-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UdeEwYec2eYJ6iBireeU6zwJhpOzG6arVq9vayIzMVELztHROatdjPudRdD/mWOB VfiBxhSiMHFz7/BJwhogEQ== 0000042542-97-000011.txt : 19970811 0000042542-97-000011.hdr.sgml : 19970811 ACCESSION NUMBER: 0000042542-97-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970808 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GOODRICH B F CO CENTRAL INDEX KEY: 0000042542 STANDARD INDUSTRIAL CLASSIFICATION: CHEMICALS & ALLIED PRODUCTS [2800] IRS NUMBER: 340252680 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-00892 FILM NUMBER: 97654641 BUSINESS ADDRESS: STREET 1: 4020 KINROSS LAKES PARKWAY CITY: RICHFIELD STATE: OH ZIP: 44286-9368 BUSINESS PHONE: 2166597600 MAIL ADDRESS: STREET 1: 4020 KINROSS LAKES PARKWAY CITY: RICHFIELD STATE: OH ZIP: 44286-9368 10-Q 1 THE B.F.GOODRICH COMPANY FORM 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended June 30, 1997 Commission file number 1-892 THE B.F.GOODRICH COMPANY NEW YORK 34-0252680 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 4020 KINROSS LAKES PARKWAY, RICHFIELD, OHIO 44286-9368 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 216-659-7600 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No -------- -------- As of June 30, 1997, there were 54,050,729 shares of common stock outstanding. There is only one class of common stock. PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements THE B.F.GOODRICH COMPANY CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) (Dollars in millions, except per share amounts)
Three Months Ended Six Months Ended June 30, June 30, -------------------------------- ------------------------------- 1997 1996 1997 1996 -------------- -------------- -------------- -------------- Sales $ 578.1 $ 506.1 $ 1,127.5 $ 1,004.1 Operating Costs and Expenses: Cost of sales 387.2 338.7 762.2 671.7 Selling and administrative expenses 132.0 110.7 257.1 220.1 Restructuring costs - - - 4.0 -------------- -------------- -------------- -------------- 519.2 449.4 1,019.3 895.8 -------------- -------------- -------------- -------------- Operating income 58.9 56.7 108.2 108.3 Interest expense (8.2) (9.5) (17.2) (20.2) Interest income 1.4 0.3 2.4 0.9 Gain on issuance of subsidiary stock 13.7 - 13.7 - Other income (expense) - net 21.4 (5.1) 17.1 (9.4) -------------- -------------- -------------- -------------- Income from continuing operations before income taxes and Trust distributions 87.2 42.4 124.2 79.6 Income tax expense (32.2) (14.7) (45.7) (28.1) Distributions on Trust preferred securities (2.6) (2.7) (5.2) (5.3) -------------- -------------- -------------- -------------- Income from continuing operations 52.4 25.0 73.3 46.2 Income from discontinued operations (Note B): Income from discontinued operations (net of tax) 3.4 12.9 8.0 11.6 Gain on sale of discontinued operations, including provision of $7.9 for operating losses during the phase-out period (less applicable income taxes of $22.8) - - 59.5 - -------------- -------------- -------------- -------------- Net Income $ 55.8 $ 37.9 $ 140.8 $ 57.8 ============== ============== ============== ============== Earnings per share: Continuing operations $ 0.96 $ 0.46 $ 1.35 $ 0.86 Discontinued operations 0.06 0.24 1.24 0.22 -------------- -------------- -------------- -------------- Net income $ 1.02 $ 0.70 $ 2.59 $ 1.08 ============== ============== ============== ============== Weighted average number of common and common equivalent shares outstanding - in millions 54.5 54.0 54.5 53.6 Dividends paid per common share $ 0.275 $ 0.275 $ 0.55 $ 0.55
See notes to condensed consolidated financial statements. - 2 - THE B.F.GOODRICH COMPANY CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) (Dollars in millions)
June 30, December 31, 1997 1996 --------------- -------------- ASSETS Current Assets Cash and cash equivalents $ 174.9 $ 48.7 Accounts and notes receivable, less allowances for doubtful receivables (June 30, 1997, $11.6; December 31, 1996, $13.1) 367.5 398.0 Inventories 350.0 367.1 Deferred income taxes 68.0 68.0 Prepaid expenses and other assets 26.5 30.5 --------------- --------------- Total Current Assets 986.9 912.3 --------------- --------------- Property Land, buildings and machinery and equipment 1,551.0 1,663.7 Allowances for depreciation and amortization (676.4) (717.7) --------------- --------------- Total Property 874.6 946.0 --------------- --------------- Deferred Income Taxes - 3.3 Goodwill 504.3 544.3 Identifiable Intangible Assets 43.5 47.6 Other Assets 208.1 209.6 --------------- --------------- $ 2,617.4 $ 2,663.1 =============== =============== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Short-term bank debt $ 34.8 $ 130.8 Accounts payable 227.2 243.1 Accrued expenses 233.2 237.2 Income taxes payable 12.1 11.1 Current maturities of long-term debt and capital lease obligations 6.8 36.0 --------------- --------------- Total Current Liabilities 514.1 658.2 --------------- --------------- Long-term Debt and Capital Lease Obligations 391.8 400.0 Postretirement Benefits Other Than Pensions 341.4 348.5 Other Non-current Liabilities 81.5 83.6 Mandatorily Redeemable Preferred Securities of Trust 122.9 122.6 Shareholders' Equity Common stock - $5 par value Authorized 100,000,000 shares; issued 55,248,759 shares at June 30, 1997, and 54,899,308 shares at December 31, 1996 276.2 274.5 Additional capital 367.3 357.3 Income retained in the business 564.8 453.7 Cumulative unrealized translation adjustments (2.4) 5.9 Unearned portion of restricted stock awards (5.4) (9.0) Common stock held in treasury, at cost (1,198,030 shares at June 30, 1997, and 1,135,985 shares at December 31, 1996) (34.8) (32.2) --------------- --------------- Total Shareholders' Equity 1,165.7 1,050.2 --------------- --------------- $ 2,617.4 $ 2,663.1 =============== ===============
See notes to condensed consolidated financial statements. - 3 - THE B.F.GOODRICH COMPANY CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (Dollars in millions)
Six Months Ended June 30, ------------------------------------ 1997 1996 ---------------- ---------------- OPERATING ACTIVITIES Net Income $ 140.8 $ 57.8 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 60.0 57.5 Deferred income taxes 17.6 15.8 Gains on sale of businesses (116.7) (6.4) Change in assets and liabilities, net of effects of acquisitions and dispositions of businesses: Receivables (16.1) 1.8 Inventories (29.6) (23.6) Other current assets 1.2 0.4 Accounts payable 7.3 (27.6) Accrued expenses 0.4 0.1 Income taxes payable 3.0 4.7 Other non-current assets and liabilities (4.0) (17.1) ---------------- ---------------- Net cash provided by operating activities 63.9 63.4 INVESTING ACTIVITIES Purchases of property (62.9) (78.0) Proceeds from sale of property 3.6 0.9 Proceeds from sale of businesses 303.2 14.8 Payments made in connection with acquisitions, net of cash acquired (23.4) (105.3) ---------------- ---------------- Net cash provided (used) by investing activities 220.5 (167.6) FINANCING ACTIVITIES Net (decrease) increase in short-term debt (95.0) 224.2 Proceeds from issuance of long-term debt - 20.0 Repayment of long-term debt and capital lease obligations (34.0) (137.0) Proceeds from issuance of capital stock 6.9 7.7 Purchases of treasury stock (0.3) (0.1) Dividends (29.6) (29.0) Distributions on quarterly income preferred securities (5.2) (2.6) ---------------- ---------------- Net cash (used) provided by financing activities (157.2) 83.2 EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (1.0) (0.6) ---------------- ---------------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 126.2 (21.6) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 48.7 60.3 ---------------- --------------- CASH AND CASH EQUIVALENTS AT JUNE 30 $ 174.9 $ 38.7 ================ =============== Supplemental Cash Flow Information: Income taxes paid $ 49.1 $ 11.3 ================ =============== Interest paid, net of amounts capitalized $ 16.2 $ 20.0 ================ =============== Contribution of common stock to pension trust $ - $ 30.0 ================ ===============
See notes to condensed consolidated financial statements. - 4 - NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note A: BASIS OF INTERIM FINANCIAL STATEMENT PREPARATION - The accompanying unaudited condensed consolidated financial statements of The BFGoodrich Company ("BFGoodrich" or the "Company") have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 1997, are not necessarily indicative of the results that may be achieved for the year ending December 31, 1997. For further information, refer to the consolidated financial statements and footnotes included in the Company's Annual Report on Form 10-K for the year ended December 31, 1996. The Company recognizes gains (and losses) on the issuance of stock by a subsidiary in accordance with the SEC's Staff Accounting Bulletin 84. Certain prior year amounts have been reclassified to conform to the current year presentation. Note B: DISCONTINUED OPERATIONS - On July 16, 1997, the Company entered into a definitive agreement to sell its chlor-alkali and olefins ("CAO") business (comprising primarily inventory, fixed assets and certain other assets, amounting to approximately $60.0 million at June 30, 1997) to The Westlake Group for cash proceeds of $92.75 million. The Company will also receive cash from the settlement of accounts receivable net of accounts payable (amounting to approximately $10.0 million at June 30, 1997). The sale is expected to be completed during the third quarter and will result in a gain. The disposition of the CAO business represents the disposal of a segment of a business under APB Opinion No. 30 ("APB 30"). Accordingly, the consolidated statement of income has been restated to reflect the CAO business (previously reported as Other Operations) as a discontinued operation. On February 3, 1997, the Company completed the sale of Tremco Incorporated to RPM, Inc. for $230.7 million, resulting in an after-tax gain of $59.5 million, or $1.09 per share. The sale of Tremco Incorporated completed the disposition of the Company's Sealants, Coatings and Adhesives ("SC&A") Group which also represented a disposal of a segment of a business under APB 30. A summary of the results of discontinued operations for the periods presented follows (dollars in millions). - 5 -
Three Months Ended June 30, Six Months Ended June 30, ------------------------------------------------------------ 1997 1996 1997 1996 ---- ---- ---- ---- Sales: CAO $ 37.8 $ 44.1 $ 78.3 $ 77.3 SC&A - 95.8 - 169.1 ---------------------------------------------------------------- $ 37.8 $ 139.9 $ 78.3 $ 246.4 ================================================================ Pretax income from operations: CAO $ 5.3 $ 8.3 $ 12.4 $ 13.1 SC&A - 7.2 - 0.7 ---------------------------------------------------------------- 5.3 15.5 12.4 13.8 Pretax gain on sale of business - 6.4 - 6.4 Income tax expense (1.9) (9.0) (4.4) (8.6) ---------------------------------------------------------------- Income from discontinued operations $ 3.4 $ 12.9 $ 8.0 $ 11.6 ================================================================
