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<SEC-DOCUMENT>0000950144-02-001786.txt : 20020414
<SEC-HEADER>0000950144-02-001786.hdr.sgml : 20020414
ACCESSION NUMBER: 0000950144-02-001786
CONFORMED SUBMISSION TYPE: 10-K405
PUBLIC DOCUMENT COUNT: 5
CONFORMED PERIOD OF REPORT: 20011231
FILED AS OF DATE: 20020225

FILER:

COMPANY DATA:
COMPANY CONFORMED NAME: GOODRICH CORP
CENTRAL INDEX KEY: 0000042542
STANDARD INDUSTRIAL CLASSIFICATION: GUIDED MISSILES & SPACE VEHICLES & PARTS [3760]
IRS NUMBER: 340252680
STATE OF INCORPORATION: NY
FISCAL YEAR END: 1231

FILING VALUES:
FORM TYPE: 10-K405
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-00892
FILM NUMBER: 02557441

BUSINESS ADDRESS:
STREET 1: 4 COLISEUM CENTRE
STREET 2: 2730 WEST TYVOLA ROAD
CITY: CHARLOTTE
STATE: NC
ZIP: 28217
BUSINESS PHONE: 7044237000

MAIL ADDRESS:
STREET 1: 4 COLISEUM CENTRE
STREET 2: 2730 WEST TYVOLA RD
CITY: CHARLOTTE
STATE: NC
ZIP: 28217

FORMER COMPANY:
FORMER CONFORMED NAME: GOODRICH B F CO
DATE OF NAME CHANGE: 19920703
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K405
<SEQUENCE>1
<FILENAME>g74381e10-k405.txt
<DESCRIPTION>GOODRICH CORPORATION
<TEXT>
<PAGE>

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2001.

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from to

</TABLE>

Commission file number 1-892
GOODRICH CORPORATION
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C>
New York 34-0252680
(State of incorporation) (I.R.S. Employer Identification No.)
Four Coliseum Centre
2730 West Tyvola Road 28217
Charlotte, North Carolina (Zip Code)
(Address of principal executive offices)

</TABLE>

Registrant's telephone number, including area code: (704) 423-7000

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

NAME AND EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
- --------------------------------- -----------------------------
Common Stock, $5 par value New York Stock Exchange
8.30% Cumulative Quarterly Income
Preferred Securities, Series A* New York Stock Exchange

</TABLE>

(*) Issued by BFGoodrich Capital and the payments of trust distributions
and payments on liquidation or redemption are guaranteed under certain
circumstances by Goodrich Corporation. Goodrich Corporation is the
owner of 100% of the common securities issued by BFGoodrich Capital, a
Delaware statutory business trust.

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None

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 [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K. [X]

The aggregate market value of the voting stock, consisting solely of
common stock, held by nonaffiliates of the registrant as of February 15, 2002
was $2.8 billion ($27.99 per share). On such date, 101,715,416 of such shares
were outstanding.

<PAGE>

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's 2001 Annual Report to Shareholders are
incorporated by reference into Part I (Items 1 and 2), Part II (Items 5, 6, 7,
7a and 8) and Part IV (Item 14) hereof. Portions of the proxy statement dated
March 2002 are also incorporated by reference into Part III.

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(THIS PAGE INTENTIONALLY LEFT BLANK)

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<PAGE>

PART I

ITEM 1. BUSINESS

OVERVIEW

We are a leading worldwide supplier of aerospace components, systems and
services serving the commercial, military, regional, business and general
aviation markets. Our major products include aircraft engine nacelle and pylon
systems, aircraft landing gear, wheels and brakes, sensors and sensor-based
systems, fuel measurement and management systems, flight attendant and cockpit
seats, aircraft evacuation slides and rafts, optical and electro-optical
systems, space applications, ice protection systems and collision warning
systems. Maintenance, repair and overhaul services on commercial airframes and
components are also provided.

Discontinued operations consist of the Performance Materials segment, which was
divested in February 2001, and the Engineered Industrial Products segment, which
is intended to be spun-off to shareholders in the second quarter of 2002. Unless
otherwise noted herein, disclosures in this Annual Report on Form 10-K relate
only to our continuing operations.

Our business is conducted on a global basis with manufacturing, service and
sales undertaken in various locations throughout the world. Our products and
services are principally sold to customers in North America and Europe.

Our principal executive offices are located at Four Coliseum Centre, 2730 West
Tyvola Road, Charlotte, North Carolina 28217 (telephone 704-423-7000).

We were incorporated under the laws of the State of New York on May 2, 1912 as
the successor to a business founded in 1870.

DISCONTINUED OPERATIONS

Proposed Spin-off of Engineered Industrial Products Segment

In September 2001, we announced that our Board of Directors had approved in
principle the tax-free spin-off of our Engineered Industrial Products ("EIP")
segment to shareholders. The spin-off will be effected through a tax-free
distribution to our shareholders of all of the capital stock of EnPro
Industries, Inc. ("EnPro"), a newly formed wholly-owned subsidiary of Goodrich.

The EIP segment is currently owned by Coltec Industries Inc ("Coltec"), a
wholly-owned subsidiary of Goodrich. Prior to the distribution, Coltec's
aerospace business will assume all intercompany balances outstanding between
Coltec and us and Coltec will then transfer to us by way of a dividend all of
the assets, liabilities and operations of Coltec's aerospace business, including
these assumed balances. Following the spin-off, Coltec will be a wholly-owned
subsidiary of EnPro and Coltec's aerospace businesses will be owned by us.

It is anticipated that the $150 million of outstanding Coltec Capital Trust
convertible trust preferred securities will remain outstanding as a part of the
EnPro capital structure. Certain payments with respect to these securities are
guaranteed by Coltec and us, and are expected to be guaranteed by EnPro.
Following the spin-off, these securities will be convertible into a combination
of Goodrich and EnPro common stock. Separately, we expect that we will offer to
exchange the $300 million of Coltec's 7.5% Senior Notes due 2008 for similar
Goodrich debt securities prior to the spin-off. Assuming this exchange offer is
fully subscribed, EnPro will have total debt and convertible trust preferred
securities of approximately $165 million at the time of the spin-off. We also
contemplate that a new EnPro senior secured revolving credit facility will be in
place after the spin-off.

Although the spin-off is subject to certain conditions, no consents are required
from our security holders or the holders of Coltec's outstanding debt or
convertible trust preferred securities to complete the spin-off. We expect to
complete the spin-off in the second quarter of 2002.

The spin-off of the EIP segment represents the disposal of a segment under APB
Opinion No. 30 ("APB 30"). Accordingly, the segment is being accounted for as a
discontinued operation and the revenues, costs and expenses, assets and
liabilities, and cash flows of EIP have been segregated in our Consolidated
Statement of Income, Consolidated Balance Sheet and Consolidated Statement of
Cash Flows.

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<PAGE>

Divestiture of Performance Materials Segment

On February 28, 2001, we completed the sale of our Performance Materials ("PM")
segment to an investor group led by AEA Investors, Inc. (the "Buyer") for
approximately $1.4 billion. Total net proceeds, after anticipated tax payments
and transaction costs, included approximately $1 billion in cash and $172
million in debt securities issued by the Buyer (see additional discussion
regarding the debt securities received in Note F to the Consolidated Financial
Statements within the 2001 Annual Report to Shareholders, which is incorporated
herein by reference). The transaction resulted in an after-tax gain of $93.5
million and is subject to certain post closing adjustments (e.g. working capital
adjustments).

We have calculated a $25 million working capital adjustment in our favor, which
has been considered in the after-tax gain noted above. The Buyer is disputing
our working capital adjustment and has asserted that we owe the Buyer
approximately $10 million under the purchase and sale agreement. Should the
parties not be able to settle their differences, the disputed matters will be
forwarded to an independent third party for resolution. Such resolution will be
final and binding on all parties. We expect to finalize the working capital
adjustment during 2002.

Pursuant to the terms of the transaction, we have retained certain assets and
liabilities (primarily pension, postretirement and environmental liabilities) of
the Performance Materials segment. We have also agreed to indemnify the Buyer
for liabilities arising from certain events as defined in the agreement. Such
indemnification is not expected to be material to our financial condition, but
could be material to our results of operations in a given period.

The disposition of the Performance Materials segment also represented the
disposal of a segment under APB 30. Accordingly, the segment is being accounted
for as a discontinued operation and the revenues, costs and expenses, assets and
liabilities, and cash flows of Performance Materials have been segregated in our
Consolidated Statement of Income, Consolidated Balance Sheet and Consolidated
Statement of Cash Flows.

OTHER DISPOSITIONS

During 2001, we sold a minority interest in one business, resulting in a pre-tax
gain of $7.2 million, which has been reported in other income (expense), net.

During 2000, we sold all of our interest in one business, resulting in a pre-tax
gain of $2.0 million, which has been reported in other income (expense), net.

During 1999, we sold all or a portion of our interest in two businesses,
resulting in a pre-tax gain of $6.8 million, which has been reported in other
income (expense), net.

ACQUISITIONS

Pooling-of-Interests

On July 12, 1999, we completed a merger with Coltec Industries Inc ("Coltec") by
exchanging 35.5 million shares of Goodrich common stock for all of the common
stock of Coltec. Each share of Coltec common stock was exchanged for .56 of one
share of Goodrich common stock. The merger was accounted for as a pooling of
interests, and all prior period financial statements were restated to include
the financial information of Coltec as though Coltec had always been a part of
Goodrich.

Purchases

The following acquisitions were recorded using the purchase method of
accounting. Their results of operations have been included in our results since
their respective dates of acquisition. Acquisitions made by the Performance
Materials and Engineered Industrial Products segments are not discussed below.

During 2001, we acquired a manufacturer of aerospace lighting systems and
related electronics and the assets of a designer and manufacturer of inertial
sensors used for guidance and control of unmanned vehicles and precision-guided
systems. Total consideration paid by us for these acquisitions aggregated $114.4
million, of which $101.6 million represented goodwill and other intangible
assets. The purchase price allocation for these acquisitions has been based on
preliminary estimates.

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<PAGE>

During 2000, we acquired a manufacturer of earth and sun sensors for satellite
attitude determination and control; ejection seat technology; a manufacturer of
fuel nozzles; a developer of avionics and displays; the assets of a developer of
precision electro-optical instrumentation serving both the space and military
markets; an equity interest in a joint venture focused on developing and
operating a comprehensive open electronic marketplace for aerospace aftermarket
products and services; a manufacturer of precision and large optical systems,
laser warning systems and visual surveillance systems for day and night use; and
a supplier of pyrotechnic devices for space, missile, and aircraft systems.
Total consideration paid by us for these acquisitions aggregated $242.6 million,
of which $105.4 million represented goodwill and intangible assets.

During 1999, we acquired a manufacturer of spacecraft attitude determination and
control systems and sensor and imaging instruments; the remaining 50 percent
interest in a joint venture, located in Singapore, that overhauls and repairs
thrust reversers, nacelles and nacelle components; an ejection seat business;
and a manufacturer and developer of micro-electromechanical systems, which
integrate electrical and mechanical components to form "smart" sensing and
control devices. Total consideration paid by us aggregated $56.5 million, of
which $55.0 million represented goodwill and intangible assets.

The purchase agreement for the manufacturer and developer of
micro-electromechanical systems provides for additional consideration to be paid
over six years based on a percentage of net sales. The additional consideration
for the first five years, however, is guaranteed to be not less than $3.5
million. As the $3.5 million of additional consideration is not contingent on
future events, it has been included in the purchase price and allocated to the
net assets acquired. All additional contingent amounts payable under the
purchase agreement will be recorded as additional purchase price/goodwill when
earned.

The impact of these acquisitions was not material in relation to our results of
operations. Consequently, pro forma financial information is not presented.

OPERATING SEGMENTS

Due to the sale of our Performance Materials segment in 2001, as well as the
intended spin-off of our Engineered Industrial Products segment in 2002, we have
redefined our segments. Our operations are now classified into four reportable
business segments: Aerostructures and Aviation Technical Services, Landing
Systems, Engine and Safety Systems and Electronic Systems.

Aerostructures and Aviation Technical Services: Aerostructures is a leading
supplier of nacelles, pylons, thrust reversers and related aircraft engine
housing components. The aviation technical sales division performs comprehensive
total aircraft maintenance, repair, overhaul and modification for many
commercial airlines, independent operations, aircraft leasing companies and
airfreight carriers.

Landing Systems: Landing Systems provides systems and components pertaining to
aircraft taxi, take-off, landing and stopping. Several divisions within the
segment are linked by their ability to contribute to the integration, design,
manufacture and service of entire aircraft undercarriage systems, including
sensors, landing gear, certain brake controls and wheels and brakes.

Engine and Safety Systems: Engine and Safety Systems produces engine and fuel
controls, pumps, fuel delivery systems, as well as structural and rotating
components such as disks, blisks, shafts and airfoils for both aerospace and
industrial gas turbine applications. This segment also produces aircraft
evacuation, de-icing and passenger restraint systems, as well as ejection seats
and crew and attendant seating.

Electronic Systems: Electronic Systems produces a wide array of products that
provide flight performance measurements, flight management, and control and
safety data. Included are a variety of sensors systems that measure and manage
aircraft fuel and monitor oil debris; engine, transmission and structural
health; and aircraft motion control systems. The segment's products also include
instruments and avionics, warning and detection systems, ice detection systems,
test equipment, aircraft lighting systems, landing gear cables and harnesses,
satellite control, data management and payload systems, launch and missile
telemetry systems, airborne surveillance and reconnaissance systems and laser
warning systems.

For financial information concerning the sales, operating income, total assets,
capital expenditures, depreciation and amortization and geographic information
by segment, see Note L to the Consolidated Financial Statements within the 2001
Annual Report to Shareholders, which is incorporated herein by reference.

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<PAGE>

CUSTOMERS

We serve a broad range of customers worldwide in the commercial, military,
regional, business and general aviation markets. We market our products, systems
and services directly to our customers through an internal marketing and sales
force.

In 2001, 2000 and 1999, sales to The Boeing Company totaled 23 percent, 23
percent and 26 percent, respectively, of consolidated sales. In 2001, 2000 and
1999, sales to Airbus totaled 13 percent of consolidated sales. These amounts
include direct sales to Boeing and Airbus as well as indirect sales through
system suppliers and sub-assemblers.

COMPETITION

The aerospace industry in which we operate is highly competitive. Principal
competitive factors include price, product and system performance, quality,
service, design and engineering capabilities, new product innovation and timely
delivery. We compete worldwide with a number of United States and international
companies that are both larger and smaller than us in terms of resources and
market share, and some of which are our customers. Some of our competitors have
more extensive or more specialized engineering, manufacturing and marketing
capabilities than we do in certain areas. As a result, these competitors may be
able to adapt more quickly to new or emerging technologies and changes in
customer requirements or may be able to devote greater resources to the
development, promotion and sale of their products than we can.

We experience intense competition for new commercial programs, as well.
Manufactures of many aircraft offer their customers various choices of products
at the time of sale of the aircraft. As a result, we and our competitors may
offer substantial discounts and other financial incentives, performance and
operating cost guarantees, participation in financing arrangements and
maintenance agreements. The original selection of components by manufactures,
and by purchasers, of the new aircraft can also have a significant impact on
later sales of spare parts and maintenance services.

BACKLOG

At December 31, 2001, we had a backlog of approximately $3.4 billion, of which
approximately 53 percent is expected to be filled during 2002. The amount of
backlog at December 31, 2000 was approximately $3.2 billion. Backlogs are
subject to delivery delays or program cancellations, which are beyond our
control.

RAW MATERIALS

Raw materials and components used in the manufacture of our products, including
aluminum, steel and carbon fibers, are available from a number of manufacturers
and are generally in adequate supply.

ENVIRONMENTAL

We are subject to various domestic and international environmental laws and
regulations which may require that we investigate and remediate the effects of
the release or disposal of materials at sites associated with past and present
operations. We are currently involved in the investigation and remediation of a
number of sites under these laws. Based on currently available information, we
do not believe that future environmental costs in excess of those accrued with
respect to such sites will have a material adverse effect on our financial
condition. There can be no assurance, however, that additional future
developments, administrative actions or liabilities relating to environmental
matters will not have a material adverse effect on our results of operations or
cash flows in a given period.

For additional information concerning environmental matters, see Note T to the
Consolidated Financial Statements within the 2001 Annual Report to Shareholders,
which is incorporated herein by reference.

RESEARCH AND DEVELOPMENT

We perform research and development under Company funded programs for commercial
products and under contracts with others. Research and development under
contracts with others is performed on both military and commercial products.
Total research and development expenditures in 2001, 2000 and 1999 were $198.2
million, $186.0 million and $180.0 million, respectively. Of these amounts,
$49.0 million, $50.6 million and $43.7 million, respectively, were funded by
customers.

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<PAGE>

INTELLECTUAL PROPERTY

We have many patents of our own and have acquired licenses under patents of
others. While such patents in the aggregate are important to us, neither our
primary business nor any of our industry segments is dependent on any single
patent or group of related patents. We use a number of trademarks important
either to our business as a whole or to our industry segments considered
separately. We believe that these trademarks are adequately protected.

HUMAN RESOURCES

As of December 31, 2001, we had approximately 16,600 employees in the United
States. An additional 2,600 people were employed by us in other countries. The
Company has 4,800 employees in businesses reported as discontinued operations
which are not included in the amounts above. We believe that we have good
relationships with our employees. The hourly employees who are unionized are
covered by collective bargaining agreements with a number of labor unions and
with varying contract termination dates through June 2004. There were no
material work stoppages during 2001.

FOREIGN OPERATIONS

We are engaged in business in foreign markets. Our manufacturing and service
facilities are located in Australia, Canada, England, France, Germany, Hong
Kong, India, Mexico, Poland, Scotland, Singapore, and Slovakia. We also market
our products and services through sales subsidiaries and distributors in a
number of foreign countries. We also have technical fee, patent royalty
agreements and joint venture agreements with various foreign companies.

Outside North America, no single foreign geographic area is currently
significant, although we continue to expand our business in Europe. Currency
fluctuations, tariffs and similar import limitations, price controls and labor
regulations can affect our foreign operations, including foreign affiliates.
Other potential limitations on our foreign operations include expropriation,
nationalization, restrictions on foreign investments or their transfers, and
additional political and economic risks. In addition, the transfer of funds from
foreign operations could be impaired by the unavailability of dollar exchange or
other restrictive regulations that foreign governments could enact. We do not
believe that such restrictions or regulations would have a materially adverse
effect on our business, in the aggregate.

For additional financial information about U.S. and foreign sales, see Note L to
the Consolidated Financial Statements within the 2001 Annual Report to
Shareholders, which is incorporated herein by reference.

CERTAIN BUSINESS RISKS

Our business, financial condition, results of operations and cash flows can be
impacted by a number of factors, including but not limited to those set forth
below and elsewhere in this Annual Report on Form 10-K, any one of which could
cause our actual results to vary materially from recent results or from our
anticipated future results.

THE MARKETS WE SERVE ARE CYCLICAL AND SENSITIVE TO DOMESTIC AND FOREIGN ECONOMIC
CONSIDERATIONS WHICH COULD ADVERSELY AFFECT OUR BUSINESS AND FINANCIAL RESULTS.

The markets in which we sell our products are, to varying degrees, cyclical and
have experienced periodic downturns. For example, markets for certain of our
commercial aviation products sold to OEMs have experienced downturns during
periods of slowdowns in the commercial airline industry and during periods of
weak conditions in the economy generally, as demand for new aircraft typically
declines during these periods. Although we believe that aftermarket demand for
many of our products may reduce our exposure to these business downturns, we
have experienced these conditions in our business in the past and may experience
downturns in the future.

The U.S. and other world markets are currently experiencing an economic downturn
and many of the markets that we serve have been affected by this downturn. As a
result, our business and financial results have been adversely affected. If this
economic downturn were to continue for an extended period or if conditions were
to worsen, the negative impact on our business and financial results could be
further exacerbated.

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<PAGE>

Further, the terrorist attacks of September 11, 2001 adversely impacted the U.S.
and world economies and a wide range of industries. Those terrorist attacks, the
allied military response and subsequent developments may lead to future acts of
terrorism, additional hostilities and financial, economic and political
instability. While the precise effects of such instability on our industry and
our business is difficult to determine, it may negatively impact our business,
financial condition, results of operations and cash flows.

CURRENT CONDITIONS IN THE AIRLINE INDUSTRY COULD ADVERSELY AFFECT OUR BUSINESS
AND FINANCIAL RESULTS.

The downturn in the commercial air transport market, exacerbated by the
terrorist attacks of September 11, has adversely affected the financial
condition of many of our commercial airline customers. Many of our airline
customers have announced reductions in their aircraft fleet sizes, resulting in
decreased aftermarket demand for many of our products. In addition, many of our
airline customers have requested extended payment terms or reduced pricing. We
have been evaluating these requests on a case-by-case basis. To the extent
extended payment terms are granted to customers, it may negatively affect our
future cash flow. We perform ongoing credit evaluations on the financial
condition of all of our customers and maintain reserves for uncollectible
accounts receivable based upon expected collectibility. Although we believe that
our reserves are adequate, we are not able to predict with certainty the changes
in the financial stability of these customers. Any material change in the
financial status of any one or group of customers could have a material adverse
effect on our financial condition, results of operations, or cash flows.

A SIGNIFICANT DECLINE IN BUSINESS WITH BOEING OR AIRBUS COULD ADVERSELY AFFECT
OUR BUSINESS AND FINANCIAL RESULTS.

Approximately 23% and 13% of our sales for the year ended December 31, 2001 were
made to Boeing and its designated subcontractors, and Airbus and its designated
subcontractors. Accordingly, a significant reduction in purchases by either of
these customers could materially impair our results of operations and weaken our
financial condition. Boeing and Airbus have both announced that new commercial
aircraft deliveries for 2002 will be lower than 2001 as a result of reduced
demand. We expect that this reduction in commercial aircraft deliveries by
Boeing and Airbus will adversely affect our results of operations and cash
flows.

DEMAND FOR OUR DEFENSE AND SPACE RELATED PRODUCTS IS DEPENDENT UPON GOVERNMENT
SPENDING.

Approximately 20% of our net sales for the year ended December 31, 2001 were
derived from the defense and space industry. The defense and space industry is
largely dependent upon government budgets, particularly the U.S. defense budget.
We cannot assure you that new military aircraft programs will enter full-scale
production as expected. A change in levels of defense spending could curtail or
enhance prospects in our military business. A change in the level of anticipated
new product development costs could negatively impact our business.

COMPETITIVE PRESSURES MAY ADVERSELY AFFECT OUR BUSINESS AND FINANCIAL RESULTS.

The aerospace industry in which we operate is highly competitive. We compete
worldwide with a number of United States and international companies that are
both larger and smaller than us in terms of resources and market share, and some
of which are our customers. While we are the market and technology leader in
many of our products, in certain areas some of our competitors may have more
extensive or more specialized engineering, manufacturing and marketing
capabilities than we do in areas in which we compete. As a result, these
competitors may be able to adapt more quickly to new or emerging technologies
and changes in customer requirements or may be able to devote greater resources
to the development, promotion and sale of their products than we can.

THE SIGNIFICANT CONSOLIDATION OCCURRING IN THE AEROSPACE INDUSTRY COULD
ADVERSELY AFFECT OUR BUSINESS AND FINANCIAL RESULTS.

The aerospace industry in which we operate has been experiencing significant
consolidation among suppliers, including us and our competitors, and the
customers we serve. Commercial airlines have increasingly been merging and
creating global alliances to achieve greater scale and enhance their geographic
reach. Aircraft manufacturers have made acquisitions to expand their product
portfolios to better compete in the global marketplace. In addition, aviation
suppliers have been consolidating and forming alliances to broaden their product
and integrated system offerings and achieve critical mass. This supplier
consolidation is in part attributable to aircraft manufacturers and airlines
more frequently awarding long-term sole source or preferred supplier contracts
to the most capable suppliers, thus reducing the total number of suppliers from
whom components and systems are purchased. We cannot assure you that our
business and financial results will not be adversely impacted as a result of
consolidation by our competitors or customers.

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<PAGE>

OUR CONSOLIDATION AND RESTRUCTURING ACTIONS MAY NOT RESULT IN COST SAVINGS.

During the fourth quarter of 2001, we announced that we were eliminating
approximately 2,400 aerospace and corporate positions and consolidating various
aerospace operations in order to align capacity with current customer demand. We
cannot assure you that these consolidation and restructuring actions will prove
successful or result in all of the cost savings that we currently anticipate
within the timeframe expected.

OUR ACQUISITION STRATEGY EXPOSES US TO RISKS, INCLUDING THE RISK THAT WE MAY NOT
BE ABLE TO SUCCESSFULLY INTEGRATE ACQUIRED BUSINESSES.

We have a consistent strategy to grow, in part, by the acquisition of additional
businesses and are continuously evaluating various acquisition opportunities.
Our ability to grow by acquisition is dependent upon, among other factors, the
availability of suitable acquisition candidates. Growth by acquisition involves
risks that could adversely affect our operating results, including difficulties
in integrating the operations and personnel of acquired companies, the potential
amortization of acquired intangible assets and the potential loss of key
employees of acquired companies. We may not be able to complete acquisitions on
satisfactory terms or, if any acquisitions are completed, satisfactorily
integrate these acquired businesses.

THE AEROSPACE INDUSTRY IS HIGHLY REGULATED.

The aerospace industry is highly regulated in the United States by the Federal
Aviation Administration, or FAA, and in other countries by similar agencies. We
must be certified by the FAA and, in some cases, by individual original
equipment manufacturers, or OEMs, in order to engineer and service parts and
components used in specific aircraft models. If material authorizations or
approvals were revoked or suspended, our operations would be adversely affected.
New or more stringent governmental regulations may be adopted, or industry
oversight heightened, in the future, and we may incur significant expenses to
comply with any new regulations or any heightened industry oversight.

WE MAY HAVE LIABILITIES RELATING TO ENVIRONMENTAL LAWS AND REGULATIONS WHICH
COULD ADVERSELY AFFECT OUR FINANCIAL RESULTS.

ANY PRODUCT LIABILITY CLAIMS IN EXCESS OF INSURANCE MAY ADVERSELY AFFECT OUR
FINANCIAL CONDITION.

Our operations expose us to potential liability for personal injury or death as
a result of the failure of an aircraft component that has been serviced by us,
the failure of an aircraft component designed or manufactured by us or the
irregularity of metal products processed or distributed by us. While we believe
that our liability insurance is adequate to protect us from these liabilities,
our insurance may not cover all liabilities. Additionally, insurance coverage
may not be available in the future at a cost acceptable to us. Any material
liability not covered by insurance or for which third party indemnification is
not available could have a material adverse effect on our financial condition.

OUR FACILITIES COULD BE DAMAGED BY CATASTROPHES WHICH COULD REDUCE OUR
PRODUCTION CAPACITY AND RESULT IN A LOSS OF CUSTOMERS.

We have facilities in the U.S. and in foreign countries, which, by virtue of
their geographical location are susceptible to earthquakes and other natural
disasters. Although we carry property insurance, including earthquake insurance
and business interruption insurance, our inability to meet customer schedules as
a result of a catastrophe may result in a loss of customers or significant
additional costs, such as penalty claims, under customer contracts.

-10-
<PAGE>

IF COLTEC IS UNABLE TO MEET ITS OBLIGATIONS IN THE FUTURE, INCLUDING OBLIGATIONS
TO ASBESTOS CLAIMANTS, COLTEC CREDITORS MAY SEEK TO RECOVER FROM GOODRICH.

After the spin-off is completed, it is possible that asbestos-related claims
might be asserted against us on the theory that we have some responsibility for
the asbestos-related liabilities of Coltec or its subsidiaries, even though the
activities that led to those claim occurred prior to our ownership of Coltec.
Also, it is possible that a claim could be asserted against us that Coltec's
dividend of its aerospace business to us prior to the spin-off was made at a
time when Coltec was insolvent or caused Coltec to become insolvent. Such a
claim could seek recovery from us on behalf of Coltec of the fair market value
of the dividend.

No such claims have been asserted against us to date. We believe that we would
have substantial legal defenses against any such claims. Any such claims would
require, as a practical matter, that Coltec's subsidiaries were unable to
satisfy their asbestos-related liabilities and that Coltec was found to be
responsible for these liabilities and is unable to meet its financial
obligations. In addition, the distribution agreement between EnPro and Goodrich
that will be used to effectuate the spin-off will provide Goodrich with an
indemnification from EnPro covering, among other things, these liabilities. We
believe any such claims would be without merit and that Coltec will be solvent
both before and after the dividend. If we are ultimately found to be responsible
for the asbestos-related liabilities of Coltec's subsidiaries, we believe it
would not have a material adverse effect on our financial condition, but could
have a material adverse effect on our results of operations and cash flows in a
particular period. However, because of the uncertainty as to the number, timing
and payments related to future asbestos-related claims, there can be no
assurance that any such claims will not have a material adverse effect on our
financial condition, results of operations and cash flows. If a claim related to
the dividend of Coltec's aerospace business were successful, it could have a
material adverse impact on our financial condition, results of operations and
cash flows.

ITEM 2. PROPERTIES

We operate manufacturing plants and service facilities in 28 states in the U.S.
and in Australia, Canada, England, France, Germany, Hong Kong, India, Mexico,
Poland, Scotland, Singapore, and Slovakia. In addition, we have other facilities
throughout the United States and in various foreign countries, which include
sales offices, administrative offices and warehouses.

Certain information with respect to our significant facilities that are owned is
set forth below:

Approximate
Number of
Segment Location Square Feet
- ------- -------- -----------
<S> <C> <C>
Aerostructures and Chula Vista, California 1,840,000
Aviation Technical Riverside, California 1,160,000
Services Everett, Washington (b) 1,030,000

Landing Systems Troy, Ohio 410,000
Oakville, Canada 360,000

Engine and Safety West Hartford, Connecticut (a) 550,000
Systems

Electronic Systems Danbury, Connecticut 520,000

EIP (c) Beloit, Wisconsin 855,000
Palmyra, New York 685,000
Quincy, Illinois 325,000

</TABLE>

(a) The Engine and Safety Systems Segment utilizes approximately 300,000
square feet, with the balance leased to third parties.
(b) Although the building is owned, the land at this facility is leased.
(c) After the spin-off of EIP, we will no longer own these facilities.

