Goodrich Announces 59 Percent Increase in Fourth Quarter 2011 Earnings per Diluted Share and 19 Percent Increase in Sales; Full Year 2011 Net Income per Diluted Share Grew 40 Percent, to $6.33, Including Merger-related Costs of $0.18 per Diluted Share

CHARLOTTE, N.C., Feb. 2, 2012 /PRNewswire-FirstCall/ -- Goodrich Corporation (NYSE: GR) announced results today for the fourth quarter and full year 2011.

Commenting on the company's performance and its outlook, Marshall Larsen, Chairman, President and Chief Executive Officer said, "Goodrich's fourth quarter results provided us with an excellent finish to a very eventful 2011.  Thanks to the diligent efforts of all of our employees, we significantly exceeded expectations for earnings and cash flow for the fourth quarter and for the full year of 2011 and reached record levels of sales and profitability.

Our sales growth of 16 percent for the full year 2011 was very broad-based.  Our large commercial airplane original equipment sales grew by 18 percent as we continued to support production rate increases by Airbus and Boeing.  Our commercial aftermarket sales grew by 15 percent, and our defense and space sales grew by 10 percent, which included 6 percent organic growth.

"Propelled by strong sales growth in all of our market channels, we continued to achieve very high levels of segment operating income margin, delivering segment operating income margin of 19.7 percent for the fourth quarter and 18.5 percent for the full year 2011.  This impressive margin performance helped us achieve full year 2011 earnings per diluted share of $6.33, the highest level of EPS in our history.

"Looking forward to 2012, we continue to expect our merger with United Technologies to close in mid-2012.  As noted in our proxy, we continue to make progress on the regulatory filings, and our shareholder vote to approve the merger has been scheduled for March 13, 2012."

Fourth Quarter 2011 Results

Goodrich reported fourth quarter 2011 net income of $238 million, or $1.85 per diluted share, on sales of $2,145 million.  In the fourth quarter 2010, the company reported net income of $148 million, or $1.16 per diluted share, on sales of $1,806 million.  Segment operating income margin for the fourth quarter 2011 was 19.7 percent.  

For the fourth quarter 2011 compared with the fourth quarter 2010, Goodrich sales changes by market channel were as follows:

• Large commercial airplane original equipment sales increased by about 27 percent,  
• Regional, business and general aviation airplane original equipment sales increased by
  about 17 percent, of which about 10 percent was organic growth,
• Large commercial, regional, business and general aviation airplane aftermarket sales increased by about 20 percent, of which about 18 percent was organic growth, and
• Defense and space sales of both original equipment and aftermarket products and services increased by about 12 percent.  Organic sales growth for this market channel was about 5 percent.  

The increase in net income is attributable primarily to the impact of sales growth in all of the company's major market channels, strong operational performance, and ongoing success on continuous improvement initiatives.  Other factors impacting performance are noted below:  

• The fourth quarter 2011 results included lower pre-tax income of $2 million, $1 million after-tax or $0.01 per diluted share, related to the changes in estimates for certain long-term contracts primarily in our aerostructures and aircraft wheels and brakes businesses, compared to the fourth quarter 2010.  Total pre-tax changes in estimates for the fourth quarter 2011 were $25 million.  Changes in both periods were related primarily to favorable cost and operational performance, changes in volume expectations and sales pricing improvements and finalization of contract terms on current and/or follow-on contracts.
• The fourth quarter 2011 results included higher pre-tax income of $19 million, $12 million after-tax or $0.09 per diluted share, related to lower world-wide pension plan expense, compared to the fourth quarter 2010.
• The company reported an effective tax rate of 29.3 percent for the fourth quarter 2011, compared to an effective tax rate of 8.5 percent during the fourth quarter 2010.  The fourth quarter 2010 tax rate included a tax benefit related to a settlement with the California Franchise Tax Board concerning issues related to Goodrich and Rohr for all tax years through 2001 and the full year 2010 benefit of the R&D tax credit, which was renewed by the U.S. Congress in late 2010.
• The fourth quarter 2010 results included pre-tax debt redemption costs of approximately $35 million, $22 million after-tax or $0.17 per diluted share.  There were no similar charges during the fourth quarter 2011.

