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Exhibit 99.1
FINANCIAL REPORT
Rick Schmidt
Senior VP and Chief Financial Officer
The BFGoodrich Company
November 7, 2000
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AREAS OF DISCUSSION
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- 3RD QUARTER AND YTD RESULTS
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- 2000 Outlook
- 2000 Free cash flow
- Methodology for Performance Materials as a discontinued
operation
- 2001 outlook
- Credit rating update
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3RD QUARTER SEGMENT RESULTS
1999 2000 Change
Sales Actual Actual %
------- -------- ------
Aerospace $ 855M $ 926M 8%
Performance Mtls. $ 306 $ 285 (7%)
Eng. Industrial $ 171 $ 167 (2%)
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Total Sales $1,332M $ 1,378M 3%
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Operating Income
Aerospace $ 131M $ 154M 18%
Performance Mtls. $ 36 $ 26 (28%)
Eng. Industrial $ 28 $ 29 3%
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Total Operating Income $ 195M $ 209M 7%
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OI Margins - % 14.6% 15.2% 4%
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Excludes special items
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THIRD QUARTER - FINANCIAL RESULTS
1999 2000 Change
Actual Actual %
-------- --------- ---------
Sales $1,332M $1,378M 3%
Segment Ops Income $ 195 $ 209 7%
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OI % of Sales 14.6% 15.2% 4%
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Corp. G&A/Other ($ 23) ($ 25) 9%
Merger/Special Charges ($ 202) ($ 8) (96%)
Net Interest Exp. ($ 33) ($ 43) 30%
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Pre-Tax Income ($ 63) $ 133 N/M
Taxes/Tides ($ 8) ($ 53) N/M
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Net Income - as reported ($ 71)M $ 80M N/M
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Net Income ex. special items $ 83 M $ 85M 3%
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EPS - Diluted
Reported ($ 0.64) $ 0.77 N/M
Excluding Special Charges $ 0.74 $ 0.82 11%
N/M - Not meaningful
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NINE MONTHS - SEGMENT RESULTS
1999 2000 Change
Sales Actual Actual %
------ ------ -
Aerospace $2,747M $2,719M (1%)
Performance Mtls. $ 917 $ 891 (3%)
Eng. Industrial $ 543 $ 527 (3%)
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Total Sales $4,207M $4,137M (2%)
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Operating Income
Aerospace $ 418M $ 435M 4%
Performance Mtls. $ 105 $ 91 (13%)
Eng. Industrial $ 99 $ 95 (4%)
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Total Operating Income $ 622M $ 621M ---
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OI Margins - % 14.8% 15.0% 1%
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Excludes special items
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NINE MONTHS 2000 REVENUE AND
OPERATING INCOME
(DOLLARS IN MILLIONS)
[PIE CHART]
NINE MONTHS 2000 REVENUES -
$4,137
PERFORMANCE MATERIALS 21%
ENGINEERED INDUSTRIAL 13%
AEROSPACE 66%
[PIE CHART]
NINE MONTHS 2000 SEGMENT
OPERATING INCOME $621
PERFORMANCE MATERIALS 15%
ENGINEERED INDUSTRIAL 15%
AEROSPACE 70%
15.0% MARGIN
3 PROFITABLE SEGMENTS
Excludes special items
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NINE MONTHS - FINANCIAL RESULTS
1999 2000 Change
Actual Actual %
------ ------ ------
Sales $4,207M $4,137M (2%)
Segment Ops Income $ 623 $ 621 ----
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OI % of Sales 14.8% 15.0% 1%
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Corp. G&A/Other ($ 68) ($ 66) (3%)
Merger/Special Charges ($ 233) ($ 29) (88%)
Net Interest Exp. ($ 99) ($ 114) 15%
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Pre-Tax Income $ 223 $ 412 85%
Taxes/Tides ($ 120) ($ 164) 37%
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Net Income - as reported $ 103M $ 248M 140%
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Net Income ex. special items $ 276M $ 266M (4%)
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EPS - Diluted
Reported $ 0.93 $ 2.30 147%
Excluding Special Charges $ 2.47 $ 2.46 ---
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AREAS OF DISCUSSION
- 3rd Quarter and YTD results
-----------------------------------------------------------------------
- 2000 OUTLOOK
-----------------------------------------------------------------------
- 2000 Free cash flow
- Methodology for Performance Materials as a discontinued
operation
- 2001 outlook
- Credit rating update
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4TH QUARTER OUTLOOK - FINANCIAL RESULTS
4Q1999 4Q2000
Actual Outlook
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Sales $1,330M $ 1,420 - 1,470M
Segment Ops Income $ 191 $210 - 215
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OI % of Sales 14.4% 14.5 - 15.0%
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Corp. G&A/Other ($ 15)
Merger/Special Charges ($ 30) (Around $12)
Net Interest Exp. ($ 34)
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Pre-Tax Income $ 112
Taxes/Tides ($ 46)
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Net Income - as reported $ 66M Around $80M
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Net Income ex. special items $ 87M Around $88M
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EPS - Diluted
Reported $ 0.60 Around $0.76
Excluding Special Charges $ 0.78 Around $0.84
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FULL YEAR OUTLOOK - FINANCIAL RESULTS
1999 2000
Actual Outlook
--------- ----------------
Sales $5,538 $ 5,550 - 5,600M
Segment Ops Income $ 814 $830 - 835
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OI % of Sales 14.7% 14.8 - 15.0%
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Corp. G&A/Other ($ 82)
Merger/Special Charges ($ 263) (Around $41)
