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Marshall Larsen
Chairman, President and CEO
Bank of America 35th Annual Investment Conference
San Francisco
September 21, 2005
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Certain statements made in this presentation 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: demand for and market acceptance of new and existing products, such as the Airbus A350 and A380, the Boeing 787 Dreamliner, the Embraer 190, and the Lockheed Martin F-35 Joint Strike Fighter and F-22 Raptor; the health of the commercial aerospace industry, including the impact of bankruptcies in the airline industry; global demand for aircraft spare parts and aftermarket services; and other factors discussed in the Company's filings with the Securities and Exchange Commission and in the Company's July 28, 2005 Second Quarter 2005 Results press release.
The Company cautions you not to place undue reliance on the forward-looking statements contained in this presentation, 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
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Company Overview - Goodrich
One of the largest worldwide aerospace suppliers
Broadest portfolio of products in industry
Proprietary, flight critical products
Operating history of over 130 years
More than 22,100 employees in facilities throughout the world
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Goodrich – Key MarketLeadership Positions
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Goodrich – Key MarketLeadership Positions
$4.7B$9.7B$8.9B$14.7B2004 Aerospace Sales
Sensors
Cargo Systems
APUs
Wheel/BrakesEvacuation Systems
Lighting
Space Systems
Landing GearEnvironmental ControlsFlight Ctrl/ActuationElectronic ControlsAvionics
Power GenerationEnginesNacelles
GoodrichHONSNECMAUTC
Aerospace Focus Aerospace Focus -- Leadership Positions Leadership Positions -- Global Presence Global Presence -- Broad Systems Capability Broad Systems Capability -- Highly Engineered ProductsHighly Engineered Products
Goodrich has the broadest portfolio of system leadership positions;with approximately 85% of sales in markets with #1 or #2 positions world-wide
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First Half 2005 Sales by Market ChannelTotal Sales $2,628M
Large Commercial AircraftAftermarket
24%Regional, Business & General Aviation
Aftermarket7%
Boeing Commercial OE
8%
Airbus Commercial OE
16%Military &
Space, OE & Aftermarket
28%
Other 6%
Heavy A/CMaint.
4%
OE
AM
Balanced business mix – three major market channels, each with strong growth
Regional, Business & Gen.
Av. OE7%
Total Commercial Aftermarket35%
Total Commercial OE31%
Total Military and Space28%
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2005 Market Channel Growth Expectations
Approx. 15%15%6%Other
>10%22%6%Regional, Business & General Aviation - OE
10% - 12%
>25%
Approx. 10%
Approx. 20%
5% - 6%
2005 Expected Change from
2004
15%
38%
13%
18%
11%
1st 6 Mos. 2005 vs. 1st 6 Mos. 2004
Average Growth
3%Heavy Airframe Maintenance
30%Military and Space –OE and Aftermarket
$4.7BGoodrich Total Sales
32%Aftermarket – Large Commercial and Regional, Business and GA
23%Boeing and Airbus –OE Production
2004 Sales MixSales by Market Channel
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Current vs. Prior CycleMarket Differences
Market
Growth rate for OE production smoother
Better balance between Boeing and Airbus
Significantly larger fleet to fuel aftermarket strength
Airbus and regional jet fleet is older, more mature –increased aftermarket support
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Large Aircraft Deliveries Prior Cycle vs. Current Expectations
0
100
200
300
400
500
600
700
800
900
1,000
1996 1997 1998 1999
Air
craf
t D
eliv
ered
Boeing Airbus
0
100
200
300
400
500
600
700
800
900
1,000
2003 2004 2005Est.*
2006Est.*
Air
craf
t D
eliv
ered
Boeing Airbus
32% CAGR
11% CAGR
Based on current estimates, this upcycle will have more measured OE growth
*Forecasts based on public information from manufacturers
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Current vs. Prior CycleCompany Specific Differences
Goodrich SpecificSignificantly larger sales base