Net cash provided by operating activities, minus capital expenditures, for the fourth quarter 2011 was $455 million, an increase of $568 million from the same period in 2010.  The increase was due primarily to lower pension contributions, higher income from continuing operations and favorable changes in working capital, compared to the fourth quarter 2010.  During the fourth quarter 2011, Goodrich contributed $10 million to its worldwide pension plans, compared to contributions of $313 million in the fourth quarter 2010. Capital expenditures were $140 million in the fourth quarter 2011, compared with capital expenditures of $123 million in the fourth quarter 2010.  

Full year 2011 Results

For the full year 2011, the company reported net income of $810 million, or $6.33 per diluted share, on sales of $8,075 million, compared to the full year 2010 net income of $579 million, or $4.51 per diluted share, on sales of $6,967 million.  

For the full year 2011 compared with the full year 2010, Goodrich sales changes by market channel were as follows:

• Large commercial airplane original equipment sales increased by about 18 percent,  
• Regional, business and general aviation airplane original equipment sales increased by
  about 42 percent, of which about 20 percent was organic growth,
• Large commercial, regional, business and general aviation airplane aftermarket sales increased by about 15 percent, of which about 13 percent was organic growth, and
• Defense and space sales of both original equipment and aftermarket products and services increased by about 10 percent.  Organic sales growth for this market channel was about 6 percent.  

The increase in net income is attributable primarily to the impact of sales growth in all of the company's major market channels, strong operational performance, ongoing success on continuous improvement and cost reduction initiatives, higher favorable changes in estimates for certain long-term contracts and lower pension expense, partially offset by merger-related costs, plant closure costs and acquisition-related costs.  Several of these factors are noted below:  

• The full year 2011 results included lower pre-tax income of $36 million, $23 million after-tax or $0.18 per diluted share, related to the expected merger with United Technologies.  The pre-tax costs consist of $18 million of transaction-related costs, primarily for third party fees as well as approximately $18 million of increased share-based compensation expenses related to the increased share price.  
• The full year 2011 results included pre-tax costs of $20 million, $13 million after-tax or $0.10 per diluted share related to a plant closure decision announced in June 2011.    
• The full year 2011 results included pre-tax and after-tax costs of $9 million, or $0.07 per diluted share, associated with the Microtecnica and Winslow acquisitions.  
• The full year 2011 results included higher pre-tax income of $10 million, $6 million after-tax or $0.05 per diluted share, related to the revision of estimates for certain long-term contracts primarily in our aerostructures and intelligence, surveillance and reconnaissance (ISR) businesses, compared to the full year 2010.  Total revisions in estimates for the full year 2011 were $108 million, pre-tax.  Revisions in both periods were primarily related to favorable cost and operational performance, changes in volume expectations and sales pricing improvements and finalization of contract terms on current and/or follow-on contracts.
• The full year 2011 results included higher pre-tax income of $78 million, $49 million after-tax or $0.39 per diluted share, related to lower world-wide pension plan expense, compared to the full year 2010.
• The company reported an effective tax rate of 29.7 percent for the full year 2011, compared to an effective tax rate of 27.4 percent for the full year 2010.  
• The full year 2010 results included pre-tax debt redemption costs of approximately $35 million, $22 million after-tax or $0.17 per diluted share.  There were no similar charges during 2011.    

Net cash provided by operating activities, minus capital expenditures, for the full year 2011 was $863 million, an increase of $571 million from the same period in 2010.  The increase was due primarily to lower pension contributions and higher income from continuing operations, compared to the full year 2010.  During the full year 2011, Goodrich contributed $91 million to its worldwide pension plans, compared to contributions of $444 million in the full year 2010.  Capital expenditures were $318 million for the full year 2011, compared with capital expenditures of $222 million in the full year 2010.  

