206,000Total
    
    
    1,141,538
    
    
    $
    50.72
    
    
    
    1,047,100
    
    
    $229 million
 
 (1)
    
    The category includes 94,438 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 our repurchase
program that was announced on October 24, 2006 (the Program). Under the Program we are
authorized to repurchase up to $300 million of our common stock. Unless terminated earlier by
resolution of our Board of Directors, the Program will expire when we have purchased all
shares authorized for repurchase. Item 6. Exhibits.
  Exhibit 3.1
    
    Restated Certificate of Incorporation of Goodrich Corporation,
filed as Exhibit 3.1 to Goodrich Corporations Quarterly
Report on Form 10-Q for the quarter ended September 30, 2003
(File No. 1-892), is incorporated herein by reference.Exhibit 3.2
    
    By-Laws of Goodrich Corporation, as amended, filed as Exhibit
4(B) to Goodrich Corporations Registration Statement on Form
S-3 (File No. 333-98165), is incorporated herein by reference.
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 Two to the Goodrich Corporation 2001 Equity Compensation PlanExhibit 15
    
    Letter Re: Unaudited Interim Financial Information.Exhibit 31
    
    Rule 13a-14(a)/15d-14(a) Certifications.Exhibit 32
    
    Section 1350 Certifications.
 48




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SIGNATURE
  April 30, 2007
    GOODRICH CORPORATION/s/ SCOTT E. KUECHLEScott E. KuechleSenior Vice President and Chief Financial Officer/s/ SCOTT A. COTTRILLScott A. Cottrill Vice President and Controller(Principal Accounting Officer) 49




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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 4(B) to Goodrich
Corporations Registration Statement on Form S-3 (File No. 333-98165), 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. 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 Two to the Goodrich Corporation 2001 Equity Compensation Plan.*Exhibit 15
    
    Letter Re: Unaudited Interim Financial Information.*Exhibit 31
    
    Rule 13a-14(a)/15d-14(a) Certifications.*Exhibit 32
    
    Section 1350 Certifications.*
 
 *
    
    Submitted electronically herewith. 50