-----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, CZaegsYSk4IQg5XaKnqdWsVW7zooXEqySj5RUIL26Pbhyi9KzVTS4WloUAaXf95U VvyT5TKjYSNSqMSLfA2Anw== /in/edgar/work/0000950152-00-007450/0000950152-00-007450.txt : 20001027 0000950152-00-007450.hdr.sgml : 20001027 ACCESSION NUMBER: 0000950152-00-007450 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20001026 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20001026 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GOODRICH B F CO CENTRAL INDEX KEY: 0000042542 STANDARD INDUSTRIAL CLASSIFICATION: [3760 ] IRS NUMBER: 340252680 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-00892 FILM NUMBER: 746631 BUSINESS ADDRESS: STREET 1: 3 COLISEUM CENTRE STREET 2: 2550 WEST TYVOLA ROAD CITY: CHARLOTTE STATE: NC ZIP: 28217 BUSINESS PHONE: 7044237000 MAIL ADDRESS: STREET 1: 3 COLISEUM CENTRE STREET 2: 2550 WEST TYVOLA ROAD CITY: 2550 WEST TYVOLA ROA STATE: NC ZIP: 28217 8-K 1 l84723ae8-k.txt THE B.F. GOODRICH COMPANY FORM 8-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): October 26, 2000 THE B.F.GOODRICH COMPANY (Exact Name of Registrant as Specified in Charter) New York 1-892 34-0252680 (State or Other (Commission (IRS Employer Jurisdiction of File Number) Identification No.) Incorporation) Four Coliseum Centre 2730 West Tyvola Road Charlotte, North Carolina 28217 (Address of Principal Executive Offices)(Zip Code) Registrant's telephone number, including area code: (704) 423-7000 2 ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (a) Financial Statements of Businesses Acquired. None. (b) Pro Forma Financial Information None. (c) Exhibits Exhibit 99.1 The B.F.Goodrich Company Press Release dated October 26, 2000 titled "BFGoodrich reports higher third-quarter results, including an 11% increase in EPS". ITEM 9. REGULATION FD DISCLOSURE On October 26, 2000, The B.F.Goodrich Company issued a press release announcing its earnings for the three-months and nine-months periods ended September 30, 2000. A copy of such press release is filed as Exhibit 99.1 hereto and is incorporated by reference herein. 2 3 SIGNATURES 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 hereunto duly authorized. THE B.F.GOODRICH COMPANY (Registrant) Date: October 26, 2000 By: /s/ Robert D. Koney, Jr. ---------------------------------- Robert D. Koney, Jr. Vice President and Controller 3 EX-99.1 2 l84723aex99-1.txt NEWS RELEASE EXHIBIT 99.1 1 [BF GOODRICH LOGO] NEWS - -------------------------------------------------------------------------------- THE BFGOODRICH COMPANY PR00-0077 Four Coliseum Centre MEDIA CONTACT: Kevin Ramundo 2730 West Tyvola Road PHONE: 704-423-7024 Charlotte, North Carolina 28217-4578 FAX: 704-423-7127 www.bfgoodrich.com Investor Contact: Paul Gifford PHONE: 704-423-5517 FAX: 704-423-5516 BFGOODRICH REPORTS HIGHER THIRD-QUARTER RESULTS, INCLUDING AN 11% INCREASE IN EPS - - AEROSPACE CONTINUES STRONG PERFORMANCE AS MARGINS INCREASE TO 16.6 % - - INDUSTRIAL OPERATING INCOME AND MARGINS INCREASE - - DIVESTITURE OF PERFORMANCE MATERIALS PROGRESSING CHARLOTTE, N.C., October 26, 2000 - The BFGoodrich Company (NYSE: GR) announced today that third-quarter net income, excluding special items, was $85.2 million, compared to $83.0 million, in the year-ago quarter. On a per-share basis, excluding special items, the company earned $0.82 per share in the current quarter, an increase of 11 percent versus $0.74 per share in last year's third quarter. Sales in the current quarter were approximately $1.4 billion, compared to $1.3 billion in the year-ago quarter. After special charges, third-quarter net income equaled $79.9 million, or $0.77 per share. In the year-ago quarter, the company reported a net loss due to merger and consolidation costs associated with the Coltec merger. The impact of translating foreign currency at rates in effect during the quarter compared to those from last year reduced third-quarter revenues by $10 million, and lowered earnings per share by $0.01. Through the first three quarters, the impact of foreign currency translation reduced revenues by $30 million, and lowered earnings per share by $0.02. Commenting on the third-quarter operating results, David L. Burner, BFGoodrich's chairman and chief executive officer, said, "Our Aerospace segment again achieved excellent results despite the downturn in commercial transport deliveries. All four operating groups in this segment achieved higher sales and three reported double-digit operating income growth. I am especially pleased with the growth of our Aerospace margins, which have increased throughout the year and now stand at a record 16.6 percent. Our Engineered Industrial Products segment also reported higher profits and improved margins, while results in Performance Materials