-11-
<PAGE>

In addition to the owned facilities, certain manufacturing activities are
conducted within leased premises, the largest of which is in the Aerostructures
and Aviation Technical Services Segment, located in Chula Vista, California, and
covers approximately 890,000 square feet. Some of these leases provide for
options to purchase or to renew such leases.

In the spring of 2000, we moved our headquarters operations to a new office
building in Charlotte, North Carolina. We leased approximately 110,000 square
feet for an initial term of ten years, with two, five-year options to 2020. The
new offices provide space for the Corporate headquarters and also for the
headquarters of the Aerostructures and Aviation Technical Services, Engine and
Safety Systems and the Electronic Systems Segments.

In the opinion of management, our principal properties, whether owned or leased,
are suitable and adequate for the purposes for which they are used and are
suitably maintained for such purposes. See Item 1, "Business-Environmental
Matters" for a description of proceedings under applicable environmental laws
regarding some of our properties.

In addition, we and our subsidiaries are lessees under a number of cancelable
and non-cancelable leases for certain real properties, used primarily for
administrative, retail, maintenance, repair and overhaul of aircraft, aircraft
wheels and brakes and evacuation systems and warehouse operations, and for
certain equipment (see Note I to the Consolidated Financial Statements within
the 2001 Annual Report to Shareholders, which is incorporated herein by
reference).

ITEM 3. LEGAL PROCEEDINGS

GENERAL

There are pending or threatened against us or our subsidiaries various claims,
lawsuits and administrative proceedings, all arising from the ordinary course of
business with respect to commercial, product liability, asbestos and
environmental matters, which seek remedies or damages. We believe that any
liability that may finally be determined with respect to such claims, lawsuits
and proceedings should not have a material effect on our consolidated financial
position or results of operations. From time to time, we are also involved in
legal proceedings as a plaintiff involving contract, patent protection,
environmental and other matters.

ENVIRONMENTAL

Environmental liabilities are recorded when our liability is probable and the
costs are reasonably estimable, which generally is not later than at completion
of a feasibility study or when we have recommended a remedy or have committed to
an appropriate plan of action. The accruals are reviewed periodically and, as
investigations and remediations proceed, adjustments are made as necessary.
Accruals for losses from environmental remediation obligations do not consider
the effects of inflation, and anticipated expenditures are not discounted to
their present value. The accruals are not reduced by possible recoveries from
insurance carriers or other third parties, but do reflect anticipated
allocations among potentially responsible parties at federal Superfund sites or
similar state-managed sites and an assessment of the likelihood that such
parties will fulfill their obligations at such sites. Our measurement of
environmental liabilities by us is based on currently available facts, present
laws and regulations, and current technology. Such estimates take into
consideration our prior experience in site investigation and remediation, the
data concerning cleanup costs available from other companies and regulatory
authorities, and the professional judgment of our environmental experts in
consultation with outside environmental specialists, when necessary.

Estimates of our liability are further subject to uncertainties regarding the
nature and extent of site contamination, the range of remediation alternatives
available, evolving remediation standards, imprecise engineering evaluations and
estimates of appropriate cleanup technology, methodology and cost, the extent of
corrective actions that may be required, and the number and financial condition
of other potentially responsible parties, as well as the extent of their
responsibility for the remediation. Accordingly, as investigation and
remediation of these sites proceeds, it is likely that adjustments in our
accruals will be necessary to reflect new information. The amounts of any such
adjustments could have a material adverse effect on our results of operations in
a given period,

-12-
<PAGE>
but the amounts, and the possible range of loss in excess of the amounts
accrued, are not reasonably estimable. Based on currently available information,
however, management does not believe that future environmental costs in excess
of those accrued with respect to sites with which we have been identified are
likely to have a material adverse effect on the our financial condition. There
can be no assurance, however, that additional future developments,
administrative actions or liabilities relating to environmental matters will not
have a material adverse effect on our results of operations in a given period.

At December 31, 2001, our reserves for environmental remediation obligations
totaled $84.9 million, of which $11.0 million was included in accrued
liabilities ($1.5 million of which is classified within merger-related and
consolidation costs). Of the $84.9 million, $12.8 million is associated with
ongoing operations and $72.1 million is associated with businesses previously
disposed of or discontinued.

The timing of expenditures depends on a number of factors that vary by site,
including the nature and extent of contamination, the number of potentially
responsible parties, the timing of regulatory approvals, the complexity of the
investigation and remediation, and the standards for remediation. We expect that
we will expend present accruals over many years, and will complete remediation
of all sites which we have identified in up to thirty years. This period
includes operation and monitoring costs which are generally incurred over 15
years.

TOLO LITIGATION

In May 2000, we and our subsidiary Rohr, Inc. ("Rohr"), were served with
complaints in a lawsuit filed in the Superior Court of Orange County,
California, by former shareholders and certain former employees of Tolo, Inc.
Tolo, Inc. is a subsidiary of Rohr that was acquired in 1997. The former
shareholders alleged that we and Rohr breached the stock purchase agreement by
failing to pay $2.4 million under the terms of the agreement. In September 2001,
a jury found us liable to the shareholders for the $2.4 million retained by Rohr
under the stock purchase agreement and also assessed punitive damages of $48
million. The court subsequently reduced the punitive damage award to $24
million.

At the time of the purchase we established a reserve of $2.4 million relating to
the amount withheld by Rohr pursuant to the stock purchase agreement. We have
not established an accrual for the punitive damages award of $24 million, which
was based on the plaintiff"s fraudulent concealment claim, for the reasons set
forth below.

We and our legal counsel believe that there were numerous points of reversible
error in the trial that make it more likely than not that the judgment will be
reversed or vacated on appeal. First, we believe the plaintiffs' fraud claim is
legally deficient under California law and should be reversed. If the fraud
claim is not reversed, defendants' should, at a minimum, be granted a new trial
on the fraudulent concealment claim because the trial court permitted plaintiffs
to add this claim late in the trial but did not allow us to introduce evidence
to defend against it. We also believe that the trial court made numerous
prejudicial errors regarding the admission and exclusion of evidence relating to
the fraud claims, which further supports the grant of a new trial. And finally,
we believe that the trial court's directed verdict on plaintiffs' breach of
contract claim should be set aside and a new trial granted because, among other
things, there was sufficient evidence for the jury to find for the defendants on
this claim.

ENGINEERED INDUSTRIAL PRODUCTS - CONTINGENCIES

Asbestos

Garlock and Anchor. Two subsidiaries of Coltec, Garlock Sealing Technologies,
LLC ("Garlock") and The Anchor Packing Company ("Anchor"), have been among a
number of defendants (typically 15 to 40) in actions filed in various states by
plaintiffs alleging injury or death as a result of exposure to asbestos fibers.
Among the products at issue in those actions are industrial sealing products,
predominantly gaskets, manufactured and/or sold by Garlock or Anchor. The
damages claimed vary from action to action and in some cases plaintiffs seek
both compensatory and punitive damages. To date, neither Garlock nor Anchor has
been required to pay any punitive damage awards, although there can be no
assurance that they will not be required to do so in the future. Liability for
compensatory damages has historically been allocated among all responsible
defendants, thus limiting the potential monetary impact of a particular judgment
or settlement on any individual defendant.

-13-
<PAGE>

We believe that Garlock and Anchor are in a favorable position compared to many
other asbestos defendants because, among other things, the asbestos-containing
products sold by Garlock and Anchor are encapsulated, which means the asbestos
fibers are incorporated into the product during the manufacturing process and
sealed in a binder. They are also nonfriable, which means they cannot be
crumbled by hand pressure. The Occupational Safety and Health Administration,
which began generally requiring warnings on asbestos-containing products in
1972, has never required that a warning be placed on products such as Garlock's
gaskets. Notwithstanding that no warning label has been required, Garlock
included one on all of its asbestos-containing products beginning in 1978.
Further, gaskets such as those previously manufactured and sold by Garlock are
one of the few asbestos-containing products permitted to be manufactured under
regulations of the EPA. Since the mid-1980s, U.S. sales of asbestos-containing
industrial sealing products have not been a material part of Garlock's sales and
those sales have been predominantly to sophisticated purchasers such as the U.S.
Navy and large petrochemical facilities. These purchasers generally have
extensive health and safety procedures and are familiar with the risks
associated with the use and handling of industrial sealing products that contain
asbestos. Garlock discontinued distributing asbestos-containing products in the
U.S. during 2000 and world-wide mid-2001.

Garlock settles and disposes of actions on a regular basis. In addition, some
actions are disposed of at trial. Garlock's historical settlement strategy has
been to try to match the timing of payments with recoveries received from
insurance. However, in 1999 and 2000, Garlock implemented a short-term
aggressive settlement strategy. The purpose of this short-term strategy was to
achieve a permanent reduction in the number of overall asbestos claims through
the settlement of a larger than normal number of claims, including some claims
not yet filed as lawsuits. Garlock believes that these settlements were at a
lower overall cost to Garlock than would eventually have been paid even though
the timing of payment was accelerated. Mainly due to this short-term aggressive
settlement strategy and because settlements are made over a period of time, the
settlement amounts paid in 2001, 2000 and 1999 increased over prior periods.

Settlements are generally made on a group basis with payments made to individual
claimants over a period of one to four years and are made without any admission
of liability. Settlement amounts vary depending upon a number of factors,
including the jurisdiction where the action was brought, the nature of the
disease alleged, the occupation of the plaintiff, the presence or absence of
other possible causes of the plaintiff's alleged illness, the availability of
legal defenses, such as the statute of limitations, and whether the action is an
individual one or part of a group. Garlock's allocable portion of the total
settlement amount for an action typically ranges from 1% to 2% of the total
amount.

Before any payment on a settled claim is made, the claimant is required to
submit a medical report acceptable to Garlock substantiating the
asbestos-related illness and meeting specific criteria of disability. In
addition, sworn testimony that the claimant worked with or around Garlock
asbestos-containing products is required. Generally, the claimant is also
required to sign a full and unconditional release of Garlock, its subsidiaries,
parent, officers, directors, affiliates and related parties from any liability
for asbestos-related injuries or claims.

When a settlement demand is not reasonable given the totality of the
circumstances, Garlock generally will try the case. Garlock has been successful
in winning a substantial majority of the cases it has tried to verdict.
Garlock's share of adverse verdicts in these cases in 2001, 2000 and 1999
totaled less than $7 million in the aggregate, and some of those verdicts are on
appeal.

Anchor is an inactive and insolvent subsidiary of Coltec. The insurance coverage
available to it is fully committed. Anchor continues to pay settlement amounts
covered by its insurance but has not committed to settle any further actions
since 1998. As cases reach the trial stage, Anchor is typically dismissed
without payment.

The insurance coverage available to Garlock is substantial. At December 31,
2001, Garlock had available $1.011 billion of insurance coverage from carriers
that it believes to be solvent. Of that amount, $119 million is allocated to
claims that have been paid by Garlock and submitted to its insurance companies
for reimbursement and $161 million has been committed to claim settlements not
yet paid by Garlock. Thus, at December 31, 2001, $731 million remained available
for coverage of future claims. Insurance coverage for asbestos claims is not
available to cover exposures initially occurring on and after July 1, 1984.
Garlock and Anchor continue to be named as defendants in new actions, a few of
which allege initial exposure after July 1, 1984. To date, no payments with
respect to these claims, pursuant to a settlement or otherwise, have been made.
In addition, Garlock and Anchor believe that they have substantial defenses to
these claims and therefore automatically reject them for settlement. However,
there can be no assurance that any or all of these defenses will be successful
in the future.

-14-
<PAGE>

Arrangements with Garlock's insurance carriers limit the amount that can be
received by it in any one year. The amount of insurance available to cover
claims paid by Garlock currently is limited to $80 million per year in 2001 and
2000 ($60 million in 1999), covering both settlements and reimbursements of
legal fees. This limit automatically increases by 8% every three years. Amounts
paid by Garlock in excess of this annual limit that would otherwise be
recoverable from insurance may be collected from the insurance companies in
subsequent years so long as insurance is available but subject to the annual
limit in each subsequent year. As a result, Garlock is required to pay out of
its own cash any amounts paid to settle or dispose of asbestos-related claims in
excess of the annual limit and collect these amounts from its insurance carriers
in subsequent years. Various options, such as raising the annual limit, are
being pursued to ensure as close a match as possible between payments by Garlock
and recoveries received from insurance. There can be no assurance that Garlock
will be successful as to any or all of these options.

In accordance with internal procedures for the processing of asbestos product
liability actions and due to the proximity to trial or settlement, certain
outstanding actions against Garlock and Anchor have progressed to a stage where
the cost to dispose of these actions can reasonably be estimated. These actions
are classified as actions in advanced stages and are included in the table as
such below. With respect to outstanding actions against Garlock and Anchor that
are in preliminary procedural stages, as well as any actions that may be filed
in the future, insufficient information exists upon which judgments can be made
as to the validity or ultimate disposition of such actions, thereby making it
difficult to reasonably estimate what, if any, potential liability or costs may
be incurred. Accordingly, no estimate of future liability has been included in
the table below for such claims.

We record an accrual for liabilities related to Garlock and Anchor
asbestos-related matters that are deemed probable and can be reasonably
estimated, which consist of settled claims and actions in advanced stages of
processing. We also record an asset equal to the amount of those liabilities
that is expected to be recovered by insurance. These amounts are reflected
within discontinued operations in our consolidated balance sheet and statement
of cash flows. A table is provided below depicting quantitatively the items
discussed above.

2001 2000 1999
------- ------- -------
<S> <C> <C> <C>
(NUMBER OF CASES)

New Actions Filed During the Year (1) 37,600 36,200 30,200
Actions in Advanced Stages at Year-End 2,500 5,800 8,300
Open Actions at Year-End 95,400 96,300 96,000

(DOLLARS IN MILLIONS AT YEAR-END)
Estimated Liability for Settled Claims and Actions
in Advanced Stages of Processing (2) $170.9 $231.2 $163.1
Estimated Amounts Recoverable From Insurance (2)(3) $293.7 $285.7 $188.2

(DOLLARS IN MILLIONS)
Payments (2) $162.7 $119.7 $ 84.5
Insurance Recoveries (2) 87.9 83.3 65.2
------ ------ ------
Net Cash Flow (3) $(74.8) $(36.4) $(19.3)
====== ====== ======

</TABLE>

(1) Consists only of actions actually filed with a court of competent
jurisdiction. To the extent that a particular action names both Garlock
and Anchor as defendants, for purposes of this table the action is
treated as a single action.
(2) Includes amounts with respect to all claims settled, whether or not an
action has actually been filed with a court of competent jurisdiction,
claims which have been dismissed or tried and claims otherwise closed
during the period.
(3) Payments made during the period for which Garlock does not receive a
corresponding insurance recovery due to the annual limit imposed under
Garlock's insurance policies will be recovered in future periods to the
extent insurance is available. When estimating the amounts recoverable,
Garlock only includes insurance coverage available from carriers
believed to be solvent.

As shown in the table above, the number of new actions filed during 2001
increased slightly over 2000, while the number of new actions filed during 2000
increased significantly over 1999. We believe this increase represents the
acceleration of claims from future periods mostly attributable to bankruptcies
of other asbestos defendants. The acceleration of claims may have the impact of
accelerating the associated settlement payments. We believe the number of new
actions will decrease in future years due, in part, to the previously-described
acceleration of future claims and because the largest asbestos exposures
occurred prior to the mid-1970s. However, there can be no assurance that the
number of new claims filed will not remain at current levels or increase in
future years.

-15-
<PAGE>

Garlock and Anchor recorded charges to operations amounting to approximately $8
million in each of 2001, 2000 and 1999, representing payments and related
expenditures made during the periods which are not recoverable at all under
insurance, whether in the present period or in future periods.

Garlock and Anchor paid $74.8, $36.4 million and $19.3 million for the defense
and disposition of asbestos-related actions, net of amounts received from
insurance carriers, during 2001, 2000 and 1999, respectively. The amount of
payments in 2001 was consistent with their expectation that payments during 2001
would be higher than in 2000 and in 1999.

Considering the foregoing, as well as the experience of our subsidiaries and
other defendants in asbestos litigation, the likely sharing of judgments among
multiple responsible defendants, recent bankruptcies of other defendants,
legislative efforts and given the substantial amount of insurance coverage that
Garlock expects to be available from its solvent carriers, we believe that
pending actions against Garlock and Anchor are not likely to have a material
adverse effect on our consolidated financial condition, but could be material to
our consolidated results of operations or cash flows in a given period. However,
because of the uncertainty as to the number and timing of potential future
actions, as well as the amount that will have to be paid to settle or satisfy
any such actions in the future, there can be no assurance that those future
actions will not have a material adverse effect on our consolidated financial
condition, results of operations and cash flows.

Coltec and some of its subsidiaries (other than Garlock and Anchor) have also
been named as defendants in various actions by plaintiffs alleging injury or
death as a result of exposure to asbestos fibers. The number of claims to date
has not been significant and insurance coverage is available to Coltec. Based on
the above, we believe that these pending and reasonably anticipated future
actions are not likely to have a material adverse effect on our consolidated
financial condition, results of operations and cash flows and are therefore not
discussed above.

Coltec, Garlock, Anchor and some of Coltec's other subsidiaries are also
defendants in other asbestos-related lawsuits or claims involving maritime
workers, medical monitoring claimants and co-defendants. Based on past
experience, we believe that these categories of claims are not likely to have a
material adverse effect on our consolidated financial condition, results of
operations and cash flows and are therefore not discussed above.

OTHER EIP MATTERS

Coltec has contingent liabilities related to discontinued operations of its
predecessors for which it has retained liabilities or is obligated under
indemnity agreements. These contingent liabilities include potential product
liability and associated claims related to Coltec's former Colt Firearms
subsidiary for firearms manufactured prior to 1990 and related to Coltec's
former Central Maloney subsidiary for electrical transformers manufactured prior
to 1994. There are currently no claims pending against Coltec related to these
former subsidiaries. However, such claims could arise in the future. Coltec also
has ongoing obligations with regard to workers compensation and medical benefit
matters associated with Crucible Materials Corporation and Colt Firearms that
relate to Coltec's periods of ownership of these companies.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

-16-
<PAGE>

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The number of common shareholders of record at December 31, 2001, was 11,235.
The discussions of the limitations and restrictions on the payment of dividends
on common stock are included in Notes H and Q to the Consolidated Financial
Statements within the 2001 Annual Report to Shareholders, which is incorporated
herein by reference.

Common Stock Prices and Dividends. Our common stock (symbol GR) is listed on the
New York Stock Exchange. The table below lists dividends per share and quarterly
price ranges for our common stock based on New York Stock Exchange prices.

2001 2000
- -------------------------------------- --------------------------------------
QUARTER HIGH LOW DIVIDEND QUARTER HIGH LOW DIVIDEND
- -------- ----- ----- -------- ------- ----- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
First 42.65 33.06 $.275 First 29 9/16 21 9/16 $.275
Second 44.50 36.01 .275 Second 37 13/16 27 3/4 .275
Third 38.80 15.91 .275 Third 43 1/8 31 3/16 .275
Fourth 26.89 18.65 .275 Fourth 42 3/4 32 1/2 .275

</TABLE>

ITEM 6. SELECTED FINANCIAL DATA

The tabular information appearing under "Selected Financial Data" on page 67 of
the 2001 Annual Report to Shareholders is incorporated herein by reference.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The information appearing under "Management's Discussion and Analysis" on pages
1 through 25 of the 2001 Annual Report to Shareholders is incorporated herein by
reference.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information appearing under "Quantitative and Qualitative Disclosures About
Market Risk" on page 26 of the 2001 Annual Report to Shareholders is
incorporated herein by reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Consolidated Financial Statements and related notes thereto, together with
the report thereon by Ernst & Young LLP dated February 4, 2002, as well as the
Quarterly Financial Data, appearing on pages 28 through 66 of the 2001 Annual
Report to Shareholders are incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

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<PAGE>

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Biographical information concerning our Directors appearing under the caption
"Election of Directors" and information under the caption "Section 16(a)
Beneficial Ownership Reporting Compliance" in our proxy statement dated March
2002 is incorporated herein by reference. Biographical information concerning
our Executive Officers is as follows:

DAVID L. BURNER, AGE 62, CHAIRMAN AND CHIEF EXECUTIVE OFFICER

Mr. Burner joined the Company in 1983 as Financial Vice President of the
Company's Engineered Products Group. Later that year he became Vice President
and General Manager of the Off-Highway Braking Systems Division and in 1985
became an Executive Vice President of the Aerospace and Defense Division. In
February 1987 Mr. Burner became President of that Division, which is now
Goodrich Aerospace. He was elected a Senior Vice President of the Company in
1990 and Executive Vice President in October 1993. He joined the Office of the
Chairman in July 1994, was elected President of the Company in December 1995,
Chief Executive Officer in December 1996 and Chairman in July 1997. Mr. Burner
began his career with Arthur Andersen & Co. He received his B.S.C. degree from
Ohio University. Mr. Burner is a member of the Board of Directors of Briggs &
Stratton Corporation, Lance, Inc., Milacron Inc. and Progress Energy, Inc.

MARSHALL O. LARSEN, AGE 53, PRESIDENT AND CHIEF OPERATING OFFICER

Mr. Larsen joined the Company in 1977 as an Operations Analyst. In 1981, he
became Director of Planning and Analysis and subsequently Director of Product
Marketing. In 1986, he became Assistant to the President and later served as
General Manager of several divisions of the Company's aerospace business. He was
elected a Vice President of the Company and named a Group Vice President of
Goodrich Aerospace in 1994 and was elected an Executive Vice President of the
Company and President and Chief Operating Officer of Goodrich Aerospace in 1995.
He was elected President and Chief Operating Officer of the Company in February
2002. Mr. Larsen received a B.S. in Engineering from the U.S. Military Academy
and an M.S. in Industrial Management from the Krannert Graduate School of
Management at Purdue University.

ERNEST F. SCHAUB, AGE 58, EXECUTIVE VICE PRESIDENT AND PRESIDENT AND CHIEF
OPERATING OFFICER, GOODRICH ENGINEERED INDUSTRIAL PRODUCTS

Mr. Schaub joined the Company in November 1971 as a Key Industrial Engineer. He
served in various management positions until 1987 when he was named Group Vice
President, Braking Systems of Goodrich Aerospace. In January 1994 Mr. Schaub was
named Group President, Landing Systems of Goodrich Aerospace. In September 1999
he was elected Executive Vice President of the Company and President and Chief
Operating Officer of Goodrich Engineered Industrial Products. Mr. Schaub
received a B.S. in industrial engineering from the University of New Haven and
an M.B.A. from Case Western Reserve University.

STEPHEN R. HUGGINS, AGE 58, SENIOR VICE PRESIDENT, STRATEGIC RESOURCES AND
INFORMATION TECHNOLOGY

Mr. Huggins joined the Company in 1988 as Group Vice President, Specialty
Products. He later served as Group Vice President, Engine and Fuel Systems from
1991 to 1995 and as Vice President - Business Development, Aerospace from 1995
to 1999. In February 1999, he was elected Vice President, Strategic Planning and
Chief Knowledge Officer. In February 2000, Mr. Huggins was elected Senior Vice
President, Strategic Resources and Information Technology. Mr. Huggins received
a B.S. in aerospace engineering from Virginia Polytechnic Institute.

JERRY S. LEE, AGE 60, SENIOR VICE PRESIDENT, TECHNOLOGY AND INNOVATION

Mr. Lee joined the Company in 1979 as Manager of Engineering Science, Engineered
Products Group. He later served as Director of R&D, Goodrich Aerospace from 1983
to 1988, Vice President - Technology from 1989 - 1998 and Vice President -
Technology and Innovation from 1998 to June 2000. In June 2000, Mr. Lee was
elected Senior Vice President - Technology and Innovation. Mr. Lee received a
B.S. in mechanical engineering and Ph.D. in mechanical engineering from North
Carolina State University.

-18-
<PAGE>

TERRENCE G. LINNERT, AGE 55, SENIOR VICE PRESIDENT, HUMAN RESOURCES AND
ADMINISTRATION, GENERAL COUNSEL

Mr. Linnert joined Goodrich in November 1997. Prior to joining Goodrich, Mr.
Linnert was Senior Vice President of Corporate Administration, Chief Financial
Officer and General Counsel at Centerior Energy Corporation. At Goodrich, Mr.
Linnert has responsibilities for the Company's human resources, administration,
legal, internal auditing and government relations organizations. Mr. Linnert
joined The Cleveland Electric Illuminating Company in 1968, holding various
engineering, procurement and legal positions until 1986, when CEI and The Toledo
Edison Company became affiliated as wholly owned subsidiaries of Centerior
Energy Corporation. Subsequently, Mr. Linnert had a variety of legal
responsibilities until he was named director of legal services in 1990. In 1992,
he was appointed a vice president, with responsibilities for legal, governmental
and regulatory affairs. Prior to joining the Company, his responsibilities at
Centerior included managing the legal, finance, human resources, regulatory and
governmental affairs, internal auditing and corporate secretary functions. Mr.
Linnert received a B.S. in electrical engineering from the University of Notre
Dame and a juris doctor degree from the Cleveland-Marshall School of Law at
Cleveland State University.

ULRICH SCHMIDT, AGE 52, SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER

Mr. Schmidt joined the Company in 1994 as Vice President of Finance for Goodrich
Aerospace and served in that capacity until 1999, when he was named Vice
President of Finance and Business Development for Goodrich Aerospace. In October
2000, Mr. Schmidt was elected Senior Vice President and Chief Financial Officer
of the Company. Mr. Schmidt received a B.A. in business administration and an
M.B.A. in finance from Michigan State University.

ROBERT D. KONEY, JR., AGE 45, VICE PRESIDENT AND CONTROLLER

Mr. Koney joined the Company in 1986 as a financial accounting manager. He
became Assistant Controller for Goodrich Aerospace in 1992 before being
appointed Vice President and Controller for the Commercial Wheels and Brakes
business in 1994. He was elected Vice President and Controller in April 1998.
Prior to joining Goodrich, he held management positions with Picker
International and Arthur Andersen & Company. Mr. Koney received a B.A. in
accounting from the University of Notre Dame and an M.B.A. from Case Western
Reserve University.

ITEM 11. EXECUTIVE COMPENSATION

Information concerning executive compensation appearing under the captions
"Executive Compensation" and "Governance of the Company - Compensation of
Directors" in our proxy statement dated March 2002 is incorporated herein by
reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Security ownership data appearing under the captions "Holdings of Company Equity
Securities by Directors and Executive Officers" and "Beneficial Ownership of
Securities" in our proxy statement dated March 2002 is incorporated herein by
reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information appearing under the captions "Executive Compensation --
Indebtedness" and "Executive Compensation-Executive Stock Purchase Program" in
our proxy statement dated March 2002 is incorporated herein by reference.

-19-
<PAGE>

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) Documents filed as part of this report:

(1) The 2001 Annual Report to Shareholders. The following
financial information is incorporated herein by reference:

(PAGE REFERENCES TO 2001 ANNUAL REPORT)

PAGE
----
<S> <C>

Management's Discussion and Analysis 1

Management's Responsibility for Financial Statements 27

Report of Independent Auditors 28

Consolidated Statement of Income for the years ended
December 31, 2001, 2000 and 1999 29

Consolidated Balance Sheet at December 31, 2001 and 2000 30

Consolidated Statement of Cash Flows for the years ended
December 31, 2001, 2000 and 1999 31

Consolidated Statement of Shareholders' Equity for the
years ended December 31, 2001, 2000 and 1999 32

Notes to Consolidated Financial Statements 33

Quarterly Financial Data (Unaudited) 66

Selected Financial Data 67

</TABLE>

(2) Consolidated Financial Statement Schedules:

Schedules have been omitted because they are not
applicable or the required information is shown in
the Consolidated Financial Statements or the Notes to
the Consolidated Financial Statements.

(3) Listing of Exhibits: A listing of exhibits is on
pages 22 to 24 of this Form 10-K.

(b) Reports on Form 8-K filed in the fourth quarter of 2001:

Current Report on Form 8-K filed October 25, 2001 (relating to
the announcement of the Company's earnings for the three-month
and nine-month periods ended September 30, 2001).

Current Report on Form 8-K filed November 6, 2001 (relating to
the furnishing of information pursuant to Regulation FD)

Current Report on Form 8-K filed December 14, 2001 (relating
to the furnishing of information pursuant to Regulation FD).

-20-
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) 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 ON FEBRUARY 19, 2002.

GOODRICH CORPORATION
(Registrant)

By /s/ David L. Burner
-------------------------------
(David L. Burner, Chairman and
Chief Executive Officer)

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THIS REPORT HAS BEEN SIGNED BELOW ON FEBRUARY 19, 2002 BY THE FOLLOWING PERSONS
(INCLUDING A MAJORITY OF THE BOARD OF DIRECTORS) ON BEHALF OF THE REGISTRANT AND
IN THE CAPACITIES INDICATED.