Net Interest Exp. ($ 134)
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Pre-Tax Income $ 335
Taxes/Tides ($ 165)
Net Income - as reported $ 170 Around $334M
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Net Income ex. special items $ 362 Around $360M
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EPS - Diluted
Reported $ 1.53 Around $3.06
Excluding Special Charges $ 3.24 Around $3.30
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AREAS OF DISCUSSION
- 3rd Quarter and YTD results
- 2000 Outlook
----------------------------------------------------------------
- 2000 FREE CASH FLOW
----------------------------------------------------------------
- Methodology for Performance Materials as a discontinued
operation
- 2001 outlook
- Credit rating update
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2000 FREE CASH FLOW
(DOLLARS IN MILLIONS)
Actual 3Q YTD Target
1999 2000 2000 2000
----- ----- ----- ----------
Cash flow from Operations $373 $(16) $80 $325 - 345
PLUS:
Merger & Consolidations* 207 8 71 75 - 80
Special Tax Payment -- 114 114 114
----- ----- ----- ----------
Adjusted Operating Cash Flow $ 580 $ 106 $ 265 $520 - 540
MINUS:
Capital Expenditures (246) (43) (132) (200 - 210)
Dividends (92) (29) (90) (117)
----- ----- ----- ----------
Free Cash Flow $ 242 $ 34 $ 43 $200 - 220
* Includes BEP Payment of $24M in YTD 2000
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4TH QUARTER OPERATING CASH FLOW TARGETS
(DOLLARS IN MILLIONS)
Adjusted Operating Cash Flow
Nine months YTD $ 265
Total Year Target $ 520 - 540
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4Q Target $ 255 - 275
Trade Receivable Collections
$M DSO
--------
12/31/99 687 48
9/30/00 794 49
12/31/00 EST. 700 48
Sources of 4th Quarter Operating Cash Flow
Trade Receivable Collections $ 90 - 100
Super 727 Receivables $ 45 - 50
Asbestos Insurance Proceeds $ 25 - 30
All Other $ 95 - 100*
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Total $ 255 - 275
* 3Q EBITDA excluding specials = $246M
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AREAS OF DISCUSSION
- 3rd Quarter and YTD results
- 2000 Outlook
- 2000 Free cash flow
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- METHODOLOGY FOR PERFORMANCE MATERIALS AS A DISCONTINUED OPERATION
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- 2001 outlook
- Credit rating update
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PERFORMANCE MATERIALS AS A DISCONTINUED OPERATION
- Methodology used to restate results
- Based on APB 30 Guidelines
- Interest expense allocated based on relative PM net asset values
- Certain Corporate G&A allocations to PM reclassed to continuing
operations
- Separate PM tax provision calculated
- New 2000 estimated effective tax rate for BFGoodrich, excluding PM, is
35.5% versus 36.5%
- Methodology reviewed by Ernst & Young
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AREAS OF DISCUSSION
- 3rd Quarter and YTD results
- 2000 Outlook
- 2000 Free cash flow
- Methodology for Performance Materials as a discontinued operation
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- 2001 OUTLOOK
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- Credit rating update
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2001 OUTLOOK
2001 Outlook
2000 Including PM
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Aerospace $3.7B 7% organic growth plus
complementary acquisitions
Engineered Industrial 0.7 Relatively flat
Performance Materials 1.2 Flat/modest growth
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Total Sales $5.6B $5.9 - 6.1B
Operating Margins 14.8-15.0% +6% to 8% growth in
segment operating
income dollars
Diluted EPS Around $3.30 +6% to 9%
(excluding special items)
2001 WITHOUT PERFORMANCE MATERIALS AS DISCONTINUED IS UNCERTAIN, BASED ON NET
PROCEEDS, TIMING OF CLOSING AND USE OF PROCEEDS
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AREAS OF DISCUSSION
- 3rd Quarter and YTD results
- 2000 Outlook
- 2000 Free cash flow
- Methodology for Performance Materials as a discontinued operation
- 2001 outlook
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- CREDIT RATING UPDATE
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FINANCING STRATEGY
- Current ratings are A-,Baa1, and A- by S&P, Moody's, and Fitch (Duff &
Phelps)
- Rating provides excellent access to debt markets, including commercial
paper
- Allows flexibility to take advantage of significant strategic opportunities
- Investment grade avoids restrictive covenants seen with non-investment
grade debt
- Expect to manage to A/BBB range over the long-term
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AEROSPACE/INDUSTRIAL PEER GROUP
(Dollars in Millions)
MARKET
CAPITALIZATION 1999 NET S&P
AS OF 10/27/00 SALES CREDIT RATING
-------------- -------- -------------
Boeing (BA) 57,088 57,993 AA-
Rockwell (ROK) 6,848 7,043 A+
United Technologies (UTX) 31,175 23,844 A+
Honeywell (HON) 41,204 23,735 A
Parker Hannifin (PH) 4,753 5,355 A
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BFGOODRICH 3,824 5,537 A-
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Textron (TXT) 6,705 11,579 A-
TRW (TRW) 4,933 16,969 BBB
Litton Industries (LIT) 2,299 4,827 BBB
Lockheed Martin (LMT) 14,687 25,530 BBB-
Raytheon (RTN/B) 11,006 19,841 BBB-
Northrop Grumman (NOC) 5,598 8,995 BBB-
Sequa (SQA/A) 435 1,699 BB
BE Aerospace (BEAV) 397 723 B
Moog (MOG/A) 274 630 B
Fairchild (FA) 147 635 B-
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CONCLUSIONS
- Pleased with 2000 results to date
- 2000 expectations for around $3.30 diluted EPS, excluding special items
- Expect 6% to 9% EPS growth in 2001
- Strategically well positioned for growth in sales and earnings beyond 2001
- Working to complete PM divestiture
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Part of this presentation 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 Exchanges
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.