were lower due to a very difficult market environment." Page 1 of 4 PR00-0077 - BFGoodrich reports higher-third quarter results, including 11% increase in operating EPS 2 [BF GOODRICH LOGO] NEWS For the first nine months of 2000, net income, excluding special items, was $266.0 million, or $2.46 per share, compared to $276.0 million, or $2.47 per share, in the comparable 1999 period. Sales for the first nine months of the year were $4.1 billion, compared with $4.2 billion in 1999. THIRD-QUARTER SEGMENT REVIEW VERSUS YEAR-AGO QUARTER - ---------------------------------------------------- In Aerospace, sales increased 8 percent to $926.0 million, operating income increased 18 percent to $154.1 million, and margins rose to 16.6 percent from 15.3 percent. These excellent results reflect increased demand in regional, business and military original equipment segments of the industry and the company's growing position in aftermarket products and services. Electronic Systems, Aerostructures and Aviation Services, and Engine and Safety Systems all achieved double-digit operating income growth. In Engineered Industrial Products, sales decreased 2 percent to $167.4 million, and operating income increased 3 percent to $29.0 million. The three largest units in the segment, Garlock Sealing Technologies, Fairbanks Morse Engine and Quincy Compressor all achieved higher profits. Operational efficiency improvement and cost reduction helped offset the negative impact of foreign exchange rates and weakness in automotive, truck and trailer markets for industrial products. In Performance Materials, sales decreased 7 percent to $284.8 million while operating income declined 28 percent to $25.9 million. The decrease in operating income was due to the impact of higher raw material costs, foreign exchange effects and lower volumes, offset somewhat by favorable product mix, improved pricing for some products, strong sales growth in personal care products and continued success in productivity programs. THIRD-QUARTER HIGHLIGHTS - ------------------------ The third quarter was one of the most successful in the company's history in terms of new aerospace business. BFGoodrich was awarded long-term aerostructures contracts worth over $2 billion for existing military aircraft and a new regional jet. The SmartDeckTM "cockpit of the future" for general aviation and business jets and a new collision avoidance system were successfully launched. Contracts for landing gear, brakes, flight control and emergency evacuation systems for several regional jet aircraft were signed and the company opened a new VIP completions center for business jets. In addition, BFGoodrich entered into alliances with Boeing and Rockwell Collins to provide maintenance, repair and Page 2 of 4 PR00-0077 - BFGoodrich reports higher-third quarter results, including 11% increase in operating EPS 3 [BF GOODRICH LOGO] NEWS other services, and completed three small complementary acquisitions, including a business which will add star-based, position-determination systems to the company's rapidly growing space flight systems business. The company also announced that it would become an equity partner in MyAircraft.com, a venture that already includes several premier aerospace companies in what many believe will become the leading e-commerce website serving the aerospace industry. Engineered Industrial Products also had considerable success in new products. Quincy's newest line of reciprocating compressors for the smaller end of the industrial and commercial compressed air market is now in production with deliveries scheduled to begin in February of 2001. Also slated for deliveries early next year is a new line of oil-free compressors aimed at health care and electronics markets where the purity of the process air supply is a critical requirement. In addition, Garlock Sealing Technologies has introduced product line extensions for packing and bearing-protection sealing systems. The company's strategic review of the Engineered Industrial Products segment has determined that there is continuing growth potential, particularly in the sealing and compressor businesses through new product development, global expansion and complementary acquisitions. Operationally, the focus will continue to be on increased efficiency and consolidation opportunities. BFGoodrich also continued the process of selling the Performance Materials segment. As previously indicated, possible alternative uses of the proceeds include debt repayment, additional share repurchases and acquisitions. Additional share repurchases would require the approval of the company's Board of Directors. NEAR-TERM OUTLOOK - ----------------- BFGoodrich expects that the performance of its aerospace business will be strong