Note C: INVENTORY - Inventories included in the accompanying condensed consolidated balance sheet consist of:
(Dollars in millions) June 30, December 31, 1997 1996 ------------ ------------ FIFO or average cost (which approximates current costs): Finished products $ 130.5 $ 157.7 In process 139.4 122.0 Raw materials & supplies 138.1 152.1 ----- ----- 408.0 431.8 Reserve to reduce certain inventories to LIFO basis (58.0) (64.7) ----- ------ Total $ 350.0 $ 367.1 ===== =====
- 6 - Note D: ACQUISITIONS AND DIVESTITURES - During the latter part of the second quarter of 1997, the Company completed the sale of its Engine Electrical Systems Division, which was part of the Sensors and Integrated Systems Group in the Aerospace segment. The Company received cash proceeds of $72.5 million, which resulted in a pretax gain of $26.4 million ($16.4 million after tax). During the latter part of the first quarter of 1997, the Company's Aerospace segment acquired a manufacturer of data acquisition systems for satellites and other aerospace applications. The final purchase price of $23.4 million includes approximately $14 million of goodwill. The purchase price allocations have been based on preliminary estimates. Goodwill is being amortized using the straight-line method over 20 years. The results of operations since the acquisition date have been included in the consolidated financial statements, and are not material. Note E: CAPITAL STOCK - During the first six months of 1997, 349,451 shares of authorized but previously unissued shares of common stock were issued under an employee compensation plan. Also under this plan, 48,345 shares of treasury stock were purchased and 13,700 unearned shares were forfeited and returned to treasury stock. Note F: PUBLIC OFFERING OF SUBSIDIARY STOCK - In May 1997, the Company's subsidiary, DTM Corporation ("DTM"), issued 2,852,191 shares of its authorized but previously unissued common stock in an initial public offering ("IPO"). The shares were issued at $8.00 per share ($7.44 per share net of the underwriting discount) resulting in cash proceeds of $21.2 million to DTM, net of the underwriting discount. DTM develops, designs, manufactures, markets and supports, on an international basis, rapid prototyping and rapid tooling systems, powdered material and related services. The Company owned approximately 92 percent of DTM's outstanding common stock immediately prior to the IPO. As a result of the IPO, the Company's interest declined to approximately 50 percent (the Company did not sell any of its interest in the IPO). The Company recognized a pretax gain of $13.7 million ($8.0 million after tax, including provision for deferred income taxes) in accordance with the SEC's Staff Accounting Bulletin 84. Note G: INCOME TAXES - The effective tax rate for the second quarter and first six months of 1997 was higher than the federal statutory rate principally due to state and local income taxes. The lower effective rate for the comparable periods of 1996 was principally due to lower foreign income taxes. Note H: CONTINGENCIES - There are pending or threatened against BFGoodrich or its subsidiaries various claims, lawsuits and administrative proceedings, all arising from the ordinary course of business with respect to commercial, product liability and environmental matters, which - 7 - seek remedies or damages. BFGoodrich believes that any liability that may finally be determined with respect to commercial and product liability claims, should not have a material effect on the Company's consolidated financial position or results of operations. The Company is also involved from time to time in legal proceedings as a plaintiff involving contract, patent protection, environmental and other matters. Gain contingencies, if any, are recognized when they are realized. The Company and its subsidiaries are generators of both hazardous wastes and non-hazardous wastes, the treatment, storage, transportation and disposal of which are subject to various laws and governmental regulations. Although past operations were in substantial compliance with the then-applicable regulations, the Company has been designated as a potentially responsible party by the U.S. Environmental Protection Agency in connection with 32 sites, most of which related to previously discontinued businesses. The Company believes it may have continuing liability with respect to not more than 15 sites. A significant portion of accrued environmental liabilities is in connection with five sites which relate to businesses previously discontinued. Two of the most significant variables in determining the Company's ultimate liability are the remediation method finally adopted for the site and the Company's share of the total site remediation cost. With respect to the five previously discontinued sites, the Company's maximum percentage share of the ultimate remediation costs is fixed. Of the five sites, two sites are in the operation and maintenance phase for which costs are reasonably fixed; a third site is in the construction phase, which is expected to be completed soon, which the Company will "buy out" of for a percentage of the total cost without any further liability exposure; a fourth site is currently being constructed for which reasonable estimates of the ultimate completion cost can be made; however, the final cost at completion can vary significantly as a result of changes made during the construction phase and changed regulatory agency requirements, all of which are difficult to predict. With respect to the fifth site, uncertainty exists as to the total cost of remediation and the amount of past EPA costs to be reimbursed. Management believes that it is reasonably possible that additional environmental costs may be incurred beyond the amounts accrued as a result of new information. However, the amounts, if any, cannot be estimated and management believes that they would not be material to the Company's financial condition, but could be material to the Company's results of operations in a given period. Note I: RECENTLY ISSUED ACCOUNTING STANDARD - In February 1997, the Financial Accounting Standards Board issued Statement No. 128, Earnings per Share, which is required to be adopted on December 31, 1997. At that time, the Company will be required to change the method currently used to compute earnings per share and to restate all prior periods. Under the new requirements for calculating primary earnings per share, the dilutive effect of stock options will be excluded. The impact of Statement 128 on the calculation of primary and fully diluted earnings per share for the three and six month periods ended June 30, 1997 and June 30, 1996 is not material. - 8 - ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS ---------------------------------- COMPARISON OF THE SECOND QUARTER AND FIRST HALF OF 1997 TO THE SECOND QUARTER AND FIRST HALF OF 1996 -------------------------------------------- TOTAL COMPANY ------------- During the second quarter of 1997, the Company's chlor-alkali and olefins ("CAO") business has been reported as a discontinued operation. The following discussion and analysis excludes the results of the CAO business (previously reported as Other Operations), unless otherwise stated. Sales in the second quarter of 1997 increased to $578.1 million, or 14 percent over the same period last year. Excluding acquisitions and divestitures, sales increased 11 percent, largely reflecting higher volumes in both the Aerospace and Specialty Chemicals segments. Sales for the first half of 1997 increased to $1,127.5 million from $1,004.1 million for the corresponding period of 1996, reflecting a 12 percent increase. Excluding acquisitions and divestitures, sales increased 8 percent, for the same reasons as the second quarter. Cost of sales as a percent of sales in the second quarter of 1997 compared to the same period of 1996 remained virtually unchanged. Total cost of sales increased to $387.2 million in the second quarter of 1997 from $338.7 million in the second quarter of 1996, reflecting acquisitions and internal volume growth. Cost of sales as a percent of sales for the first half of 1997 increased by 0.7 percentage points. This increase reflects higher original-equipment strategic sales incentives in the Aerospace segment, coupled with higher start-up costs and increased operating expenses in the Specialty Chemicals segment related to several capital projects in Europe and the United States. Selling and administrative expenses were 22.8 percent of sales for the second quarter of 1997 compared to the 21.9 percent for the corresponding period of 1996. Selling and administrative expenses were $132.0 million for the second quarter of 1997 compared to $110.7 million in the same period of 1996. These increases reflect acquisitions, and higher support costs associated with capital expansions. For the first half of 1997, selling and administrative expenses were 22.8 percent compared with 21.9 percent for the same period of 1996. Selling and administrative expenses were $257.1 million for the first half of 1997 compared with $220.1 million for the corresponding period last year. The increase occurred for the same reasons as the second quarter. During the second quarter of 1997, the Company recognized a $13.7 million pretax gain ($8.0 - 9 - million after tax) in connection with the issuance of a subsidiary's common stock in an initial public offering (see note F to the condensed consolidated financial statements for further details). The Company does not expect public or private offerings of subsidiaries' previously unissued stock to occur in the foreseeable future. In February 1997, the Financial Accounting Standards Board issued Statement No. 128, Earnings per Share, which is required to be adopted on December 31, 1997. At that time, the Company will be required to change the method currently used to compute earnings per share and to restate all prior periods. Under the new requirements for calculating primary earnings per share, the dilutive effect of stock options will be excluded. The impact of Statement 128 on the calculation of primary and fully diluted earnings per share for the three and six month periods ended June 30, 1997 and June 30, 1996 is not material. OUTLOOK ------- During 1997, the Company has sold Tremco Incorporated and Engine Electrical Systems Division, and the sale of CAO is pending. To date in 1997, the Company has made only one relatively modest acquisition. The Company has expressed interest in acquiring several significant businesses, but has not been successful in its efforts to date. While the Company continues to explore significant acquisition opportunities at prices it believes to be appropriate, it is not likely that one will be completed in time to offset in 1997 the loss in operating income that would have been expected to be generated by the divested businesses. If the Company does not make one or more significant acquisitions in the near future, the Company may consider the possibility of entering into a share repurchase program. - 10 - SEGMENT ANALYSIS ----------------