/s/ DAVID L. BURNER /s/ROBERT D. KONEY, JR.
---------------------------------------- ----------------------------------
(David L. Burner) (Robert D. Koney, Jr.)
Chairman and Chief Executive Officer Vice President and Controller
And Director (Principal Executive Officer) (Principal Accounting Officer)

/s/ ULRICH SCHMIDT /s/ DOUGLAS E. OLESEN
---------------------------------------- ----------------------------------
(Ulrich Schmidt) (Douglas E. Olesen)
Senior Vice President and Chief Financial Director
Officer (Principal Financial Officer)

/s/ DIANE C. CREEL /s/ RICHARD de J. OSBORNE
---------------------------------------- ----------------------------------
(Diane C. Creel) (Richard de J. Osborne)
Director Director

/s/ GEORGE A. DAVIDSON, JR. /s/ ALFRED M. RANKIN, JR.
---------------------------------------- ----------------------------------
(George A. Davidson, Jr.) (Alfred M. Rankin, Jr.)
Director Director

/s/ HARRIS E. DELOACH, JR . /s/ JAMES R. WILSON
----------------------------------------- ----------------------------------
(Harris E. DeLoach, Jr.) (James R. Wilson)
Director Director

/s/ JAMES J. GLASSER /s/ A. THOMAS YOUNG
---------------------------------------- ----------------------------------
(James J. Glasser) (A. Thomas Young)
Director Director

/s/ WILLIAM R. HOLLAND
----------------------------------------
(William R. Holland)
Director

</TABLE>

-21-
<PAGE>
INDEX TO EXHIBITS

<TABLE>
<CAPTION>
Exhibit
Number Description
- ---------- --------------
<S> <C>
2(A) Agreement for Sale and Purchase of Assets Between The
B.F.Goodrich Company and PMD Group Inc., dated as of November
28, 2000, filed as Exhibit 2(A) to the Company's Annual Report
on Form 10-K for the year ended December 31, 2000, is
incorporated herein by reference.

3(A) The Company's Restated Certificate of Incorporation, with
amendments filed August 4, 1997 and May 6, 1998, filed as
Exhibit 3(A) to the Company's Annual Report on Form 10-K for
the year ended December 31, 1998, is incorporated herein by
reference.

3(B) The Company's By-Laws, as amended, through April 20, 1998,
filed as Exhibit 3(B) to the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1998, is
incorporated herein by reference.

3(C) Amendment to Restated Certificate of Incorporation filed June
1, 2001, filed as Exhibit 3(C) to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 2001.

3(D) Certificate of Correction to Restated Certificate of
Incorporation filed November 1, 2001. (*)

4 Information relating to the Company's long-term debt and trust
preferred securities is set forth in Note H -- "Financing
Arrangements" and Note Q - "Preferred Securities of Trust" to
the Company's financial statements, which are filed as Exhibit
13 to this Annual Report on Form 10-K. Instruments defining
the rights of holders of such long-term debt and trust
preferred securities are not filed herewith since no single
item exceeds 10% of consolidated assets. Copies of such
instruments will be furnished to the Commission upon request.

10(A) Stock Option Plan, filed as Exhibit 10(A) to the Company's
Annual Report on Form 10-K for the year ended December 31,
1998, is incorporated herein by reference.

10(B) Form of Disability Income Agreement, filed as Exhibit 10(B)(4)
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1998, is incorporated herein by reference.

10(C) Form of Supplemental Executive Retirement Plan Agreement,
filed as Exhibit 10(C) to the Company's Annual Report on Form
10-K for the year ended December 31, 1998, is incorporated
herein by reference.

10(D) Management Incentive Program, filed as Exhibit 10(D) to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1998, is incorporated herein by reference.

10(E) Form of Management Continuity Agreement entered into by The
B.F.Goodrich Company and certain of its employees, filed as
Exhibit 10(E) to the Company's Annual Report on Form 10-K for
the year ended December 31, 1999, is incorporated herein by
reference.

10(F) Senior Executive Management Incentive Plan, filed as Appendix
B to the Company's 2000 Proxy Statement dated March 3, 2000,
is incorporated herein by reference.

10(G) 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, filed as Exhibit 1 to the
Company's Registration Statement on Form 8-A filed June 19,
1997, is incorporated herein by reference.
</TABLE>

-22-
<PAGE>

<TABLE>
<S> <C>
10(H) Employee Protection Plan, filed as Exhibit 10(I) to the
Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997, is incorporated herein by reference.

10(I) Benefit Restoration Plan, filed as Exhibit 10(J) to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1992, is incorporated herein by reference.

10(J) The B.F.Goodrich Company Savings Benefit Restoration Plan,
filed as Exhibit 4(b) to the Company's Registration Statement
on Form S-8 (No. 333-19697), is incorporated herein by
reference.

10(K) 1998 - 2000 Long-Term Incentive Plan Summary Plan Description
and form of award, filed as Exhibit 10(K) to the Company's
Annual Report on Form 10-K for the year ended December 31,
1998, is incorporated herein by reference.

10(L) 1999 - 2001 Long-Term Incentive Plan Summary Plan Description
and form of award, filed as Exhibit 10(L) to the Company's
Annual Report on Form 10-K for the year ended December 31,
1999, is incorporated herein by reference.

10(M) Performance Share Deferred Compensation Plan Summary Plan
Description, filed as Exhibit 10(LL) to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31,
2000, is incorporated herein by reference.

10(N) 2000 - 2001 and 2000 - 2002 Long-Term Incentive Plan Summary
Plan Description, filed as Exhibit 10(MM) to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30,
2000, is incorporated herein by reference.

10(O) Form of Award Agreement for 2000 - 2001 Long-Term Incentive
Plan, filed as Exhibit 10(NN) to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 2000, is
incorporated herein by reference.

10(P) Form of Award Agreement for 2000 - 2002 Long-Term Incentive
Plan, filed as Exhibit 10(OO) to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 2000, is
incorporated herein by reference.

10(Q) Amended and Restated Assumption of Liabilities and
Indemnification Agreement between the Company and The Geon
Company, filed as Exhibit 10.3 to the Registration Statement
on Form S-1 (No. 33-70998) of The Geon Company, is
incorporated herein by reference.

10(R) Outside Directors' Phantom Share Plan, filed as Exhibit 10(R)
to the Company's Annual Report on Form 10-K for the year ended
December 31, 2000, is incorporated herein by reference.

10(S) Directors Deferred Compensation Plan, filed as Exhibit 10(N)
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1997, is incorporated herein by reference.

10(T) Rohr, Inc. Supplemental Retirement Plan (Restated 1997), filed
as an exhibit to Rohr, Inc.'s Quarterly Report on Form 10-Q
for the quarterly period ended May 4, 1997, is incorporated
herein by reference.

10(U) Rohr, Inc. 1991 Stock Compensation for Non-Employee Directors,
filed as an exhibit to Rohr, Inc.'s Annual Report on Form 10-K
for the fiscal year ended July 31, 1992, is incorporated
herein by reference.

10(V) Rohr, Inc. 1989 Stock Option Plan, filed as Exhibit 10.18 to
the Rohr Industries, Inc. Annual Report on Form 10-K for the
fiscal year ended July 31, 1990, is incorporated herein by
reference.

10(W) Rohr, Inc. 1995 Stock Incentive Plan, filed as Exhibit 4.1 to
Rohr, Inc.'s Registration Statement on Form S-8 (File No.
33-65447) filed on December 28, 1995, is incorporated herein
by reference.

10(X) Benefits Equalization Plan of Coltec Industries Inc effective
January 1, 1976 and Amended and Restated as of January 1,
1989, filed as Exhibit 10.3 to Coltec Industries Inc's Annual
Report on Form 10-K for the year ended December 31, 1997, is
incorporated herein by reference.

</TABLE>

-23-
<PAGE>

<TABLE>
<S> <C>
10(Y) 1992 Stock Option and Incentive Plan of Coltec Industries Inc,
filed as Exhibit 10.24 to Coltec Industries Inc's Annual
Report on Form 10-K for the year ended December 31, 1991, is
incorporated herein by reference.

10(Z) Amendment No. 1 to Coltec Industries Inc's 1992 Stock Option
and Incentive Plan, filed as Exhibit 10.15 to Coltec
Industries Inc's Annual Report on Form 10-K for the year ended
December 31, 1993, is incorporated herein by reference.

10(AA) Second Amendment to Coltec Industries Inc's 1992 Stock Option
and Incentive Plan, filed as Exhibit 10.3 to Coltec Industries
Inc's Quarterly Report on Form 10-Q for the quarter ended
September 28, 1997, is incorporated herein by reference.

10(BB) Amendment No. 3 to Coltec Industries Inc's 1992 Stock Option
and Incentive Plan, filed as Exhibit A to Coltec Industries
Inc's definitive proxy statement filed March 26, 1997, is
incorporated herein by reference.

10(CC) Stock Option Plan, filed as Appendix B to the Company's
definitive proxy statement filed March 4, 1999, is
incorporated herein by reference.

10(DD) 2001 Stock Option Plan, filed as Exhibit D to the Company's
2001 Proxy Statement dated March 5, 2001 is incorporated
herein by reference.

10(EE) Amendment Number One to the 2001 Stock Option Plan, filed as
Exhibit 10(JJ) to the Company's Quarterly Report on Form 10-Q
for the quarter ended September 30, 2001, is incorporated
herein by reference.

10(FF) 2001 - 2003 Long-Term Incentive Plan Summary Plan Description
and form of award agreement, filed as Exhibit 10(HH) to the
Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 2001, is incorporated herein by reference.

10(GG) Employee Stock Purchase Plan, filed as Exhibit E to the
Company's 2001 Proxy Statement dated March 5, 2001 is
incorporated herein by reference.

10(HH) Amendment Number One to the Employee Stock Purchase Plan,
filed as Exhibit 10(KK) to the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 2001, is
incorporated herein by reference.

10(II) Goodrich Corporation Severance Plan, filed as Exhibit 10(II)
to the Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 2001, is incorporated herein by reference.

13 Annual Report to Shareholders. The Company's 2001 Annual
Report to Shareholders (only those portions incorporated by
reference in the Form 10-K).(*)

21 Subsidiaries. (*)

23(a) Consent of Ernst & Young LLP, Independent Auditors(*)

</TABLE>

----------------------------

(*) Filed herewith.

The Company will supply copies of the foregoing exhibits to any shareholder upon
receipt of a written request addressed to the Assistant Secretary of Goodrich
Corporation, 2730 West Tyvola Road, Charlotte, NC 28217, and the payment of $.50
per page to help defray the costs of handling, copying and postage.

-24-

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.D
<SEQUENCE>3
<FILENAME>g74381ex3-d.txt
<DESCRIPTION>CERTIFICATE OF CORRECTION OF RESTATED CERTIFICATE
<TEXT>
<PAGE>
EXHIBIT 3(D)

CERTIFICATE OF CORRECTION

OF THE

CERTIFICATE OF AMENDMENT

OF THE

CERTIFICATE OF INCORPORATION

GOODRICH CORPORATION

UNDER SECTION 105 OF THE

BUSINESS CORPORATION LAW

FILED BY:

KENNETH L. WAGNER
SENIOR COUNSEL AND ASSISTANT SECRETARY
GOODRICH CORPORATION
FOUR COLISEUM CENTRE
2730 WEST TYVOLA ROAD
CHARLOTTE, NORTH CAROLINA 28217

<PAGE>

CERTIFICATE OF CORRECTION

OF THE

CERTIFICATE OF AMENDMENT

OF THE

CERTIFICATE OF INCORPORATION

GOODRICH CORPORATION

UNDER SECTION 105 OF THE

BUSINESS CORPORATION LAW

We, the undersigned, Terrence G. Linnert and Kenneth L. Wagner, being
respectively Senior Vice President and Assistant Secretary of Goodrich
Corporation, for the purpose of correcting an incorrect statement in the
Certificate of Amendment (as defined below) pursuant to Section 105 of the
Business Corporation Law, do hereby certify as follows:

1. The name of the Corporation is Goodrich Corporation.

2. A Certificate of Amendment of the Certificate of
Incorporation of the Corporation (the "Certificate of Amendment") was filed by
the Department of State on May 4, 1998.

3. Section 3 of the Certificate of Amendment incorrectly stated
that the entire existing Article FOURTH of the Certificate of Incorporation,
rather than only the first sentence thereof, was to be deleted and replaced
with the language set forth in Section 3 of the Certificate of Amendment.

4. Section 3 of the Certificate of Amendment is corrected to
read as follows:

"3. The Certificate of Incorporation of the Company is
hereby amended to modify Article FOURTH to increase the number of
authorized shares of Common Stock from 100,000,000 to 200,000,000
shares by deleting the first sentence of the existing Article FOURTH
in its entirety and substituting the following:

FOURTH - The aggregate number of shares which the
Company shall have authority to issue is 210,000,000, divided
into 10,000,000 shares of Series Preferred Stock of the par
value of $1 per share (hereafter called "Series Preferred
Stock"), and 200,000,000 shares of Common Stock of the par
value of $5 per share (hereafter called "Common Stock")."

2
<PAGE>

IN WITNESS WHEREOF, the undersigned have executed and signed their
names and affirm under the penalties of perjury that the statements made herein
are true this 31st day of October, 2001.

GOODRICH CORPORATION

/s/ Terrence G. Linnert
-------------------------------------------
Terrence G. Linnert
Senior Vice President

/s/ Kenneth L. Wagner
-------------------------------------------
Kenneth L. Wagner
Assistant Secretary

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13
<SEQUENCE>4
<FILENAME>g74381ex13.txt
<DESCRIPTION>ANNUAL REPORT TO SHAREHOLDERS. THE COMPANY'S 2001
<TEXT>
<PAGE>
Exhibit 13

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

YOU SHOULD READ THE FOLLOWING DISCUSSION IN CONJUNCTION WITH THE AUDITED
CONSOLIDATED FINANCIAL STATEMENTS OF GOODRICH CORPORATION INCLUDED ELSEWHERE IN
THIS DOCUMENT.

THIS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS CONTAINS FORWARD-LOOKING STATEMENTS. SEE "FORWARD-LOOKING STATEMENTS"
FOR A DISCUSSION OF THE UNCERTAINTIES, RISKS AND ASSUMPTIONS ASSOCIATED WITH
THESE STATEMENTS.

AS DISCUSSED BELOW, THE COMPANY'S ENGINEERED INDUSTRIAL PRODUCTS AND PERFORMANCE
MATERIALS SEGMENTS HAVE BEEN ACCOUNTED FOR AS DISCONTINUED OPERATIONS. UNLESS
OTHERWISE NOTED HEREIN, DISCLOSURES PERTAIN ONLY TO THE COMPANY'S CONTINUING
OPERATIONS.

OVERVIEW

Goodrich Corporation (the "Company" or "Goodrich") is a leading worldwide
supplier of aerospace components, systems and services serving the commercial,
military, regional, business and general aviation markets. The Company's
business is conducted on a global basis with manufacturing, service and sales
undertaken in various locations throughout the world.

Due to the sale of the Performance Materials segment in 2001, as well as the
intended spin-off of the Engineered Industrial Products segment in 2002, the
Company has redefined its segments. Its operations are now classified into four
reportable business segments: Aerostructures and Aviation Technical Services,
Landing Systems, Engine and Safety Systems, and Electronic Systems.

Aerostructures and Aviation Technical Services: Aerostructures is a leading
supplier of nacelles, pylons, thrust reversers and related aircraft engine
housing components. The aviation technical services division performs
comprehensive total aircraft maintenance, repair, overhaul and modification
services for many commercial airlines, independent operators, aircraft leasing
companies and airfreight carriers.

Landing Systems: Landing Systems provides systems and components pertaining to
aircraft taxi, take-off, landing and stopping. Several divisions within the
group are linked by their ability to contribute to the integration, design,
manufacture and service of entire aircraft undercarriage systems, including
sensors, landing gear, certain brake controls and wheels and brakes.

Engine and Safety Systems: Engine and Safety Systems produces engine and fuel
controls, pumps, fuel delivery systems, as well as structural and rotating
components such as disks, blisks, shafts and airfoils for both aerospace and
industrial gas turbine applications. This group also produces aircraft
evacuation, de-icing and passenger restraint systems, as well as ejection seats
and crew and attendant seating.

Electronic Systems: Electronic Systems produces a wide array of products that
provide flight performance measurements, flight management, and control and
safety data. Included are a variety of sensors systems that measure and manage
aircraft fuel and monitor oil debris; engine, transmission and structural
health; and aircraft motion control systems. The group's products also include
instruments and avionics, warning and detection systems, ice detection systems,
test equipment, aircraft lighting systems, landing gear cables and harnesses,
satellite control, data management and payload systems, launch and missile
telemetry systems, airborne surveillance and reconnaissance systems and laser
warning systems.

1
<PAGE>

2001 RESULTS

The following table summarizes the Company's results of operations for 2001 and
2000.

<TABLE>
<CAPTION>
YEAR-ENDED DECEMBER 31,

(IN MILLIONS) 2001(A) 2000(B)
2001 ADJUSTED 2000 ADJUSTED
--------- --------- --------- ---------

<S> <C> <C> <C> <C>
Sales $ 4,184.5 $ 4,184.5 $ 3,700.5 $ 3,700.5
--------- --------- --------- ---------
Segment Operating Income $ 444.8 $ 644.1 $ 562.5 $ 593.6
--------- --------- --------- ---------

Income from Continuing Operations $ 176.9 $ 306.3 $ 235.2 $ 265.5
Income from Discontinued Operations 112.3 -- 90.7 --
--------- --------- --------- ---------
Net Income $ 289.2 $ 306.3 $ 325.9 $ 265.5
========= ========= ========= =========

Diluted EPS $ 2.76 $ 2.87 $ 3.04 $ 2.43
========= ========= ========= =========

Net Cash Provided by Operating Activities $ 382.6 $ 168.2
========= =========
Free Cash Flow (C) $ 222.5 $ 229.5
========= =========
</TABLE>

(A) Results exclude the effect of a $107.3 million charge ($71.3 million
after-tax), or $0.67 a diluted share for merger-related and
consolidation costs, a $94.5 million charge ($62.8 million after-tax),
or $0.59 a diluted share recorded in cost of sales for inventory
adjustments and a $7.2 million gain ($4.7 million after-tax), or $0.04
a diluted share from the sale of a portion of the Company's interest in
a business. Results also exclude the after-tax effect of income from
discontinued operations ($112.3 million, or $1.11 a diluted share)

(B) Results exclude the effect of a $44.2 million charge ($28.6 million
after-tax), or $0.26 a diluted share for merger-related and
consolidation costs and a $2.5 million charge ($1.7 million after-tax),
or $0.01 a diluted share related to an impairment loss on businesses
held for disposal. Results also exclude the after-tax effect of income
from discontinued operations ($90.7 million, or $0.88 a diluted share).

(C) Free cash flow is defined as operating cash flow adjusted for cash
payments related to special items less capital expenditures. Free cash
flow in 2000 also excludes a $113.7 million payment to the IRS related
to an income tax assessment and the associated accrued interest. The
Company believes free cash flow provides meaningful additional
information on our operating results and on our ability to service our
long-term debt and other fixed obligations and to fund our continued
growth. Free cash flow should not be construed as an alternative to
operating income(loss) as determined in accordance with generally
accepted accounting principles in the United States ("GAAP"), as an
alternative to cash flow from operating activities (as determined in
accordance with GAAP), or as a measure of liquidity. Because free cash
flow is not calculated in the same manner by all companies, our
presentation may not be comparable to other similarly titled measures
reported by other companies.

Special items, as used throughout this document, include merger-related and
consolidation costs, gains or losses on the sale of businesses, results of
discontinued operations, asset impairment charges and other restructuring costs.

Sales

Sales increased $484.0 million, or 13.1 percent, from $3,700.5 million in 2000
to $4,184.5 million in 2001. The increase was primarily attributable to
increased volumes in almost all of the Company's businesses as well as from
acquisitions (approximately $190 million). These increases were partially offset
by lower sales in the Company's landing gear overhaul and aircraft maintenance
businesses.

2
<PAGE>

The increase in sales at the Company's core businesses was due primarily to
higher sales to the commercial transport OE; regional, business and general
aviation OE and aftermarket; and industrial gas turbine markets in 2001. The
decrease in sales at the Company's legacy landing gear and aircraft maintenance
businesses was due mostly to reduced work as airlines sought to defer or reduce
discretionary maintenance and overhaul work and as the Company decided not to
accept certain work due to pricing and profitability concerns.

Segment Operating Income

See discussion within the BUSINESS SEGMENT PERFORMANCE section below.

Income from Continuing Operations, Excluding Special Items

Income from continuing operations, excluding special items, increased $40.8
million, from $265.5 million in 2000 to $306.3 million in 2001. The increase was
due primarily to the increased sales noted above and an increase in interest
income attributable to the PIK note ($17.6 million - see Note F to the
Consolidated Financial Statements), partially offset by increased sales
incentives and additional income tax expense due to higher pre-tax earnings and
a higher effective tax rate in 2001.

These results exclude the effect of a $107.3 million charge for merger-related
and consolidation costs, a $94.5 million charge related primarily to reducing
the Company's investment in the B717 program and in its Super 27 re-engining
program, and a $7.2 million gain from the sale of a portion of the Company's
interest in a business. See additional discussion below under RESTRUCTURING AND
CONSOLIDATION ACTIVITIES.

Income from Discontinued Operations

The increase between periods was mostly due to the gain on sale of the
Performance Materials segment recognized in 2001 of $93.5 million, partially
offset by reduced earnings at both the Performance Materials (approximately $42
million) and EIP (approximately $30 million) segments. The decrease in earnings,
period over period, attributable to Performance Materials was primarily due to
the sale of the business in February 2001 (two months of earnings in 2001 versus
twelve months in 2000). The decrease in earnings attributable to EIP was mostly
due to the factors noted below.

EIP sales decreased $21.4 million, or 3.2 percent, from $663.3 million in 2000
to $641.9 million in 2001. Excluding the September 2001 acquisition of Glacier
Bearings, sales declined by approximately 7 percent with only Fairbanks Morse
Engine showing an increase in sales. The increase in sales at Fairbanks Morse
related primarily to higher shipments to the commercial power generation market
that generally carry lower margins than sales to its other markets. Weakness in
the chemical, petroleum, pulp and paper, heavy-duty vehicle and general
industrial markets was the primary factor behind the decrease in sales at the
segment's other businesses. Average capacity utilization in U.S. factories fell
to 20 year lows in 2001 while domestic industrial production has fallen each
month since mid-2000. These factors have contributed to a cutback in capital
spending and delays in scheduled maintenance programs throughout the process
industries. In addition to the lower volumes noted above, profitability was also
negatively impacted by the segment's inability in the short-term to reduce fixed
costs at the same rate as sales declined, increased foreign competition due to
the strong U.S. dollar which drove average pricing levels down in certain
product lines, and an unfavorable mix of products sold. Restructuring charges
(before tax) amounted to $4.6 million and $1.4 million in 2001 and 2000,
respectively.

Net Cash Provided by Operating Activities

Operating cash flow increased by $214.4 million, from $168.2 million in 2000 to
$382.6 million in 2001. The increase was primarily due to a $113.7 million
payment to the Internal Revenue Service ("IRS") in 2000, increased cash earnings
from continuing operations, lower merger-related and consolidation cost payments
and lower tax payments, partially offset by a deterioration in working capital
during 2001.

3
<PAGE>

Free Cash Flow

Free cash flow decreased by $7.0 million, from $229.5 million in 2000 to $222.5
million in 2001. The decrease was primarily due to increased capital
expenditures and an increase in working capital, mostly offset by increased
earnings and lower tax payments.

OUTLOOK

The Company expects 2002 to be a challenging year for the commercial aerospace
industry. Boeing and Airbus have both announced that new commercial aircraft
delivery estimates for 2002 will be lower than 2001, and most airlines have
announced reductions in their aircraft fleet sizes, as compared to 2001. To
develop its outlook, the Company assumed new aircraft production rates based
upon the announced plans of Boeing, Airbus and the regional jet manufacturers.
The Company also has assumed that airline capacity reductions will result in
more than a 10 percent decline in 2002 aftermarket sales versus 2001.

Using these assumptions, the Company expects that its diluted earnings per share
from continuing operations in 2002, excluding special items, will be in the
range of $2.45 to $2.55. This range compares to the $2.87 per diluted share,
excluding special items, the Company achieved in 2001. The 2002 estimate
includes the net benefit from eliminating goodwill amortization under Statement
of Financial Accounting Standards ("SFAS") No. 142 and expected higher levels of
pension expense and savings from the restructuring initiatives discussed below.
Revenue is expected to be approximately 5 to 10 percent lower than the $4.2
billion of revenue recorded in 2001. The Company also anticipates generating
between $275 and $300 million of free cash flow. The Company expects earnings
per diluted share from continuing operations, excluding special items, for the
first quarter of 2002 to be between $0.50 and $0.55 per diluted share. The
Company expects the first quarter of 2002 to be the weakest quarter of the year
and believes that each subsequent quarter in 2002 will show sequential
improvement. The Company also believes that the domestic economy and airline
travel will recover during 2002.

RESTRUCTURING AND CONSOLIDATION ACTIVITIES

During the fourth quarter of 2001, the company incurred various consolidation
and restructuring related charges of $191 million ($127 million after-tax),
including $187 million from continuing operations and $4 million from
discontinued operations. For the full year 2001, such charges approximated $207
million ($137 million after-tax), including $202 million from continuing
operations and $5 million from discontinued operations. These charges were
largely related to the anticipated decline in sales to the commercial air
transport market resulting from the terrorist attacks of September 11th. As
previously announced, these charges were primarily related to aerospace facility
consolidations, a significant workforce reduction (approximately 2,400
positions), asset impairment charges and costs associated with reducing the
company's investment in the Boeing 717 program and in the Super 727 re-engining
program. The non-cash component of these charges is expected to be about 70
percent of the pre-tax amount. These activities are expected to be largely
completed by the end of 2002. After completion, it is expected that the
Company's aerospace businesses will realize annual pre-tax savings in excess of
$125 million as a result of these actions.

The Company expects to incur additional restructuring and consolidation charges
during 2002 of approximately $20 million to $25 million based on actions of
which it is currently aware.

SPIN-OFF OF ENGINEERED INDUSTRIAL PRODUCTS SEGMENT

In September 2001, the Company announced that its Board of Directors had
approved in principle the tax-free spin-off of its Engineered Industrial
Products ("EIP") segment to shareholders. The spin-off will be effected through
a tax-free distribution to the Company's shareholders of all of the capital
stock of EnPro Industries, Inc. ("EnPro"), a newly formed wholly-owned
subsidiary of the Company.

4
<PAGE>

The EIP segment is currently owned by Coltec Industries Inc ("Coltec"), a
wholly-owned subsidiary of Goodrich. Prior to the Distribution, Coltec's
aerospace business will assume all intercompany balances outstanding between
Coltec and Goodrich and Coltec will then transfer to Goodrich by way of a
dividend all of the assets, liabilities and operations of Coltec's aerospace
business, including the assumed intercompany balances. Following the spin-off,
Coltec will be a wholly-owned subsidiary of EnPro and Coltec's aerospace
businesses will be owned by Goodrich.

It is anticipated that the $150 million of outstanding Coltec Capital Trust
convertible trust preferred securities will remain outstanding as a part of the
EnPro capital structure. Certain payments with respect to these securities are
guaranteed by Coltec and the Company, and are expected to be guaranteed by
EnPro. Following the spin-off, these securities will be convertible into a
combination of Goodrich and EnPro common stock. Separately, the Company expects
that it will offer to exchange the $300 million of Coltec's 7.5% Senior Notes
due 2008 for similar Company debt securities prior to the spin-off. Assuming
this exchange offer is fully subscribed, EnPro will have total debt and
convertible trust preferred securities of approximately $165 million at the time
of the spin-off. The Company also contemplates that a new EnPro senior secured
revolving credit facility will be in place after the spin-off.

Although the spin-off is subject to certain conditions, no consents are required
from the Company's security holders or the holders of Coltec's outstanding debt
or convertible trust preferred securities to complete the spin-off. The Company
expects to complete the spin-off in the second quarter of 2002.

The spin-off of the EIP segment represents the disposal of a segment under APB
Opinion No. 30 ("APB 30"). Accordingly, EIP is being accounted for as a
discontinued operation and the revenues, costs and expenses, assets and
liabilities, and cash flows of EIP have been segregated in the Company's
Consolidated Statement of Income, Consolidated Balance Sheet and Consolidated
Statement of Cash Flows.

DIVESTITURE OF PERFORMANCE MATERIALS SEGMENT

On February 28, 2001, the Company completed the sale of its Performance
Materials ("PM") segment to an investor group led by AEA Investors, Inc. (the
"Buyer") for approximately $1.4 billion. Total net proceeds, after anticipated
tax payments and transaction costs, included approximately $1 billion in cash
and $172 million in debt securities issued by the buyer (see additional
discussion regarding the debt securities received in Note F of the accompanying
consolidated financial statements). The transaction resulted in an after-tax
gain of $93.5 million and is subject to certain post closing adjustments (e.g.
working capital adjustments).

The Company has calculated a $25 million working capital adjustment in its
favor, which has been considered in the after-tax gain noted above. The Buyer is
disputing the Company's working capital adjustment and has asserted that the
Company owes the Buyer approximately $10 million under the purchase and sale
agreement. Should the parties not be able to settle their differences, the
disputed matters will be forwarded to an independent third party for resolution.
Such resolution will be final and binding on all parties. The Company expects to
finalize the working capital adjustment during 2002.

Pursuant to the terms of the transaction, the Company has retained certain
assets and liabilities (primarily pension, postretirement and environmental
liabilities) of the Performance Materials segment. The Company has also agreed
to indemnify the buyer for liabilities arising from certain events as defined in
the agreement. Such indemnification is not expected to be material to the
Company's financial condition, but could be material to the Company's results of
operations in a given period.

The disposition of the Performance Materials segment also represented the
disposal of a segment under APB 30. Accordingly, Performance Materials is being
accounted for as a discontinued operation and the revenues, costs and expenses,
assets and liabilities, and cash flows have been segregated in the Company's
Consolidated Statement of Income, Consolidated Balance Sheet and Consolidated
Statement of Cash Flows.

SHARE REPURCHASE PROGRAM

On September 17, 2001, the Company announced a program to repurchase up to $300
million of its common stock and has purchased 2.5 million shares through
December 31, 2001. The total cost of these shares was approximately $50 million
with an average price of $20.29 per share.

5
<PAGE>

DIVIDEND

The Company's current dividend level is expected to be reviewed in early 2002 by
the Company's Board of Directors in connection with the Engineered Industrial
Products spin-off with the intent of adjusting it to a level consistent with
that of a post-spin peer group.