in the fourth quarter, while market conditions for industrial products and specialty chemicals will remain weak. Based on this outlook, the company expects revenues of approximately $5.6 billion in 2000, with fully diluted earnings per share, excluding special items, around the consensus estimate of $3.30. Page 3 of 4 PR00-0077 - BFGoodrich reports higher-third quarter results, including 11% increase in operating EPS 4 [BF GOODRICH LOGO] NEWS The BFGoodrich Company, headquartered in Charlotte, North Carolina, has leading market positions in advanced aerospace systems, performance materials, and engineered industrial products. The company has $5.5 billion in annual revenues and 27,000 employees worldwide. The tables that follow provide more detailed information about BFGoodrich results for the third quarter and year-to-date. [Part of this announcement contains forward-looking statements that involve risks and uncertainties, and actual results could differ materially from those projected in the forward-looking statements. The risks and uncertainties are detailed from time to time in reports filed with the Securities and Exchange Commission, including but not limited to the last section of the Management's Discussion and Analysis entitled "Forward-Looking Information is Subject to Risk and Uncertainty" contained in the company's Annual Report on Form 10-K, and in other filings.] ### Page 4 of 4 PR00-0077 - BFGoodrich reports higher-third quarter results, including 11% increase in operating EPS 5
THE BFGOODRICH COMPANY (Dollars in millions except per share amounts) Three Months Ended September 30 -------------------------------------------------------------------------- 2000 2000 1999 1999 As Reported As Adjusted(A) As Reported As Adjusted(B) Sales $ 1,378.2 $ 1,378.2 $ 1,332.1 $ 1,332.1 =========== =========== =========== =========== Income before Income Taxes and Trust Distributions 133.1 141.4 (63.2) 139.1 Income Tax Expense (48.6) (51.6) (3.1) (51.5) Distributions on Trust Preferred Securities (4.6) (4.6) (4.6) (4.6) ----------- ----------- ----------- ----------- Net Income (Loss) $ 79.9 $ 85.2 $ (70.9) $ 83.0 =========== =========== =========== =========== Income Per Share: Basic $ 0.79 $ 0.84 $ (0.64) $ 0.75 =========== =========== =========== =========== Diluted $ 0.77 $ 0.82 $ (0.64) $ 0.74 =========== =========== =========== =========== Weighted - Average Number of Shares Outstanding (in millions): Basic 101.6 101.6 110.1 110.1 =========== =========== =========== =========== Diluted 106.3 106.3 110.1 113.9 =========== =========== =========== ===========
(A) Results exclude the effect of a $8.3 million charge ($5.3 million after-tax), or $0.05 a diluted share, related to merger-related and consolidation costs. (B) Results exclude the effect of a $202.3 million charge ($153.9 million after-tax), or $1.35 a diluted share, primarily related to merger-related and consolidation costs. Weighted average diluted shares as adjusted include 0.9 million incremental shares for assumed exercises of stock options, performance shares and restricted shares and 2.9 million potential common shares for assumed conversions of convertible preferred securities that were anti-dilutive on an as reported basis. 6
THE BFGOODRICH COMPANY (Dollars in millions except per share amounts) Nine Months Ended September 30 -------------------------------------------------------------------------------------- 2000 2000 1999 1999 As Reported As Adjusted(A) As Reported As Adjusted(B) Sales $ 4,137.3 $ 4,137.3 $ 4,207.3 $ 4,207.3 =============== ================ =============== =============== Income from before Income Taxes and Trust Distributions 411.8 440.7 222.8 455.3 Income Tax Expense (150.3) (160.9) (105.7) (165.5) Distributions on Trust Preferred (13.8) (13.8) (13.8) (13.8) Securities --------------- --------------- --------------- --------------- Net Income $ 247.7 $ 266.0 $ 103.3 $ 276.0 =============== ================ =============== =============== Income Per Share: Basic $ 2.34 $ 2.52 $ 0.94 $ 2.51 =============== ================ =============== =============== Diluted $ 2.30 $ 2.46 $ 0.93 $ 2.47 =============== ================ =============== =============== Weighted-Average Number of Shares Outstanding (in millions): Basic 105.7 105.7 109.9 109.9 =============== ================ =============== =============== Diluted 109.9 109.9 110.8 113.7 =============== ================ =============== ===============
(A) Results exclude the effect of a $28.9 million charge ($18.3 million after-tax), or $0.16 a diluted share, related to merger-related and consolidation costs. (B) Results exclude the effect of a $232.5 million charge ($172.7 million after-tax), or $1.52 a diluted share, primarily related to merger-related and consolidation costs. Weighted average diluted shares as adjusted include 2.9 million potential common shares for assumed conversions of convertible preferred securities that were anti-dilutive on an as reported basis. 7