Three Months Ended June 30, Six Months Ended June 30, (Dollars in Millions) 1997 1996 1997 1996 - --------------------------------------------------------------------------------------------------------------- Sales: Aerospace $349.7 $303.0 $ 676.4 $ 610.0 Specialty Chemicals 228.4 203.1 451.1 394.1 ------ ------ -------- -------- Total $578.1 $506.1 $1,127.5 $1,004.1 - --------------------------------------------------------------------------------------------------------------- Operating Income: Aerospace $ 42.9 $ 39.9 $ 75.9 $ 79.1 Specialty Chemicals 31.1 28.5 62.2 53.5 ------ ------ -------- -------- Total Reportable Segments 74.0 68.4 138.1 132.6 Corporate (15.1) (11.7) (29.9) (24.3) ------ ------ -------- -------- Total $ 58.9 $ 56.7 $ 108.2 $ 108.3 - ---------------------------------------------------------------------------------------------------------------
The Company's operations are classified into two reportable business segments: BFGoodrich Aerospace ("Aerospace") and BFGoodrich Specialty Chemicals ("Specialty Chemicals"). Aerospace consists of three business groups: Landing Systems; Sensors and Integrated Systems; and Maintenance, Repair and Overhaul ("MRO"). They serve commercial, military, regional, business and general aviation markets. Specialty Chemicals consists of two business groups: Specialty Additives and Specialty Plastics. They serve various markets, such as personal care, industrial piping, plumbing, pharmaceuticals, printing, textiles and automotive. Corporate includes general corporate administrative costs and Advanced Technology Group research expenses. Segment operating income is total segment revenue reduced by operating expenses directly identifiable with that business segment. Intersegment eliminations are included in Corporate and are not significant in any period. An expanded analysis of sales and operating income by business segment follows. - 11 - Aerospace - ---------
Sales by Group (in millions) Three Months Ended June 30, Six Months Ended June 30, 1997 1996 1997 1996 - ----------------------------------------------------------------------------------------------------- Landing Systems $ 120.8 $ 95.8 $ 236.6 $ 196.0 Sensors and Integrated Systems 140.1 120.1 266.1 238.0 MRO 88.8 87.1 173.7 176.0 - ----------------------------------------------------------------------------------------------------- TOTAL $ 349.7 $ 303.0 $ 676.4 $ 610.0 - -----------------------------------------------------------------------------------------------------
Second Quarter 1997 Versus Second Quarter 1996 - ---------------------------------------------- The Aerospace segment achieved sales of $349.7 million in the second quarter of 1997, an increase of 15 percent over the second quarter of 1996. Excluding divestitures and an acquisition, sales increased 14 percent. The Landing Systems Group sales increased 26 percent over the 1996 second quarter. This growth largely reflects higher demand from original-equipment manufacturers for landing gear and evacuation products, primarily for the B747-400 and B767 programs. Demand also improved for wheels and brakes products for regional, business and military aircraft, as well as for the B777, B737 and A330/340 commercial programs. Excluding divestitures and an acquisition, sales in the Sensors and Integrated Systems Group increased 12 percent over the 1996 second quarter. This increase reflects stronger demand for aftermarket spares sales, particularly for aircraft sensors and ice protection products. In addition, higher commercial original-equipment demand for sensors products, principally on the B747 and B777 programs, contributed to the quarterly sales growth. Sales in the MRO Group increased modestly over the prior year second quarter, due to continued strong sales growth at the group's airframe business. The airframe business achieved a 10 percent sales increase over the second quarter of 1996, largely reflecting the full impact of new contracts with two airlines. This growth, however, was substantially offset by lower sales from the component services businesses due to reduced demand from a major customer with whom a new maintenance contract is currently being negotiated, in addition to lost business resulting from the bankruptcy of two major customers. First Half of 1997 Versus First Half of 1996 - -------------------------------------------- Total Aerospace segment sales for the first half of 1997 increased by 11 percent compared - 12 - with the first half of 1996. Excluding divestitures and an acquisition, sales increased 9 percent. Sales in the Landing Systems Group increased 21 percent over the first half of 1996. This improvement occurred for the same reasons affecting the second quarter. The Sensors and Integrated Systems Group achieved a 12 percent sales increase during the first half of 1997. Excluding divestitures and an acquisition, sales increased 7 percent, also for the same reasons affecting the second quarter sales results. The MRO Group's sales declined modestly compared to the first half of 1996. In addition to the factors affecting the second quarter sales, the 1996 sales include approximately $7 million of product sales by the component services businesses which are not normally made by the service businesses and which are not expected to recur.
Operating Income by Group (in millions) Three Months Ended June 30, Six Months Ended June 30, 1997 1996 1997 1996 - --------------------------------------------------------------------------------------------------- Landing Systems $ 18.1 $ 15.6 $ 31.4 $ 30.4 Sensors and Integrated Systems 19.4 17.2 34.9 30.1 MRO 5.4 7.1 9.6 18.6 - --------------------------------------------------------------------------------------------------- TOTAL $ 42.9 $ 39.9 $ 75.9 $ 79.1 - ---------------------------------------------------------------------------------------------------
Second Quarter 1997 Versus Second Quarter 1996 - ---------------------------------------------- Overall, the Aerospace segment's operating income increased 8 percent compared with the second quarter of 1996. Excluding divestitures and an acquisition, operating income increased 7 percent. The Landing Systems Group achieved a 16 percent increase in operating income over the second quarter of 1997, largely as a result of higher sales levels. This income growth was achieved despite significantly higher original-equipment strategic sales incentives by the group's wheel and brake businesses, and a nearly three week long strike at the group's landing gear business. The Sensors and Integrated Systems Group operating income increased 13 percent compared with the second quarter of 1996, due to higher sales volumes, particularly for higher margin - 13 - aftermarket spares sales. Operating income in the 1997 second quarter was constrained by higher engineering costs associated with development programs, mainly in connection with the aircraft health and usage monitoring system. Excluding divestitures and an acquisition, the group's operating income increased 12 percent. Operating income in the MRO Group declined to $5.4 million in the second quarter of 1997 from $7.1 million in the same period last year, primarily due to the lower component services sales levels previously mentioned. In addition, the group's airframe business continues to experience (although at a diminishing level) labor inefficiencies from training new technicians. During the second half of 1996, the airframe business experienced substantially higher than normal turnover levels due to increased employment at Boeing's neighboring facility. Although turnover of skilled technicians has returned to historical levels during 1997, replacement technicians are still undergoing training, thus negatively impacting productivity. First Half of 1997 Versus First Half of 1996 - -------------------------------------------- Total Aerospace operating income declined by 4 percent compared with the first half of 1996. Excluding divestitures and an acquisition, operating income decreased 6 percent. The Landing Systems and Sensors and Integrated Systems Groups achieved higher operating income for the first half of 1997 compared with the first half of 1996 for the same reasons that affected the second quarter income results. Excluding divestitures and an acquisition, the Sensors and Integrated Systems Group's operating income increased 11 percent. Operating income in the MRO Group declined significantly during the first half of 1997 compared with the same period of 1996, also due to the same reasons affecting the second quarter income results. Specialty Chemicals - -------------------
Sales by Group (in millions) Three Months Ended June 30, Six Months Ended June 30, 1997 1996 1997 1996 - --------------------------------------------------------------------------------------------------- Specialty Plastics $ 77.0 $ 71.0 $ 153.8 $ 142.6 Specialty Additives 151.4 132.1 297.3 251.5 - --------------------------------------------------------------------------------------------------- TOTAL $ 228.4 $ 203.1 $ 451.1 $ 394.1 - ---------------------------------------------------------------------------------------------------
- 14 - Second Quarter 1997 Versus Second Quarter 1996 - ---------------------------------------------- The Specialty Chemicals segment achieved sales of $228.4 million in the second quarter of 1997, an increase of 12 percent over the second quarter of 1996. Excluding the five acquisitions made in the second quarter of 1996, sales increased 8 percent. The Specialty Plastics Group achieved a 9 percent increase in sales over the second quarter of last year. Excluding an acquisition, sales increased 7 percent, reflecting higher volumes across all business lines. This growth, however, was dampened by the negative foreign currency translation effect of the stronger U.S. dollar, primarily relative to the Belgian franc. Sales in the Specialty Additives Group increased 8 percent, excluding acquisitions. The group experienced higher volumes across all business lines, with demand being particularly solid in the personal-care, paper, coatings and adhesives markets. The group also benefited from higher selling prices. To a lesser extent, the group was adversely affected by unfavorable foreign currency translation effects. First Half of 1997 Versus First Half of 1996 - -------------------------------------------- Year-to-date sales for the Specialty Chemicals segment increased 14 percent. Excluding acquisitions, sales increased 7 percent. Both the Specialty Plastics and Specialty Additives Groups achieved higher sales compared with the comparable period of 1996, for the same reasons affecting the second quarter results. Excluding acquisitions, sales increased 6 percent in the Specialty Plastics Group and 7 percent in the Specialty Additives Group.