The supplemental discussion and tables that follow provide more detailed information about the fourth quarter 2011 segment results.

Goodrich Corporation, a Fortune 500 company, is a global supplier of systems and services to aerospace, defense and homeland security markets.  With one of the most strategically diversified portfolios of products in the industry, Goodrich serves a global customer base with significant worldwide manufacturing and service facilities.  For more information visit http://www.goodrich.com.

FORWARD-LOOKING INFORMATION IS SUBJECT TO RISK AND UNCERTAINTY

Certain statements made in this document are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding our future plans, objectives and expected performance. Specifically, statements that are not historical facts, including statements accompanied by words such as "believe," "expect," "anticipate," "intend," "should," "estimate," or "plan," are intended to identify forward-looking statements and convey the uncertainty of future events or outcomes. We caution readers that any such forward-looking statements are based on assumptions that we believe are reasonable, but are subject to a wide range of risks, and actual results may differ materially.

Important factors that could cause actual results to differ from expected performance include, but are not limited to:

• demand for and market acceptance of new and existing products, such as the Airbus A350 XWB, A320neo and A380, the Boeing 787 and 737 MAX, the EMBRAER 190, the Mitsubishi Regional Jet (MRJ), the Bombardier CSeries, the Dassault Falcon 7X and the Lockheed Martin F-35 Lightning II and the Northrop Grumman Joint STARS re-engining program;

• our ability to maintain profitability on the aerostructures 787 OE contract with Boeing;

• 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 Airbus A350 XWB, A320neo and A380, the Boeing 787 and 737 MAX, the EMBRAER 190, the Mitsubishi Regional Jet (MRJ), the Bombardier CSeries, the Dassault Falcon 7X and the Lockheed Martin F-35 Lightning II and the Northrop Grumman Joint STARS re-engining program;

• our ability to obtain price adjustments pursuant to certain of our long-term contracts;

• the financial viability of key suppliers and the ability of our suppliers to perform under existing contracts;

• the extent to which we are successful in integrating and achieving expected operating synergies for recent and future acquisitions;

• performance issues with products currently in production or in use and successful development of products and advanced technologies;

• the impact of bankruptcies and/or consolidations in the airline industry;

• the health of the commercial aerospace industry, including the large commercial, regional, business and general aviation aircraft manufacturers;

• 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 and the successful implementation of any announced actions;

• threats and events associated with and efforts to combat terrorism;

• the extent to which changes in regulations and/or assumptions result in changes to expenses relating to employee and retiree medical and pension benefits;

• competitive product and pricing pressures;

• our ability to recover under contractual rights of indemnification for environmental, asbestos and other claims arising out of the divestiture of our tire, vinyl, engineered industrial products and other businesses;

• the effect of changes in accounting policies or legislation, including tax legislation;

• 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, interest rates, inflation, fuel prices, deflation, recession and other external factors over which we have no control;

• the outcome of contingencies including completion of acquisitions, joint ventures, divestitures, tax audits, litigation and environmental remediation efforts;

• the impact of labor difficulties or work stoppages at our, a customer's or a supplier's facilities;

• uncertainties and business impacts associated with the proposed acquisition of the Company by United Technologies, including uncertainties relating to the anticipated timing of filings and approvals relating to the transaction, the expected timing of completion of the transaction and the ability to complete the transaction; and

• the potential impact of litigation relating to the proposed transaction with United Technologies.

We caution you not to place undue reliance on the forward-looking statements contained in this document, which speak only as of the date on which such statements are made. We undertake no obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date on which such statements were made or to reflect the occurrence of unanticipated events.