BFGOODRICH SEGMENT REPORTING (Dollars in millions) Three Months Ended Nine Months Ended September 30 September 30 --------------------------- --------------------------- 2000 1999 2000 1999 Sales: Aerospace: Aerostructures and Aviation Services $ 375.4 $ 332.4 $ 1,081.4 $ 1,141.1 Landing Systems 265.9 261.5 785.0 803.9 Engine and Safety Systems 152.3 136.4 453.6 417.7 Electronic Systems 132.4 124.9 399.2 384.6 ---------- ---------- ---------- ---------- 926.0 855.2 2,719.2 2,747.3 ---------- ---------- ---------- ---------- Engineered Industrial Products 167.4 170.6 527.2 542.7 ---------- ---------- ---------- ---------- Performance Materials: Textile and Coatings Solutions 119.9 133.2 383.3 403.8 Polymer Additives and Specialty Plastics 101.0 111.3 321.4 330.6 Consumer Specialties 63.9 61.8 186.2 182.9 ---------- ---------- ---------- ---------- 284.8 306.3 890.9 917.3 ---------- ---------- ---------- ---------- Total Sales $ 1,378.2 $ 1,332.1 $ 4,137.3 $ 4,207.3 ========== ========== ========== ========== Operating Income: Aerospace: Aerostructures and Aviation Services $ 57.3 $ 44.8 $ 155.2 $ 156.7 Landing Systems 35.7 36.5 108.1 115.8 Engine and Safety Systems 28.0 24.5 85.5 74.4 Electronic Systems 33.1 25.1 85.9 71.4 ---------- ---------- ---------- ---------- 154.1 130.9 434.7 418.3 ---------- ---------- ---------- ---------- Engineered Industrial Products 29.0 28.1 95.2 99.3 ---------- ---------- ---------- ---------- Performance Materials: Textile and Coatings Solutions 4.5 10.4 21.9 27.5 Polymer Additives and Specialty Plastics 13.8 20.5 48.4 55.5 Consumer Specialties 7.6 5.2 20.6 21.9 ---------- ---------- ---------- ---------- 25.9 36.1 90.9 104.9 ---------- ---------- ---------- ---------- Total Segment Operating Income $ 209.0 $ 195.1 $ 620.8 $ 622.5 Corporate General and Administrative Costs (17.4) (16.6) (52.9) (53.3) Merger-related and Consolidation Costs (8.3) (204.7) (28.9) (241.0) ---------- ---------- ---------- ---------- Total Operating Income (Loss) $ 183.3 $ (26.2) $ 539.0 $ 328.2 ========== ========== ========== ==========
8 BFGOODRICH SEGMENT RESULTS THIRD QUARTER 2000 VERSUS SECOND QUARTER 2000 AEROSPACE SEGMENT - ----------------- ($ millions) 3Q00 2Q00 ---- ---- Sales $926.0 $900.2 Operating Income 154.1 141.9 In the Aerospace segment, sales increased $25.8 or 3%, from the second to the third quarter of 2000. This increase is due to higher volume in the Landing Systems and Aerostructures & Aviation Services groups. The Engine and Safety Systems and Electronic Systems groups recorded lower sales for the quarter. Operating income for the third quarter of 2000 increased 9% from the second quarter. The increase in operating income in the Landing Systems, Electronic Systems and Aerostrutures & Aviation Services groups was offset slightly by lower operating income in the Engine & Safety Systems group. PERFORMANCE MATERIALS SEGMENT - ----------------------------- ($ millions) 3Q00 2Q00 ---- ---- Sales $284.8 $298.5 Operating Income 25.9 30.9 Performance Materials' sales decreased 5%, while operating income decreased 16%, primarily due to higher raw material costs, especially for PVC and Toluene, and unfavorable exchange rate impact of the Euro. These decreases were offset slightly by continued productivity improvements and selective price increases. ENGINEERED INDUSTRIAL PRODUCTS SEGMENT - -------------------------------------- ($ millions) 3Q00 2Q00 ---- ---- Sales $167.4 $182.2 Operating Income 29.0 32.6 In Engineered Industrial Products, sales decreased $14.8 or 8% from $182.2 in the second quarter of 2000 to $167.4 in the third quarter of 2000. This decrease is due in part to normal seasonality declines seen during the third quarter. Operating income decreased $3.6 or 11% for the quarter. This decrease is due primarily to volume reductions offset by cost reductions and productivity improvements. Page 1 9 BFGOODRICH GROUP RESULTS THIRD QUARTER AND YEAR-TO-DATE 2000 VERSUS THIRD QUARTER AND YEAR-TO-DATE 1999 BFGOODRICH AEROSPACE SEGMENT ---------------------------- AEROSTRUCTURES AND AVIATION SERVICES GROUP - ------------------------------------------ ($ millions) YTD YTD 3Q00 3Q99 2000 1999 ---- ---- ---- ---- Sales $375.4 $332.4 $1,081.4 $1,141.1 Operating Income 57.3 44.8 155.2 156.7 Sales for the quarter increased 13% over third quarter 1999 to $375.4. This increase is primarily due to stronger sales of Super 727 combined with higher aftermarket sales for the PW4000 and V2500 programs. There was also a favorable settlement of a contract claim