Operating Income by Group (in millions) Three Months Ended June 30, Six Months Ended June 30, 1997 1996 1997 1996 - --------------------------------------------------------------------------------------------------- Specialty Plastics $ 8.5 $ 11.2 $ 18.3 $ 22.4 Specialty Additives 22.6 17.3 43.9 31.1 - --------------------------------------------------------------------------------------------------- TOTAL $ 31.1 $ 28.5 $ 62.2 $ 53.5 - ---------------------------------------------------------------------------------------------------
- 15 - Second Quarter 1997 Versus Second Quarter 1996 - ---------------------------------------------- Operating income for the Specialty Chemicals segment increased 9 percent. Excluding acquisitions, operating income increased 6 percent. The Specialty Plastics Group operating income decreased 25 percent from the prior year quarter, excluding an acquisition, despite higher sales in 1997. The group's operating margins were down principally due to higher PVC raw material costs, and start-up costs and higher operating expenses associated with capacity expansions in Europe and the U.S. Operating income was also adversely affected by unfavorable foreign exchange rates. The Specialty Additives Group operating income increased 31 percent, excluding acquisitions. This achievement largely reflects the benefit of higher volumes, complemented by higher selling prices and lower raw material costs. First Half of 1997 Versus First Half of 1996 - -------------------------------------------- Operating income for the first half of 1997 increased 16 percent for the Specialty Chemicals segment. Excluding acquisitions, operating income increased 10 percent. Excluding acquisitions, operating income decreased 19 percent in the Specialty Plastics Group but increased 33 percent in the Specialty Additives Group, for the same reasons affecting the second quarter results. In addition, the first half of 1996 included a $1.1 million and $2.9 million pretax charge for the Specialty Plastics and Specialty Additives Groups, respectively, relating to a voluntary early retirement program. CORPORATE --------- Second quarter 1997 Corporate expenses increased to $15.1 million, compared to $11.7 million in the same period last year. This increase is largely attributable to higher costs associated with the Company's long-term incentive plan and other employee benefit costs. Corporate expenses for the first half of 1997 were $29.9 million compared with $24.3 million for the same period of 1996. The increase is due to the same reasons for the second quarter increase. INTEREST EXPENSE/INCOME ----------------------- Interest expense in the second quarter of 1997 decreased 14 percent to $8.2 million, compared to the same period in 1996. Interest expense for the first half of 1997 decreased 15 - 16 - percent to $17.2 million, compared to the first half of 1996. These decreases were due to lower short-term debt levels, principally resulting from the use of the proceeds from business divestitures (see note D to the condensed consolidated financial statements). Higher interest income in the 1997 periods compared with 1996 reflects higher cash levels in 1997 generated from the proceeds of business divestitures. INCOME TAXES ------------ For the second quarter of 1997, an income tax provision of $32.2 million was recorded on pretax income from continuing operations of $87.2 million, an effective tax rate of 36.9 percent. For the same period last year, an income tax provision of $14.7 million was recorded on pretax income from continuing operations of $42.4 million, an effective tax rate of 34.7 percent. For the first half of 1997, an income tax provision of $45.7 million was recorded on pretax income from continuing operations of $124.2 million, an effective tax rate of 36.8 percent. For the same period last year, an income tax provision of $28.1 million was recorded, reflecting an effective rate of 35.3 percent. For the 1997 periods, the effective tax rate was higher than the federal statutory rate principally due to state and local income taxes. The effective rate was lower for the 1996 periods principally due to lower foreign income taxes. DISCONTINUED OPERATIONS ----------------------- On July 16, 1997, the Company entered into a definitive agreement to sell its CAO business (comprising primarily inventory, fixed assets and certain other assets, amounting to approximately $60.0 million at June 30, 1997) to The Westlake Group for cash proceeds of $92.75 million. The Company will also receive cash from the settlement of accounts receivable net of accounts payable (amounting to approximately $10.0 million at June 30, 1997). The sale is expected to be completed during the third quarter and will result in a gain. The disposition of the CAO business represents the disposal of a segment of a business under APB Opinion No. 30 ("APB 30"). Accordingly, the consolidated statement of income has been restated to reflect the CAO business (previously reported as Other Operations) as a discontinued operation. On February 3, 1997, the Company completed the sale of Tremco Incorporated to RPM, Inc. for $230.7 million, resulting in an after-tax gain of $59.5 million, or $1.09 per share. The sale of Tremco Incorporated completed the disposition of the Company's Sealants, Coatings and Adhesives ("SC&A") Group which also represented a disposal of a segment of a business under APB 30. - 17 - A summary of the results of discontinued operations is presented in note B to the accompanying condensed consolidated financial statements. CAPITAL RESOURCES AND LIQUIDITY ------------------------------- Current assets less current liabilities increased by $218.7 million from December 31, 1996 to June 30, 1997. This result reflects the proceeds from the sale of Tremco Incorporated and the Engine Electrical Systems Division, and lower working capital usage by the Company's businesses during the first half of the year. The Company's current ratio increased from 1.4X at December 31, 1996 to 1.9X at June 30, 1997. The quick ratio also increased from .68X at December 31, 1996 to 1.1X at June 30, 1997. The Company expects to have adequate cash flow from operations and has the credit facilities (described in the Company's Annual Report on Form 10-K for the year ended December 31, 1996) to satisfy its operating requirements and capital spending programs and to finance growth opportunities as they arise. The Company's debt-to-capitalization ratio was 25.2 percent at June 30, 1997, compared with 32.6 percent at December 31, 1996. For purposes of this ratio, the Trust preferred securities are treated as capital. Cash Flows Cash flow from operating activities in the first half of 1997 was virtually the same as the corresponding period last year. The Company continues to realize the benefits of its initiatives to reduce the investment in operating working capital. Average operating working capital (defined as accounts receivable plus pre-LIFO inventory less accounts payable) as a percent of annualized sales was 22.9 percent for the first half of 1997, compared with 25.3 percent for the same period last year (percentages exclude the SC&A Group). During the first half of 1997, the Company generated over $300 million in cash proceeds from the previously mentioned business dispositions. The Company expects to generate positive cash flow from operating activities in 1997 after satisfying capital expenditures and payment of dividends, but excluding the effects of acquisitions and divestitures. - 18 - PART II - OTHER INFORMATION Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The registrant held its Annual Meeting of Shareholders on April 21, 1997. As described in the 1997 Proxy Statement, the following actions were taken: - The fourteen nominees for directors were elected. - The appointment of Ernst & Young LLP as independent auditors for the year 1997 was ratified. The votes were as follows: For Director:
Number of Number of Shares Shares Voted For Vote Withheld Jeannette Grasselli Brown 48,823,456 575,769 David L. Burner 48,766,740 632,485 George A. Davidson, Jr. 48,843,862 555,363 Richard K. Davidson 48,832,690 566,535 James J. Glasser 48,807,465 591,760 Thomas H. O'Leary 48,811,395 587,830 Douglas E. Olesen 48,814,665 584,560 John D. Ong 48,630,469 768,756 Richard de J. Osborne 48,843,546 555,679 Joseph A. Pichler 48,825,928 573,297 Alfred M. Rankin, Jr. 48,828,019 571,206 Ian M. Ross 48,804,090 595,135 D. Lee Tobler 48,783,391 615,834 A. Thomas Young 48,834,527 564,698
For ratification of independent auditors: 48,808,611 shares voted for; 288,654 shares voted against; and 301,960 shares vote withheld. - 19 - Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibit 10(A) - Stock Option Plan, as amended through June 2, 1997. Exhibit 10(H) - Rights Agreement, dated as of June 2, 1997, between The B.F.Goodrich Company and The Bank of New York which includes the form of Certificate of Amendment setting forth the terms of the Junior Participating Preferred Stock, Series F, par value $1 per share, as Exhibit A, the form of Right Certificate as Exhibit B and the Summary of Rights to Purchase Preferred Shares as Exhibit C which was filed as Exhibit 1 to Form 8-A filed June 19, 1997 is incorporated herein by reference. Exhibit 10(I) - Employee Protection Plan. Exhibit 11 - Statement re Computation of Per Share Earnings is filed as part of this report. Exhibit 27 - Financial data schedule. (b) Reports on Form 8-K: The Company filed a report on Form 8-K with respect to the adoption on June 2, 1997 by the Company's Board of Directors of a Shareholders Rights Plan effective on August 2, 1997, to replace the existing plan that expires August 2, 1997. - 20 - SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. August 6, 1997 The B.F.Goodrich Company /S/D. LEE TOBLER ----------------------------- D. Lee Tobler Executive Vice President and Chief Financial Officer /S/STEVEN G. ROLLS ----------------------------- Steven G. Rolls Vice President & Controller (Chief Accounting Officer) - 21 - EX-10 2 EXHIBIT 10(A) Exhibit 10(A) THE B.F.GOODRICH COMPANY STOCK OPTION PLAN 1. PURPOSE. The purpose of the Plan is to promote the interests of the shareholders by providing stock-based incentives to selected employees to align their interests with shareholders and to motivate them to put forth maximum efforts toward the continued growth, profitability and success of the Company. In furtherance of this objective, stock options, stock appreciation rights, performance shares, restricted shares, common stock, and/or other incentive awards may be granted in accordance with the provisions of this Plan. 2. ADMINISTRATION. The Plan is to be administered by the Compensation Committee or any successor committee (the "Committee") of the Board of Directors of the Company. The Committee shall consist of at least three members who shall not be eligible to participate in the Plan. The Committee shall have full power and authority to construe, interpret and administer the Plan. All decisions, actions or interpretations of the Committee shall be final, conclusive and binding on all parties. The Committee may delegate to the Chief Executive Officer and to other senior officers of the Company the authority to make awards under the Plan with respect to not more than ten percent of the shares authorized under the Plan, pursuant to such conditions and limitations as the Committee may establish, except that only the Committee may make awards to Participants who are subject to Section 16 of the Securities Exchange Act of 1934. 