Marshall Larsen
Chairman, President and CEO
Jefferies Quarterdeck
Aerospace Defense and IT Services Conference
December 3, 2003
Certain statements made in the following presentations are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the Company's future plans, objectives, and expected performance. The Company cautions readers that any such forward-looking statements are based on assumptions that the Company believes are reasonable, but are subject to a wide range of risks, and actual results may differ materially.
Important factors that could cause actual results to differ include, but are not limited to, the extent to which the Company is successful in integrating the Aeronautical Systems businesses and achieving operating synergies; the nature, and extent and timing of the Company’s proposed restructuring and consolidation actions and the extent to which the Company is able to achieve savings from these actions, as well as other factors discussed in the Company's filings with the Securities and Exchange Commission, including in the Company's Annual Report on Form 10-K for the year ended December 31, 2002.
The Company cautions you not to place undue reliance on the forward-looking statements contained in these presentations, which speak only as of the date on which such statements were made. The Company undertakes no obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date on which such statements were made or to reflect the occurrence of unanticipated events.
Forward Looking Statements
Company Overview - Goodrich
One of the largest worldwide aerospace suppliersBroadest portfolio of products in industryProprietary, flight critical productsOperating history of over 130 years with recent repositioning as focused aerospace supplierMore than 20,000 employees in facilities throughout the world
Goodrich – A Global Franchise
Goodrich Today
Aerospace Focus - Leadership Positions - Global Presence - Broad Systems Capability - Highly Engineered Products
Landing GearWheels & BrakesActuationCustomer ServicesAirframe Technical ServiceEPP
AerostructuresTurbine Fuel TechnologiesEngine ControlsTurbo Machinery ProductsCargo Management Systems
SensorsFuel and UtilityOptical and SpaceLightingDe-IcingPowerInterior ProductsPropulsion Products
Goodrich
AirframeJohn Grisik
EngineJack Carmola
ElectronicsCindy Egnotovich
Goodrich Today
Aerospace Focus - Leadership Positions - Global Presence - Broad Systems Capability - Highly Engineered Products
Goodrich participates in all major aerospace market segments
Large Commercial AircraftAftermarket
25%Regional, Business & General AviationOE & Aftermarket
12%
Boeing Commercial OE
9%
Airbus Commercial OE
15%
Military & Space, OE & Aftermarket
30%
IGT & Other
6%
Heavy AirframeMaintenance
3%
1st Nine Months 2003 Sales - $3,253 M
OE
AM
OE
AM
Sales by Market Channel – 1999 – 2003E
Military and Space
Large Cmcl. Aircraft
Aftermarket
Regional, Business & G.A.
Boeing OE
Airbus OE
Other
0%
20%
40%
60%
80%
100%
1999 2000 2001 2002 2003E
Significantly decreased dependence on Commercial OE
(Percentage of Total)
Goodrich Today
$4B$10B$7B$13BAerospace Sales
#1Sensors
#1Cargo Systems
APUs
#2Wheel/Brakes#1Evacuation Systems
#2Lighting
Space Systems
#1Landing Gear
Environmental Controls#1Flight Ctrl/Actuation#1Electronic Controls
Avionics
#2Power GenerationEngines
#1Nacelles
GoodrichHONSNECMAUTC
Aerospace Focus - Leadership Positions - Global Presence - Broad Systems Capability - Highly Engineered Products
Goodrich has the broadest portfolio of system leadership positions
Agenda
Market Summary
Aerospace Strategy
2003 and 2004 Outlook
Commercial OE
Balanced duopoly
Airbus gaining on Boeing
Market flat near term
Recovery begins in 2005-2006
Active Commercial Fleet 2003
3,29611,436
Active Commercial Fleet 2012
6,26312,160
Source: Airline Monitor
BoeingAirbus
Boeing Airbus
0
100
200
300
400
500
600
700
1992
1994
1996
1998
2000
2002
2004
Est
.
AirbusBoeing
Air
plan
e D
eliv
erie
s
Commercial OE - Airbus
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
5,500
6,000
6,500
7,000
7,500
8,000
8,500
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
aged less than 5 yrs aged 5 yrs or greater
CAGR of 14.2% for
aged 5 yrs or greater
Nu
mbe
r of
Pla
nes
Airbus fleet aging drives aftermarket growth for suppliers
Fleet Aging
Source: GR Estimates
Regional Jets
Airlines eliminating scope clauses
Encroaching on Large Commercial model sizes
Embraer and Bombardier primary suppliers
New Chinese and Russian market entrants
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120
100
200
300
Regional Jet DeliveriesBombardier Embraer
Large RJ’s Continue to Gain Share (19-100 Seat A/C)
'93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12$0
$2
$4
$6
$8(Deliveries in $ Billions)
Props 30/50-seat Jets 60/100-seat JetsSource: GR Estimates
Regional Jets
0
1,000
2,000
3,000
4,000
5,000
6,000
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
aged less than 5 yrs aged 5 yrs or greater
Num
ber
of P
lane
s
CAGR of 28.2% for
aged 5 yrs or greater
RJ fleet aging drives aftermarket growth for suppliers
Fleet Aging
Source: GR Estimates
Aftermarket
0%1%2%3%4%5%6%7%8%9%
10%
2003 2004 2005 2006 2007 2008
ASM, RPM Forecast (yr/yr) - Airline Monitor, GR Est.