recorded this quarter. OE production sales were lower on the B757, MD-11 and MD-80 programs (the MD-11 and MD-80 programs are no longer in production) partially offset by an increase in B717-200 sales. Operating income for the quarter increased $12.5, or 28%, from $44.8 in the third quarter of 1999 to $57.3 in the third quarter of 2000. This increase is predominantly due to increased sales volume, the favorable claim settlement, a favorable sales mix, and site consolidation costs that were incurred in 1999. Aviation services reported a small profit on sales of $60.8 for the third quarter of 2000. LANDING SYSTEMS GROUP - --------------------- ($ millions) YTD YTD 3Q00 3Q99 2000 1999 ---- ---- ---- ---- Sales $265.9 $261.5 $785.0 $803.9 Operating Income 35.7 36.5 108.1 115.8 Sales during the quarter increased $4.4, or 2%, from $261.5 in the third quarter of 1999 to $265.9 in 2000. The increase is attributable to higher sales in wheels and brakes, especially in the regional, business and military market segment, as well as increased aftermarket sales to commercial airline customers. These increases were offset by lower landing gear sales, and reduced sales in landing gear and wheel and brake services. Operating income decreased 2% to $35.7 for the quarter. Landing Systems recorded lower operating income than the third quarter 1999, consistent with their decreased OE and services volume and increased nonrecurring engineering and Coltec consolidation costs, partially offset by favorable inventory adjustments recorded during the quarter. In addition, despite higher sales of wheels and brakes, income decreased due to the impact of a customer bankruptcy, increased sales incentives and higher raw material costs. Landing gear and wheel and brake services had higher operating income as a result of productivity improvements and lower spending. Page 2 10 ELECTRONIC SYSTEMS GROUP - ------------------------ ($ millions) YTD YTD 3Q00 3Q99 2000 1999 ---- ---- ---- ---- Sales $132.4 $124.9 $399.2 $384.6 Operating Income 33.1 25.1 85.9 71.4 Sales for the quarter increased $7.5 or 6% to $132.4 in the third quarter of 2000. The increase was primarily due to stronger sales in avionics products and Space Flight Systems, especially satellite products, partially offset by decreased sales of aircraft sensors and a small product line divestiture. Avionics had increased sales over the same period a year ago as a result of increased market penetration and new product introductions in the general aviation market. Operating income increased 32% from $25.1 in the third quarter of 1999 to $33.1 in the third quarter 2000. This increase is due to increased demand for general aviation products, a gain on the sale of a building, a favorable sales mix and recovery of certain development costs related to the helicopter health and usage monitoring system (HUMS). ENGINE & SAFETY SYSTEMS GROUP - ----------------------------- ($ millions) YTD YTD 3Q00 3Q99 2000 1999 ---- ---- ---- ---- Sales $152.3 $136.4 $453.6 $417.7 Operating Income 28.0 24.5 85.5 74.4 Sales during the third quarter of 2000 increased $15.9 or 12% to $152.3. This increase was due to significantly stronger sales in virtually all of the products. Operating income increased $3.5 or 14% to $28.0 in the third quarter of 2000. This increase is a result of the higher volume experienced in the group and a gain on sale of a small parcel of land, partially offset by an unfavorable sales mix and increased research and development spending on the inflatabelt product the group is developing. Page 3 11 BFGOODRICH PERFORMANCE MATERIALS SEGMENT ---------------------------------------- TEXTILE & COATINGS SOLUTIONS GROUP - ---------------------------------- ($ millions) YTD YTD 3Q00 3Q99 2000 1999 ---- ---- ---- ---- Sales $119.9 $133.2 $383.3 $403.8 Operating Income 4.5 10.4 21.9 27.5 Sales decreased 10% from $133.2 in the third quarter of 1999 to $119.9 in the third quarter of 2000. Operating income decreased 57% for the quarter from $10.4 to $4.5. The decrease in sales is due to softening demand, a decision by the company to discontinue sales of certain low margin products and unfavorable foreign exchange. Operating income decreases were driven by lower volumes and higher raw material prices, offset slightly by a favorable sales mix and improved pricing trends. POLYMER ADDITIVES & SPECIALTY PLASTICS GROUP - -------------------------------------------- ($ millions) YTD YTD 3Q00 3Q99 2000 1999 ---- ---- ---- ---- Sales $101.0 $111.3 $321.4 $330.6 Operating Income 13.8 20.5 48.4 55.5 Sales for the quarter decreased $10.3 or 9%, from $111.3 in 1999 to $101.0 in 2000. The decrease was driven by the exclusion of Telene(C) sales, as this business was contributed April 1, 2000 to a joint