• 1996 sales at $1.25B• 2005 estimated sales at $5.2 to $5.3B – more than a four-fold increase
Significantly more diverse products• 1996 – focused on wheels and brakes, landing gear, sensors and
evacuation systems• 2005 – all of the above plus aerostructures, engine controls, actuation
and moreTop line growth potential from new programs is much greaterCurrently at 28% military and space, versus 18% in 1996 (without Rohr) and 9% in 1997 (including Rohr)Much better positioned from a cost structure standpointHigher proportion of “power-by-the-hour” contracts
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Airbus A380, A350 & Boeing 787 Awards
Pending
Pending
Pending
Pending
Pending
Pending
Pending
Pending
Pending
Pending
Pending
Pending
A350Passenger
Version
Engine Fan Case/Other Specialty Aerostructures Products
Cargo Systems
PendingSpecialty Seating
Flight Control Actuation
Fuel & Proximity Systems
Engine Controls
Sensors
A380Passenger
Version
787Passenger
Version
Evacuation Systems
Power Generation/Distribution
Wheels and Brakes
Nacelles
Lighting
Landing Gear
Note: Shaded areas indicate Goodrich positions
Significant market penetration on new programs
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Key New Programs Will Add Balanced Future Growth
C-5 Re-Engine
Small Engine Controls
A380 Program Joint Strike Fighter
*Total estimated sales over life of program *** Total estimated sales through 2028** Year in which significant sales are expected to begin **** Total estimated sales over 20 years
$6 Billion+*2005**
$0.8 Billion+*2004**
$5 Billion+*2006**
$1.1 Billion+*2005**
CommercialCommercial MilitaryMilitary
CF34-10 Nacelle System
$1.4 Billion+*2005**
$7 Billion+***2008**
787 Dreamliner
$6 Billion****2010**
A350 Program
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$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Expected Future Sales from Key New Programs
New program sales are expected to provide significant incremental sales growth
(Dollars in Millions)(Dollars in Millions)
Annual Expected Future Sales for:Annual Expected Future Sales for:•• A380 ProgramA380 Program•• 787 Program787 Program•• A350 ProgramA350 Program•• CF34CF34--10 Nacelle System10 Nacelle System•• JSF ProgramJSF Program•• CC--5 Re5 Re--engine Programengine Program•• Small Engine ControlsSmall Engine Controls
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Emerging Growth Opportunities
HUMS: Health & Usage Management Systems
Patented Software that can detect and identify subtle, abnormal vibrations and predict wear in rotating machinery
Airborne Reconnaissance – DB110“Turnkey” reconnaissance system for Border Patrol and Homeland Security
Chemical/Biological Detection SystemsRobust chemical and biological detection system for Defense and Homeland Security applications
Laser Perimeter Awareness SystemAutonomous perimeter security
Nuclear Power and WeaponsPetrochemical
Military Bases
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Conclusion
Top Quartile Aerospace Returns
Operational Excellence
Leverage the EnterpriseBalanced Growth
Push aggressive Supply Chain Management and Continuous ImprovementDrive breakthrough change in product and development costs using LPD and DFSSImprove Enterprise manufacturing and engineering efficiencies
Use portfolio mass and breadth to capture market shareWin new program positionsPursue Military Markets and Government funding opportunitiesAftermarket products and services expansion
Manage investments at the portfolio levelProvide Enterprise Shared ServicesLeverage SBU capabilities into integrated, higher level systemsSimplify customer interfaces –act as “One Company”
Goodrich – Strategic Imperatives
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• Part travel reduced by 78% from 1,677m to 372m• Operator travel reduced by 85% from 2,442m to 372m• Lead time for Titanium Valve Block reduced by 86% from 72 days to 10 days• Work in progress reduced by 64% from 39 blocks to 14 blocks
Pre-Event – Monday Morning Post Event – Friday Morning
A380 Prismatic Titanium Machining CellLinkage and Flow EventEntire area moved during the week
3 Months Action in 1 Week
Operational ExcellenceLean Manufacturing - Actuation Systems