RESULTS OF OPERATIONS

TOTAL COMPANY

(IN MILLIONS)

<TABLE>
<CAPTION>
2001 2000 1999
-------- -------- --------

<S> <C> <C> <C>
SALES:
Aerostructures and Aviation Technical Services $1,514.4 $1,455.5 $1,476.9
Landing Systems 1,149.1 1,057.7 1,060.6
Engine and Safety Systems 762.6 644.4 594.4
Electronic Systems 758.4 542.9 514.3
-------- -------- --------
Total Sales $4,184.5 $3,700.5 $3,646.2
======== ======== ========

OPERATING and NET INCOME:
Aerostructures and Aviation Technical Services $ 223.7 $ 209.0 $ 216.8
Landing Systems 153.1 149.0 147.1
Engine and Safety Systems 131.9 117.5 102.2
Electronic Systems 135.4 118.1 95.6
-------- -------- --------
Segment Operating Income 644.1 593.6 561.7
Merger-Related and Consolidation Costs (107.3) (44.2) (228.3)
Unusual inventory adjustments (94.5) -- --
Corporate General and Administrative Costs (57.7) (59.7) (59.3)
-------- -------- --------
Total Operating Income 384.6 489.7 274.1
Net interest expense (83.7) (102.1) (84.3)
Other income (expense) - net (19.2) (20.6) (4.8)
Income tax expense (94.3) (121.3) (88.6)
Distribution on Trust preferred securities (10.5) (10.5) (10.5)
-------- -------- --------
Income from continuing operations 176.9 235.2 85.9
Income from discontinued operations - net of taxes 112.3 90.7 83.7
-------- -------- --------
Net income $ 289.2 $ 325.9 $ 169.6
======== ======== ========
</TABLE>

Fluctuations in sales and segment operating income are discussed within the
BUSINESS SEGMENT PERFORMANCE section below.

Merger-Related and Consolidation Costs: The Company has recorded merger-related
and consolidation costs in each of the last three years. These costs are
discussed in detail above and in Note C of the accompanying Notes to
Consolidated Financial Statements.

Unusual Inventory Adjustments: These costs are classified within cost of sales
and related primarily to inventory adjustments associated with reducing the
Company's investment in the Boeing 717 program and in its Super 27 re-engining
program due to reduced expectations for these programs. The reduced expectations
for the Boeing 717 program relate directly to Boeing's announced production
schedule reductions for this program during the fourth quarter of 2001, while
the Super 27 reduction in expectations was primarily due to deteriorating
economic conditions and the September 11th terrorist attacks.

6
<PAGE>

Corporate General and Administrative Costs: Corporate general and administrative
costs, as a percent of sales, slightly decreased in 2001. Such costs, as a
percent of sales, were 1.4 percent, 1.6 percent and 1.6 percent in 2001, 2000,
and 1999, respectively. The reduction in costs in 2001 was primarily due to
lower incentive compensation costs due to the Company's depressed stock price at
the end of the year, partially offset by rebranding costs incurred during 2001
associated with the Goodrich name change.

Net Interest Expense: Net interest expense decreased $18.4 million from $102.1
million in 2000 to $83.7 million in 2001. The significant decrease between
periods was due to the sale of Performance Materials during the first quarter of
2001. The Company was able to significantly reduce its short-term indebtedness
with the proceeds from the sale and will record interest income going forward on
the payment-in-kind ("PIK") debt securities issued by the buyer. The Company
recorded $17.6 million of PIK interest income during 2001. See additional
discussion of the PIK securities in Note F of the accompanying Consolidated
Financial Statements.

Net interest expense increased by $17.8 million from $84.3 million in 1999 to
$102.1 million in 2000. The increase is primarily attributable to increased
borrowings in 2000 as a result of share repurchases, primarily in the fourth
quarter, and acquisitions.

Other Income(Expense) - Net: The table below allows other income(expense) - net
to be evaluated on a comparable basis.

<TABLE>
<CAPTION>
(IN MILLIONS)
2001 2000 1999
------ ------ ------

<S> <C> <C> <C>
As reported $(19.2) $(20.6) $ (4.8)
Gains/(losses) on sale of businesses and demutalization of insurance companies 7.2 (0.5) 15.2
------ ------ ------
Adjusted Other income (expense) - net $(26.4) $(20.1) $(20.0)
====== ====== ======
</TABLE>

Included within other income(expense) - net are gains and losses from the sale
of businesses, as well as gains in 1999 from the demutualization of certain
insurance carriers. Excluding these items, other income(expense) - net was
expense of $26.4 million, $20.1 million and $20.0 million in 2001, 2000 and
1999, respectively. The increase in costs in 2001 was primarily due to increased
retiree healthcare benefit costs associated with previously disposed of
businesses - mostly related to the Performance Materials disposition during the
first quarter of 2001 (approximately $7 million), and increased earnings
attributable to minority interests (approximately $5 million), partially offset
by higher income from subsidiaries accounted for under the equity method
(approximately $2 million) and lower costs associated with executive life
insurance programs (approximately $3 million).

The increase in costs between 1999 and 2000 was primarily attributable to lower
income from subsidiaries accounted for under the equity method of accounting and
increased retiree health care benefit costs associated with previously disposed
of businesses, mostly offset by lower earnings attributable to minority
interests.

Income Tax Expense: The Company's effective tax rate from continuing operations
was 33.5 percent, 33.1 percent and 47.9 percent in 2001, 2000 and 1999,
respectively. The increase in the 2001 effective tax rate was primarily
attributable to earnings of foreign operations that were subject to taxation at
higher rates than U.S. earnings. The decreased rate in 2000 was primarily
attributable to significant non-deductible merger-related costs incurred in 1999
that significantly increased the effective tax rate in that year, lower state
and local taxes and increased benefits from R&D and foreign sales credits.

7
<PAGE>

Income from Continuing Operations: Income from continuing operations included
various charges or gains (referred to as special items) which affected reported
earnings. Excluding the effects of special items, income from continuing
operations in 2001 was $306.3 million, or $2.87 per diluted share, compared with
$265.5 million, or $2.43 per diluted share in 2000 and $253.9 million, or $2.23
per diluted share in 1999. The following table presents the impact of special
items on earnings per diluted share. Additional information regarding
merger-related and consolidation costs can be found above and in Note C of the
accompanying Consolidated Financial Statements.

<TABLE>
<CAPTION>
EARNINGS PER DILUTED SHARE 2001 2000 1999
- -------------------------- ------ ------ ------

<S> <C> <C> <C>
Income from continuing operations $ 1.65 $ 2.16 $ 0.76
Net (gain) loss on sold businesses (0.04) 0.01 (0.02)
Restructuring and consolidation costs 1.26 0.26 1.49
------ ------ ------
Income from continuing operations,
excluding special items $ 2.87 $ 2.43 $ 2.23
====== ====== ======
</TABLE>

Income from continuing operations for the year ended December 31, 2001 included
a $107.3 million charge ($71.3 million after-tax), or $0.67 a diluted share for
merger-related and consolidation costs, a $94.5 million charge ($62.8 million
after-tax), or $0.59 a diluted share, related primarily to reducing the
Company's investment in the B717 program and in its Super 27 re-engining program
and a $7.2 million gain ($4.7 million after-tax), or $0.04 a diluted share, from
the sale of a portion of the Company's interest in a business.

Income from continuing operations for the year ended December 31, 2000 included
$28.6 million ($0.26 per share) of merger-related and consolidation costs and a
$1.7 million ($0.01 per share) impairment loss on a business held for sale.

Income from continuing operations for the year ended December 31, 1999 includes
(i) $162.2 million ($1.42 per share) for costs associated with the Coltec
merger; (ii) a net gain on the sale of businesses of $2.4 million ($.02 per
share); and (iii) a charge of $8.2 million ($.07 per share) related to segment
restructuring activities.

<TABLE>
<CAPTION>
(IN MILLIONS)

INCOME FROM DISCONTINUED OPERATIONS 2001 2000 1999
- ----------------------------------- -------- ------- --------

<S> <C> <C> <C>
Performance Materials $ 91.4 $ 39.6 $ 30.9
Special Items - PM (93.5) (0.1) 24.9
-------- -------- --------
(2.1) 39.5 55.8
-------- ------- --------

EIP 20.9 51.1 52.8
Special Items - EIP 2.9 0.9 (0.8)
-------- ------- --------
23.8 52.0 52.0
-------- ------- --------

Total income from discontinued operations $ 112.3 $ 90.7 $ 83.7
======== ======= ========

Total income from discontinued
operations - excluding special items $ 21.7 $ 91.5 $ 107.8
======== ======= ========
</TABLE>

Income from Discontinued Operations: Income from discontinued operations
increased $21.6 million from $90.7 million in 2000 to $112.3 million in 2001.
Income from discontinued operations, excluding special items, decreased $69.8
million, from $91.5 million in 2000 to $21.7 million in 2001. The decrease in
earnings, period over period, attributable to Performance Materials was
primarily due to the sale of the business in February 2001 (two months of
earnings in 2001 versus twelve months in 2000). The decrease in earnings
attributable to EIP was mostly due to the factors noted below.

8
<PAGE>

EIP sales decreased $21.4 million, or 3.2 percent, from $663.3 million in 2000
to $641.9 million in 2001. Excluding the September 2001 acquisition of Glacier
Bearings, sales declined by approximately 7 percent with only Fairbanks Morse
Engine showing an increase in sales. The increase in sales at Fairbanks Morse
related primarily to higher shipments to the commercial power generation market
that generally carry lower margins than sales to its other markets. Weakness in
the chemical, petroleum, pulp and paper, heavy-duty vehicle and general
industrial markets was the primary factor behind the decrease in sales at the
segment's other businesses. Average capacity utilization in U.S. factories fell
to 20 year lows in 2001 while domestic industrial production has fallen each
month since mid-2000. These factors have contributed to a cutback in capital
spending and delays in scheduled maintenance programs throughout the process
industries. In addition to the lower volumes noted above, profitability was also
negatively impacted by the segment's inability to reduce fixed costs at the same
rate as sales declined, increased foreign competition due to the strong U.S.
dollar which drove average pricing levels down in certain product lines, and an
unfavorable mix of products sold. Restructuring charges (before tax) amounted to
$4.6 million and $1.4 million in 2001 and 2000, respectively.

Income from discontinued operations increased $7.0 million from $83.7 million in
1999 to $90.7 million in 2000. Income from discontinued operations, excluding
special items, decreased $16.3 million, from $107.8 million in 1999 to $91.5
million in 2000. The decrease was primarily due to lower net income from the
Company's former chemicals business due primarily to significantly higher raw
material and energy costs (primarily toluene, PVC and natural gas), lower sales
due to reduced volumes and prices and increased interest expense. These
decreases were only partially offset by volume strength in certain other product
lines (primarily Carbopol, thermoplastic polyurethane and rubber chemicals),
reductions in manufacturing/overhead costs and a favorable sales mix.

Special items related to discontinued operations of Performance Materials, net
of tax, included $93.5 million related to the gain on sale of Performance
Materials in 2001; $0.1 million of income related to a net adjustment of amounts
previously recorded for consolidation activities in 2000; and $24.9 million of
costs related to restructuring activities in 1999.

Special items related to discontinued operations of EIP, net of tax, included
$2.9 million and $0.9 million of costs in 2001 and 2000, respectively, related
to restructuring and consolidation activities and $0.8 million in 1999 related
to a gain on the sale of a business ($3.2 million) net of additional
restructuring and consolidation activities ($2.4 million).

ACQUISITIONS

POOLING-OF-INTERESTS

On July 12, 1999, the Company completed a merger with Coltec Industries Inc
("Coltec") by exchanging 35.5 million shares of Goodrich common stock for all of
the common stock of Coltec. Each share of Coltec common stock was exchanged for
.56 of one share of Goodrich common stock. The merger was accounted for as a
pooling of interests, and all prior period financial statements were restated to
include the financial information of Coltec as though Coltec had always been a
part of Goodrich.

PURCHASES

The following acquisitions were recorded using the purchase method of
accounting. Their results of operations have been included in the Company's
results since their respective dates of acquisition. Acquisitions made by
businesses included within the Performance Materials and Engineered Industrial
Products Segments are not discussed below.

During 2001, the Company acquired a manufacturer of aerospace lighting systems
and related electronics, as well as the assets of a designer and manufacturer of
inertial sensors used for guidance and control of unmanned vehicles and
precision-guided systems. Total consideration aggregated $114.4 million, of
which $101.6 million represented goodwill and other intangible assets. The
purchase price allocation for these acquisitions has been based on preliminary
estimates.

9
<PAGE>

During 2000, the Company acquired a manufacturer of earth and sun sensors for
attitude determination and control ejection seat technology; a manufacturer of
fuel nozzles; a developer of avionics and displays; the assets of a developer of
precision electro-optical instrumentation serving the space and military
markets; an equity interest in a joint venture focused on developing and
operating a comprehensive open electronic marketplace for aerospace aftermarket
products and services; a manufacturer of precision and large optical systems,
laser encoding systems, and visual surveillance systems for day and night use
and a supplier of pyrotechnic devices for space, missile, and aircraft systems.
Total consideration aggregated $242.6 million, of which $105.4 million
represented goodwill and other intangible assets.

During 1999, the Company acquired a manufacturer of spacecraft attitude
determination and control systems and sensor and imaging instruments; the
remaining 50 percent interest in a joint venture, located in Singapore, that
overhauls and repairs thrust reversers, nacelles and nacelle components; an
ejection seat business; and a manufacturer and developer of
micro-electromechanical systems, which integrate electrical and mechanical
components to form "smart" sensing and control devices. Total consideration
aggregated $56.5 million, of which $55.0 million represented goodwill.

The purchase agreements for the manufacturer and developer of
micro-electromechanical systems provides for additional consideration to be paid
over six years based on a percentage of net sales. The additional consideration
for the first five years, however, is guaranteed not to be less than $3.5
million. As the $3.5 million of additional consideration is not contingent on
future events, it has been included in the purchase price and allocated to the
net assets acquired. All additional contingent amounts payable under the
purchase agreement will be recorded as additional purchase price/goodwill when
earned.

The impact of these acquisitions was not material in relation to the Company's
results of operations. Consequently, pro forma information is not presented.

DISPOSITIONS

During 2001, the Company sold a minority interest in one of its businesses,
resulting in a pre-tax gain of $7.2 million, which has been reported in other
income (expense), net.

During 2000, the Company sold a product line of one of its businesses, resulting
in a pre-tax gain of $2.0 million, which has been reported in other income
(expense), net.

During 1999, the Company sold all or a portion of its interest in two
businesses, resulting in a pre-tax gain of $6.8 million, which has been reported
in other income (expense), net.

BUSINESS SEGMENT PERFORMANCE

SEGMENT ANALYSIS

Due to the sale of the Company's Performance Materials segment, as well as the
intended spin-off of the Company's EIP segment, the Company has redefined its
segments in accordance with SFAS 131. The Company's operations are now
classified into four reportable business segments: Aerostructures and Aviation
Technical Services, Landing Systems, Engine and Safety Systems, and Electronic
Systems.

An expanded analysis of sales and operating income by business segment follows.

Segment operating income, as recorded, is total segment revenue reduced by
operating expenses directly identifiable with that business segment. Segment
operating income, as adjusted, is total segment revenue reduced by operating
expenses directly identifiable with that business segment, except for
merger-related and consolidation costs and unusual inventory adjustments which
are presented separately (see further discussion of merger-related and
consolidation costs and unusual inventory adjustments in Note C and Note L,
respectively, to the accompanying Consolidated Financial Statements).

10
<PAGE>

2001 COMPARED WITH 2000

<TABLE>
<CAPTION>
% OF SALES
----------------
2001 2000 % CHANGE 2001 2000
-------- -------- -------- ---- ----
(IN MILLION)
<S> <C> <C> <C> <C> <C>
SALES:
Aerostructures and Aviation Technical Services $1,514.4 $1,455.5 4.0
Landing Systems 1,149.1 1,057.7 8.6
Engine and Safety Systems 762.6 644.4 18.3
Electronic Systems 758.4 542.9 39.7
-------- --------
Total Sales $4,184.5 $3,700.5 13.1
======== ========

SEGMENT OPERATING INCOME, as recorded:
Aerostructures and Aviation Technical Services $ 94.1 $ 205.3 (54.2) 6.2 14.1
Landing Systems 108.4 123.7 (12.4) 9.4 11.7
Engine and Safety Systems 114.2 115.8 (1.4) 15.0 18.0
Electronic Systems 128.1 117.7 8.8 16.9 21.7
-------- --------
Segment Operating Income $ 444.8 $ 562.5 (20.9) 10.6 15.2
======== ========

SEGMENT OPERATING INCOME, as adjusted:
Aerostructures and Aviation Technical Services $ 223.7 $ 209.0 7.0 14.8 14.4
Landing Systems 153.1 149.0 2.8 13.3 14.1
Engine and Safety Systems 131.9 117.5 12.3 17.3 18.2
Electronic Systems 135.4 118.1 14.6 17.9 21.8
-------- --------
Segment Operating Income $ 644.1 $ 593.6 8.5 15.4 16.0
======== ========
</TABLE>

AEROSTRUCTURES AND AVIATION TECHNICAL SERVICES sales increased $58.9 million, or
4.0 percent, from $1,455.5 million during 2000 to $1,514.4 million in 2001. The
increase was due to a significant increase in aerostructures related sales
(approximately $92 million), offset by lower sales at the segment's aviation
technical services businesses (approximately $33 million). The segment's
aviation technical services business performs comprehensive total aircraft
maintenance, repair, modification and overhaul work. Most of the decrease in
sales in this business unit was attributable to lower aircraft maintenance work,
period over period.

The increase in aerostructures related sales (nacelles, pylons, thrust reversers
and related engine housing components and services) was primarily due to rate
increases on the CFM 56 (A319, A320 and A321 programs), PW4000, B717-200, and
V2500 programs, higher aftermarket spares sales, increased aftermarket services
and spares sales and several new programs (C-5 Pylon, F-15). Partially
offsetting these increases was a decrease in aftermarket sales on the Super 27
program, as well as rate decreases on the CFM56-5 (A340) and RR535-E4 programs.

Operating income, as adjusted, increased $14.7 million, or 7.0 percent, from
$209.0 million in 2000 to $223.7 million in 2001. The increase was driven by the
increase in sales noted above, productivity improvements on several
aerostructures programs and reduced non-recurring engineering costs associated
with the terminated X-33 program. Partially offsetting these increases were
additional costs associated with the implementation of an ERP system at the
segment's aerostructures businesses, increased losses of approximately $1
million associated with the segment's aviation technical services business and
the closeout of the MD-11 and MD-90 contracts in 2000.

LANDING SYSTEMS sales increased $91.4 million, or 8.6 percent, from $1,057.7
million during 2000 to $1,149.1 million during 2001. The increase in sales was
primarily attributable to higher sales of landing gear and wheels and brakes.
Landing gear sales increased across all major markets primarily due to increased
sales of original equipment to Boeing, Bombardier, and the U.S. government,
partially offset by reduced pricing on several Boeing programs as a result of
contract extensions (through 2006) approved during mid-2001. Major programs
contributing to the increased sales of landing gear included the

11
<PAGE>

B757, B777, C-17, F18 and RJ601 programs. The increased sales of wheels and
brakes related primarily to increased aftermarket sales in the commercial,
regional, business and military markets primarily on the A319/320, B747-400,
B777, Embraer 145, DeHavilland Dash 8, F16, and Cessna programs, partially
offset by decreased sales on the B727 out of production program. This increase
in sales was partially offset by a significant decrease in sales of landing gear
overhaul services ($20.5 million), primarily due to fewer customer removals as a
result of airlines deferring or reducing discretionary expenditures.

Operating income, as adjusted, increased $4.1 million, or 2.8 percent, from
$149.0 million during 2000 to $153.1 million during 2001. The increase was
primarily due to the increase in volume noted above as well as a favorable sales
mix, partially offset by increased sales incentives, reduced pricing as noted
above, additional costs related to expedited shipments of certain landing gear
to Boeing and an increased loss associated with providing landing gear overhaul
services primarily due to the decrease in volume noted above (this business
recorded a slight loss in 2000).

ENGINE AND SAFETY SYSTEMS sales increased $118.2 million, or 18.3 percent, from
$644.4 million during 2000 to $762.6 million during 2001. While all of the
segment's product lines experienced an increase in sales over the prior year,
the increase was primarily attributable to a significant increase in aftermarket
sales of evacuation products, particularly on the B747 program; increased sales
of ejection seats; increased demand for the segment's gas turbine products that
serve both the aerospace and industrial engine markets; as well as acquisitions
(approximately $30 million).

Operating income, as adjusted, increased $14.4 million, or 12.3 percent, from
$117.5 million during 2000 to $131.9 million during 2001. The increase was
primarily attributable to the increase in sales noted above, partially offset by
increased R&D expenses (primarily related to continuing development of passenger
restraint systems) and inefficiencies at one of its locations that produces gas
turbine products.

ELECTRONIC SYSTEMS SEGMENT sales increased $215.5 million, or 39.7 percent, from
$542.9 million during 2000 to $758.4 million during 2001. The increase was
driven primarily by space-based acquisitions (approximately $160 million) and
increased sales by the segment's core businesses (approximately $55 million).
The increase in sales at the segment's core businesses was primarily
attributable to increased sales of sensors, fuel and utility systems as well as
lightning detection and collision avoidance units, partially offset by lower
sales in the segment's legacy space-based businesses. The increase in sensor
sales was driven by increased regional and business OE demand, airline retrofits
and the resumption of thermocouple shipments to the USAF. The fuel and utility
sales increases were due mostly to aftermarket sales of spares and retrofit
products, particularly on the B747 and B737 programs. The decrease in sales in
the segment's legacy space-based businesses was due primarily to program delays
and cancellations.

Operating income, as adjusted, increased $17.3 million, or 14.6 percent, from
$118.1 million during 2000 to $135.4 million during 2001. The increase was
primarily due to the factors noted above, partially offset by increased
investments in MEMS (micro-electromechanical systems) technologies and products,
increased R&D expenses on the Smart Deck Integrated Flight Controls & Display
System and on the HUMS system (helicopter health and usage management system),
as well as higher costs related to the consolidation and integration of
acquisitions.

The significant reduction in operating margins, period over period (21.7 percent
in 2000 to 16.9 percent in 2001) was primarily attributable to program delays
and cancellations impacting the segment's space-based businesses, as well as
lower margins on sales from acquired companies. The Company expects these
margins to increase next year as a result of current and planned consolidation
and integration activities.

12
<PAGE>

2000 COMPARED WITH 1999

<TABLE>
<CAPTION>
% OF SALES
------------------
2000 1999 % CHANGE 2000 1999
-------- -------- -------- ---- ----
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
SALES
Aerostructures and Aviation Technical
Services $1,455.5 $1,476.9 (1.4)
Landing Systems 1,057.7 1,060.6 (0.3)
Engine and Safety Systems 644.4 594.4 8.4
Electronic Systems 542.9 514.3 5.6
-------- --------
Total Sales $3,700.5 $3,646.2 1.5
======== ========

SEGMENT OPERATING INCOME, as recorded
Aerostructures and Aviation Technical
Services $ 205.3 $ 210.6 (2.5) 14.1 14.3
Landing Systems 123.7 130.1 (4.9) 11.7 12.3
Engine and Safety Systems 115.8 102.2 13.3 18.0 17.2
Electronic Systems 117.7 86.6 35.9 21.7 16.8
-------- --------
Segment Operating Income $ 562.5 $ 529.5 6.2 15.2 14.5
======== ========

SEGMENT OPERATING INCOME, as adjusted
Aerostructures and Aviation Technical
Services $ 209.0 $ 216.8 (3.6) 14.4 14.7
Landing Systems 149.0 147.1 1.3 14.1 13.9
Engine and Safety Systems 117.5 102.2 15.0 18.2 17.2
Electronic Systems 118.1 95.6 23.5 21.8 18.6
-------- --------
Segment Operating Income $ 593.6 $ 561.7 5.7 16.0 15.4
======== ========
</TABLE>

AEROSTRUCTURES AND AVIATION TECHNICAL SERVICES SEGMENT sales decreased $21.4
million, or 1.4 percent, from $1,476.9 million in 1999 to $1,455.5 million in
2000. The decrease was primarily attributable to the favorable settlement of a
contract claim that resulted in approximately $60 million in sales during 1999,
lower sales on the B757, PW4000, MD-11 and MD-80 programs (the MD-11 and MD-80
programs are no longer in production) and lower sales of aftermarket aviation
services. These decreases were partially offset by increased sales on the
B717-200, A340, V2500 and Super 27 programs, as well as additional aftermarket
aerostructures services. Aviation services sales were lower primarily due to
lower component volume. Aerostructures aftermarket services posted higher sales
than a year ago due to increased volume from its Asian facility.

Operating income, as adjusted, decreased $7.8 million, or 3.6 percent, from
$216.8 million in 1999 to $209.0 million in 2000. The decrease was primarily
attributable to lower results at aviation technical services, partially offset
by increased operating income from aerostructures. The increase in
aerostructures operating income, despite the decrease in sales, is attributable
to higher margins on certain contracts due to productivity improvements and cost
controls and significantly lower costs on the site consolidation project that
began last year. The decrease in operating income at aviation services was
primarily attributable to lower volume, increased overhead costs, most of which
related to retaining and training the current work force, inventory adjustments
and the write-off of receivables due to the bankruptcy of National Airlines.

LANDING SYSTEMS SEGMENT sales decreased $2.9 million from $1,060.6 million in
1999 to $1,057.7 million in 2000. The decrease was primarily attributable to
lower sales of landing gear and of landing gear services, partially offset by
increased sales of wheels and brakes and the favorable settlement of claims for
increased work scope on engineering changes related to existing landing gear
products. Landing gear sales decreased as a result of reduced Boeing OE
deliveries on the B777 and B757 aircraft and the discontinuation of new aircraft
production on the MD11 and B737 classic aircraft. Sales for landing gear
overhaul

13
<PAGE>

services decreased due to fewer customer removals as a result of airline
operating cost constraints caused by higher fuel costs. Sales of wheels and
brakes increased significantly year over year due to growth in the commercial
aftermarket, regional, business, and military markets. Programs most responsible
for these increased sales included the A319/320, B737 next generation, Embraer
145, and F16 aircraft.

Operating income, as adjusted, increased $1.9 million, or 1.3 percent, from
$147.1 million in 1999 to $149.0 million in 2000. The increase resulted
primarily from increased sales of wheels and brakes as noted above and the
favorable settlement of claims for increased work scope on engineering changes
related to existing landing gear products. These increases in operating income
were mostly offset by the impact of lower landing gear sales, increased sales
incentives and inefficiencies associated with the shutdown and transfer of
production out of the Euless, Texas landing gear facility.

ENGINE AND SAFETY SYSTEMS SEGMENT sales increased $50.0 million, or 8.4 percent,
from $594.4 million in 1999 to $644.4 million in 2000. The increase was
primarily attributable to continued strong demand for aerospace OE and
industrial gas turbine products. Engine related products that experienced an
increase in volume included coated blades and vanes, fuel injection nozzles,
discs and airfoils. The increase in sales was also a result of increased demand
for aircraft evacuation products.

Operating income, as adjusted, for 2000 increased $15.3 million, or 15 percent,
from $102.2 million in 1999 to $117.5 million in 2000. Operating income results
followed the increases in sales described above. In addition to overall stronger
volume, Engine Systems recorded a small gain on the sale of land and Safety
Systems recovered previously expensed non-recurring engineering costs offsetting
some of the higher R&D expenses related to continuing development of its
automotive passenger restraint systems.

ELECTRONIC SYSTEMS SEGMENT sales increased $28.6 million, or 5.6 percent, from
$514.3 million in 1999 to $542.9 million in 2000. The increase was primarily
attributable to acquisitions in space flight systems and increased OE and
aftermarket demand for the segment's avionics products. These increases were
partially offset by the impact of a product line divestiture in 2000 and lower
engine sensor sales.

Operating income, as adjusted, increased $22.5 million, or 23.5 percent, from
$95.6 million in 1999 to $118.1 million in 2000. Higher volume in
space/satellite products, primarily from acquisitions, increased demand for
general aviation products, a favorable sales mix, productivity improvements and
lower new product development costs on the helicopter health and usage
management system accounted for the increase in operating income.

LIQUIDITY AND CAPITAL RESOURCES

The Company currently expects to fund expenditures for capital requirements as
well as liquidity needs from a combination of internally generated funds and
financing arrangements. The Company believes that its internally generated
liquidity, together with access to external capital resources, will be
sufficient to satisfy existing commitments and plans, and also to provide
adequate financial flexibility to take advantage of potential strategic business
opportunities should they arise within 2002.

CREDIT FACILITIES

In December 2001 the Company executed $750 million in new committed global
syndicated revolving credit agreements. These credit agreements replaced the
$600 million of committed domestic revolving credit agreements and the $80
million committed multi-currency revolving credit facility. The international
bank group providing credit under the new agreements is substantially the same
group that provided credit under the previous agreements. The new credit
facilities consist of a $425 million three-year agreement expiring in December
2004 and a $325 million 364-day agreement expiring in December 2002. Management
intends to renew the $325 million credit facility at its annual renewal and does
not anticipate any problems therein. At December 31, 2001, $670 million was
unused and available under these committed revolving credit facilities.

The Company had committed foreign lines of credit and overdraft facilities at
December 31, 2001 of $20 million, all of which was available at that date.

14
<PAGE>

The Company also maintains $111 million of uncommitted domestic money market
facilities with various banks to meet short-term borrowing requirements. As of
December 31, 2001, $75 million of these facilities was unused and available.
These uncommitted credit facilities are provided by a small number of commercial
banks that also provide the Company with committed credit through the syndicated
revolving credit facilities and with various cash management, trust and other
services. As a result of these established relationships, the Company believes
that its uncommitted facilities are a highly reliable and cost-effective source
of liquidity.