venture that is accounted for as an equity method investment. The remaining decrease was a result of lower volume in the plumbing markets due to the reduction of housing starts and the foreign exchange impact of the weaker Euro. Operating income decreased $6.7, or 33%, from $20.5 in the third quarter of 1999 to $13.8 in the third quarter of 2000. Sharply higher raw material costs, especially for PVC; lower volumes as noted above, and the unfavorable impact of foreign exchange are principal drivers of the decrease. Page 4 12 CONSUMER SPECIALTIES GROUP - -------------------------- ($ millions) YTD YTD 3Q00 3Q99 2000 1999 ---- ---- ---- ---- Sales $63.9 $61.8 $186.2 $182.9 Operating Income 7.6 5.2 20.6 21.9 Sales increased 3%, from $61.8 in the third quarter of 1999 to $63.9 in the third quarter of 2000. Operating income increased $2.4, or 46%, from $5.2 in the third quarter of 1999 to $7.6 in the third quarter of 2000. The increased sales are due primarily to strong volumes in the group's Personal Care (Carbopol(C)) product line. This strength was partially offset by reductions in volume and price in the food & beverage markets, lower intermediate sales, the exchange rate impact of the weaker Euro and competitive pricing pressures. Operating income increases are due to strong sales to the personal care market and favorable manufacturing and overhead spending compared to 1999. These increases were partially offset by higher raw materials costs, particularly toluene, and the exchange rate impact of the weaker Euro. BFGOODRICH ENGINEERED INDUSTRIAL PRODUCTS SEGMENT ------------------------------------------------- ($ millions) YTD YTD 3Q00 3Q99 2000 1999 ---- ---- ---- ---- Sales $167.4 $170.6 $527.2 $542.7 Operating Income 29.0 28.1 95.2 99.3 Sales for the third quarter decreased $3.2 or 2% to $167.4 primarily due to the completion of a significant diesel-engine program during 1999 and the initiation of sales of a similar but lower revenue-producing program during 2000. Lower sales to the automotive and truck/trailer market partially offset by increased sales of sealing-related and compressed air products also contributed to the decline. Operating income increased 3% quarter over quarter to $29.0. This increase was primarily due to operational efficiencies in the sealing business, the reduction in nonrecurring engineering costs and favorable inventory adjustments at Fairbanks Morse, partially offset by the impact of reduced sales and unfavorable foreign exchange rates. Page 5 13 Non-Segment Expenses -------------------- ($ millions) YTD YTD 3Q00 3Q99 2000 1999 ---- ---- ---- ---- Corporate G&A $17.4 $16.6 $52.9 $53.3 Net Interest Expense $43.0 $33.4 $113.9 $99.3 Distribution on Trust Preferred Securities $4.6 $4.6 $13.8 $13.8 Preliminary Balance Sheet and Cash Flow Data -------------------------------------------- ($ millions) YTD YTD 9/30/2000 12/31/1999 --------- ---------- Cash and Cash Equivalents $90.2 $66.4 Total Debt $2,250.8 $1,760.5 Debt to Capitalization 61.0% 52.8% Capital Expenditures $132.1 $246.3 Acquisitions $49.2 $76.1 Depreciation and Amortization $209.5 $230.6 Dividends $89.5 $91.6 Page 6 14
ACCOUNTS RECEIVABLE ------------------- ($ millions) 1999 2000 Q1 Q2 Q3 Q4 Q1 Q2 Q3 ------------------------------------------------- ------------------------------------- As Reported $841.0 $889.4 $864.1 $845.1 $917.3 $972.8 $1,030.4 Less: Corporate Receivables (105.5) (131.4) (138.7) (158.4) (180.5) (216.9) (236.3) ------------------------------------------------- ------------------------------------- Trade Accounts Receivable $735.5 $758.0 $725.4 $686.7 $736.8 $755.9 $794.1 Days sales outstanding 43.5 46.8 47.1 47.8 44.7 46.9 49.4 (DSO)*
*DSO represents the number of preceding days sales comprising the trade accounts receivable balance. DSO, calculated using trade accounts receivable, was 49 days for the third quarter of 2000, as compared to 47 days in the second quarter of 2000 and 47 days in the third quarter of 1999. The Company's DSO has ranged from 44 to 49 days over the past seven quarters as illustrated above due to normal fluctuations in the amount and timing of revenue and collections. Corporate receivables are excluded as these amounts, primarily receivables from insurance carriers for asbestos claim settlements, are not correlated with revenue and therefore distort the DSO calculation. The growth in trade receivables in the third quarter 2000 is due to higher Aerospace sales in September for which receivables have yet to be collected and to unbilled receivables in Space Flight Systems consistent with their revenue recognition policy. Accounts receivable for Performance Materials and Engineered Industrial Products declined in the third quarter compared to the second quarter 2000.