3. SHARES AVAILABLE FOR THE PLAN. An aggregate of 3,200,000 shares of common stock of the Company shall be available for delivery pursuant to the provisions of the Plan. Such shares may be either authorized but unissued shares or treasury shares. Any shares awarded under the Plan which are not issued or otherwise are returned to the Company, whether because awards have been forfeited, lapsed, expired, been canceled, withheld to satisfy withholding tax obligations or otherwise, shall again be available for other awards under the Plan. However, upon surrender of a stock option or exercise of any related stock appreciation right, the number of shares subject to the surrendered option shall be charged against the maximum number of shares issuable under the Plan and shall not be available for future awards. 4. LIMITATION ON AWARDS. No individual employee may receive awards under this Plan with respect to more than 200,000 shares in any calendar year. 5. TERM. No awards may be made under this Plan after April 15, 2001. 6. ELIGIBILITY. Awards under the Plan may be made to any salaried, full-time employee of the Company or any subsidiary corporation of which more than 50% of the voting stock is owned by the Company. Directors who are not full-time employees are not eligible to participate. 1 7. STOCK OPTIONS. The Committee may in its discretion from time to time grant to eligible employees options to purchase, at a price not less than 100% of the fair market value on the date of grant (the "option price"), common stock of the Company, subject to the conditions set forth in this Plan. The Committee may not reduce the option price of any stock option grant after it is made, except in connection with a Corporate Reorganization, nor may the Committee agree to exchange a new lower priced option for an outstanding higher priced option The Committee, at the time of granting to any employee an option to purchase shares or any related stock appreciation right or limited stock appreciation right under the Plan, shall fix the terms and conditions upon which such option or appreciation right may be exercised, and may designate options incentive stock options pursuant to Section 422 of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code") or any other statutory stock option that may be permitted under the Internal Revenue Code from time to time, provided, however that (i) the date on which such options and related appreciation rights shall expire, if not exercised, may not be later than ten years after the date of grant of the option, (ii) in the case of options designated as incentive stock options (as defined in Section 422 of the Internal Revenue Code), the aggregate fair market value of stock optioned to an employee (determined at time of grant) under this plan or any other plan of this Company and its subsidiaries with respect to which incentive stock options are exercisable for the first time by such employee during any calendar year shall be limited to $100,000 (unless such Section 422 limit is revised, then in conformance with such revision) and (iii) in case of any other statutory stock option permitted under the Internal Revenue Code, then in accordance with such provisions as in effect from time to time. Within the foregoing limitations, the Committee shall have the authority in its discretion to specify all other terms and conditions, including but not limited to provisions for the exercise of options in installments, the time limits during which options may be exercised, and in lieu of payment in cash, the exercise in whole or in part of options by tendering common stock of the Company owned by the employee, valued at the fair market value on the date of exercise or other acceptable forms of consideration equal in value to the option price. The Committee may, in its discretion, issue rules or conditions with respect to utilization of common stock for all or part of the option price, including limitations on the pyramiding of shares. 8. STOCK APPRECIATION RIGHTS. The Committee may, in its discretion, grant stock appreciation rights and limited stock appreciation rights (as hereinafter described) in connection with any stock option, either at the time of grant of such stock option or any time thereafter during the term of such stock option. Except for the terms of this Plan with respect to limited stock appreciation rights, each stock appreciation right shall be subject to 2 the same terms and conditions as the related stock option and shall be exercisable at such times and to such extent as the Committee shall determine, but only so long as the related option is exercisable. The number of stock appreciation rights or limited stock appreciation rights shall be reduced not only by the number of appreciation rights exercised but also by the number of shares purchased upon the exercise of a related option. A related stock option shall cease to be exercisable to the extent the stock appreciation rights or limited stock appreciation rights are exercised. Upon surrender to the Company of the unexercised related stock option, or any portion thereof, a stock appreciation right shall entitle the optionee to receive from the Company in exchange therefor (a) a payment in stock as determined below, or (b) to the extent determined by the Committee, the cash equivalent of the fair market value of such payment in stock on the exercise date had the employee been awarded a payment in stock instead of cash, or any combination of stock and cash. The number of shares which shall be issued pursuant to the exercise of stock appreciation rights shall be determined by dividing (1) the total number of stock appreciation rights being exercised multiplied by the amount by which the fair market value of a share of common stock of the Company on the exercise date exceeds the option price of the related option, by (2) the fair market value of a share of common stock of the Company on the exercise date. No fractional shares shall be issued. The grant of limited stock appreciation rights will permit a grantee to exercise such limited stock appreciation rights for cash during a sixty-day period commencing on the date on which any of the events described in the definition of Change of Control occurs, each of which events shall hereinafter be known as a "Change in Control Event." Notwithstanding the foregoing, however, if the Change in Control Event occurs within six months after the date on which limited stock appreciation rights were granted, then the sixty-day period during which such limited stock appreciation rights may be exercised for cash shall commence six months after the date on which the limited stock appreciation rights were granted. The amount of cash received upon the exercise of any limited stock appreciation rights under either of the preceding two sentences shall equal the excess, if any, of the fair market value of a share of the Company's common stock on the date of exercise of the limited stock appreciation rights, over the option price of the stock option to which the limited stock appreciation rights relate. 9. PERFORMANCE SHARE AWARDS. The Committee may make awards in common stock subject to conditions established by the Committee which may include attainment of specific performance objectives ("Performance Share Awards"). Performance Share Awards may include the awarding of additional shares upon attainment of the specified performance objectives. 10. PERFORMANCE OBJECTIVES. Performance objectives that may be used under the Plan include Net Income, Pretax Income, Consolidated Operating Income, Segment Operating Income, Return on Equity, Operating Income Return on Net Capital Employed, Return on Assets, Cash Flow, Working Capital and Earnings per Share of Common Stock 3 of the Company (the "Performance Objectives"). The Performance Objectives shall be calculated without regard to any change in accounting standards adopted pursuant to the Financial Accounting Standards Board after the goal for a Performance Objective is adopted which will affect the performance measure by 10 percent or more. 11. RESTRICTED SHARES. The Committee may make awards in common stock subject to conditions, if any, established by the Committee which may include continued service with the Company or its subsidiaries. Any award of Restricted Shares which is conditioned upon continued employment shall be conditioned upon continued employment for a minimum period of two years and ten months following the award, except in the case of death, disability or retirement. The maximum number of Restricted Shares that may be awarded under the plan shall be 800,000 shares. 12. OTHER AWARDS. The Committee may make awards authorized under this Plan in Units, the value of which is based, in whole or in part, on the value of the Company's common stock, in lieu of making such awards in common stock. The Committee may provide for the deferral of cash-based awards under such terms and conditions as in its discretion it deems appropriate. 12A. DEFERRED AWARDS. The Committee may permit recipients of awards to elect to defer receipt of such awards under such terms and conditions that the Committee may prescribe. The Committee may authorize the Company to establish various trusts or make other arrangements with respect to any deferred awards. 13. FAIR MARKET VALUE. For all purposes of this Plan the fair market value of a share of stock shall be the mean of the high and low prices of the Company's common stock on the relevant date as reported on the New York Stock Exchange -- Composite Transactions listing (or similar report), or, if no sale was made on such date, then on the next preceding day on which such a sale was made. 14. TERMINATION OF EMPLOYMENT. Upon the termination of employment of any employee for any reason, his or her options and any related appreciation rights shall terminate at that time with respect to all shares which were not then purchasable by him or her, provided, however, that if the termination of employment is by reason of death, disability or retirement the Committee may in its sole discretion provide that such options and related appreciation rights shall not terminate upon death, disability or retirement and may become immediately exercisable or continue to become exercisable in accordance with the terms of the original grant. 