Continued borrowing under the Company's credit facilities is conditioned upon
compliance with financial and other covenants set forth in the related
agreements. The Company is currently in compliance with all such covenants. The
Company's credit facilities do not contain any rating downgrade triggers that
would accelerate the maturity of the Company's indebtedness thereunder. However,
a ratings downgrade would result in an increase in the interest rate and fees
payable under the Company's syndicated revolving credit facilities. Such a
downgrade also could adversely affect the Company's ability to renew existing,
or obtain access to new, credit facilities in the future and could increase the
cost of such new facilities.

LONG-TERM FINANCING

At December 31, 2001, the Company had long-term debt of $1,304.0 million, with
maturities ranging from 2003 to 2046. Reflected as current maturities of
long-term debt at December 31, 2001 was $4.3 million of miscellaneous debt
maturing throughout 2002. The Company also retired $175 million of long-term
debt when it came due in July 2001.

The Company had the authority to issue up to $500 million of debt securities,
series preferred stock and common stock under its existing shelf registration
statement at December 31, 2001. Any issuance of securities pursuant to the shelf
registration statement is expected to be used for general corporate purposes.

In connection with the spin-off of the EIP segment, the Company expects to offer
to exchange new Company debt securities for the outstanding $300 million of
Coltec's 7.5% Senior Notes due 2008, which are classified within continuing
operations within the Company's consolidated financial statements. The interest
rate, term, payment dates and redemption provisions of the new Company debt
securities are expected to be substantially identical to those of the Coltec
Senior Notes.

QUIPS

At December 31, 2001 and 2000 there were outstanding $126.5 million of 8.30%
Cumulative Quarterly Income Preferred Securities, Series A ("QUIPS") issued by
BFGoodrich Capital, a Delaware business trust all of the common equity of which
is owned by the Company (the "Trust"). The QUIPS are supported by 8.30% Junior
Subordinated Debentures, Series A, due 2025 ("QUIPS Debentures") issued by the
Company. The Company has unconditionally guaranteed all distributions required
to be made by the Trust, but only to the extent the Trust has funds legally
available for such distributions.

TIDES

At December 31, 2000 and 2001 there were outstanding $150 million of 5 1/4%
Convertible Preferred Securities -- Term Income Deferred Equity Securities
("TIDES") issued by Coltec Capital Trust, a Delaware business trust, all of the
common equity of which is owned by Coltec (the "Coltec Trust"). The TIDES are
supported by an equivalent aggregate principal amount of 5 1/4% Convertible
Junior Subordinated Deferrable Interest Debentures due April 15, 2028 ("TIDES
Debentures") issued by Coltec to Coltec Capital Trust. The Company has
unconditionally guaranteed all distributions required to be made by the Coltec
Trust, but only to the extent the Coltec Trust has funds legally available for
such distributions. The Company has also unconditionally guaranteed Coltec's
obligations under the TIDES Debentures.

The TIDES are convertible at the option of the holders at any time into the
common stock of the Company at an effective conversion price of $52.33 per share
and are redeemable at the Company's option after April 20, 2001 at 102.63% of
the liquidation amount declining ratably to 100% after April 20, 2004. Following
the spin-off, the TIDES will be convertible into a combination of Goodrich and
EnPro common stock. As the TIDES will remain as part of the EnPro capital
structure following the spin-off, amounts associated with the TIDES have been
segregated and reported as discontinued operations in the Consolidated Statement
of Income and Consolidated Balance Sheet.

15
<PAGE>

OFF-BALANCE SHEET ARRANGEMENTS

The Company utilizes several forms of off-balance sheet financing arrangements.
At December 31, 2001, these included:

<TABLE>
<CAPTION>
UNDISCOUNTED
MINIMUM
FUTURE LEASE RECEIVABLES
(IN MILLIONS) PAYMENTS SOLD
------------ -----------

<S> <C> <C>
Tax Advantaged Operating Leases $ 79 --
Standard Operating Leases 81 --
----
$160 --
====

Short-term Receivables -- $ 97
Long-term Receivables -- 20
----
-- $117
====
</TABLE>

Lease Agreements

The Company financed its use of certain equipment, including corporate aircraft,
under committed lease arrangements provided by financial institutions. These
arrangements allow the Company to claim a deduction for the tax depreciation on
the assets, rather than the lessor, and allowed the Company to lease up to a
maximum of $95 million at December 31, 2001. Since the terms of these
arrangements meet the accounting definition of operating lease arrangements, the
aggregate sum of future minimum lease payments is not reflected on the Company's
consolidated balance sheet. At December 31, 2001, approximately $79 million of
future minimum lease payments were outstanding under these arrangements. The
Company also has various other operating lease agreements whose future minimum
lease payments approximated $81 million at December 31, 2001. See Note I of the
accompanying Consolidated Financial Statements for additional disclosure.

Sale of Receivables

At December 31, 2000, the Company had in place a trade receivables
securitization program pursuant to which it could sell receivables up to a
maximum of $95 million. Accounts receivable sold under this program were $81.5
million at December 31, 2000 ($30.5 million of which related to the EIP segment
and, accordingly, is classified within discontinued operations). In December
2001, this program was terminated and replaced with a new program pursuant to
which the Company may sell trade receivables up to a maximum of $110 million.
Accounts receivable sold under the new program were $97.3 million at December
31, 2001.

Continued availability of the securitization program is conditioned upon
compliance with financial and other covenants set forth in the related
agreements. The Company is currently in compliance with all such covenants. The
securitization agreement also includes a rating downgrade trigger pursuant to
which the agreement may be terminated upon a rating downgrade of the Company. If
such an event were to occur, the Company expects that it would have sufficient
capital resources through its existing revolving credit facilities to meet its
needs.

During 2000, the Company entered into an agreement to sell certain long-term
receivables. At December 31, 2000, $47.7 million of the Company's long-term
receivables were sold to a financial institution under this agreement. This
agreement contains recourse provisions under which the Company may be required
to repurchase receivables. In the fourth quarter of 2001, approximately $20
million of these long-term receivables were repurchased by the Company at the
request of the financial institution. At December 31, 2001, $20.3 million of the
Company's long-term receivables were owned by the financial institution and
subject to the recourse provisions of this Agreement.

16
<PAGE>

CASH FLOW

The following table summarizes our cash flow activity for 2001, 2000 and 1999:

<TABLE>
<CAPTION>
Cash Flows From: 2001 2000 1999
------- ------- -------

<S> <C> <C> <C>
Operating activities $ 382.6 $ 168.2 $ 210.5
Investing activities $(288.8) $(349.4) $(166.5)
Financing activities $(936.3) $ 80.6 $ (72.2)
Discontinued operations $ 850.7 $ 114.6 $ 42.8
</TABLE>

OPERATING CASH FLOWS

Operating cash flows decreased $42.3 million from $210.5 million in 1999 to
$168.2 million in 2000. The decrease was primarily attributable to a $113.7
million payment to the Internal Revenue Service ("IRS") and an increase in
long-term receivables associated with certain leasing activities (Super 27
program), partially offset by lower merger-related and consolidation cost
payments and increased proceeds from the sale of receivables.

The payment to the IRS was for an income tax assessment and the related accrued
interest. The Company intends to pursue its administrative and judicial remedies
for a refund of this payment. A reasonable estimation of the Company's potential
refund cannot be made at this time; accordingly, no receivable has been
recorded.

INVESTING CASH FLOWS

The Company used $288.8 million in investing activities in 2001 versus $349.4
million in 2000. The decrease was due primarily to lower spending on
acquisitions (approximately $128 million), partially offset by increased
spending on capital expenditures (approximately $57 million).

The Company used $349.4 million in investing activities in 2000 versus $166.5
million in 1999. The increase was primarily attributable to additional amounts
spent on acquisitions, partially offset by reduced capital expenditures.

FINANCING CASH FLOWS

Financing activities consumed $936.3 million and $72.2 million of cash in 2001
and 1999, respectively, and provided $80.6 million in cash in 2000. The primary
reason for the increased use of cash in 2001 was the repayment of short-term
indebtedness with the proceeds from the Performance Materials sale (see
discontinued operations cash flow discussion below). The Company increased its
borrowings in 2000 to finance acquisitions as well as the Company's share
repurchase program.

DISCONTINUED OPERATIONS CASH FLOW

Cash flow from discontinued operations increased $736.1 million, from $114.6
million in 2000 to $850.7 million in 2001. Performance Materials accounted for
approximately $960 million of this increase, partially offset by a decrease of
$224 million in cash flow attributable to the EIP segment. The Performance
Materials increase was primarily attributable to the sale of the business during
the first quarter of 2001, while the decrease in cash flow attributable to the
EIP segment was primarily attributable to the Glacier Bearings acquisition
during 2001 (approximately $150 million) and increased payments related to the
defense and disposition of asbestos-related claims.

17
<PAGE>

Cash flow from discontinued operations increased $71.8 million from $42.8
million in 1999 to $114.6 million in 2000. Approximately $29 million of the
increase was attributable to the Performance Materials segment and approximately
$42 million of the increase was attributable to the EIP segment. The increase in
cash flows attributable to Performance Materials was primarily due to lower
merger-related and consolidation payments in 2000, better utilization of working
capital and reduced capital expenditures and acquisition related payments. The
increase in cash flows attributable to the EIP segment was primarily
attributable to better utilization of working capital and lower capital
expenditures, partially offset by increased payments related to the defense and
disposition of asbestos-related claims.

COMMERCIAL AIRLINE CUSTOMERS

The downturn in the commercial air transport market, exacerbated by the
terrorist attacks on September 11, 2001, has adversely affected the financial
condition of many of the Company's commercial airline customers. Many of these
customers have requested extended payment terms for future shipments and/or
reduced pricing. The Company has been reviewing and evaluating these requests on
a case by case basis. The Company performs ongoing credit evaluations on the
financial condition of all of its customers and maintain reserves for
uncollectible accounts receivable based upon expected collectibility. Although
the Company believes its reserves are adequate, it is not able to predict with
certainty the changes in the financial stability of these customers. Any
material change in the financial status of any one or group of customers could
have a material adverse effect on the Company's financial condition, results of
operations, or cash flows. To the extent extended payment terms are granted to
customers, it may negatively affect future cash flow.

INSURANCE COSTS AND AVAILABILITY

As a result of the terrorist attacks on September 11 and general market
conditions, the Company expects its insurance costs to increase and certain
types of coverage to be available only with significantly reduced limits and/or
less favorable terms and conditions. In particular, the Company's property and
casualty policies expire in July and August 2002, respectively, and we expect
premiums to increase significantly. We do not expect the cost increase to be
material to the Company's results of operations and we expect to maintain
coverage limits that are generally consistent with current levels. The Company
does, however, expect that coverage for terrorist acts, including indirect
business interruption, will deteriorate or be eliminated entirely at policy
renewal.

The Company's aircraft products liability and executive risk programs expire in
2003 and 2004, respectively, and we do not expect to experience any increase in
costs or disruption in policy terms for these programs until that time.

In late September 2001, hangarkeeper's liability insurance coverage related to
war and terrorist acts was cancelled industry-wide. This insurance provides
protection against damage to a customer's property while such property is in the
Company's care, custody, and control and applies most directly to the Company's
aircraft maintenance operations. In October 2001, the Company obtained
approximately $50 million of hangarkeeper's liability coverage related to war
and terrorist acts. In addition, the Company obtained indemnification from most
of its airline customers, who are insured commercially and under a new FAA
program, for losses above the policy limit of $50 million.

CONTINGENCIES

GENERAL

There are pending or threatened against Goodrich or its subsidiaries various
claims, lawsuits and administrative proceedings, all arising from the ordinary
course of business with respect to commercial, product liability, asbestos and
environmental matters, which seek remedies or damages. Goodrich believes that
any liability that may finally be determined with respect to such claims,
lawsuits and proceedings should not have a material effect on the Company's
consolidated financial position or results of operations. From time to time, the
Company is also involved in legal proceedings as a plaintiff involving contract,
patent protection, environmental and other matters. Gain contingencies, if any,
are recognized when they are realized.

18
<PAGE>

ENVIRONMENTAL

Environmental liabilities are recorded when the Company's liability is probable
and the costs are reasonably estimable, which generally is not later than at
completion of a feasibility study or when the Company has recommended a remedy
or has committed to an appropriate plan of action. The accruals are reviewed
periodically and, as investigations and remediations proceed, adjustments are
made as necessary. Accruals for losses from environmental remediation
obligations do not consider the effects of inflation, and anticipated
expenditures are not discounted to their present value. The accruals are not
reduced by possible recoveries from insurance carriers or other third parties,
but do reflect anticipated allocations among potentially responsible parties at
federal Superfund sites or similar state-managed sites and an assessment of the
likelihood that such parties will fulfill their obligations at such sites. The
measurement of environmental liabilities by the Company is based on currently
available facts, present laws and regulations, and current technology. Such
estimates take into consideration the Company's prior experience in site
investigation and remediation, the data concerning cleanup costs available from
other companies and regulatory authorities, and the professional judgment of the
Company's environmental experts in consultation with outside environmental
specialists, when necessary.

The Company is subject to various domestic and international environmental laws
and regulations which may require that it investigate and remediate the effects
of the release or disposal of materials at sites associated with past and
present operations, including sites at which the Company has been identified as
a potentially responsible party under the federal Superfund laws and comparable
state laws. The Company is currently involved in the investigation and
remediation of a number of sites under these laws. Estimates of the Company's
liability are further subject to uncertainties regarding the nature and extent
of site contamination, the range of remediation alternatives available, evolving
remediation standards, imprecise engineering evaluations and estimates of
appropriate cleanup technology, methodology and cost, the extent of corrective
actions that may be required, and the number and financial condition of other
potentially responsible parties, as well as the extent of their responsibility
for the remediation. Accordingly, as investigation and remediation of these
sites proceeds, it is likely that adjustments in the Company's accruals will be
necessary to reflect new information. The amounts of any such adjustments could
have a material adverse effect on the Company's results of operations in a given
period, but the amounts, and the possible range of loss in excess of the amounts
accrued, are not reasonably estimable. Based on currently available information,
however, management does not believe that future environmental costs in excess
of those accrued with respect to sites with which the Company has been
identified are likely to have a material adverse effect on the Company's
financial condition. There can be no assurance, however, that additional future
developments, administrative actions or liabilities relating to environmental
matters will not have a material adverse effect on the Company's results of
operations in a given period.

At December 31, 2001, the Company's reserves for environmental remediation
obligations totaled $84.9 million, of which $11.0 million was included in
accrued liabilities ($1.5 million of which is classified within merger-related
and consolidation costs). Of the $84.9 million, $12.8 million is associated with
ongoing operations and $72.1 million is associated with businesses previously
disposed of or discontinued.

The timing of expenditures depends on a number of factors that vary by site,
including the nature and extent of contamination, the number of potentially
responsible parties, the timing of regulatory approvals, the complexity of the
investigation and remediation, and the standards for remediation. The Company
expects that it will expend present accruals over many years, and will complete
remediation of all sites with which it has been identified in up to thirty
years. This period includes operation and monitoring costs which are generally
incurred over 15 years.

TOLO LITIGATION

In May 2000, the Company and its subsidiary Rohr, Inc. ("Rohr"), were served
with complaints in a lawsuit filed in the Superior Court of Orange County,
California, by former shareholders and certain former employees of Tolo, Inc.
Tolo, Inc. is a subsidiary of Rohr that was acquired in 1997. The former
shareholders alleged that the Company and Rohr breached the stock purchase
agreement by failing to pay $2.4 million under the terms of the agreement. In
September 2001, a jury found that the Company was liable to the shareholders for
the $2.4 million retained by Rohr under the stock purchase agreement and was
also assessed punitive damages of $48 million. The court subsequently reduced
the punitive damage award to $24 million.

19
<PAGE>

At the time of the purchase the Company established a reserve of $2.4 million
relating to the amount withheld by Rohr pursuant to the stock purchase
agreement. The Company has not established an accrual for the punitive damages
award of $24 million, which was based on the plaintiff"s fraudulent concealment
claim, for the reasons set forth below.

The Company and its legal counsel believe that there were numerous points of
reversible error in the trial that make it more likely than not that the
judgment will be reversed or vacated on appeal. First, the Company believes the
plaintiffs' fraud claim is legally deficient under California law and should be
reversed. If the fraud claim is not reversed, defendants' should, at a minimum,
be granted a new trial on the fraudulent concealment claim because the trial
court permitted plaintiffs to add this claim late in the trial but did not allow
the Company to introduce evidence to defend against it. The Company also
believes that the trial court made numerous prejudicial errors regarding the
admission and exclusion of evidence relating to the fraud claims, which further
supports the grant of a new trial. And finally, the Company believes that the
trial court's directed verdict on plaintiffs' breach of contract claim should be
set aside and a new trial granted because, among other things, there was
sufficient evidence for the jury to find for the defendants on this claim.

DISCONTINUED OPERATIONS

Contingencies associated with Coltec and its subsidiaries, including
asbestos-related liabilities, are discussed in Note S to the Consolidated
Financial Statements. After the spin-off is completed, it is possible that
asbestos-related claims might be asserted against the Company on the theory that
it has some responsibility for the asbestos-related liabilities of Coltec or its
subsidiaries, even though the activities that led to those claims occurred prior
to the Company's ownership of Coltec. Also, it is possible that a claim could be
asserted against the Company that Coltec's dividend of its aerospace business to
the Company prior to the spin-off was made at a time when Coltec was insolvent
or caused Coltec to become insolvent. Such a claim could seek recovery from the
Company on behalf of Coltec of the fair market value of the dividend.

No such claims have been asserted against the Company to date. The Company
believes that it would have substantial legal defenses against any such claims.
Any such claims would require, as a practical matter, that Coltec's subsidiaries
were unable to satisfy their asbestos-related liabilities and that Coltec was
found to be responsible for these liabilities and is unable to meet its
financial obligations. The Company believes any such claims would be without
merit and that Coltec will be solvent both before and after the dividend. If the
Company is ultimately found to be responsible for the asbestos-related
liabilities of Coltec's subsidiaries, the Company believes it would not have a
material adverse effect on its financial condition, but could have a material
adverse effect on its results of operations and cash flows in a particular
period. However, because of the uncertainty as to the number, timing and
payments related to future asbestos-related claims, there can be no assurance
that any such claims would not have a material adverse effect on the Company's
financial condition, results of operations and cash flows. If a claim related to
the dividend of Coltec's aerospace business were successful, it could have a
material adverse impact on the Company's financial condition, results of
operations and cash flows.

GUARANTEES

The Company has guaranteed certain payments with respect to the $150 million of
TIDES. Following the spin-off of the EIP segment, the TIDES will remain
outstanding as an obligation of Coltec Capital Trust and the Company's guarantee
of certain payments with respect to the TIDES will remain an obligation of the
Company.

In addition to its guarantee of the TIDES, the Company has an outstanding
contingent liability for guaranteed debt and lease payments of $5.5 million and
for letters of credit of $37.8 million at December 31, 2001.

CERTAIN AEROSPACE CONTRACTS

As discussed above, the Company's aerostructures business has a contract with
Boeing on the B717-200 program that is subject to certain risks and
uncertainties. Based on revisions to Boeing's production rate and delivery
schedule for the B717-200 program, announced by Boeing at the end of 2001, the
Company reevaluated its estimated costs to complete the contract, its learning
curve assumptions as well as the number of aircraft expected to be delivered. As
a result of this analysis, the Company recorded a charge of $76.5 million during
the fourth quarter of 2001. This charge eliminated the remaining balance of
excess-over-average inventory costs yet to be recognized and reduced
pre-production inventory balances down to $35.2 million as of December 31, 2001.
The Company will continue to record no margin on this contract based on its
revised assumptions.

20
<PAGE>

The Company's aerostructures business also re-engines 727 aircraft. The
re-engining enables operators of these aircraft meet sound attenuation
requirements as well as improve their fuel efficiency. The aerostructures
business has entered into several collateralized financing arrangements to
assist its customers and has also entered into certain off-balance sheet
financing arrangements (primarily the sale of receivables with recourse) related
to this program. As a result of the dramatic downturn in the commercial aviation
market resulting primarily from the September 11th terrorist attacks, the
Company reevaluated the recoverability of its investment in the 727 program and
recorded a charge of approximately $19 million in the fourth quarter of 2001 as
a result of this analysis. At December 31, 2001, the Company had approximately
$43 million of remaining inventory on its balance sheet, as well as accounts and
notes receivable of approximately $73 million (approximately $20 million of
which is off-balance sheet and is subject to recourse provisions). Collection of
these receivables, as well as the recovery of some portion of the Company's
investment in existing inventory balances, may be negatively affected should the
overall deterioration in the commercial aerospace market continue through 2002
or if the market for re-engined Super 27 aircraft does not strengthen.

EURO CONVERSION

The Company successfully addressed the many areas involved with the introduction
of the Euro on January 1, 2002, including information technology, business
and finance systems, as well as the impact on the pricing and distribution of
the Company's products.

The effect of the introduction of the Euro, as well as any related costs of
conversion, did not have a material impact on the Company's results of
operations, financial condition or cash flows.

NEW ACCOUNTING STANDARDS

In March 2000, the Financial Accounting Standards Board ("FASB") issued
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation--an interpretation of APB Opinion No. 25" ("FIN 44"). FIN 44
clarifies the application of APB Opinion No. 25 and among other issues clarifies
the following: the definition of an employee for purposes of applying APB
Opinion No. 25; the criteria for determining whether a plan qualifies as a
noncompensatory plan; the accounting consequence of various modifications to the
terms of previously fixed stock options or awards; and the accounting for an
exchange of stock compensation awards in a business combination. FIN 44 is
effective July 1, 2000, but certain conclusions in FIN 44 cover specific events
that occurred after either December 15, 1998 or January 12, 2000. FIN 44 did not
have a material impact on the Company's financial condition or results of
operations.

In September 2000, the Financial Accounting Standards Board ("FASB") issued
Statement No. 140, "Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities" ("SFAS 140"). This statement replaces FASB
Statement No. 125, "Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities" ("SFAS 125"). It revises the standards for
accounting for securitizations and other transfers of financial assets and
collateral and requires certain disclosures, but it carries over most of SFAS
125's provisions without reconsideration. SFAS 140 is effective for transfers
and servicing of financial assets and extinguishments of liabilities occurring
after March 31, 2001. The adoption of SFAS 140 did not have a material impact on
the Company's financial condition or results of operations.

Effective January 1, 2001, the Company adopted Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS No. 133"), as amended, which requires that all derivative
instruments be reported on the balance sheet at fair value and that changes in a
derivative's fair value be recognized currently in earnings unless specific
hedge criteria are met. If the derivative is designated as a fair value hedge,
the changes in the fair value of the derivative and of the hedged item
attributable to the hedged risk are recognized in earnings. If the derivative is
designated as a cash flow hedge, the effective portions of changes in the fair
value of the derivative are recorded in other comprehensive income and are
recognized in the income statement when the hedged item affects earnings.
Ineffective portions of changes in the fair value of cash flow hedges are
recognized in earnings.

21
<PAGE>

In accordance with the transition provisions of SFAS No. 133, the Company
recorded the previously unrecognized fair market value of an interest rate swap
designated as a fair value hedge and the associated adjustment to the carrying
amount of the debt instrument designated as the hedged item as cumulative-effect
adjustments to net income. As this pre-existing hedging relationship would have
met the requirements for the shortcut method at inception, the Company chose to
calculate the transition adjustment upon initial adoption as though the shortcut
method had been applied since the inception of the hedging relationship. The
effect of the adjustment to the carrying value of the debt was offset entirely
by the impact of recording the fair value of the interest rate swap.
Accordingly, the net cumulative-effect adjustment to net income was zero.

In July 2001, the FASB issued Statement No. 141 "Business Combinations" ("SFAS
141") and Statement No. 142 "Goodwill and Other Intangible Assets" ("SFAS 142").
SFAS 141 is effective as follows: a) use of the pooling-of-interest method is
prohibited for business combinations initiated after June 30, 2001; and b) the
provisions of SFAS 141 also apply to all business combinations accounted for by
the purchase method that are completed after June 30, 2001. There are also
transition provisions that apply to business combinations completed before July
1, 2001, that were accounted for by the purchase method. SFAS 142 is effective
for fiscal years beginning after December 15, 2001 and applies to all goodwill
and other intangible assets recognized in an entity's statement of financial
position at that date, regardless of when those assets were initially
recognized.

The Company completed two acquisitions in the third quarter of 2001 and has not
recorded any amortization on amounts preliminarily allocated to goodwill in
accordance with SFAS 141.

The Company will apply the new rules on accounting for goodwill and other
intangible assets beginning in the first quarter of 2002. Application of the
nonamortization provisions of the Statement is expected to result in an increase
in income from continuing operations before income taxes and trust distributions
of approximately $29 million per year. As provided for in the transition
provisions of SFAS 142, the Company will perform the first of the required
impairment tests of goodwill and indefinite lived intangible assets during the
first six months of 2002. The Company has not yet determined what the effect of
these tests will be on the Company's financial condition or results of
operations.

In June 2001, the FASB issued Statement No. 143 "Accounting for Asset Retirement
Obligations" ("SFAS 143"). SFAS 143 addresses financial accounting and reporting
for obligations associated with the retirement of tangible long-lived assets and
the associated asset retirement costs. It applies to legal obligations
associated with the retirement of long-lived assets that result from the
acquisition, construction, development and/or the normal operation of a
long-lived asset, except for certain obligations of lessees. SFAS 143 is
effective for financial statements issued for fiscal years beginning after June
15, 2002. The Company has not yet determined what the effect of SFAS 143 will be
on its consolidated financial condition or results of operations.

In October 2001, the FASB issued Statement No. 144 "Accounting for the
Impairment or Disposal of Long-Lived Assets" ("SFAS 144"). SFAS 144 supersedes
FASB Statement No. 121 "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of" ("SFAS 121"), however it retains the
fundamental provisions of that statement related to the recognition and
measurement of the impairment of long-lived assets to be "held and used." In
addition, SFAS 144 provides more guidance on estimating cash flows when
performing a recoverability test, requires that a long-lived asset (group) to be
disposed of other than by sale (e.g. abandoned) be classified as "held and used"
until it is disposed of, and establishes more restrictive criteria to classify
an asset (group) as "held for sale." SFAS 144 is effective for fiscal years
beginning after December 15, 2001. The Company has not yet determined what the
effect of SFAS 144 will be on its consolidated financial condition or results of
operations.

22
<PAGE>
CRITICAL ACCOUNTING POLICIES

The Company's discussion and analysis of its financial condition and results of
operations are based upon the Company's consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted
in the United States. The preparation of these financial statements requires the
Company to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses, and related disclosure of contingent
assets and liabilities. On an on-going basis, the Company evaluates its
estimates, including those related to customer programs and incentives, product
returns, bad debts, inventories, investments, intangible assets, income taxes,
financing operations, warranty obligations, excess component order cancellation
costs, restructuring, long-term service contracts, pensions and other
post-retirement benefits, and contingencies and litigation. The Company bases
its estimates on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions.

The Company believes the following critical accounting policies affect its more
significant judgments and estimates used in the preparation of its consolidated
financial statements.

REVENUE RECOGNITION

For revenues not recognized under the contract method of accounting, the Company
recognizes revenues from the sale of products at the point of passage of title,
which is at the time of shipment. Revenues earned from providing maintenance
service are recognized when the service is complete.

CONTRACT ACCOUNTING - PERCENTAGE OF COMPLETION

Revenue Recognition

The Company also has sales under long-term, fixed-priced contracts, many of
which contain escalation clauses, requiring delivery of products over several
years and frequently providing the buyer with option pricing on follow-on
orders. Sales and profits on each contract are recognized in accordance with the
percentage-of-completion method of accounting, using the units-of-delivery
method. The Company follows the guidelines of Statement of Position 81-1 ("SOP
81-1"), "Accounting for Performance of Construction-Type and Certain
Production-Type Contracts" (the contract method of accounting) except that the
Company's contract accounting policies differ from the recommendations of SOP
81-1 in that revisions of estimated profits on contracts are included in
earnings under the reallocation method rather than the cumulative catch-up
method. Under the reallocation method, the impact of revisions in estimates
related to units shipped to date is recognized ratably over the remaining life
of the contract while under the cumulative catch-up method such impact would be
recognized immediately. To the extent the Company were to make a significant
acquisition that used the cumulative catch-up method to record revisions in
estimated profits on contracts, it would be required to change its current
method of accounting. Such a change would be recorded as a change in accounting
principle and would most likely result in the restatement of prior periods in
accordance with APB 20.

Profit is estimated based on the difference between total estimated revenue and
total estimated cost of a contract, excluding that reported in prior periods,
and is recognized evenly in the current and future periods as a uniform
percentage of sales value on all remaining units to be delivered. Current
revenue does not anticipate higher or lower future prices but includes units
delivered at actual sales prices. Cost includes the estimated cost of the
preproduction effort (primarily tooling and design), plus the estimated cost of
manufacturing a specified number of production units. The specified number of
production units used to establish the profit margin is predicated upon
contractual terms adjusted for market forecasts and does not exceed the lesser
of those quantities assumed in original contract pricing or those quantities
which the Company now expects to deliver in the timeframe/periods assumed in the
original contract pricing. The Company's policies only allow the estimated
number of production units to be delivered to exceed the quantity assumed within
the original contract pricing when the Company receives firm orders for
additional units. The timeframe/period assumed in the original contract pricing
is generally equal to the period specified in the contract. If the contract is a
"life of program" contract, then such period is equal to the time period used in
the original pricing model which generally equals the time period required to
recover the Company's pre-production costs. Option quantities are combined with
prior orders when follow-on orders are released.

23
<PAGE>

The contract method of accounting involves the use of various estimating
techniques to project costs at completion and includes estimates of recoveries
asserted against the customer for changes in specifications. These estimates
involve various assumptions and projections relative to the outcome of future
events, including the quantity and timing of product deliveries. Also included
are assumptions relative to future labor performance and rates, and projections
relative to material and overhead costs. These assumptions involve various
levels of expected performance improvements. The Company reevaluates its
contract estimates periodically and reflects changes in estimates in the current
and future periods under the reallocation method.