INVENTORY --------- ($ millions) 1999 2000 Q1 Q2 Q3 Q4 Q1 Q2 Q3 --------------------------------------------------- --------------------------------------- Inventory* $972.5 $926.1 $973.2 $989.5 $1,003.6 $1,024.0 $1,047.9 717-200 pre-production/ excess over average (125.3) (132.6) (135.0) (138.8) (140.5) (140.8) (136.3) --------------------------------------------------- --------------------------------------- Adjusted inventory $847.2 $793.5 $838.2 $850.7 $863.1 $883.2 $911.6 Revenue $1,411.8 $1,463.4 $1,332.1 $1,330.2 $1,378.2 $1,380.9 $1,378.2 Days sales in inventory (DSI) 54.0 49.3 57.9 58.8 57.0 58.2 60.9
*1999 inventory balances have been adjusted to conform to current year presentation. DSI, excluding pre-production and excess over average costs on the 717-200 program, was 61 days in the third quarter of 2000, as compared to 58 days in the second quarter of 2000 and 58 days in the third quarter of 1999. Pre-production and excess over average costs on the 717-200 program are excluded as these amounts are not correlated with current revenues and therefore distort the DSI calculation. The increase in recent quarters reflects inventory increases in Aerospace needed to support the expected increase in commercial transport deliveries in 2001. Page 7 15
THE BFGOODRICH COMPANY ($ MILLIONS) 1999 ------------------------------------------------------------------ Q1 Q2 Q2 YTD Q3 Q3YTD Q4 1999 -------------------------------------------------------- ======== AEROSPACE SALES Aerostructures & Aviation Services 387.5 421.2 808.7 332.4 1,141.1 335.8 1,476.9 Landing Systems 262.5 279.9 542.4 261.5 803.9 256.7 1,060.6 Engine & Safety Systems 143.5 137.8 281.3 136.4 417.7 147.9 565.6 Electronic Systems 132.7 127.0 259.7 124.9 384.6 129.7 514.3 Total Trade Sales 926.2 965.9 1,892.1 855.2 2,747.3 870.1 3,617.4 OPERATING Aerostructures & Aviation Services 56.5 55.4 111.9 44.8 156.7 60.1 216.8 INCOME Landing Systems 36.8 42.5 79.3 36.5 115.8 31.3 147.1 Engine & Safety Systems 24.7 25.2 49.9 24.5 74.4 24.8 99.2 Electronic Systems 24.5 21.8 46.3 25.1 71.4 24.2 95.6 Total Operating Income 142.5 144.9 287.4 130.9 418.3 140.4 558.7 MARGIN Aerostructures & Aviation Services 14.6% 13.2% 13.8% 13.5% 13.7% 17.9% 14.7% Landing Systems 14.0% 15.2% 14.6% 14.0% 14.4% 12.2% 13.9% Engine & Safety Systems 17.2% 18.3% 17.7% 18.0% 17.8% 16.8% 17.5% Electronic Systems 18.5% 17.2% 17.8% 20.1% 18.6% 18.7% 18.6% Total Operating Margin 15.4% 15.0% 15.2% 15.3% 15.2% 16.1% 15.4% -------------------------------------------------------- ======== PERFORMANCE MATERIALS -------------------------------------------------------- ======== SALES Textile and Coatings Solutions 131.5 139.1 270.6 133.2 403.8 131.3 535.1 Polymer Additives and Specialty 109.3 110.0 219.3 111.3 330.6 107.9 438.5 Plastics Consumer Specialties 59.2 61.9 121.1 61.8 182.9 61.2 244.1 Total Trade Sales 300.0 311.0 611.0 306.3 917.3 300.4 1,217.7 OPERATING Textile and Coatings Solutions 6.2 10.9 17.1 10.4 27.5 7.9 35.4 INCOME Polymer Additives and Specialty 18.3 16.7 35.0 20.5 55.5 16.7 72.2 Plastics Consumer Specialties 5.1 11.6 16.7 5.2 21.9 7.4 29.3 Total Operating Income 29.6 39.2 68.8 36.1 104.9 32.0 136.9 MARGIN Textile and Coatings Solutions 4.7% 7.8% 6.3% 7.8% 6.8% 6.0% 6.6% Polymer Additives and Specialty 16.7% 15.2% 16.0% 18.4% 16.8% 15.5% 16.5% Plastics