15. ASSIGNABILITY. Options and any related appreciation rights and other awards granted under this Plan shall not be transferable other than by will or the laws of descent and distribution or by such other means as the Committee may approve from time to time. 4 16. CORPORATE REORGANIZATION. The number and kind of shares authorized for delivery under the Plan and the price at which shares may be purchased may be adjusted appropriately in the event of any stock split, stock dividend, combination of shares, merger, consolidation, reorganization, or other change in the structure of the Company or the nature of the shares of the Company. The determination of what adjustments, if any, are appropriate shall be made in the discretion of the Board of Directors or the Committee. In the event of a dissolution or liquidation of the Company or a merger, consolidation, sale of all or substantially all of its assets, or other corporate reorganization in which the Company is not the surviving corporation or any merger in which the Company is the surviving corporation but the holders of its common stock receive securities of another corporation, any outstanding options hereunder shall terminate, provided that each optionee shall, in such event, have the right immediately prior to such dissolution, liquidation, merger, consolidation, sale of assets or reorganization in which the Company is not the surviving corporation or any merger in which the Company is the surviving corporation but the holders of its common stock receive securities of another corporation, to exercise any unexpired option and/or stock appreciation right in whole or in part without regard to the exercise date contained in such option. Nothing herein contained shall prevent the assumption and continuation of any outstanding option or the substitution of a new option by the surviving corporation. 17. COMMITTEE'S DETERMINATION. The Committee's determinations under the Plan including without limitation, determinations of the employees to receive awards or grants, the form, amount and timing of such awards or grants, the terms and provisions of such awards or grants and the agreements evidencing same, and the establishment of Performance Objectives need not be uniform and may be made by it selectively among employees who receive, or are eligible to receive awards or grants under the Plan whether or not such employees are similarly situated. 18. LEAVE OF ABSENCE OR OTHER CHANGE IN EMPLOYMENT STATUS. The Committee shall be entitled to make such rules, regulations and determinations as it deems appropriate under the Plan in respect of any leave of absence taken by an employee or any other change in employment status, such as a change from full time employment to a consulting relationship, of an employee relative to any grant or award. Without limiting the generality of the foregoing, the Committee shall be entitled to determine (i) whether or not any such leave of absence or other change in employment status shall constitute a termination of employment within the meaning of the Plan and (ii) the impact, if any, of any such leave of absence or other change in employment status on awards under the Plan theretofore made to any employee who takes such leave of absence or otherwise changes his or her employment status. 5 19. WITHHOLDING TAXES. The Committee shall have the right to require any Federal, state or local withholding tax requirements to be satisfied by withholding shares of common stock or other amounts which would otherwise be payable under the Plan. 20. RETENTION OF SHARES. If shares of common stock are awarded subject to attainment of Performance Objectives, continued service with the Company or other conditions, the shares may be registered in the employees' names when initially awarded, but possession of certificates for the shares shall be retained by the Secretary of the Company for the benefit of the employees, or shares may be registered in book entry form only, in both cases subject to the terms of this Plan and the conditions of the particular awards. In either event, each employee shall have the right to receive all dividends and other distributions made with respect to such awards registered in his or her name and shall have the right to vote or execute proxies with respect to such registered shares. 21. FORFEITURE OF AWARDS. Any awards or parts thereof made under this plan which are subject to Performance Objectives or other conditions which are not satisfied, shall be forfeited, and any shares of common stock issued shall revert to the Treasury of the Company. 22. CONTINUED EMPLOYMENT. Nothing in the Plan or in any agreement entered into pursuant to the Plan shall confer upon any employee the right to continue in the employment of the Company or affect any right which the Company may have to terminate the employment of such employee. 23. CHANGE IN CONTROL. For purposes of the Plan, a Change in Control shall mean: (i) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that the following acquisitions shall not constitute a Change of Control: (A) any acquisition directly from the Company (other than by exercise of a conversion privilege), (B) any acquisition by the Company or any of its subsidiaries, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries or (D) any acquisition by any corporation with respect to which, following such acquisition, more than 70% of, respectively, the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Company Voting Securities immediately prior to such acquisition in 6 substantially the same proportions as their ownership, immediately prior to such acquisition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be; or (ii) During any period of two consecutive years, individuals who, as of the beginning of such period, constitute the Board (the "Incumbent Board"), cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the beginning of such period whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act); or (iii) approval by the shareholders of the Company of a reorganization, merger or consolidation, in each case, with respect to which all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such reorganization, merger or consolidation, do not, following such reorganization, merger or consolidation, beneficially own, directly or indirectly, more than 70% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such reorganization, merger or consolidation in substantially the same proportions as their ownership, immediately prior to such reorganization, merger or consolidation of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be; or (iv) Approval by the shareholders of the Company of (A) a complete liquidation or dissolution of the Company or (B) a sale or other disposition of all or substantially all of the assets of the Company, other than to a corporation, with respect to which following such sale or other disposition, more than 70% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be. 24. EFFECT OF CHANGE IN CONTROL. Options and any related appreciation rights that are not then exercisable shall become immediately exercisable in the event of a Change in Control. The Committee may make such provision with respect to other awards under this Plan as it deems appropriate in its discretion. 7 25. COMPLIANCE WITH LAWS AND REGULATIONS. Notwithstanding any other provisions of the Plan, the issuance or delivery of any shares may be postponed for such period as may be required to comply with any applicable requirements of any national securities exchange or any requirements under any other law or regulation applicable to the issuance or delivery of such shares, and the Company shall not be obligated to issue or deliver any such shares if the issuance or delivery thereof shall constitute a violation of any provision of any law or any regulation of any governmental authority, whether foreign or domestic, or any national securities exchange. 26. AMENDMENT. The Board of Directors of the Company may alter or amend the Plan, in whole or in part, from time to time, or terminate the Plan at any time, provided however, that no amendment shall be made without the approval of the shareholders which has the effect of increasing the number of shares subject to this Plan (other than in connection with a Corporate Reorganization), but no such action shall adversely affect any rights or obligations with respect to awards previously made under the Plan. 8 EX-10 3 EXHIBIT 10(I) Exhibit 10(I) THE B.F.GOODRICH COMPANY EMPLOYEE PROTECTION PLAN The B.F.Goodrich Company Employee Protection Plan (the "Plan") is established this 18th day of July, 1988. 1. PURPOSE. The purpose of this Plan is to attract and retain qualified employees, and to minimize the disruption among those employees that can occur as a result of attempts to change control of Goodrich, thereby assuring continuing stability in the operations of Goodrich and each of the Domestic Subsidiaries. 2. CERTAIN DEFINITIONS. For purpose of this Plan: a) "Goodrich" means The B.F.Goodrich Company, a New York corporation. b) "Domestic Subsidiary" means each corporation incorporated within the United States of America which is directly or indirectly wholly owned by Goodrich at the time of a Change in Control, and which is specifically identified in Appendix A to this Plan. Appendix A may be amended from time to time prior to a Change in Control by the Chief Executive Officer of Goodrich. c) "Company" means, collectively or individually, Goodrich and each or any Domestic Subsidiary. d) "Covered Employee" means an employee who by virtue of Articles 3 and 5 of this Plan is entitled to participate in the benefits of this Plan according to the terms and conditions stated herein. e) "Plan" means, collectively, this Employee Protection Plan, Appendix A attached hereto, and any amendments and modifications thereto. 