RPM ASMDriven by ASMs, fleet size & GDP
2004 expected to recover slightly
Airline inventory management
Above average growth rates possible over next several years
2003 Global MRO Market ($B)
19%
23%
29%
29%
Airframe Engines Components Line Maintenenace
CAGR (’03-’08) = 4.2%
Source: Back Aviation
Uncertainty remains in near-term aftermarket forecasts
Military & Space
Market is global New fighters driving growthIntelligence, Transports and Rotorcraft Markets growingTransformational spending underway Growth opportunity
0
40
80
120
160
200
2002 2003 2004 2005 2006 2007 2008
US Defense Spending ($B)
Procurement & RDT&E Intelligence
Military Transports
'93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '120
20
40
60
80(Units Delivered)
0
1
2
3
4
5
6(Market Value in '03$ Billions)
Units ValueSource: Teal Group
'93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '120
20
40
60
80(Units Delivered)
0
1
2
3
4
5
6(Market Value in '03$ Billions)
Units ValueSource: Teal Group
'93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '120
200
400
600
800
1,000
0
2
4
6
8
Source: Teal GroupUnits Value
The World Rotorcraft Market
'93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '120
200
400
600
800
1,000
0
2
4
6
8
Source: Teal GroupUnits Value
World Fighter Market
'93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '120
100
200
300
400
500(Units Delivered)
0
5
10
15
(Market Value in '03$Bns)
Source: Teal Group
'93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '120
100
200
300
400
500(Units Delivered)
0
5
10
15
(Market Value in '03$Bns)
Source: Teal Group
(Units Delivered) (Market Value in '03$ Billions)(Units Delivered) (Market Value in '03$ Billions)
Source: Teal GroupUnits Value Source: Teal GroupUnits Value
Source: DoD
Market Summary
Commercial aerospace OE market is at bottom but recovery projected in 2005-2006
Airbus gaining market parity with Boeing
Low cost carriers winning market share
Commercial aftermarket expected to recover slightly in 2004, higher growth in 2005 and beyond
Stable regional jet deliveries; rapidly growing aftermarket
Military market continues to present growth opportunities
Significant opportunity for growth over the cycle
Agenda
Market Summary
Aerospace Strategy
2003 and 2004 Outlook
Building Goodrich Aerospace
Operational Excellence
• Aerospace brand• Efficiency• Quality• Culture
Niche Player(Sales= $200 M)
Consolidator
• Lean• Integration of acquisitions• Exploit synergies
• Acquirer / survivor• Assemble system platforms• Attractive niche positions
Grow(Sales $1-2 B)
Innovator
• Innovation training • Alliances • Customer relationship management• E-commerce/SCM• Talent
• Differentiate • Commercialize technology• Export technology• Exploit technology
• Opportunistic deals• Strategic bolt-ons• New platforms (space)• Acquire technology
Build PlatformsAchieve Critical Mass
(Sales=$4 B)
Sales
1985 20001990 1995
Goodrich has grown from a niche player to an industry leader
Goodrich Strategic Imperatives
Balanced GrowthFaster than the overall marketWin key positions on new aircraft (e.g. 7E7)Migrate commercial products/technologies to military applicationsPenetrate adjacent markets
Leverage the EnterpriseResource allocationTechnology/InnovationEnterprise-wide initiativesCustomer alignment/focus
Operational ExcellenceIntegrate Aeronautical SystemsLean manufacturing/Six SigmaMake/Buy analysis
Successful implementation will enable Goodrich to compete/win in all business environments
Enterprise-wide Initiatives
Supply Chain ManagementInformation TechnologyHuman ResourcesContinuous Process Improvement
Lean ManufacturingSix Sigma
New Product Design/Build ProcessesIncentive Compensation Alignment
Enterprise-wide initiatives significantly improve alignment across segments
Goodrich Strategic Initiatives
Successful implementation is expected to result in:
Continued cost competitivenessOrganic Growth above market trendsSignificant improvement in segment operating marginsContinued strong cash flowSustainable value creation
New Programs Will Accelerate Future Growth
*Total estimated sales over life of program** Year in which significant sales are expected to begin
C-5 Re-Engine
Universal Control Program
A380 ProgramJoint Strike
Fighter
$6 Billion+*2005**
$0.8 Billion+*2004**