Inventory

Inventoried costs on long-term contracts include certain preproduction costs,
consisting primarily of tooling and design costs and production costs, including
applicable overhead. The costs attributed to units delivered under long-term
commercial contracts are based on the estimated average cost of all units
expected to be produced and are determined under the learning curve concept,
which anticipates a predictable decrease in unit costs as tasks and production
techniques become more efficient through repetition. This usually results in an
increase in inventory (referred to as "excess-over average") during the early
years of a contract.

If in-process inventory plus estimated costs to complete a specific contract
exceeds the anticipated remaining sales value of such contract, such excess is
charged to current earnings, thus reducing inventory to estimated realizable
value.

SALES INCENTIVES

The Company offers sales incentives to certain commercial customers in
connection with sales contracts. These incentives may consist of upfront cash
payments, merchandise credits and/or free products. The cost of these incentives
is recognized in the period incurred unless it is specifically guaranteed of
recovery within the contract by the customer. If the contract contains such a
guarantee, then the cost of the sales incentive is capitalized and amortized
over the contract period.

ASBESTOS

The Company records an accrual for asbestos-related matters that are deemed
probable and can be reasonably estimated, which consist of settled claims and
actions in advanced stages of processing. The Company also records an asset
equal to the amount of those liabilities that is expected to be recovered by
insurance.

In accordance with internal procedures for the processing of asbestos product
liability actions and due to the proximity to trial or settlement, certain
outstanding actions progress to a stage where the cost to dispose of these
actions can reasonably be estimated. These actions are classified as actions in
advanced stages. With respect to outstanding actions that are in preliminary
procedural stages, as well as any actions that may be filed in the future,
insufficient information exists upon which judgments can be made as to the
validity or ultimate disposition of such actions, thereby making it difficult to
reasonably estimate what, if any, potential liability or costs may be incurred.
Accordingly, no estimate of future liability has been included for such claims.
See Note S of the accompanying Consolidated Financial Statements for additional
discussion of asbestos matters.

24
<PAGE>

FORWARD-LOOKING INFORMATION IS SUBJECT TO RISK AND UNCERTAINTY

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

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

- global demand for aircraft spare parts and aftermarket
services;
- the impact of the terrorist attacks on September 11, 2001 and
their aftermath;
- the timing related to restoring consumer confidence in air
travel;
- the health of the commercial aerospace industry, including the
impact of bankruptcies in the airline industry;
- the extent to which the Company is able to achieve savings
from its restructuring plans;
- the timing and successful completion of the spin-off of the
Company's Engineered Industrial Products business;
- the successful completion of Coltec's dividend of its
aerospace business to the Company;
- the solvency of Coltec at the time of and subsequent to the
EIP spin-off;
- demand for and market acceptance of new and existing products,
including potential cancellation of orders by commercial customers;
- successful development of advanced technologies;
- competitive product and pricing pressures;
- domestic and foreign government spending, budgetary and trade
policies;
- economic and political changes in international markets where
the Company competes, such as changes in currency exchange rates,
inflation rates, recession and other external factors over which the
Company has no control; and
- the outcome of contingencies (including completion of
acquisitions, divestitures, litigation and environmental remediation
efforts).

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

25
<PAGE>

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to certain market risks as part of its ongoing business
operations, including risks from changes in interest rates and foreign currency
exchange rates, that could impact its financial condition, results of operations
and cash flows. The Company manages its exposure to these and other market risks
through regular operating and financing activities, and on a limited basis,
through the use of derivative financial instruments. The Company intends to use
such derivative financial instruments as risk management tools and not for
speculative investment purposes.

INTEREST RATE EXPOSURE The Company is exposed to interest rate risk as a result
of its outstanding debt obligations. The table below provides information about
the Company's derivative financial instruments and other financial instruments
that are sensitive to changes in interest rates, including interest rate swaps
and debt obligations. For debt obligations, the table represents principal cash
flows and related weighted average interest rates by expected (contractual)
maturity dates. For interest rate swaps, the table presents notional amounts
and weighted-average interest rates by contractual maturity dates. Notional
values are used to calculate the contractual payments to be exchanged under the
contract. Weighted average variable (receive) rates are based on implied forward
rates in the yield curve at December 31, 2001.

EXPECTED MATURITY DATES

<TABLE>
<CAPTION>
($ IN MILLIONS)
FAIR
2002 2003 2004 2005 2006 THEREAFTER TOTAL VALUE
-------- ------ ------ ------ ------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Debt
Fixed Rate ................... $ 4.3 $ 2.2 $ 1.3 $ 1.3 $ 1.3 $1,281.4 $1,291.7 $1,190.4
Average Interest Rate ...... 5.1% 3.8% 3.1% 3.0% 3.3% 7.0% 6.9%
Variable Rate ................ $ 113.3 $ -- $ -- -- -- $ 16.5 $ 129.8 $ 129.8
Average Interest Rate ...... 2.4% -- -- -- -- 4.9% 2.7%

Capital Lease Obligations....... $ 2.1 $ 1.9 $ 1.4 $ 0.3 $ -- $ -- $ 5.7 $ 4.8
Interest Rate Swaps
Fixed to Variable............. $ 200.0 $ 200.0 $ (7.3)
Average Pay Rate............ 4.8% 4.8%
Average Receive Rate........ 6.0% 6.0%
</TABLE>

FOREIGN CURRENCY EXPOSURE The Company is exposed to foreign currency risks that
arise from normal business operations. These risks include the translation of
local currency balances of the Company's foreign subsidiaries, intercompany
loans with foreign subsidiaries and transactions denominated in foreign
currencies. The Company's objective is to minimize its exposure to these risks
through its normal operating activities and, where appropriate, through foreign
currency forward exchange contracts.

The Company's international operations expose it to translation risk when the
local currency financial statements are translated to U.S. dollars. As currency
exchange rates fluctuate, translation of the statements of income of
international businesses into U.S. dollars will affect comparability of revenues
and expenses between years. The Company hedges a significant portion of its net
investments in international subsidiaries by financing the purchase and cash
flow requirements through local currency borrowings.

See Note A to the Consolidated Financial Statements for a discussion of the
Company's exposure to foreign currency transaction risk. At December 31, 2001, a
hypothetical 10 percent movement in foreign exchange would not have a material
effect on earnings.

26
<PAGE>

MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS

The Consolidated Financial Statements and Notes to Consolidated Financial
Statements of Goodrich Corporation and subsidiaries have been prepared by
management. These statements have been prepared in accordance with generally
accepted accounting principles and, accordingly, include amounts based upon
informed judgments and estimates. Management is responsible for the selection of
appropriate accounting principles and the fairness and integrity of such
statements.

The Company maintains a system of internal controls designed to provide
reasonable assurance that accounting records are reliable for the preparation of
financial statements and for safeguarding assets. The Company's system of
internal controls includes: written policies, guidelines and procedures;
organizational structures, staffed through the careful selection of people that
provide an appropriate division of responsibility and accountability; and an
internal audit program. Ernst & Young LLP, independent auditors, were engaged to
audit and to render an opinion on the Consolidated Financial Statements of
Goodrich Corporation and subsidiaries. Their opinion is based on procedures
believed by them to be sufficient to provide reasonable assurance that the
Consolidated Financial Statements are not materially misstated. The report of
Ernst & Young LLP follows.

The Board of Directors pursues its oversight responsibility for the financial
statements through its Audit Review Committee, composed of Directors who are not
employees of the Company. The Audit Review Committee meets regularly to review
with management and Ernst & Young LLP the Company's accounting policies,
internal and external audit plans and results of audits. To ensure complete
independence, Ernst & Young LLP and the internal auditors have full access to
the Audit Review Committee and meet with the Committee without the presence of
management.

/s/ D. L. BURNER
- --------------------------------------------
D. L. Burner
Chairman
and Chief Executive Officer

/s/ ULRICH SCHMIDT
- --------------------------------------------
Ulrich Schmidt
Senior Vice President
and Chief Financial Officer

/s/ R. D. KONEY, JR.
- --------------------------------------------
R. D. Koney, Jr.
Vice President and Controller

27
<PAGE>

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

To the Shareholders and Board of Directors of
Goodrich Corporation

We have audited the accompanying consolidated balance sheet of Goodrich
Corporation and subsidiaries as of December 31, 2001 and 2000, and the related
consolidated statements of income, shareholders' equity and cash flows for each
of the three years in the period ended December 31, 2001. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Goodrich
Corporation and subsidiaries at December 31, 2001 and 2000, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 2001, in conformity with accounting principles
generally accepted in the United States.

/s/ Ernst & Young LLP

Charlotte, North Carolina
February 4, 2002

28
<PAGE>

CONSOLIDATED STATEMENT OF INCOME

<TABLE>
<CAPTION>
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

YEAR ENDED DECEMBER 31 2001 2000 1999
- ---------------------- ---------- ---------- ----------
<S> <C> <C> <C>
SALES ...................................................... $ 4,184.5 $ 3,700.5 $ 3,646.2
Operating costs and expenses:
Cost of sales ........................................... 3,127.6 2,676.2 2,651.7
Selling and administrative costs ........................ 565.0 490.4 492.1
Merger-related and consolidation costs .................. 107.3 44.2 228.3
---------- ---------- ----------
3,799.9 3,210.8 3,372.1
---------- ---------- ----------
OPERATING INCOME ........................................... 384.6 489.7 274.1
Interest expense ........................................... (107.8) (107.3) (87.5)
Interest income ............................................ 24.1 5.2 3.2
Other income (expense)-- net ............................... (19.2) (20.6) (4.8)
---------- ---------- ----------
Income from continuing operations before income
taxes and Trust distributions ............................ 281.7 367.0 185.0
Income tax expense ......................................... (94.3) (121.3) (88.6)
Distributions on Trust preferred securities ................ (10.5) (10.5) (10.5)
---------- ---------- ----------
INCOME FROM CONTINUING OPERATIONS .......................... 176.9 235.2 85.9
Income from discontinued operations - net of taxes ......... 112.3 90.7 83.7
---------- ---------- ----------
NET INCOME .............................................. $ 289.2 $ 325.9 $ 169.6
========== ========== ==========

BASIC EARNINGS PER SHARE:
Continuing operations ................................... $ 1.72 $ 2.24 $ 0.78
Discontinued operations ................................. 1.08 0.87 0.76
---------- ---------- ----------
NET INCOME .............................................. $ 2.80 $ 3.11 $ 1.54
========== ========== ==========

DILUTED EARNINGS PER SHARE:
Continuing operations ................................... $ 1.65 $ 2.16 $ 0.76
Discontinued operations ................................. 1.11 0.88 0.79
---------- ---------- ----------
NET INCOME .............................................. $ 2.76 $ 3.04 $ 1.55
========== ========== ==========
</TABLE>

See Notes to Consolidated Financial Statements.

29
<PAGE>

CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
(DOLLARS IN MILLIONS, EXCEPT SHARE AMOUNTS)
DECEMBER 31 2001 2000
- ----------- --------- ---------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents .................................................... $ 85.8 $ 77.5
Accounts and notes receivable ................................................ 570.4 633.3
Inventories .................................................................. 841.5 809.6
Deferred income taxes ........................................................ 112.9 88.4
Prepaid expenses and other assets ............................................ 26.2 75.1
Net assets of discontinued operations ........................................ 284.5 1,049.7
--------- ---------
TOTAL CURRENT ASSETS ...................................................... 1,921.3 2,733.6
Property ..................................................................... 955.5 897.0
Prepaid pension .............................................................. 238.7 235.0
Deferred income taxes ........................................................ -- 4.2
Goodwill ..................................................................... 747.3 681.7
Identifiable intangible assets ............................................... 138.8 102.1
Payment-in-kind notes receivable, less discount
($22.2 at December 31, 2001) ............................................ 168.4 --
Other assets ................................................................. 468.1 404.4
Net assets of discontinued operations ........................................ -- 80.9
--------- ---------
TOTAL ASSETS .............................................................. $ 4,638.1 $ 5,138.9
========= =========

CURRENT LIABILITIES
Short-term bank debt ......................................................... $ 113.3 $ 755.6
Accounts payable ............................................................. 396.6 366.3
Accrued expenses ............................................................. 523.6 515.4
Income taxes payable ......................................................... 119.2 59.3
Current maturities of long-term debt and capital lease obligation ............ 5.9 179.2
--------- ---------
TOTAL CURRENT LIABILITIES ............................................... 1,158.6 1,875.8
Long-term debt and capital lease obligations ................................. 1,307.2 1,301.4
Pension obligations .......................................................... 155.5 61.4
Postretirement benefits other than pensions .................................. 320.1 334.4
Deferred income taxes ........................................................ 13.9 --
Other non-current liabilities ................................................ 196.4 212.9
Commitments and contingent liabilities ....................................... -- --
Mandatorily redeemable preferred securities of trust ......................... 125.0 124.5

SHAREHOLDERS' EQUITY
Common stock-- $5 par value
Authorized, 200,000,000 shares; issued, 115,144,771 shares in 2001 and
113,295,049 shares in 2000 (excluding 14,000,000 shares
held by a wholly-owned subsidiary) ........................................ 575.7 566.5
Additional paid-in capital ................................................... 973.5 922.8
Income retained in the business .............................................. 333.7 158.1
Accumulated other comprehensive income ....................................... (110.1) (57.7)
Unearned compensation ........................................................ (0.6) (1.2)
Common stock held in treasury, at cost (13,446,808 shares in 2001
and 10,964,761 shares in 2000) ............................................ (410.8) (360.0)
--------- ---------
TOTAL SHAREHOLDERS' EQUITY ............................................. 1,361.4 1,228.5
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ............................. $ 4,638.1 $ 5,138.9
========= =========
</TABLE>

See Notes to Consolidated Financial Statements.

30
<PAGE>

CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
(DOLLARS IN MILLIONS)
YEAR ENDED DECEMBER 31 2001 2000 1999
- ---------------------- -------- -------- --------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Income from continuing operations .................................... $ 176.9 $ 235.2 $ 85.9
Adjustments to reconcile income from continuing operations
to net cash provided by operating activities:
Merger-related and consolidation:
Expenses ....................................................... 107.3 44.2 228.3
Payments ....................................................... (30.3) (57.5) (175.8)
Unusual inventory adjustments ..................................... 94.5 -- --
Depreciation and amortization ..................................... 173.8 165.4 137.6
Deferred income taxes ............................................. 18.5 (33.2) 81.4
Net gains on sale of businesses ................................... (7.8) (2.0) (1.7)
Payment-in-kind interest income ................................... (17.6) -- --
Gain on sale of investment ........................................ -- -- (3.2)
Change in assets and liabilities, net of effects of
acquisitions and dispositions of businesses:
Receivables .................................................... 21.6 (72.7) 3.2
Change in receivables sold, net ............................... 46.3 39.2 --
Inventories .................................................... (120.1) (36.0) (32.8)
Other current assets ........................................... (8.8) (31.2) (10.7)
Accounts payable ............................................... 13.1 81.6 (12.5)
Accrued expenses ............................................... 42.3 5.1 16.0
Income taxes payable ........................................... (52.3) 12.2 36.9
Tax benefit on non-qualified options ........................... (7.7) (8.3) --
Other non-current assets and liabilities ....................... (67.1) (173.8) (142.1)
-------- -------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES ...................... 382.6 168.2 210.5
-------- -------- --------

INVESTING ACTIVITIES
Purchases of property ................................................ (190.5) (133.8) (144.7)
Proceeds from sale of property ....................................... 2.0 26.4 13.6
Proceeds from sale of businesses ..................................... 18.9 4.8 17.6
Sale of short-term investments ....................................... -- -- 3.5
Payments made in connection with acquisitions,
net of cash acquired .............................................. (119.2) (246.8) (56.5)
-------- -------- --------
NET CASH USED BY INVESTING ACTIVITIES .......................... (288.8) (349.4) (166.5)
-------- -------- --------

FINANCING ACTIVITIES
Increase (decrease) in short-term debt, net .......................... (626.4) 501.3 85.4
Proceeds from issuance of long-term debt ............................. 4.9 5.0 203.9
Increase (decrease) in revolving credit facility, net ................ -- -- (239.5)
Repayment of long-term debt and capital lease obligations ............ (187.0) (14.7) (18.6)
Proceeds from issuance of capital stock .............................. 51.4 25.4 6.9
Purchases of treasury stock .......................................... (47.1) (300.4) (0.3)
Dividends ............................................................ (113.7) (117.6) (91.6)
Distributions on Trust preferred securities .......................... (18.4) (18.4) (18.4)
-------- -------- --------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES ............... (936.3) 80.6 (72.2)
-------- -------- --------

DISCONTINUED OPERATIONS
Net cash provided (used) by discontinued operations .................. 850.7 114.6 42.8
-------- -------- --------
Effect of Exchange Rate Changes on Cash and Cash Equivalents ......... 0.1 (2.9) (1.7)
-------- -------- --------
Net Increase (Decrease) in Cash and Cash Equivalents ................. 8.3 11.1 12.9
Cash and Cash Equivalents at Beginning of Year ....................... 77.5 66.4 53.5
-------- -------- --------
Cash and Cash Equivalents at End of Year ............................. $ 85.8 $ 77.5 $ 66.4
======== ======== ========
</TABLE>

See Notes to Consolidated Financial Statements.

31
<PAGE>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
INCOME UNEARNED
RETAINED ACCUMULATED PORTION OF
COMMON STOCK ADDITIONAL IN OTHER RESTRICTED
---------------- PAID-IN THE COMPREHENSIVE STOCK TREASURY
(IN MILLIONS) SHARES AMOUNT CAPITAL BUSINESS INCOME AWARDS STOCK TOTAL
- ------------- ------- -------- ---------- --------- ------------- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE DECEMBER 31, 1998 ............. 111.525 $ 557.7 $ 883.5 $ (120.4) $ (13.6) $ (2.7) $ (65.6) $1,238.9
Net income ............................ 169.6 169.6
Other comprehensive income:
Unrealized translation
adjustments net of
reclassification adjustments
for loss included in net
income of $0.6 .................... (26.6) (26.6)
Minimum pension liability
adjustment ........................ (1.6) (1.6)
--------
Total comprehensive income ............ 141.4
Employee award programs ............... 0.540 2.6 12.3 1.5 0.7 17.1
Purchases of stock for treasury ....... (0.3) (0.3)
Dividends (per share -- $1.10) ........ -- -- -- (101.5) -- -- -- (101.5)
------- -------- ------- -------- -------- ------ -------- --------
BALANCE DECEMBER 31, 1999 ............. 112.065 560.3 895.8 (52.3) (41.8) (1.2) (65.2) 1,295.6
Net income ............................ 325.9 325.9
Other comprehensive income:
Unrealized translation
adjustments ....................... (16.4) (16.4)
Minimum pension liability
adjustment ........................ 0.5 0.5
--------
Total comprehensive income ............ 310.0
Employee award programs ............... 1.230 6.2 27.0 5.6 38.8
Purchases of stock for treasury (300.4) (300.4)
Dividends (per share -- $1.10) ....... -- -- -- (115.5) -- -- -- (115.5)
------- -------- ------- -------- -------- ------ -------- --------
BALANCE DECEMBER 31, 2000 ............. 113.295 566.5 922.8 158.1 (57.7) (1.2) (360.0) 1,228.5
Net income............................. 289.2 289.2
Other comprehensive income:
Unrealized translation
adjustments net of
reclassification adjustments
for loss included in net
income of $1.0 .................... (3.5) (3.5)
Minimum pension liability
adjustment ........................ (48.9) (48.9)
--------
Total comprehensive income............. 236.8
Employee award programs ............... 1.850 9.2 50.7 0.6 (0.7) 59.8
Purchases of stock for treasury........ (50.1) (50.1)
Dividends (per share -- $1.10) ........ -- -- -- (113.6) -- -- -- (113.6)
------- -------- ------- -------- -------- ------ -------- --------
BALANCE DECEMBER 31, 2001 ............. 115.145 $ 575.7 $ 973.5 $ 333.7 $ (110.1) $ (0.6) $ (410.8) $1,361.4
======== ======== ======= ======== ======== ====== ======== ========
</TABLE>

See Notes to Consolidated Financial Statements.

32
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A. SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION The Consolidated Financial Statements reflect the accounts
of Goodrich Corporation and its majority-owned subsidiaries ("the Company" or
"Goodrich"). Investments in 20- to 50-percent-owned affiliates and
majority-owned companies in which investment is considered temporary are
accounted for using the equity method. Equity in earnings (losses) from these
businesses is included in Other income (expense) -- net. Intercompany accounts
and transactions are eliminated.

As discussed in Note S, the Company's Performance Materials and Engineered
Industrial Products businesses have been accounted for as discontinued
operations. Unless otherwise noted, disclosures herein pertain to the Company's
continuing operations.

CASH EQUIVALENTS Cash equivalents consist of highly liquid investments with a
maturity of three months or less at the time of purchase.

SALE OF ACCOUNTS RECEIVABLE The Company adopted the provisions of Statement of
Financial Accounting Standards No. 140, "Accounting for Transfers and Servicing
of Financial Assets and Extinguishment of Liabilities" on April 1, 2001. Prior
to that, the Company accounted for the sale of receivables in accordance with
SFAS No. 125, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities." Trade accounts receivable sold are removed from
the balance sheet at the time of transfer.

INVENTORIES Inventories, other than inventoried costs relating to long-term
contracts, are stated at the lower of cost or market. Certain domestic
inventories are valued by the last-in, first-out (LIFO) cost method. Inventories
not valued by the LIFO method are valued principally by the average cost method.

In accordance with industry practice, costs in inventory include amounts
relating to contracts with long production cycles, some of which are not
expected to be realized within one year.

LONG-LIVED ASSETS Property, plant and equipment, including amounts recorded
under capital leases, are recorded at cost. Depreciation and amortization is
computed principally using the straight-line method over the following estimated
useful lives: buildings and improvements, 15 to 40 years; machinery and
equipment, 5 to 15 years. In the case of capitalized lease assets, amortization
is computed over the lease term if shorter. Repairs and maintenance costs are
expensed as incurred.

Goodwill represents the excess of the purchase price over the fair value of the
net assets of acquired businesses and is being amortized by the straight-line
method, in most cases over 20 to 40 years for all acquisitions completed prior
to June 30, 2001. Goodwill amortization is recorded in cost of sales.

Identifiable intangible assets are recorded at cost, or when acquired as a part
of a business combination, at estimated fair value. These assets include patents
and other technology agreements, trademarks, licenses, customer relationships
and non-compete agreements. They are generally amortized using the straight-line
method over estimated useful lives of 5 to 25 years for all acquisitions
completed prior to June 30, 2001.

33
<PAGE>

Impairment of long-lived assets and related goodwill is recognized when events
or changes in circumstances indicate that the carrying amount of the asset, or
related groups of assets, may not be recoverable and the Company's estimate of
undiscounted cash flows over the assets remaining estimated useful life are less
than the assets carrying value. Measurement of the amount of impairment may be
based on appraisal, market values of similar assets or estimated discounted
future cash flows resulting from the use and ultimate disposition of the asset.

REVENUE AND INCOME RECOGNITION For revenues not recognized under the contract
method of accounting, the Company recognizes revenues from the sale of products
at the point of passage of title, which is at the time of shipment. Revenues
earned from providing maintenance service are recognized when the service is
complete.

A significant portion of the Company's sales in the Aerostructures and Aviation
Technical Services Segment are under long-term, fixed-priced contracts, many of
which contain escalation clauses, requiring delivery of products over several
years and frequently providing the buyer with option pricing on follow-on
orders. Sales and profits on each contract are recognized in accordance with the
percentage-of-completion method of accounting, using the units-of-delivery
method. The Company follows the guidelines of Statement of Position 81-1 ("SOP
81-1"), "Accounting for Performance of Construction-Type and Certain
Production-Type Contracts" (the contract method of accounting) except that the
Company's contract accounting policies differ from the recommendations of SOP
81-1 in that revisions of estimated profits on contracts are included in
earnings under the reallocation method rather than the cumulative catch-up
method.

Included in sales are amounts arising from contract terms that provide for
invoicing a portion of the contract price at a date after delivery. Also
included are negotiated values for units delivered and anticipated price
adjustments for contract changes, claims, escalation and estimated earnings in
excess of billing provisions, resulting from the percentage-of-completion method
of accounting. Certain contract costs are estimated based on the learning curve
concept discussed under Inventories above. Included in accounts receivables at
December 31, 2001 and 2000, were receivable amounts under contracts in progress
of $107.2 million and $60.1 million, respectively, that represent amounts earned
but not billable at the respective balance sheet dates. These amounts become
billable according to their contract terms, which usually consider the passage
of time, achievement of milestones or completion of the project.

34
<PAGE>

FINANCIAL INSTRUMENTS The Company's financial instruments recorded on the
balance sheet include cash and cash equivalents, accounts and notes receivable,
accounts payable and debt. Because of their short maturity, the carrying amount
of cash and cash equivalents, accounts and notes receivable, accounts payable
and short-term bank debt approximates fair value. Fair value of long-term debt
is based on quoted market prices or on rates available to the Company for debt
with similar terms and maturities.

Off balance sheet derivative financial instruments at December 31, 2001, consist
of one interest rate swap agreement. This derivative is entered into with a
major commercial bank that has a high credit rating. Interest rate swap
agreements are used by the Company, from time to time, to manage interest rate
risk on its floating and fixed rate debt portfolio. The cost of interest rate
swaps is recorded as part of interest expense and accrued expenses. Fair value
of these instruments is based on estimated current settlement cost.

From time to time, the Company utilizes forward exchange contracts (principally
against the Canadian dollar, British pound, Euro and U.S. dollar) to hedge U.S.
dollar-denominated sales of certain Canadian subsidiaries and the net
receivable/payable position arising from trade sales and purchases. Foreign
currency forward contracts reduce the Company's exposure to the risk that the
eventual net cash inflows and outflows resulting from the sale of products and
purchases from suppliers denominated in a currency other than the functional
currency of the respective businesses will be adversely affected by changes in
exchange rates. Foreign currency gains and losses under the above arrangements
are not deferred and are reported as part of cost of sales and accrued expenses,
unless the forward contracts qualify for hedge accounting under SFAS 133.

The fair value of foreign currency forward contracts is based on quoted market
prices.

STOCK-BASED COMPENSATION The Company accounts for stock-based employee
compensation in accordance with the provisions of APB Opinion No. 25,
"Accounting for Stock Issued to Employees," and related Interpretations.

EARNINGS PER SHARE Earnings per share is computed in accordance with SFAS No.
128, "Earnings per Share."

RESEARCH AND DEVELOPMENT EXPENSE The Company performs research and development
under Company-funded programs for commercial products, and under contracts with
others. Research and development under contracts with others is performed on
both military and commercial products. Total research and development
expenditures from continuing operations in 2001, 2000 and 1999 were $198.2
million, $186.0 million and $180.0 million, respectively. Of these amounts,
$49.0 million, $50.6 million and $43.7 million, respectively, were funded by
customers.

RECLASSIFICATIONS Certain amounts in prior year financial statements have been
reclassified to conform to the current year presentation.

USE OF ESTIMATES The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

NEW ACCOUNTING STANDARDS Effective January 1, 2001, the Company adopted
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS No. 133"), as amended, which requires
that all derivative instruments be reported on the balance sheet at fair value
and that changes in a derivative's fair value be recognized currently in
earnings unless specific hedge criteria are met. If the derivative is designated
as a fair value hedge, the changes in the fair value of the derivative and of
the hedged item attributable to the hedged risk are recognized in earnings. If
the derivative is designated as a cash flow hedge, the effective portions of
changes in the fair value of the derivative are recorded in other comprehensive
income and are recognized in the income statement when the hedged item affects
earnings. Ineffective portions of changes in the fair value of cash flow hedges
are recognized in earnings.

35
<PAGE>

The Company will apply the new rules on accounting for goodwill and other
intangible assets beginning in the first quarter of 2002. Application of the
non-amortization provisions of the Statement is expected to result in an
increase in income from continuing operations before income taxes and Trust
distributions of approximately $29 million per year. As provided for in the
transition provisions of SFAS No. 142, the Company will perform the first of the
required impairment tests of goodwill and indefinite lived intangible assets
during the first six months of 2002. The Company has not yet determined what the
effect of these tests will be on the Company's financial position or results of
operations.

36
<PAGE>

B. ACQUISITIONS AND DISPOSITIONS

ACQUISITIONS

POOLING-OF-INTERESTS

PURCHASES

The purchase agreements for the manufacturer and developer of
micro-electromechanical systems provides for additional consideration to be paid
over the next six years based on a percentage of net sales. The additional
consideration for the first five years, however, is guaranteed not to be less
than $3.5 million. As the $3.5 million of additional consideration is not
contingent on future events, it has been included in the purchase price and
allocated to the net assets acquired. All additional contingent amounts payable
under the purchase agreement will be recorded as additional purchase price when
earned and amortized over the remaining useful life of the goodwill.

The impact of these acquisitions was not material in relation to the Company's
results of operations. Consequently, pro forma information is not presented.

<PAGE>

DISPOSITIONS

During 2001, the Company sold a minority interest in one of its businesses,
resulting in a pre-tax gain of $7.2 million, which has been reported in other
income (expense), net.

During 2000, the Company sold a product line of one of its businesses, resulting
in a pre-tax gain of $2.0 million, which has been reported in other income
(expense), net.

During 1999, the Company sold all or a portion of its interest in two
businesses, resulting in a pre-tax gain of $6.8 million, which has been reported
in other income (expense), net.

For dispositions accounted for as discontinued operations refer to Note S to the
Consolidated Financial Statements.