3. ELIGIBILITY. Employees eligible to participate in the benefits of this Plan are: a) All regular, full-time salaried employees of Goodrich, and b) Those regular, full-time salaried employees of each Domestic Subsidiary who are employed in categories similar to Covered Employees of Goodrich; provided, however, that anything to the contrary in the Plan notwithstanding, this Plan shall not be applicable to the following employees or categories of employees: i) Employees whose compensation is determined on an hourly basis and non-office employees (other than those employed at the Company's Brecksville Research and Development Center and Avon Lake Technical Center) who hold positions that are generally characterized as 'hourly' positions, regardless of whether the position of any specific employee is characterized as hourly or salaried. ii) Employees whose conditions of employment are subject to a collective bargaining agreement between Goodrich or any Domestic Subsidiary and any labor union or other collective bargaining unit. iii) Employees of Goodrich or a Domestic Subsidiary whose category of employment is described as "normal hourly salaried" (other than those in that category who are employed at the Company's Brecksville Research and Development Center and Avon Lake Technical Center, who shall be considered to be salaried employees), or who are employed in similar categories. iv) Employees who have entered into a Management Continuity Agreement with Goodrich or a similar agreement with any Domestic Subsidiary. 4. CHANGE IN CONTROL. For purposes of this Agreement, a "Change in Control" of the Company shall mean: a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then outstanding shares of common stock of Goodrich (the "Outstanding Company Common Stock") or (B) the combined voting power of the then outstanding voting securities of Goodrich entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that the following acquisitions shall not constitute a Change of Control: (A) any acquisition directly from Goodrich (other than by exercise of a conversion privilege), (B) any acquisition by Goodrich or any of its subsidiaries, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Goodrich or any of its subsidiaries or (D) any acquisition by any corporation with respect to which, following such acquisition, more than 70% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Company Voting Securities immediately prior to such acquisition in substantially the same proportions as their ownership, immediately prior to such acquisition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be; or b) During any period of two consecutive years, individuals who, as of the beginning of such period, constitute the Board of Directors of Goodrich (the "Incumbent Board") cease for any reason to constitute at least a majority of said Board; provided, however, that any individual becoming a director subsequent to the beginning of such period whose election, or nomination for election by the shareholders of Goodrich, was approved by a vote of at least 2 a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act); or c) Approval by the shareholders of Goodrich of a reorganization, merger or consolidation, in each case, with respect to which all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such reorganization, merger or consolidation, do not, following such reorganization, merger or consolidation, beneficially own, directly or indirectly, more than 70% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such reorganization, merger or consolidation in substantially the same proportions as their ownership, immediately prior to such reorganization, merger or consolidation of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be; or d) Approval by the shareholders of Goodrich of (A) a complete liquidation or dissolution of Goodrich or (B) a sale or other disposition of all or substantially all of the assets of Goodrich, other than to a corporation, with respect to which following such sale or other disposition, more than 70% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be. 5. INVOLUNTARY TERMINATION. A Covered Employee shall be entitled to the benefits provided hereunder if such Covered Employee incurs an "Involuntary Termination" of employment within two years after a Change in Control. An "Involuntary Termination" shall be deemed to have taken place upon the occurrence of one or more of the following events: a) Termination of the Covered Employee's employment with the Company without the consent of the Covered Employee, for any reason other than for cause. The Company shall bear the burden of proving that a termination was for cause by a preponderance of the evidence. Notwithstanding the foregoing provisions of this Paragraph 5(a), if the purchaser of any business unit, division, or subsidiary of the Company which is sold after the date on which a Change in Control occurs offers employment to any Covered Employee, the termination of such Covered Employee's employment by the Company prior to or simultaneous with any such sale shall not be considered an Involuntary Termination, unless 3 either (1) the base salary offered to the Covered Employee by the purchaser is lower than the Covered Employee's highest base salary between the date immediately prior to the Change in Control and the date of sale, or (2) the employee benefits offered to the Covered Employee are not at least comparable to the benefits received immediately prior to the Change in Control. If either or both of the events described in the foregoing sentence occur, a Covered Employee will be deemed to have incurred an Involuntary Termination if such Covered Employee chooses not to accept the offer of employment made by such purchaser, or accepts the offer of employment, but voluntarily terminates within sixty days following such event. b) Termination by a Covered Employee of employment with the Company within sixty days following (1) a reduction in the base salary of the Covered Employee from the highest base salary of the Covered Employee between the date immediately prior to the Change in Control and the date of such termination, or (2) a ceasing by the Company to provide employee benefits at a level at least comparable to the benefits received immediately prior to the Change in Control. c) Termination by a Covered Employee of employment with the Company within sixty days after the Covered Employee is requested to transfer to another location of the Company which is more than 50 miles farther from the Covered Employee's residence than was the location at which the Covered Employee was employed immediately prior to the Change in Control, unless the Covered Employee is offered relocation benefits at least comparable to those provided by the Company immediately prior to the Change in Control. Solely for the purposes of determining whether an "Involuntary Termination" has occurred, the term "Company" shall include any purchaser of any business unit, division, subsidiary, or assets of the Company following a Change in Control, and any and all successors to any such purchaser. 6. EMPLOYEE PROTECTION BENEFITS. Upon Involuntary Termination, a Covered Employee shall be entitled to the following "Employee Protection Benefits": a) For Covered Employees who were employed immediately prior to the Change in Control in positions having Hay point levels of less than 800, a dollar amount equal to two weeks' base salary for each full year of continuous service with the Company, any subsidiary of the Company, or any successor thereto (including any period of employment with any purchaser of any business unit, division, or assets of the Company, or any successor to any such purchaser following the date on which a Change in Control occurs), but in no event more in total than twelve months' base salary or less in total than one month's base salary. b) For Covered Employees who were employed immediately prior to the Change in Control in positions having Hay point levels of 800 or more, a dollar amount equal to twelve months' base salary, without regard to the Covered Employee's length of continuous service as an employee of the Company. 4 c) A dollar amount equal to the Covered Employee's base salary for any period of unused vacation for the year in which the Change in Control occurs, and for any period of accrued vacation for the following year, both determined as of the date immediately prior to the date of Involuntary Termination, and determined under the Company's vacation policy in effect immediately prior to the Change in Control. A Covered Employee shall also be entitled to receive a dollar amount equal to such Covered Employee's base salary for any period of deferred (or banked) vacation which such Covered Employee may have accrued under the relevant vacation policies of the Company in effect prior to the Change in Control. d) For Covered Employees who were participants in the bonus program for the year in which the Change in Control occurs, a dollar amount equal to the greater of (i) the amount most recently paid to the Covered Employee under such program for a full calendar year, (ii) the Covered Employee's "target incentive amount" under such program for the calendar year in which Involuntary Termination occurs, or (iii) the Covered Employee's "target incentive amount" under such program for the calendar year in which the Change in Control occurs, prorated to reflect the portion of the calendar year in which Involuntary Termination occurs during which a Covered Employee was employed by the Company. Comparable payments shall be made for Covered Employees of the Company who are covered by a bonus program using criteria different from those set out above. The Employee Protection Benefits, less any taxes that are required by law to be withheld, shall be paid to the Covered Employee in a lump sum within fifteen days after Involuntary Termination. Covered Employees of Domestic Subsidiaries of the Company which at the time of the Change in Control have not been assigned Hay Point ratings shall be entitled to the Employee Protection Benefit described in subparagraph 6(b) if they hold positions which are determined by Goodrich to be at least equivalent, based upon the factors used by the Hay rating system, to those held by Covered Employees whose positions are rated at 800 or more Hay points, and if their positions are listed on Exhibit B attached hereto. All other Covered Employees of Domestic Subsidiaries of the Company which at the time of the Change in Control have not assigned Hay Point ratings to the positions held by their employees shall be entitled to the Employee Protection Benefit described in subparagraph 6(a). A Covered Employee's base salary for purposes of any calculation under this Paragraph 6 shall be such Covered Employee's highest base salary between the date immediately prior to the Change in Control and the date of Involuntary Termination. In addition to the Employee Protection Benefits, upon Involuntary Termination, each Covered Employee shall be entitled to continuation of whatever medical, dental, vision, and life insurance coverages (individually, the "Specific Benefit Coverages") the Covered Employee was receiving immediately prior to the Change in Control. Such coverages shall be continued for the period following Involuntary Termination which equals in length the period of base salary used to calculate the Employee Protection Benefit described in Paragraphs 6(a) and 6(b), whichever is applicable. The Covered Employee shall be 5 responsible for paying such premiums for the Specific Benefit Coverages as were being paid by the Covered Employee immediately prior to the Change in Control. In no event, however, shall any Specific Benefit Coverage be continued once the Covered Employee commences new employment, if the Covered Employee is eligible to receive such Specific Benefit Coverage, whether or not at a comparable level, from the Covered Employee's new employer. The period following Involuntary Termination during which a Covered Employee is entitled to a Specific Benefit Coverage under this Plan is not intended to extend the period during which the Covered Employee is permitted under federal law to purchase medical, dental, or vision coverage from the Company. 