Consumer Specialties 8.6% 18.7% 13.8% 8.4% 12.0% 12.1% 12.0% Total Operating Margin 9.9% 12.6% 11.3% 11.8% 11.4% 10.7% 11.2% -------------------------------------------------------- ======== ENGINEERED INDUSTRIAL PRODUCTS -------------------------------------------------------- ======== SALES 185.6 186.5 372.1 170.6 542.7 159.7 702.4 OPERATING INCOME 34.2 37.0 71.2 28.1 99.3 18.9 118.2 MARGIN 18.4% 19.8% 19.1% 16.5% 18.3% 11.8% 16.8% -------------------------------------------------------- ======== --------------------------------------------------------------------------------------------- ======== TOTAL SALES 1,411.8 1,463.4 2,875.2 1,332.1 4,207.3 1,330.2 5,537.5 SEGMENT OPERATING INCOME 206.3 221.1 427.4 195.1 622.5 191.3 813.8 MARGIN 14.6% 15.1% 14.9% 14.6% 14.8% 14.4% 14.7% --------------------------------------------------------------------------------------------- =========
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THE BFGOODRICH COMPANY ($ MILLIONS) 2000 ---------------------------------------------- Q1 Q2 Q2 YTD Q3 Q3YTD ---------------------------------------------- AEROSPACE SALES Aerostructures & Aviation Services 357.6 348.4 706.0 375.4 1,081.4 Landing Systems 260.1 259.0 519.1 265.9 785.0 Engine & Safety Systems 147.8 153.5 301.3 152.3 453.6 Electronic Systems 127.5 139.3 266.8 132.4 399.2 Total Trade Sales 893.0 900.2 1,793.2 926.0 2,719.2 OPERATING Aerostructures & Aviation Services 48.9 49.0 97.9 57.3 155.2 INCOME Landing Systems 37.3 35.1 72.4 35.7 108.1 Engine & Safety Systems 27.3 30.2 57.5 28.0 85.5 Electronic Systems 25.2 27.6 52.8 33.1 85.9 Total Operating Income 138.7 141.9 280.6 154.1 434.7 MARGIN Aerostructures & Aviation Services 13.7% 14.1% 13.9% 15.3% 14.4% Landing Systems 14.3% 13.6% 13.9% 13.4% 13.8% Engine & Safety Systems 18.5% 19.7% 19.1% 18.4% 18.8% Electronic Systems 19.8% 19.8% 19.8% 25.0% 21.5% Total Operating Margin 15.5% 15.8% 15.6% 16.6% 16.0% ----------------------------------------------- PERFORMANCE MATERIALS ---------------------------------------------- SALES Textile and Coatings Solutions 133.7 129.7 263.4 119.9 383.3 Polymer Additives and Specialty 114.4 106.0 220.4 101.0 321.4 Plastics Consumer Specialties 59.5 62.8 122.3 63.9 186.2 Total Trade Sales 307.6 298.5 606.1 284.8 890.9 OPERATING Textile and Coatings Solutions 8.0 9.4 17.4 4.5 21.9 INCOME Polymer Additives and Specialty 19.3 15.3 34.6 13.8 48.4 Plastics Consumer Specialties 6.8 6.2 13.0 7.6 20.6 Total Operating Income 34.1 30.9 65.0 25.9 90.9 MARGIN Textile and Coatings Solutions 6.0% 7.2% 6.6% 3.8% 5.7% Polymer Additives and Specialty 16.9% 14.4% 15.7% 13.7% 15.1% Plastics Consumer Specialties 11.4% 9.9% 10.6% 11.9% 11.1% Total Operating Margin 11.1% 10.4% 10.7% 9.1% 10.2% ----------------------------------------------- ENGINEERED INDUSTRIAL PRODUCTS ----------------------------------------------- SALES 177.6 182.2 359.8 167.4 527.2 OPERATING INCOME 33.6 32.6 66.2 29.0 95.2 MARGIN 18.9% 17.9% 18.4% 17.3% 18.1% ------------------------------------------------------------------------------------ TOTAL SALES 1,378.2 1,380.9 2,759.1 1,378.2 4,137.3 SEGMENT OPERATING INCOME 206.4 205.4 411.8 209.0 620.8 MARGIN 15.0% 14.9% 14.9% 15.2% 15.0% ------------------------------------------------------------------------------------
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