Supplemental Data

Segment Review

Quarter Ended December 31, 2011 Compared with Quarter Ended December 31, 2010

Actuation and Landing Systems:  Actuation and Landing Systems segment sales for fourth quarter 2011 increased from fourth quarter 2010 primarily due to the following:

• Higher large commercial airplane OE sales of approximately $61 million, primarily in our landing gear and actuation systems businesses;

• Higher defense and space OE and aftermarket sales of approximately $37 million, primarily in our actuation systems business;

• Higher large commercial, regional, business and general aviation airplane aftermarket sales of approximately $34 million, primarily in our landing gear and actuation systems businesses;

• Higher other aerospace and non-aerospace sales of approximately $14 million, primarily in our actuation systems and engine components businesses; and

• Higher regional, business and general aviation airplane OE sales of approximately $6 million, primarily in our wheels and brakes business.

Actuation and Landing Systems segment operating income for fourth quarter 2011 increased from fourth quarter 2010 primarily as a result of the following:

• Higher sales volume and favorable product mix across most businesses, which resulted in higher income of approximately $27 million;

• Favorable pricing partially offset by higher operating costs across most businesses, which resulted in higher income of approximately $19 million; and

• Favorable foreign exchange, including remeasurement of monetary assets/liabilities, of approximately $7 million; partially offset by

• Lower income of approximately $4 million related to changes in estimates for certain long-term contracts in our wheels and brakes business that were more favorable in the fourth quarter of 2010.

Nacelles and Interior Systems:  Nacelles and Interior Systems segment sales for fourth quarter 2011 increased from fourth quarter 2010 primarily due to the following:

• Higher large commercial OE sales of approximately $65 million, primarily in our aerostructures business;

• Higher large commercial, regional, business and general aviation airplane aftermarket sales of approximately $47 million, primarily in our aerostructures and interiors businesses;

• Higher regional, business, and general aviation airplane OE sales of approximately $8 million, primarily in our aerostructures business; and

• Higher defense and space OE and aftermarket sales of approximately $4 million, primarily in our interiors business.

Nacelles and Interior Systems segment operating income for fourth quarter 2011 increased from fourth quarter 2010 primarily due to the following:

• Higher sales volume and favorable product mix, primarily in our aerostructures and interiors businesses, which resulted in higher income of approximately $42 million;

• Favorable pricing, primarily in our aerostructures business, partially offset by higher operating costs across most businesses, which resulted in higher income of approximately $6 million; and

• Higher income of approximately $4 million related to changes in estimates for certain long-term contracts in our aerostructures business that were more favorable in the fourth quarter of 2011.

Electronic Systems:  Electronic Systems segment sales for the fourth quarter 2011 increased from the fourth quarter 2010 primarily due to the following:

• Higher defense and space OE and aftermarket sales of approximately $25 million, primarily in our sensors and integrated systems and intelligence, surveillance and reconnaissance systems businesses;

• Higher large commercial, regional, business and general aviation airplane aftermarket sales of approximately $22 million, primarily in our sensors and integrated systems and engine controls and electrical power businesses;

• Higher regional business and general aviation airplane OE sales of approximately $8 million, primarily in our sensors and integrated systems business;

• Higher other aerospace and non-aerospace sales of approximately $7 million, primarily in our engine controls and electrical power business; and

• Higher large commercial airplane OE sales of approximately $2 million, primarily in our sensors and integrated systems business.

Electronic Systems segment operating income for the fourth quarter 2011 increased from the fourth quarter 2010 primarily due to the following:

• Higher sales volume and favorable product mix across most businesses, which resulted in higher income of approximately $34 million; and

• Favorable foreign exchange, including remeasurement of monetary assets/liabilities, of approximately $4 million; partially offset by

• Lower income of approximately $3 million related to changes in estimates for certain long-term contracts in our ISR business, consisting of favorable changes in estimates of approximately $3 million in the fourth quarter 2011 compared to favorable changes of approximately $6 million in the fourth quarter 2010; and

• Higher operating costs across all businesses partially offset by favorable pricing in our sensors and integrated systems and engine control and electrical power systems businesses, which resulted in lower income of approximately $2 million.

SOURCE Goodrich Corporation

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