$5 Billion+*2006**
$0.5 Billion+*2005**
Commercial Military
CF34-10 Nacelle System
$1.4 Billion+*2005**
Cockpit Door Video Surveillance System
$0.1 Billion+*2003**
$0$50
$100$150$200$250$300$350$400$450$500
2002 2003 2004 2005 2006 2007 2008
Annual Expected Future Sales for:• A380 Program• CF34-10 Nacelle System• JSF Program• C-5 Re-engine Program• Cockpit Door Video Surveillance System• Universal Control Program
Expected Future Sales from New Programs
New program sales are incremental to sales growth from existing in-production platform positions
Dollars in Millions
Agenda
Market Summary
Aerospace Strategy
2003 and 2004 Outlook
2003 Financial Outlook
$0.52($0.07)Discontinued operations
$0.33 - $0.43$1.55Continuing operations
$0.85 - $0.95 $1.14Diluted E.P.S. – Net Income
--($0.34)Cumulative effect of change in accounting
> $450M$524MCash flow from Operations
Diluted earnings (loss) per share
($50 - $60M)($52M)Including: Cash outflow for facility closures and headcount reductions
($120 - $140M)
$4.3 - $4.4B(around mid-point)
2003 Outlook
($106M)Capital Expenditures
$3.8BSales
Actual 2002
2004 Outlook Assumptions
RecoveringAirline
Profitability
Global ASMGrowth 3-5%
No New Market
Disruption(Terrorism, SARS)
Stable/SmallIncrease in
Interest Rates7E7 Launch
Late 03/Early 04
GRMacro
Assumptions
RecoveringGlobal
Economy
2004 Sales & Margin Expectations
Sales Growth Expectations Margin Considerations
Restructuring benefitsImproving AS resultsImproving mix with Aftermarket growthProductivity initiativesA380 development costs peak in 2003; 7E7 offset??Continued pricing pressurePension costs flat vs. 2003
FlatIGT/Other9%
~ 10%(Similar to
2003)
Military & Space (Total)
30%
3-5%Aftermarket (Comm & Regnl)
32%
FlatRegional, Business & GA OE
5%
2004 Market Growth
MarketGoodrich
2003 YTDSales Mix
Slight decline
Boeing/Airbus OE24%
Expect Low Single DigitGrowth for GR
Expect Margin ExpansionBeyond Sales Growth
2004 Summary
Low single digit revenue growthMargin expansion$20-25 Million headwind in selected areasCapital expenditures increase over 2003(new programs, productivity, cost reduction)
Cash flow from operations less capital expenditures should exceed net incomeSeveral unknowns cloud outlook
Expect to Issue Formal GuidanceWith Year End Earnings Release
Near Term Risks & Opportunities
A380 peaks in 2003/limited technical risk7E7 investment/timing uncertainNew Program Investments
Organizational transition completeMajor headcount reductions completeMost SBU’s profitableStrong purchase contract
AS Execution/Integration
Large cash balancesNew revolverNo current debt maturitiesPositive net cash flow last 10 Qtrs
Liquidity/Capital Markets
Capacity downsizing near completionLong term cost reduction focusEnterprise initiativesPortfolio balance
Slower Commercial Market RecoveryEvent risk
Risks GR Positioning
Manageable Risks
Near Term Risks & Opportunities
Supply chain management($2B annual spend)
Shared services
Enterprise Initiative Savings
Working capital reductionsFurther portfolio pruningAccelerate debt retirement
Higher Cash Generation
Capacity in placeSubstantial upside leverageAirline/OE outsourcing
Faster Commercial Recovery
Opportunities GR Positioning
Summary - Goodrich Attributes and Actions
Top tier aerospace supplier
Diversified, balanced business mix
Proprietary, flight critical products
Strong cash flow
Taking aggressive actions to align cost structure with current demand
Experience managing operations in challenging markets
Focused on Aeronautical Systems integration and turnaround
Committed to maintaining a conservative financial profile and investment grade ratings
All future reporting and outlook to be only on a GAAP basis
Focused on what we can control
What Investors Should Expect from Goodrich
Continued commitment to integrityTransparency of financial results and disclosureNo significant acquisitionsReduce leverage to target levelsFocused on the business• “Blocking and Tackling”
- Cash flow- Margin improvement- Aeronautical Systems integration- Working capital management
• New product development- Continue investing in new products and systems
Accountable to all stakeholders
Jefferies Quarterdeck
Aerospace Defense and IT Services Conference
December 3, 2003
Questions and Answers