7. PAYMENT LIMITATION. Notwithstanding the benefits described above, if the aggregate present value of the "parachute payments" to the Covered Employee, determined under Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), exceeds 2.99 times the "base amount" (as defined below), the amounts otherwise payable under this Plan shall be reduced so that the aggregate present value of the "parachute payments", determined under Section 280G of the Code, does not exceed 2.99 times the base amount. The preceding sentence shall apply only to those Covered Employees whose positions and/or levels of compensation are such that they would be liable for payment of the excise tax described in Section 4999 of the Code if they received "excess parachute payments" as determined under the Code. The term "base amount" shall be determined according to Section 280G of the Code and any regulations promulgated thereunder and any interpretations thereof by the Internal Revenue Service. In the absence of such regulations, if a Covered Employee was not employed by the Company (or an affiliate) during the entire "base period" (as defined in Section 280G), the base amount shall be the average of such Covered Employee's annual compensation for the complete calendar years during the base period during which the Covered Employee was so employed. If services were not performed for the Company by the Covered Employee prior to the taxable year in which the Change of Control occurs, unless otherwise provided by regulations, the base amount shall be equal to the Covered Employee's estimated annualized taxable compensation for the taxable year in which the Change in Control occurs. For purposes of this section, compensation shall include every type and form of compensation includible in gross income in respect of employment by the Company, including compensation income recognized as a result of the exercise of stock options or sale of the stock so acquired and long-term incentive payments, except to the extent otherwise provided in regulations promulgated under Section 280G of the Code. 8. OTHER ENTITLEMENTS. The provisions of this Plan, and any payment or benefit provided for hereunder, shall not reduce any amount otherwise payable to or for a Covered Employee, or in any way diminish any rights of a Covered Employee, whether existing at any point in time, or which will arise solely as a result of the passage of time, under any other benefit plan or arrangement with the Company, specifically including, but not limited to, any pension or retirement plan or arrangement, except that payments made under this Plan shall be in lieu of any benefits to which a Covered Employee would otherwise be entitled under any severance pay policy or plan of the Company, and shall be offset by any severance benefits that may become due to any Covered 6 Employee under any contract between the Company and a Covered Employee upon the termination of any such Covered Employee's employment, or under any severance pay plan or policy of any purchaser of any business unit, division, subsidiary, or assets of the Company following a Change in Control for which the Covered Employee becomes employed following a Change in Control, and any and all successors to any such purchaser. Payments under this Plan shall not be made to any Covered Employee who is employed outside the United States of America and who is legally entitled to receive any severance or other termination benefits under the laws of the foreign country in which such Covered Employee is then employed. 9. LEGAL FEES AND EXPENSES. If a Change in Control shall have occurred, thereafter the Company shall pay and be solely responsible for any and all attorneys' and related fees and expenses incurred by a Covered Employee to successfully (in whole or in part, and whether by modification of the Company's position, agreement, compromise, settlement, or administrative or judicial determination) enforce such Covered Employee's rights under any provision of this Plan. In the event that any payment to or on behalf of a Covered Employee pursuant to this paragraph of the Plan, when added to the amount of any other payment to, or receipt of any employee benefit by, a Covered Employee is deemed to constitute an "excess parachute payment" as that term is defined in Section 280G of the Code, and such payment or receipt, as the case may be, is subject to the excise tax imposed by Section 4999 of the Code, the Company shall pay to the Covered Employee an additional amount in cash equal to the amount necessary to cause the amount of the aggregate after-tax cash compensation and employee benefits otherwise receivable by the Covered Employee under this Plan to be equal to the aggregate after-tax cash compensation and employee benefits the Covered Employee would have received as if the payments under this paragraph had not been considered a "parachute payment" under Section 280G of the Code. Covered Employees shall not be required to refund any amounts received under the Plan upon obtaining new employment or otherwise mitigate the amounts received under this Agreement by seeking or accepting new employment. 10. AMENDMENT AND TERMINATION. The Plan may be amended, terminated, or otherwise modified at any time prior to a Change in Control by the Board of Directors. After the occurrence of a Change in Control, the Plan may not be amended, modified, or terminated. 11. EMPLOYMENT RIGHTS. Nothing expressed or implied in this Plan shall create any obligation on the part of the Company to continue the employment of a overed Employee. 12. GOVERNING LAW. This Plan shall be construed and governed under the laws of the State of Ohio. 13. VALIDITY. The invalidity or unenforceability of any provisions of this Plan shall not affect the validity or unenforceability of any other provision of this Agreement, which shall remain in full force and effect. 14. SUCCESSORS OF COVERED EMPLOYEE. This Plan shall inure to the benefit of and be enforceable by each Covered Employee's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If any Covered Employee should die while any amount would still be payable hereunder if the Covered Employee had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Plan to the devisee, legatee or other designee of the Covered Employee or, if there be no such designee, to Covered Employee's such estate. 15. SECTION HEADINGS. The section headings contained herein have been inserted for convenience or reference only, and shall not modify, define, expand, or limit any of the provisions hereof. 7 APPENDIX A BFGoodrich Aerospace Component Overhaul & Repair, Inc. BFGoodrich Avionics Systems, Inc. Godfrey Engineering, Inc. International BFGoodrich Technology Corporation JcAir, Inc. Mitech Corporation Rosemount Aerospace Inc. Simmonds Precision Products, Inc. Simmonds Precision Motion Controls, Inc. TRAMCO, INC. 8 EX-11 4 EXHIBIT 11 THE B.F.GOODRICH COMPANY EXHIBIT 11 - STATEMENT RE COMPUTATION OF PER SHARE EARNINGS (Dollars in millions, except per share amounts)
Three months ended June 30, Six months ended June 30, --------------------------------- ---------------------------------- 1997 1996 1997 1996 --------------- --------------- --------------- --------------- PRIMARY EARNINGS PER SHARE: Number of Shares: Average number of common shares outstanding 53,998,568 53,363,119 53,920,155 53,039,427 Effect of dilutive stock options 532,079 609,510 541,015 599,083 --------------- --------------- --------------- --------------- Total average number of common and common equivalent shares outstanding 54,530,647 53,972,629 54,461,170 53,638,510 =============== =============== =============== =============== Income: Income from continuing operations $ 52.4 $ 25.0 $ 73.3 $ 46.2 Income from discontinued operations 3.4 12.9 67.5 11.6 --------------- --------------- --------------- --------------- Net income applicable to common stock $ 55.8 $ 37.9 $ 140.8 $ 57.8 =============== =============== =============== =============== Per share amounts: Continuing operations $ 0.96 $ 0.46 $ 1.35 $ 0.86 Discontinued operations 0.06 0.24 1.24 0.22 --------------- --------------- --------------- --------------- Net income $ 1.02 $ 0.70 $ 2.59 $ 1.08 =============== =============== =============== =============== FULLY DILUTED EARNINGS PER SHARE: Number of Shares: Average number of common shares outstanding from above 53,998,568 53,363,119 53,920,155 53,039,427 Effect of dilutive stock options - based on the treasury method using last day's market price, if higher than average market price 605,389 609,589 630,032 599,338 --------------- --------------- --------------- --------------- Total average number of common and common equivalent shares outstanding 54,603,957 53,972,708 54,550,187 53,638,765 =============== =============== =============== =============== Income: Income from continuing operations $ 52.4 $ 25.0 $ 73.3 $ 46.2 Income from discontinued operations 3.4 12.9 67.5 11.6 --------------- --------------- --------------- --------------- Net income applicable to common stock $ 55.8 $ 37.9 $ 140.8 $ 57.8 =============== =============== =============== =============== Per share amounts: Continuing operations $ 0.96 $ 0.46 $ 1.34 $ 0.86 Discontinued operations 0.06 0.24 1.24 0.22 --------------- --------------- --------------- ---------------- Net income $ 1.02 $ 0.70 $ 2.58 $ 1.08 =============== =============== =============== ================
EX-27 5 EXHIBIT 27
5 This schedule contains summary financial information extracted from the Condensed Consolidated Balance Sheet and the Condensed Consolidated Statement of Income of this Form 10-Q and is qualified in its entirety by reference to such financial statements. 1,000 6-MOS DEC-31-1997 JUN-30-1997 174,900 0 379,100 11,600 350,000 986,900 1,551,000 676,400 2,617,400 514,100 391,800 122,900 0 276,200 889,500 2,617,400 1,127,500 1,127,500 762,200 762,200 0 0 17,200 124,200 45,700 73,300 67,500 0 0 140,800 2.59 2.58
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