C. MERGER-RELATED AND CONSOLIDATION COSTS

The Company incurred $107.3 million ($71.3 million after-tax) and $44.2 million
($28.6 million after-tax) of merger-related and consolidation costs in 2001 and
2000, respectively. These charges related to the following segments:

<TABLE>
<CAPTION>
(IN MILLIONS) 2001 2000
- ------------- ------- -------
<S> <C> <C>
Aerostructures and Aviation Technical Services ........ $ 35.1 $ 3.7
Landing Systems ....................................... 44.7 25.3
Engine and Safety Systems ............................. 17.7 1.7
Electronic Systems .................................... 7.3 0.4
------- -------
Total Segment Charges .............................. 104.8 31.1
Corporate ............................................. 2.5 13.1
------- -------
$ 107.3 $ 44.2
======= =======
</TABLE>

Merger-related and consolidation reserves at December 31, 2001, as well as
activity during the year, consisted of:

<TABLE>
<CAPTION>
PERFORMANCE
BALANCE MATERIALS BALANCE
DECEMBER 31, RESTRUCTURING DECEMBER 31,
(IN MILLIONS) 2000 PROVISION ACTIVITY RESERVE 2001
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Personnel related costs $ 12.9 $ 35.0 $(17.6) $ (3.7) $ 26.6
Transaction costs 1.9 -- (1.9) -- --
Consolidation costs 43.4 72.3 (59.4) (37.7) 18.6
--------------------------------------------------------------------------
$ 58.2 $107.3 $(78.9) $(41.4) $ 45.2
==========================================================================
</TABLE>

MERGER-RELATED AND CONSOLIDATION COSTS - PROVISION

The following is a description of key components of the $107.3 million provision
for merger-related and consolidation costs in 2001:

Aerostructures and Aviation Technical Services

The segment recorded $35.1 million in merger-related and consolidation costs,
consisting of $16.6 million in personnel related costs, $18.1 million in asset
impairments and $0.4 million in facility consolidation and closure costs. $20.7
million of the charge represents non-cash items, including $2.6 million of
pension curtailment charges and $18.1 in asset impairments.

38
<PAGE>

The personnel related charges are for employee severance and benefits for 1,658
employees, 488 of which were terminated in 2001, leaving 1,170 employees
remaining to be terminated as of December 31, 2001. Asset impairment charges
include $7.8 million to write down assets held for sale or disposal based on
their estimated fair value and $10.3 million to write-off of long-term
collateralized receivables as a result of a deterioration in the value of the
collateral. Facility closure costs related to equipment relocation and a lease
termination fee.

The charge recorded during 2001 is expected to generate approximately $90
million to $100 million in annual savings.

Landing Systems

The segment recorded $44.7 million in merger-related and consolidation costs,
consisting of $4.0 million in personnel related costs (net of $0.3 million
revision of prior estimate), $26.4 million in asset impairments (net of $1.3
million revision of prior estimate) and $14.3 million in facility consolidation
and closure costs. $26.7 million of the charge represents non-cash items,
including $0.6 million of pension curtailment charges and $27.7 million in asset
impairments, offset by a $1.6 million revision of prior estimates.

The personnel related charges are for employee severance and benefits for 145
employees, 49 of which were terminated in 2001, leaving 96 employees remaining
to be terminated as of December 31, 2001. Asset impairment charges relate to the
write down of assets held for sale or disposal based on their estimated fair
value, comprised primarily of $25 million, representing the difference between
the carrying value and fair value for rotable assets identified for sale.
Facility closure costs related to lease termination costs ($2.1 million),
equipment relocation ($6.3 million), environmental clean-up ($1.5 million) and
facility clean-up and preparation for sale ($4.4 million).

Of the 2001 facility consolidation and closure costs, $7.2 million were related
to the Landing Gear restructuring that began in 1999. The remaining $37.5
million charge recorded during 2001 is expected to generate approximately $7
million to $9 million in annual savings.

Engine and Safety Systems

The segment recorded $17.7 million in merger-related and consolidation costs,
consisting of $6.8 million in personnel related costs, $7.7 million in asset
impairments and $3.2 million in facility consolidation and closure costs. $8.6
million of the charge represents non-cash items, including $0.9 million of
pension curtailment charges and $7.7 million in asset impairments.

The personnel related charges are for employee severance and benefits for 801
employees, 235 of which were terminated in 2001, leaving 566 employees remaining
to be terminated as of December 31, 2001. Asset impairment charges relate to the
write down of assets held for sale or disposal based on their estimated fair
value. Facility closure costs related to lease and contract termination costs
and facility clean-up costs to prepare the facility for sale.

The charge recorded during 2001 is expected to generate approximately $11
million to $15 million in annual savings.

Electronic Systems

The segment recorded $7.3 million in merger-related and consolidation costs,
consisting of $4.8 million in personnel related costs and $2.5 million in
facility closure and consolidation costs. $0.3 million of the charge represents
a non-cash pension curtailment charge.

The personnel related charges are for employee severance and benefits for 183
employees, 51 of which were terminated in 2001, leaving 132 employees remaining
to be terminated as of December 31, 2001. Facility closure and consolidation
costs related to lease termination costs and equipment relocation.

The charge recorded during 2001 is expected to generate approximately $9 million
to $11 million in annual savings.

39
<PAGE>
Corporate

Merger-related and consolidation costs were $2.5 million, consisting of employee
severance and benefits for 15 employees terminate during the period and employee
relocation costs and change-in-control benefits associated with the Coltec
merger. There were no employees remaining to be terminated as of December 31,
2001.

MERGER-RELATED AND CONSOLIDATION COSTS - ACTIVITY

Of the $78.9 million in activity, $30.3 million represented cash payments and
$56.8 million represented asset write-offs. These amounts were offset by a net
increase to the reserve of $8.2 million, principally acquisition related
reserves that were established through the opening balance sheet.

Approximately $35 million of the $41.4 million of reserves recorded in 2000 for
restructuring costs associated with the sale of Performance Materials ($35.6
million in asset impairment costs; $2.1 million in consolidation costs; and $3.7
million in severance costs) were written-off in 2001. The remaining portion of
the reserve (approximately $6 million) was assumed by the buyer and accordingly
written-off against the gain on sale during 2001.

Merger-related and consolidation reserves at December 31, 2000, as well as
activity during the year, consisted of:

<TABLE>
<CAPTION>
PERFORMANCE
BALANCE MATERIALS BALANCE
DECEMBER 31, RESTRUCTURING DECEMBER 31,
(IN MILLIONS) 1999 PROVISION ACTIVITY RESERVE 2000
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Personnel related costs $ 35.4 $ 16.7 $(42.9) $ 3.7 $ 12.9
Transaction costs 2.0 -- (0.1) -- 1.9
Consolidation costs 6.5 27.5 (28.3) 37.7 43.4
-----------------------------------------------------------------------------------------
$ 43.9 $ 44.2 $(71.3) $ 41.4 $ 58.2
=========================================================================================
</TABLE>

During 2000, the Company recorded net merger-related and consolidation costs of
$44.2 million consisting of:

- $18.8 million in personnel-related costs (offset by a credit of $2.1
million representing a revision of prior estimates) consisting of:

- $9.5 million in settlement charges related to lump sum
payments made under a nonqualified pension plan that were
triggered by the Coltec merger.
- $3.3 million in employee relocation costs associated with
the Coltec merger.
- $6.0 million for work force reductions.

- $27.5 million in consolidation costs consisting of:

- $11.7 million of accelerated depreciation related to assets
at the Company's Euless, Texas facility whose useful lives
had been reduced as a result of the decision to consolidate
the facility with the Company's other landing gear
facilities.
- $2.5 million of asset impairment charges representing the
excess of the assets carrying value over the fair value less
costs to sell.
- $13.3 million for realignment activities, of which $6.5
million represented equipment relocation costs and $3.8
million represented facility closure costs associated with
the consolidation of the Company's landing gear businesses.
The remaining $3 million related to similar costs at various
other facilities.

The $71.3 million in activity during the year includes $57.5 million related to
cash payments and $13.8 million related to the write-off of assets and
accelerated depreciation.

40
<PAGE>

During negotiations with the buyer of Performance Materials, the buyer requested
that the Company absorb the cost of closing and/or selling certain of the
segment's textile businesses as a condition of the sale (the "Textile
Consolidation"). These actions included the closure and/or sale of certain
facilities, the sale of certain assets and the consolidation of certain
management functions. The estimated costs of these restructuring activities
included $35.6 million for asset impairments; $2.1 million for consolidation
costs and $3.7 million for severance costs.

Since the decision to perform the actions contemplated by the Textile
Consolidation was a direct result of the decision to dispose of the Performance
Materials segment, the costs associated with the Textile Consolidation were
reflected as an obligation/reserve in the consolidated balance sheet at December
31, 2000. The income statement effect was deferred and recognized as part of the
gain on sale in February 2001.

Merger-related and consolidation reserves at December 31, 1999, as well as
activity during the year, consisted of:

<TABLE>
<CAPTION>
BALANCE BALANCE
DECEMBER 31, DECEMBER 31,
(IN MILLIONS) 1998 PROVISION ACTIVITY 1999
------------- ------------ --------- -------- ------------
<S> <C> <C> <C> <C>
Personnel related costs ........... $ -- $127.8 $ (92.4) $ 35.4
Transaction costs ................. -- 79.2 (77.2) 2.0
Consolidation costs ............... -- 21.3 (14.8) 6.5
------ ------ ------- ------
$ -- $228.3 $(184.4) $ 43.9
====== ====== ======= ======
</TABLE>

During 1999, the Company recorded merger-related and consolidation costs of
$228.3 million, of which $9.3 million represents non-cash asset impairment
charges. Merger-related and consolidation costs consist of:

- $127.8 million of personnel related costs, which include severance,
change in control and relocation costs:

- Personnel related costs associated with the Coltec merger were
$120.8 million, consisting of $61.8 million incurred under change
in control provisions in employment agreements, $53.4 million in
employee severance costs and $5.6 million of relocation costs
- Personnel related costs also include employee severance costs of
$7.0 million (approximately 400 positions)

- $21.3 million of consolidation costs, which include facility
consolidation costs and asset impairment charges:

- Consolidation costs associated with the Coltec merger were $15.6
million, consisting primarily of a $6.6 million non-cash
impairment charge for the former Goodrich and Aerospace
headquarters buildings in Ohio, a $2.5 million adjustment to
accounts receivable to conform revenue recognition policies of
Goodrich and Coltec, a $3.7 million charge for realignment
activities at Landing Gear facilities (environmental and asset
disposal/exit costs) and $2.2 million of duplicate office
expense. The remaining $0.6 million represented miscellaneous
consolidation costs associated with the Coltec merger.
- Realignment activities at the Company's Lewis Engineering
operating unit in connection with the closure of the facility
($1.4 million), equipment relocation costs and costs of employees
associated with the closing of the Company's Tolo facility ($2.5
million) and costs to prepare a facility for closure at the
Company's Aircraft Integrated Systems operating unit ($1.8
million).

Transaction costs were associated with the Coltec merger and include
investment-banking fees, accounting fees, legal fees, litigation settlement
costs, registration and listing fees and other transaction costs.

The merger-related and consolidation reserves were reduced by $184.4 million
during the year, of which $175.8 million represented cash payments.

41
<PAGE>

D. EARNINGS PER SHARE

The computation of basic and diluted earnings per share for income from
continuing operations is as follows:

<TABLE>
<CAPTION>
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS) 2001 2000 1999
- --------------------------------------- -------- -------- --------
<S> <C> <C> <C>
Numerator:
Numerator for basic and diluted earnings per
share - income from continuing operations ................. $ 176.9 $ 235.2 $ 85.9
======== ======== ========
Denominator:
Denominator for basic earnings per
share-- weighted-average share ............................ 103.1 104.8 110.0
Effect of dilutive securities:
Stock options, warrants and restricted stock issue ........... 0.6 1.0 0.7
Contingent shares ............................................ 0.3 0.4 --
Convertible preferred securities ............................. 2.9 2.9 2.9
-------- -------- --------
Dilutive potential common shares ............................. 3.8 4.3 3.6
-------- -------- --------
Denominator for diluted earnings per
share-- adjusted weighted-average shares and
assumed conversion ........................................ 106.9 109.1 113.6
======== ======== ========
Per share income from continuing operations:
Basic ........................................................ $ 1.72 $ 2.24 $ 0.78
======== ======== ========
Diluted ...................................................... $ 1.65 $ 2.16 $ 0.76
======== ======== ========
</TABLE>

E. SALE OF RECEIVABLES

The Company has an agreement to sell certain trade accounts receivable, up to a
maximum of $110.0 million and $95.0 million at December 31, 2001 and 2000,
respectively. At December 31, 2001 and December 31, 2000, $97.3 million and
$51.0 million, respectively, of the Company's receivables were sold under this
agreement and the sale was reflected as a reduction of accounts receivable. The
receivables were sold without recourse and at a discount, which is included in
interest expense. This agreement includes a provision pursuant to which the
agreement may be terminated upon a rating downgrade of the Company to a certain
level. If such an event were to occur, the Company expects that it would have
sufficient capital resources through its existing revolving credit facilities to
meet its needs.

During 2000, the Company entered into an agreement to sell certain long-term
receivables. At December 31, 2001 and 2000, $20.3 million and $47.7 million,
respectively, of the Company's long-term receivables were sold under this
agreement and the sale was reflected as a reduction of long-term receivables
(included in other assets). This agreement contains various recourse provisions
under which the Company may be required to repurchase receivables. In the fourth
quarter of 2001, the Company was required to repurchase approximately $20
million of receivables pursuant to the agreement.

NOTE F. PAYMENT-IN-KIND NOTES RECEIVABLE

The proceeds from the sale of the Company's Performance Materials segment
included $172 million in debt securities issued by the buyer in the form of
unsecured notes with interest payable in cash or payment-in-kind, at the option
of the issuer. Payment-in-kind refers to the issuer's ability to issue
additional debt securities with identical terms and maturities as the original
debt securities as opposed to making interest payments in cash. The notes have a
term of 10.5 years, and bear interest at a rate of 13 percent, which increases
to 15 percent if cash interest payments do not commence after the fifth year.

The Company initially recorded a discount of $21.2 million based on a 14 percent
discount rate. The notes have a prepayment clause that allows the issuer to
reduce the principal amount by $75 million in the third year by making a $60
million cash payment. In determining the discount on the notes, the Company has
assumed that the prepayment will be made and that cash interest payments on the
notes will commence after the fifth year.

42
<PAGE>

Interest income on the notes is recognized using the effective interest method
and is recorded in Interest Income in the Consolidated Statement of Income. The
notes are classified as held-to-maturity in accordance with SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities".

The Company does not currently believe a valuation allowance is necessary. The
Company will record a valuation allowance if events or changes in circumstances
indicate that the carrying amount of the notes may not be recoverable. The fair
market value of the notes at December 31, 2001 approximated $167 million.

G. INVENTORIES

Inventories consist of the following:

<TABLE>
<CAPTION>
(IN MILLIONS) 2001 2000
- ------------- ------- -------
<S> <C> <C>
FIFO or average cost (which approximates current costs):
Finished products ............................................ $ 172.0 $ 170.7
In process ................................................... 538.9 563.9
Raw materials and supplies ................................... 217.1 162.8
------- -------
928.0 897.4
Reserve to reduce certain inventories to LIFO basis .......... (42.2) (39.0)
Progress payments and advances ............................... (44.3) (48.8)
------- -------
TOTAL ..................................................... $ 841.5 $ 809.6
======= =======
</TABLE>

Approximately 13 percent of inventory was valued by the LIFO method in 2001 and
2000.

In-process inventories as of December 31, 2001, which include significant
deferred costs for long-term contracts accounted for under contract accounting,
are summarized by contract as follows (in millions, except quantities which are
number of aircraft):

<TABLE>
<CAPTION>
(1)AIRCRAFT ORDER STATUS COMPANY ORDER STATUS
-------------------------- -----------------------------------------
DELIVERED UN- UN- (3)FIRM
TO FILLED FILLED (2)CONTRACT UNFILLED (4)YEAR
CONTRACT AIRLINES ORDERS OPTIONS QUANTITY DELIVERED ORDERS COMPLETE
- -------- -------- ------ ------- ----------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
717-200 ..................... 88 49 94 200 102 48 2007
Embraer Tailcone ............ -- 112 202 600 4 -- 2014
Trent 900 ................... -- 28 33 267 -- -- 2019
7Q7 ......................... -- -- -- 18 -- -- 2004
Others ......................

In-process inventory
related to long-term
contracts..................
In-process inventory not
related to long-term
contracts..................
Balance at December 31,
2001.......................

<CAPTION>
IN-PROCESS INVENTORY
----------------------------------
PRE- EXCESS-
PRO- PRO- OVER-
CONTRACT DUCTION DUCTION AVERAGE TOTAL
- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
717-200 ..................... $ 12.4 $ 35.2 $ -- $ 47.6
Embraer Tailcone ............ -- 13.5 -- 13.5
Trent 900 ................... -- 28.4 -- 28.4
7Q7 ......................... 0.5 18.6 -- 19.1
Others ...................... 132.5 11.0 7.2 150.7
------ ------ ------ ------
In-process inventory
related to long-term
contracts.................. $145.4 $106.7 $ 7.2 259.3
====== ====== ======
In-process inventory not
related to long-term
contracts.................. 279.6
------
Balance at December 31,
2001....................... $538.9
======
</TABLE>

(1) Represents the aircraft order status as reported by independent sources
for the related aircraft and engine option.

(2) Represents the number of aircraft used to obtain average unit cost.

(3) Represents the number of aircraft for which the Company has firm
unfilled orders.

(4) The year presented represents the year in which the final production
units included in the contract quantity are expected to be delivered.
The contract may continue in effect beyond this date.

43
<PAGE>

Based on revisions to the production schedule announced by Boeing at the end of
2001, the Company reevaluated its estimated costs to complete Boeing 717-200
contract, its learning curve assumptions as well as the number of aircraft
expected to be delivered. As a result of this analysis, the Company recorded a
charge of $76.5 million during the fourth quarter of 2001. This charge
eliminated the remaining balance of excess-over-average inventory costs yet to
be recognized and reduced pre-production inventory balances down to $35.2
million as of December 31, 2001. The Company will continue to record no margin
on this contract based on its revised assumptions.

H. FINANCING ARRANGEMENTS

SHORT-TERM BANK DEBT At December 31, 2001 the Company had $750 million in
committed global syndicated revolving credit agreements. These credit agreements
replaced the $600 million of committed domestic revolving credit agreements
(reduced upon the sale of the Performance Materials segment from $900 million at
December 31, 2000) and the $80 million committed multi-currency revolving credit
facility (reduced upon the sale of the Performance Materials segment from $125
million at December 31, 2000). The new credit facilities consist of a $425
million three-year agreement expiring in December 2004 and a $325 million
364-day agreement expiring in December 2002. Borrowings under these agreements
bear interest, at the Company's option, at rates tied to the agent bank's prime
rate or for US Dollar or Great Britain Pound borrowings, the London interbank
offered rate, and for Eurodollar borrowings, the EURIBO rate. Under the
agreements expiring in 2004, the Company is required to pay a facility fee of
12.5 basis points per annum on the total $425 million committed line.
According to the 364-day agreement that will expire in December 2002, the
Company is required to pay a facility fee of 10 basis points per annum on the
total $325 million committed line. On these two agreements, if the amount
outstanding on the line of credit exceeds thirty-three percent of the total
commitment, a usage fee of 12.5 basis points per annum on the loan outstanding
is payable by the Company. These fees and the interest rate margin on
outstanding revolver borrowings are subject to change as the Company's credit
ratings change. At December 31, 2001, $80 million was outstanding pursuant to
the three-year agreement.

In addition, the Company had available formal foreign lines of credit and
overdraft facilities of $20 million at December 31, 2001, all of which was
available.

The Company also maintains uncommitted domestic money market facilities with
various banks aggregating $111 million, of which $75 million were unused and
available at December 31, 2001. Weighted-average interest rates on short-term
borrowings were 5.8 percent, 6.6 percent and 5.2 percent during 2001, 2000 and
1999, respectively.

LONG-TERM DEBT At December 31, 2001 and 2000, long-term debt and capital lease
obligations consisted of:

<TABLE>
<CAPTION>
(IN MILLIONS) 2001 2000
- ------------- -------- --------
<S> <C> <C>
MTN notes payable .................................................... $ 699.0 $ 699.0
IDRBs, maturing in 2023, 6.0% ........................................ 60.0 60.0
7.5% senior notes, maturing in 2008 .................................. 300.0 300.0
6.6% senior notes, maturing in 2009 .................................. 207.3 200.0
Other debt, maturing to 2020 (interest rates from 4.0% to 6.5%) ...... 37.7 37.4
-------- --------
1,304.0 1,296.4
Capital lease obligation (Note I) .................................... 3.2 5.0
-------- --------
Total ................................................................ $1,307.2 $1,301.4
======== ========
</TABLE>

SENIOR NOTES In 1999, the Company issued $200.0 million of 6.6 percent senior
notes due in 2009. The Company entered into a fixed-to-floating interest rate
swap to manage the Company's interest rate exposure. The settlement and maturity
dates on the swap are the same as those on the notes. The Company may redeem all
or a portion of the notes at any time prior to maturity. In connection with the
adoption of SFAS No. 133 in 2001, the carrying value of the notes have been
adjusted to reflect the fair value of the interest rate swap.

The $300.0 million of 7.5 percent senior notes due in 2008 are obligations of
Coltec Industries Inc. The Company expects to offer to exchange all $300.0
million principal amount of these notes for similar Goodrich securities during
2002 in connection with the spin-off of EIP.

44
<PAGE>

MTN NOTES PAYABLE The Company has periodically issued long-term debt securities
in the public markets through a medium term note program (referred to as the MTN
program), which commenced in 1995. MTN notes outstanding at December 31, 2001,
consist entirely of fixed-rate non-callable debt securities. All MTN notes
outstanding were issued between 1995 and 1998, with interest rates ranging from
6.5 percent to 8.7 percent and maturity dates ranging from 2008 to 2046.

IDRBS The industrial development revenue bonds maturing in 2023 were issued to
finance the construction of a hangar facility in 1993. Property acquired through
the issuance of these bonds secures the repayment of the bonds.

Aggregate maturities of long-term debt, exclusive of capital lease obligations,
during the five years subsequent to December 31, 2001, are as follows (in
millions): 2002 -- $4.3; 2003 -- $2.2; 2004 -- $1.3; 2005 -- $1.3 and 2006 --
$1.3.

The Company's debt agreements contain various restrictive covenants that, among
other things, place limitations on the payment of cash dividends and the
repurchase of the Company's capital stock. Under the most restrictive of these
agreements, $736.4 million of income retained in the business and additional
capital was free from such limitations at December 31, 2001.

I. LEASE COMMITMENTS

The Company leases certain of its office and manufacturing facilities as well as
machinery and equipment under various leasing arrangements. The future minimum
lease payments from continuing operations, by year and in the aggregate, under
capital leases and under noncancelable operating leases with initial or
remaining noncancelable lease terms in excess of one year, consisted of the
following at December 31, 2001:

<TABLE>
<CAPTION>
NONCANCELABLE
CAPITAL OPERATING
(IN MILLIONS) LEASES LEASES
- ------------- ------ --------------
<S> <C> <C>
2002........................................................................... 2.1 24.8
2003........................................................................... 1.9 22.4
2004........................................................................... 1.4 18.8
2005........................................................................... 0.3 14.6
2006........................................................................... -- 15.6
Thereafter..................................................................... -- 64.2
----- ------
Total minimum payments......................................................... 5.7 $160.4
======
Amounts representing interest.................................................. (0.9)
-----
Present value of net minimum lease payments.................................... 4.8
Current portion of capital lease obligations................................... (1.6)
-----
TOTAL.......................................................................... $ 3.2
=====
</TABLE>

Net rent expense from continuing operations consisted of the following:

<TABLE>
<CAPTION>
(IN MILLIONS) 2001 2000 1999
- ------------- ------ ------ ------
<S> <C> <C> <C>
Minimum rentals ......... $ 31.3 $ 28.5 $ 33.1
Contingent rentals ...... 1.6 1.7 --
Sublease rentals ........ (0.1) (0.1) (0.2)
------ ------ ------
TOTAL ................... $ 32.8 $ 30.1 $ 32.9
====== ====== ======
</TABLE>

45
<PAGE>

J. PENSIONS AND POSTRETIREMENT BENEFITS

The Company has several noncontributory defined benefit pension plans covering
eligible employees. Plans covering salaried employees generally provide benefit
payments using a formula that is based on an employee's compensation and length
of service. Plans covering hourly employees generally provide benefit payments
of stated amounts for each year of service. The Company also sponsors several
unfunded defined benefit postretirement plans that provide certain health-care
and life insurance benefits to eligible employees. The health-care plans are
contributory, with retiree contributions adjusted periodically, and contain
other cost-sharing features, such as deductibles and coinsurance. The life
insurance plans are generally noncontributory.

The Company's general funding policy for qualified pension plans is to
contribute amounts at least sufficient to satisfy regulatory funding standards.
The Company's qualified pension plans were fully funded on an accumulated
benefit obligation basis at December 31, 2001 and 2000. Assets for these plans
consist principally of corporate and government obligations and commingled funds
invested in equities, debt and real estate. At December 31, 2001, the pension
plans held 2.6 million shares of the Company's common stock with a fair value of
$68.9 million.

During 2000, the Company commenced a program to fund certain non-qualified
benefit plans with the goal of being fully funded by the time an eligible
employee reaches the age of 62.

Amortization of unrecognized transition assets and liabilities, prior service
cost and gains and losses (if applicable) are recorded using the straight-line
method over the average remaining service period of active employees, or
approximately 12 years.

46
<PAGE>
The following table sets forth the status of the Company's defined benefit
pension plans and defined benefit postretirement plans as of December 31, 2001
and 2000, and the amounts recorded in the Consolidated Balance Sheet at these
dates. The pension and postretirement benefits related to discontinued
operations retained by the Company are included in the amounts below.

PENSION BENEFITS OTHER BENEFITS
------------------------ ------------------------
(IN MILLIONS) 2001 2000 2001 2000
- ------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
CHANGE IN PROJECTED BENEFIT OBLIGATIONS
Projected benefit obligation at beginning of year ........... $ 1,987.5 $ 1,875.7 $ 350.3 $ 337.9
Service cost ................................................ 28.5 28.8 2.2 2.3
Interest cost ............................................... 144.4 147.1 27.2 26.1
Amendments .................................................. 4.2 (2.7) -- --
Actuarial (gains) losses .................................... (33.1) 120.5 14.4 19.3
Participant contributions ................................... 0.8 -- -- --
Acquisitions ................................................ 2.3 2.6 2.3 --
Plan settlements ............................................ -- (18.9) -- --
Curtailment ................................................. -- -- (8.4) --
Foreign currency translation ................................ (1.1) -- -- --
Benefits paid ............................................... (173.0) (165.6) (38.5) (35.3)
--------- --------- --------- ---------
Projected benefit obligation at end of year ................. $ 1,960.5 $ 1,987.5 $ 349.5 $ 350.3
--------- --------- --------- ---------
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year .............. $ 2,110.9 $ 2,147.6 $ -- $ --
Actual return on plan assets ................................ (105.4) 117.2 -- --
Acquisitions ................................................ -- 2.8 -- --
Participant contributions ................................... 0.8 -- -- --
Company contributions ....................................... 10.5 34.7 38.5 35.3
Plan settlements ............................................ -- (25.8) -- --
Foreign currency translation ................................ (1.2) -- -- --
Benefits paid ............................................... (173.0) (165.6) (38.5) (35.3)
--------- --------- --------- ---------
Fair value of plan assets at end of year .................... $ 1,842.6 $ 2,110.9 $ -- $ --
--------- --------- --------- ---------
FUNDED STATUS (UNDERFUNDED)
Funded status ............................................... $ (117.9) $ 123.4 $ (349.5) $ (350.3)
Unrecognized net actuarial loss ............................. 255.1 (26.8) (5.1) (18.2)
Unrecognized prior service cost ............................. 42.4 55.7 (0.8) (1.1)
Unrecognized net transition obligation ...................... 1.4 27.8 -- --
--------- --------- --------- ---------
Prepaid (accrued) benefit cost .............................. $ 181.0 $ 180.1 $ (355.4) $ (369.6)
========= ========= ========= =========
AMOUNTS RECOGNIZED IN THE
STATEMENT OF FINANCIAL
POSITION CONSIST OF:
Prepaid benefit cost ........................................ $ 242.2 $ 238.0 $ -- $ --
Intangible asset ............................................ 22.8 2.7 -- --
Accumulated other comprehensive income ...................... 79.5 5.7 -- --
Accrued benefit liability ................................... (163.5) (66.3) (355.4) (369.6)
--------- --------- --------- ---------
NET AMOUNT RECOGNIZED ....................................... $ 181.0 $ 180.1 $ (355.4) $ (369.6)
========= ========= ========= =========
WEIGHTED-AVERAGE ASSUMPTIONS
AS OF DECEMBER 31
Discount rate ............................................... 7.50% 7.75% 7.50% 7.75%
Expected return on plan assets .............................. 9.25% 9.25% -- --
Rate of compensation increase ............................... 4.00% 4.00% -- --

</TABLE>

For measurement purposes, an 8.5 percent annual rate of increase in the per
capita cost of covered health care benefits was assumed for 2002. The rate was
assumed to decrease gradually to 5.0 percent for 2006 and remain at that level
thereafter.

47
<PAGE>

The projected benefit obligation, accumulated benefit obligation and fair value
of plan assets for pension plans with accumulated benefit obligations in excess
of plan assets were $87.9 million, $74.9 million, and $8.4 million,
respectively, as of December 31, 2001. The projected benefit obligation and
accumulated benefit obligation for pension plans with accumulated benefit
obligations in excess of plan assets were $75.2 million, $59.6 million,
respectively, as of December 31, 2000. These amounts are included in the above
table.

In 2001, global capital market developments resulted in negative returns on the
Company's pension plan assets and a decline in the discount rate used to
estimate the pension liability. As a result, the Company was required to adjust
the minimum pension liability recorded in its consolidated balance sheet. The
effect of this adjustment was to increase pension liabilities by $93.9 million,
increase intangible assets by $20.1 million, increase deferred income tax assets
by $24.9 million, and increase accumulated other comprehensive loss by $48.9
million ($73.8 million on a pre-tax basis).