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Operational ExcellenceLean Product Development
Implement… Improve… Standardize
Continue to Evolve787 and A350 Nacelle Program Execution
Newest Training Ground for Lean PDRaises Performance Bar for Lean PD
Rigorous and Relentless Application of Lean PD onAll New Business Acquisition ProjectsAll New Product Development Programs
New Program Execution – Lean Product Development:
7-11
VOC ImpactMatrix
LWW Prog. Plan
CustomerDeliverables
Assy. Flow II
PartFamily
CellLayout
ValidateSW3P Pull
SystemsAssy. Flow I
MACROLearning
Std.Work
Macro Learning
make sparesbuild tools make parts
talk to customer
count costlook for work
Customer audit
plan work get materiel
• Pksx xnk dcm;s• knk sdcn• [nq sndc hd hdn • nq s msjkc mzm• jsjk qw nq• ncx nokk qwddm
• Pksx xnk dcm;s• knk sdcn• [nq sndc hdhdn • nq smsjkc mzm• jsjk qw nq• ncx nokk qwddm
• Pksx xnk dcm;s• knk sdcn• [nq sndc hdhdn • nq smsjkc mzm• jsjk qw nq• ncx nokk qwddm
• Pksx xnk dcm;s• knk sdcn• [nq sndc hdhdn • nq smsjkc mzm• jsjk qw nq• ncx nokk qwddm
• Pksx xnk dcm;s• knk sdcn• [nq sndc hdhdn • nq smsjkc mzm• jsjk qw nq
• Pksx xnk dcm;s• knk sdcn• [nq sndc hdhdn • nq smsjkc mzm• jsjk qw nq
• Pksx xnk dcm;s• knk sdcn• [nq sndc hdhdn • nq smsjkc mzm• jsjk qw nq
• Pksx xnk dcm;s• knk sdcn• [nq sndc hdhdn • nq smsjkc mzm
• Pksx xnk dcm;s• knk sdcn• [nq sndc hdhdn • nq smsjkc mzm 13
Standard Work SheetPROCESS N AME:SC OPE OF
OPER ATION SFROM:
TO:PREPA RED BY:DATE:
QUALI TY CHECK SAFETY CAUTION STANDARD WORK I NPROCESS CYCLE TIMETAKT TIME OPERATOR(S):
IncomingFinished Forming Center
J. Smith3/16/00
Incoming Rack
12
3
4 56
5 =
FinishedRack
6
1
Spray & Dry
2
Form
ing
Mac
hine
3
Finish
ing
Tabl e
4
Test Bench5
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TimesMach WalkM anOperation Operation Times
Date:______________Observer(s):____________________
Process /Cell:__________________Part:_________________
Dept.:_________Operator:___________
Takt Time:_____________Machine No:___________________
StepNo.
TotalWaiting:
Plan.Op.
12/6/98Marty & Jim
Face& Burr 059Group 1 Fred M.
590 secondsN/A
(seconds)
1Pick part form tote, indexto APLT and scribe.
2Remove APLT and faceedges to scribe line.
3 Deburr holes.
4 Index part to APLT,clamp and final scribe.
6 Final deburr holes.
Place part and APLT in tote.7
100 200 300 400 500 600 700 800
77" 10"
163" 10"
84" 10"
102" 5"
50" 10"
53"
10"
TotalsMANAUTOWALKWAITING
529" 55"
584"
Remove APLT andfinal face edges.5
Standard Work Combination Sheet
ExecutionExecution Stable ProductionStable Production
LPD Model$$
TimeRecurring Unit Cost
Least Waste WayCumNon-
Recurring
PlanningPlanning
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Goodrich One SourceTechnology
Global Sourcing OffsetTarget Cost
Pre-Lean Traditional Cost Model
LWW Cost Model
The Challenge: Significant Cost Reduction
Global Sourcing Offset
Make / Buy / OffsetCore Competency Model
Buy
Make
Gap Closure
Operational ExcellenceSignificant Cost Reduction
Deploy per Site Strategy
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Goodrich Sourcing Efforts Growing in Low Cost Countries
Mexico SealsElectronic CompsMRO Transportation Service
Russia Titanium Forgingsand sheets
China Forgings/Machined PartsComp. Fan Cowls
Singapore Machined Parts/Engine Mounts
Indonesia Machined Parts JV
Taiwan Machined Panels
Korea Castings
India Engineering IT Services Components
Eastern Europe Misc. LG support
Malaysia Composite Panels
Operational ExcellenceSupply Chain Management
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Goodrich – Culture
Highest levels of integrity
Entrepreneurial, fast moving and empowered
Key functions recently aligned at enterprise level to leverage size, capabilities
Experienced, stable management team
Accountability
Customer focus
Technology leadership
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What Investors ShouldExpect from Goodrich in 2005
Key focus in 2005 – operational excellence and margin improvement
Focused on the business“Blocking and Tackling”
Cash flowMargin improvementWorking capital managementCost reduction
New product developmentContinue investing in new products and systems
Transparency of financial results and disclosure