PENSION BENEFITS OTHER BENEFITS
--------------------------------- ------------------------------
(IN MILLIONS) 2001 2000 1999 2001 2000 1999
- ------------- ------- ------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>

COMPONENTS OF NET
PERIODIC BENEFIT COST (INCOME):
Service cost ...................................... $ 28.5 $ 28.8 $ 33.2 $ 2.2 $ 2.3 $ 3.4
Interest cost ..................................... 144.4 147.1 137.8 27.2 26.4 23.1
Expected return on plan assets .................... (188.7) (190.3) (185.6) -- -- --
Amortization of prior service cost ................ 8.1 12.0 11.0 (0.1) (1.9) (2.2)
Amortization of transition obligation ............. 3.1 1.1 (1.4) -- -- --
Recognized net actuarial (gain) loss .............. (3.5) (8.6) (4.1) 0.3 0.3 (0.6)
------- ------- ------- ------ ------ ------
Benefit cost (income) ............................. (8.1) (9.9) (9.1) 29.6 27.1 23.7
Settlements and curtailments (gain)/loss .......... 15.6 9.5 0.1 (8.5) -- --
------- ------- ------- ------ ------ ------
$ 7.5 $ (0.4) $ (9.0) $ 21.1 $ 27.1 $ 23.7
======= ======= ======= ====== ====== ======
</TABLE>

The table below quantifies the impact of a one percentage point change in the
assumed health care cost trend rate.

1 PERCENTAGE 1 PERCENTAGE
POINT POINT
(IN MILLIONS) INCREASE DECREASE
- ------------- ------------ ------------
<S> <C> <C>
Effect on total of service and interest cost components in 2001 ........... $ 1.7 $ 1.5
Effect on postretirement benefit obligation as of December 31, 2001 ....... $18.9 $16.5

</TABLE>

The Company also maintains voluntary retirement savings plans for salaried and
wage employees. Under provisions of these plans, eligible employees can receive
Company matching contributions on up to the first 6 percent of their eligible
earnings. For 2001, 2000 and 1999, Company contributions amounted to $36.9
million, $37.5 million, and $36.0 million, respectively. Company contributions
include amounts related to employees of discontinued operations.

48
<PAGE>

K. INCOME TAXES

Income from continuing operations before income taxes and Trust distributions as
shown in the Consolidated Statement of Income consists of the following:

(IN MILLIONS) 2001 2000 1999
- ------------- ------ ------ ------
<S> <C> <C> <C>
Domestic ......................................... $225.7 $314.6 $139.3
Foreign .......................................... 56.0 52.4 45.7
------ ------ ------
TOTAL ............................................ $281.7 $367.0 $185.0
====== ====== ======

</TABLE>

A summary of income tax (expense) benefit from continuing operations in the
Consolidated Statement of Income is as follows:

(IN MILLIONS) 2001 2000 1999
- ------------- ------ ------ ------
<S> <C> <C> <C>
Current:
Federal .................................... $(43.3) $(128.7) $ 15.6
Foreign .................................... (29.3) (19.6) (15.8)
State ...................................... (3.2) (6.2) (7.0)
------ ------- ------
(75.8) (154.5) (7.2)
------ ------- ------
Deferred:
Federal .................................... (24.8) 46.1 (70.5)
Foreign .................................... 6.3 (12.9) (10.9)
------ ------- ------
(18.5) 33.2 (81.4)
------ ------- ------
TOTAL ................................... $(94.3) $(121.3) $(88.6)
====== ======= ======

</TABLE>

Significant components of deferred income tax assets and liabilities at December
31, 2001 and 2000, are as follows:

(IN MILLIONS) 2001 2000
- ------------- -------- --------
<S> <C> <C>
Deferred income tax assets:
Accrual for postretirement benefits other than pensions ...... $ 144.1 $ 158.0
Inventories .................................................. 57.0 42.2
Other nondeductible accruals ................................. 41.4 43.3
Tax credit and net operating loss carryovers ................. 37.1 48.6
Employee benefits plans ...................................... 4.6 8.8
Other ........................................................ 92.0 24.5
-------- --------
Total deferred income tax assets .......................... 376.2 325.4
-------- --------
Deferred income tax liabilities:
Tax over book depreciation ................................... (73.5) (55.3)
Tax over book intangible amortization ........................ (65.6) (46.5)
Pensions ..................................................... 1.8 (33.3)
Other ........................................................ (139.9) (97.7)
-------- --------
Total deferred income tax liabilities ..................... (277.2) (232.8)
-------- --------
NET DEFERRED INCOME TAXES ....................................... $ 99.0 $ 92.6
======== ========

</TABLE>

49
<PAGE>

Management has determined, based on the Company's history of prior earnings and
its expectations for the future, that taxable income of the Company will more
likely than not be sufficient to recognize fully these net deferred tax assets.
In addition, management's analysis indicates that the turnaround periods for
certain of these assets are for long periods of time or are indefinite. In
particular, the turnaround of the largest deferred tax asset related to
accounting for postretirement benefits other than pensions will occur over an
extended period of time and, as a result, will be realized for tax purposes over
those future periods. The tax credit and net operating loss carryovers,
principally relating to Rohr, are primarily comprised of federal net operating
loss carryovers of $62.8 million, which expire in the years 2005 through 2013,
and investment tax credit and other credits of $15.1 million, which expire in
the years 2003 through 2014. The remaining deferred tax assets and liabilities
approximately match each other in terms of timing and amounts and should be
realizable in the future, given the Company's operating history.

The effective income tax rate from continuing operations varied from the
statutory federal income tax rate as follows:

PERCENT OF INCOME
PRETAX
--------------------------------
2001 2000 1999
------ ------ ------
<S> <C> <C> <C>
Statutory federal income tax rate .......................... 35.0% 35.0% 35.0%
Amortization of nondeductible goodwill ..................... 1.4 0.7 0.8
Credits .................................................... (0.5) (0.4) --
State and local taxes ...................................... 0.7 1.1 2.5
Tax exempt income from foreign sales corporation ........... (6.7) (3.8) (3.5)
Trust distributions ........................................ (1.3) (1.0) (2.0)
Merger-related costs ....................................... -- -- 11.7
Repatriation of non-U.S. earnings .......................... 0.9 (0.4) 2.0
Other items ................................................ 4.0 1.9 1.4
------ ------ ------
Effective income tax rate .................................. 33.5% 33.1% 47.9%
====== ====== ======

</TABLE>

The Company has not provided for U.S. federal and foreign withholding taxes on
$146.8 million of foreign subsidiaries' undistributed earnings as of December
31, 2001, because such earnings are intended to be reinvested indefinitely. It
is not practical to determine the amount of income tax liability that would
result had such earnings actually been repatriated. On repatriation, certain
foreign countries impose withholding taxes. The amount of withholding tax that
would be payable on remittance of the entire amount of undistributed earnings
would approximate $10.9 million.

L. BUSINESS SEGMENT INFORMATION

Due to the sale of the Company's Performance Materials segment, as well as the
intended spin-off of the Company's Engineered Industrial Products segment early
in 2002, the Company has redefined its segments in accordance with Statement of
Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information". The Company's operations are now classified
into four reportable business segments: Aerostructures and Aviation Technical
Services, Landing Systems, Engine and Safety Systems, and Electronic Systems.
Accordingly, the Company has reclassified all periods based on its revised
segment reporting.

Aerostructures and Aviation Technical Services: Aerostructures is a leading
supplier of nacelles, pylons, thrust reversers and related aircraft engine
housing components. The aviation technical services division performs
comprehensive total aircraft maintenance, repair, overhaul and modification for
many commercial airlines, independent operations, aircraft leasing companies and
airfreight carriers.

Landing Systems: Landing Systems provides systems and components pertaining to
aircraft taxi, take-off, landing and braking. Several divisions within the group
are linked by their ability to contribute to the integration, design,
manufacture and service of entire aircraft undercarriage systems, including
sensors, landing gear, certain brake controls and wheels and brakes.

Engine and Safety Systems: Engine and Safety Systems produces engine and fuel
controls, pumps, fuel delivery systems, as well as structural and rotating
components such as disks, blisks, shafts and airfoils. This group also produces
aircraft evacuation, de-icing and passenger restraint systems, as well as
ejection seats and crew and attendant seating.

50
<PAGE>

Electronic Systems: Electronic Systems produces a wide array of products that
provide flight performance measurements, flight management, and control and
safety data. Included are a variety of sensors systems that measure and manage
aircraft fuel and monitor oil debris; engine, transmission and structural
health; and aircraft motion control systems. The segment's products also include
instruments and avionics, warning and detection systems, ice detection systems,
test equipment, aircraft interior and exterior lighting systems, landing gear
cables and harnesses, satellite control, data management and payload systems,
launch and missile telemetry systems, airborne surveillance and reconnaissance
systems and laser warning systems.

Segment operating income is total segment revenue reduced by operating expenses
identifiable with that business segment, except that merger related and
consolidation costs and unusual inventory adjustments are presented separately.
Unusual inventory adjustments are classified within cost of sales and relate
primarily to inventory adjustments associated with reducing the Company's
investment in the Boeing 717 program and in its Super 27 re-engining program due
to reduced expectations for these programs. The reduced expectations for the
Boeing 717 program relate directly to Boeing's announced production schedule
reductions for this program during the fourth quarter of 2001, while the Super
27 reduction in expectations was primarily due to deteriorating economic
conditions and the September 11th terrorist attacks.

The accounting policies of the reportable segments are the same as those for the
consolidated Company. There are no significant intersegment sales.

(IN MILLIONS) 2001 2000 1999
- ------------- --------- --------- ---------
<S> <C> <C> <C>
SALES
Aerostructures and Aviation Technical Services ........ $ 1,514.4 $ 1,455.5 $ 1,476.9
Landing Systems ....................................... 1,149.1 1,057.7 1,060.6
Engine and Safety Systems ............................. 762.6 644.4 594.4
Electronic Systems .................................... 758.4 542.9 514.3
--------- --------- ---------
TOTAL SALES ...................................... $ 4,184.5 $ 3,700.5 $ 3,646.2
========= ========= =========

OPERATING INCOME
Aerostructures and Aviation Technical Services ........ $ 223.7 $ 209.0 $ 216.8
Landing Systems ....................................... 153.1 149.0 147.1
Engine and Safety Systems ............................. 131.9 117.5 102.2
Electronic Systems .................................... 135.4 118.1 95.6
--------- --------- ---------
644.1 593.6 561.7
Corporate General and Administrative Expenses ......... (57.7) (59.7) (59.3)
Merger-related and Consolidation Costs ................ (107.3) (44.2) (228.3)
Unusual Inventory Adjustments ......................... (94.5) -- --
--------- --------- ---------
TOTAL OPERATING INCOME .......................... $ 384.6 $ 489.7 $ 274.1
========= ========= =========

UNUSUAL ITEMS
Aerostructures and Aviation Technical Services ........ $ 129.6 $ 3.7 $ 6.2
Landing Systems ....................................... 44.7 25.3 17.0
Engine and Safety Systems ............................. 17.7 1.7 --
Electronic Systems .................................... 7.3 0.4 9.0
--------- --------- ---------
TOTAL SEGMENT UNUSUAL ITEMS ...................... $ 199.3 $ 31.1 $ 32.2
========= ========= =========

ASSETS
Aerostructures and Aviation Technical Services ........ $ 1,221.0 $ 1,238.1 $ 1,149.3
Landing Systems ....................................... 949.0 935.8 903.3
Engine and Safety Systems ............................. 529.7 516.6 385.0
Electronic Systems .................................... 996.6 821.9 608.1
Net Assets of Discontinued Operations ................. 284.5 1,130.6 1,152.0
Corporate ............................................. 657.3 495.9 424.9
--------- --------- ---------
TOTAL ASSETS .................................... $ 4,638.1 $ 5,138.9 $ 4,622.6
========= ========= =========

</TABLE>

51
<PAGE>
<TABLE>
<CAPTION>

(IN MILLIONS) 2001 2000 1999
- ------------- --------- --------- ---------
<S> <C> <C> <C>
CAPITAL EXPENDITURES
Aerostructures and Aviation Technical Services ........ $ 64.9 $ 39.0 $ 49.7
Landing Systems ....................................... 62.3 42.5 62.1
Engine and Safety Systems ............................. 30.4 26.9 22.5
Electronic Systems .................................... 23.4 11.5 7.0
Corporate ............................................. 9.5 13.9 3.4
--------- --------- ---------
TOTAL CAPITAL EXPENDITURES ...................... $ 190.5 $ 133.8 $ 144.7
========= ========= =========

DEPRECIATION AND AMORTIZATION EXPENSE
Aerostructures and Aviation Technical Services ........ $ 46.8 $ 44.7 $ 39.9
Landing Systems ....................................... 53.9 64.8 46.7
Engine and Safety Systems ............................. 29.2 24.5 20.9
Electronic Systems .................................... 41.7 30.7 27.2
Corporate ............................................. 2.2 0.7 2.9
--------- --------- ---------
TOTAL DEPRECIATION AND AMORTIZATION ................... $ 173.8 $ 165.4 $ 137.6
========= ========= =========

GEOGRAPHIC AREAS
NET SALES
United States ......................................... $ 2,693.5 $ 1,872.7 $ 2,495.5
Canada ................................................ 177.4 166.5 112.6
Europe(1) ............................................. 938.5 1,043.9 761.2
Other Foreign ......................................... 375.1 617.4 276.9
--------- --------- ---------
TOTAL ........................................... $ 4,184.5 $ 3,700.5 $ 3,646.2
========= ========= =========

PROPERTY
United States ......................................... $ 839.5 $ 818.4 $ 746.2
Canada ................................................ 65.9 53.0 49.7
Europe ................................................ 42.6 20.3 31.9
Other Foreign ......................................... 7.5 5.3 8.6
--------- --------- ---------
TOTAL ........................................... $ 955.5 $ 897.0 $ 836.4
========= ========= =========
</TABLE>

(1) European sales in 2001, 2000 and 1999 included $383.8 million, $336.3
million and $328.8 million, respectively, of sales to customers in
France. Sales were allocated to geographic areas based on the country
to which the product was shipped.

In 2001, 2000 and 1999, direct and indirect sales to Boeing totaled 23 percent,
23 percent and 26 percent, respectively, of consolidated sales. In 2001, 2000
and 1999, direct and indirect sales to Airbus totaled 13 percent of consolidated
sales.

52
<PAGE>

M. SUPPLEMENTAL BALANCE SHEET INFORMATION

CHARGED
BALANCE TO COSTS BALANCE
BEGINNING AND AT END
(IN MILLIONS) OF YEAR EXPENSE OTHER(1) DEDUCTIONS(2) OF YEAR
- ------------- --------- ------- -------- ------------- -------
<S> <C> <C> <C> <C> <C>
RECEIVABLE ALLOWANCE
Year ended December 31, 2001 ................ $ 28.6 $ 23.6 $ 8.4 $ (4.0) $ 56.6
Year ended December 31, 2000 ................ 20.1 15.6 -- (7.1) 28.6
Year ended December 31, 1999 ................ 19.6 1.9 -- (1.4) 20.1

</TABLE>

(1) Allowance related to acquisitions and Performance Materials working
capital adjustment dispute (see Note S)
(2) Write-off of doubtful accounts, net of recoveries

(IN MILLIONS) 2001 2000
- ------------- --------- ---------
<S> <C> <C>
PROPERTY
Land ............................................................ $ 44.1 $ 40.3
Buildings and improvements ...................................... 585.0 566.0
Machinery and equipment ......................................... 1,142.5 1,167.6
Construction in progress ........................................ 151.6 84.3
--------- ---------
1,923.2 1,858.2
Less allowances for depreciation ................................ (967.7) (961.2)
--------- ---------
TOTAL ........................................................... $ 955.5 $ 897.0
========= =========

</TABLE>

Property includes assets acquired under capital leases, principally buildings
and machinery and equipment, of $17.4 million and $19.6 million at December 31,
2001 and 2000, respectively. Related allowances for depreciation and
amortization are $6.5 million and $7.5 million, respectively. Interest costs
capitalized from continuing operations were $1.4 million in 2001, $1.0 million
in 2000 and $3.4 million in 1999.

(IN MILLIONS) 2001 2000
- ------------- -------- --------
<S> <C> <C>
ACCRUED EXPENSES
Wages, vacations, pensions and other employment costs ........... $ 188.6 $ 166.0
Postretirement benefits other than pensions ..................... 35.0 35.2
Taxes, other than federal and foreign taxes on income ........... 23.3 21.9
Accrued environmental liabilities ............................... 9.5 22.9
Accrued interest ................................................ 31.8 43.4
Merger costs .................................................... 45.2 58.2
Other ........................................................... 190.2 167.8
-------- --------
TOTAL ................................................... $ 523.6 $ 515.4
======== ========

</TABLE>

(IN MILLIONS) 2001 2000
- ------------- -------- -------
<S> <C> <C>
ACCUMULATED OTHER COMPREHENSIVE INCOME
Unrealized foreign currency translation ......................... $ (57.4) $ (53.9)
Minimum pension liability ....................................... (52.7) (3.8)
-------- -------
TOTAL ........................................................... $ (110.1) $ (57.7)
======== =======

</TABLE>

The minimum pension liability amounts above are net of deferred taxes of $26.8
million and $1.9 million in 2001 and 2000, respectively.

53
<PAGE>

FAIR VALUES OF FINANCIAL INSTRUMENTS The Company's accounting policies with
respect to financial instruments are described in Note A.

The carrying amounts of the Company's significant on balance sheet financial
instruments approximate their respective fair values at December 31, 2001 and
2000, and are presented below.

<TABLE>
<CAPTION>
2001 2000
---------------------------- ----------------------------
CARRYING FAIR CARRYING FAIR
(IN MILLIONS) VALUE VALUE VALUE VALUE
- ------------- -------- -------- -------- --------

<S> <C> <C> <C> <C>
Long-term debt ......... $1,313.1 $1,211.7 $1,480.6 $1,402.4
QUIPS (see Note Q) ..... $ 125.0 $ 128.3 $ 124.5 $ 122.7
PIK Note ............... $ 168.4 $ 167.0 -- --
</TABLE>

Derivative financial instruments at December 31, 2001 and 2000 were as follows:

<TABLE>
<CAPTION>
2001 2000
----------------------- ------------------------
CONTRACT/ CONTRACT/
NOTIONAL FAIR NOTIONAL FAIR
(IN MILLIONS) AMOUNT VALUE AMOUNT VALUE
- ------------- --------- ----- --------- -----

<S> <C> <C> <C> <C>
Interest rate swaps .................. $200.0 $7.3 $220.5 $(1.2)
Foreign currency forward contracts ... -- -- $ 10.7 --
</TABLE>

At December 31, 2001 and 2000 the Company had an interest rate swap agreement
to manage the Company's fixed interest rate exposure on its $200.0 million
senior notes, wherein the Company pays a LIBOR based floating rate of interest
and receives a fixed rate. The counterparty to the swap agreement is a major
commercial bank. Management believes that losses related to credit risk are
remote.

The Company has an outstanding contingent liability for guaranteed debt and
lease payments of $5.5 million, and for letters of credit of $37.8 million. It
was not practical to obtain independent estimates of the fair values for the
contingent liability for guaranteed debt and lease payments and for letters of
credit without incurring excessive costs. In the opinion of management,
non-performance by the other parties to the contingent liabilities will not
have a material effect on the Company's results of operations or financial
condition.

N. SUPPLEMENTAL CASH FLOW INFORMATION

The following table sets forth non-cash financing and investing activities and
other cash flow information. Acquisitions accounted for under the purchase
method are summarized as follows:

<TABLE>
<CAPTION>
(IN MILLIONS) 2001 2000 1999
- ------------- ------ ------ ------

<S> <C> <C> <C>
Estimated fair value of tangible assets acquired ....... $ 5.5 $200.1 $ 20.9
Goodwill and identifiable intangible assets acquired ... 142.1 109.0 58.3
Cash paid .............................................. (119.2) (246.8) (56.5)
------ ------ ------
Liabilities assumed or created ......................... $ 28.4 $ 62.3 $ 22.7
====== ====== ======

Interest paid (net of amount capitalized) .............. $138.9 $165.1 $126.9
Income taxes paid ...................................... $122.4 $204.8 $ 66.3
</TABLE>

Interest and income taxes paid include amounts related to discontinued
operations.

54
<PAGE>

O. PREFERRED STOCK

There are 10,000,000 authorized shares of Series Preferred Stock -- $1 par
value. Shares of Series Preferred Stock that have been redeemed are deemed
retired and extinguished and may not be reissued. As of December 31, 2001,
2,401,673 shares of Series Preferred Stock have been redeemed, and no shares of
Series Preferred Stock were outstanding. The Board of Directors establishes and
designates the series and fixes the number of shares and the relative rights,
preferences and limitations of the respective series of the Series Preferred
Stock.

CUMULATIVE PARTICIPATING PREFERRED STOCK -- SERIES F The Company has 200,000
shares of Junior Participating Preferred Stock-Series F -- $1 par value
authorized at December 31, 2001. Series F shares have preferential voting,
dividend and liquidation rights over the Company's common stock. At December
31, 2001, no Series F shares were issued or outstanding and 119,319 shares were
reserved for issuance.

On August 2, 1997, the Company made a dividend distribution of one Preferred
Share Purchase Right ("Right") on each share of the Company's common stock.
These Rights replace previous shareholder rights which expired on August 2,
1997. Each Right, when exercisable, entitles the registered holder thereof to
purchase from the Company one one-thousandth of a share of Series F Stock at a
price of $200 per one one-thousandth of a share (subject to adjustment). The
one one-thousandth of a share is intended to be the functional equivalent of
one share of the Company's common stock.

The Rights are not exercisable or transferable apart from the common stock
until an Acquiring Person, as defined in the Rights Agreement, without the
prior consent of the Company's Board of Directors, acquires 20 percent or more
of the voting power of the Company's common stock or announces a tender offer
that would result in 20 percent ownership. The Company is entitled to redeem
the Rights at 1 cent per Right any time before a 20 percent position has been
acquired or in connection with certain transactions thereafter announced. Under
certain circumstances, including the acquisition of 20 percent of the Company's
common stock, each Right not owned by a potential Acquiring Person will entitle
its holder to purchase, at the Right's then-current exercise price, shares of
Series F Stock having a market value of twice the Right's exercise price.

Holders of the Right are entitled to buy stock of an Acquiring Person at a
similar discount if, after the acquisition of 20 percent or more of the
Company's voting power, the Company is involved in a merger or other business
combination transaction with another person in which its common shares are
changed or converted, or the Company sells 50 percent or more of its assets or
earnings power to another person. The Rights expire on August 2, 2007.

P. COMMON STOCK

During 2001, 2000 and 1999, 1.839 million; 1.230 million and 0.540 million
shares, respectively, of authorized but unissued shares of common stock were
issued under the Stock Option Plan and other employee stock-based compensation
plans.

On July 12, 1999, 35.472 million shares of common stock were issued in
connection with the merger with Coltec (see Note B).

The Company acquired 2.482 million, 9.330 million and 0.085 million shares of
treasury stock in 2001, 2000 and 1999, respectively, and reissued 0.198 and
0.099 million in 2000 and 1999, respectively, in connection with the Stock
Option Plan and other employee stock-based compensation plans.

As of December 31, 2001, there were 14.766 million shares of common stock
reserved for future issuance under the Stock Option Plan and other employee
stock-based compensation plans and 2.866 million shares of common stock
reserved for conversion of the 5 1/4% Trust Convertible Preferred Securities.

55
<PAGE>

Q. PREFERRED SECURITIES OF TRUST

On July 6, 1995, BFGoodrich Capital, a wholly owned Delaware statutory business
trust ("Trust") which is consolidated by the Company, received $122.5 million,
net of the underwriting commission, from the issuance of 8.3 percent Cumulative
Quarterly Income Preferred Securities, Series A ("QUIPS"). The Trust invested
the proceeds in 8.3 percent Junior Subordinated Debentures, Series A, due 2025
("Junior Subordinated Debentures") issued by the Company, which represent
approximately 97 percent of the total assets of the Trust. The Company used the
proceeds from the Junior Subordinated Debentures primarily to redeem all of the
outstanding shares of the $3.50 Cumulative Convertible Preferred Stock, Series
D.

The QUIPS have a liquidation value of $25 per Preferred Security, mature in
2025 and are subject to mandatory redemption upon repayment of the Junior
Subordinated Debentures. The Company has the option at any time on or after
July 6, 2000, to redeem, in whole or in part, the Junior Subordinated
Debentures with the proceeds from the issuance and sale of the Company's common
stock within two years preceding the date fixed for redemption.

In April 1998, Coltec privately placed with institutional investors $150
million (3,000,000 shares at liquidation value of $50 per Convertible Preferred
Security) of 5 1/4% Trust Convertible Preferred Securities ("Convertible
Preferred Securities"). The placement of the Convertible Preferred Securities
was made through Coltec's wholly-owned subsidiary, Coltec Capital Trust
("Coltec Trust"), a newly-formed Delaware business trust. The Convertible
Preferred Securities represent undivided beneficial ownership interests in the
Coltec Trust. Substantially all the assets of the Coltec Trust are the 5 1/4%
Convertible Junior Subordinated Deferrable Interest Debentures due April 15,
2028, which were acquired with the proceeds from the private placement of the
Convertible Preferred Securities. Coltec's obligations under the Convertible
Junior Subordinated Debentures, the Indenture pursuant to which they were
issued, the Amended and Restated Declaration of Trust of the Coltec Trust, the
Guarantee of Coltec and the Guarantee of the Company, taken together,
constitute a full and unconditional guarantee by the Company of amounts due on
the Convertible Preferred Securities. The Convertible Preferred Securities are
convertible at the option of the holders at any time into the common stock of
the Company at an effective conversion price of $52 1/3 per share and are
redeemable at the Company's option after April 20, 2001 at 102.63% of the
liquidation amount declining ratably to 100% after April 20, 2004. The
conversion ratio will be adjusted under the terms of the indenture to reflect
the spin-off of the EIP businesses when that transaction is completed.

The Company has unconditionally guaranteed all distributions required to be
made by the Trust and the Coltec Trust (collectively, the "Trusts"), but only
to the extent the Trusts have funds legally available for such distributions.
The only source of funds for the Trusts to make distributions to preferred
security holders is the payment by the Company of interest on the Junior
Subordinated Debentures. The Company has the right to defer such interest
payments for up to five years. If the Company defers any interest payments, the
Company may not, among other things, pay any dividends on its capital stock
until all interest in arrears is paid to the Trusts.

R. STOCK OPTION PLAN

The 2001 Stock Option Plan, which will expire on April 17, 2011, unless
renewed, provides for the awarding of or the granting of options to purchase
6,500,000 shares of common stock of the Company. Generally, options granted are
exercisable at the rate of 35 percent after one year, 70 percent after two
years and 100 percent after three years. Certain options are fully exercisable
immediately after grant. The term of each option cannot exceed 10 years from
the date of grant. All options granted under the Plan have been granted at not
less than 100 percent of fair market value (as defined) on the date of grant.

The Company also has outstanding stock options under other employee stock-based
compensation plans, including the pre-merger plans of Coltec and Rohr. These
stock options are included in the disclosures below.

56
<PAGE>
Pro forma information regarding net income and earnings per share is required by
FASB Statement No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"),
and has been determined as if the Company had accounted for its employee stock
options under the fair value method of that statement. The fair value for these
options was estimated at the date of grant using a Black-Scholes option pricing
model with the following weighted-average assumptions:

<TABLE>
<CAPTION>
2001 2000 1999
---- ---- ----
<S> <C> <C> <C>
Risk-Free Interest Rate (%) ................................ 5.0 5.0 6.7
Dividend Yield (%) ......................................... 3.5 3.4 3.5
Volatility Factor (%) ...................................... 44.2 37.5 36.0
Weighted Average Expected Life of the Options (years) ...... 7.0 7.0 7.0
</TABLE>

The option valuation model requires the input of highly subjective assumptions,
primarily stock price volatility, changes in which can materially affect the
fair value estimate. The weighted-average fair values of stock options granted
during 2001, 2000 and 1999 were $13.78, $8.65 and $12.13, respectively.

For purposes of the pro forma disclosures required by SFAS 123, the estimated
fair value of the options is amortized to expense over the options vesting
period. In addition, the grant-date fair value of performance shares (discussed
below) is amortized to expense over the three-year plan cycle without
adjustments for subsequent changes in the market price of the Company's common
stock. The Company's pro forma information is as follows:

<TABLE>
<CAPTION>
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS) 2001 2000 1999
- --------------------------------------- -------- -------- --------

<S> <C> <C> <C>
Net income:
As reported ..................... $ 289.2 $ 325.9 $ 169.6
Pro forma ....................... 274.6 320.6 157.3
Earnings per share:
Basic:
As reported ..................... $ 2.80 $ 3.11 $ 1.54
Pro forma ....................... 2.66 3.06 1.43
Diluted:
As reported ..................... $ 2.76 $ 3.04 $ 1.55
Pro forma ....................... 2.62 3.00 1.44
</TABLE>

The effects of applying SFAS 123 in this pro forma disclosure are not likely to
be representative of effects on reported net income for future years. The pro
forma effect in 1999 includes $2.6 million after-tax expense related to
acceleration of vesting in connection with the Coltec merger. Additional awards
in future years are anticipated.

57
<PAGE>

A summary of the Company's stock option activity and related information
follows:

<TABLE>
<CAPTION>
(Options in Thousands) WEIGHTED AVERAGE
OPTIONS EXERCISE PRICE
------- --------------
<S> <C> <C>
Year Ended December 31, 2001
Outstanding at beginning of Year ....... 8,519.6 $ 31.41
Granted ............................ 2,045.6 37.87
Exercised .......................... (1,834.9) 28.25
Forfeited .......................... (584.4) 32.55
--------
Outstanding at end of year ............. 8,145.9 33.60
========
Year Ended December 31, 2000
Outstanding at beginning of Year
Granted ............................ 7,811.1 $ 30.10
Exercised .......................... 2,483.7 26.66
Forfeited .......................... (1,401.6) 22.10
Expired ............................ (373.6) 32.62
--------
Outstanding at end of year ............. 8,519.6 31.41
========
Year Ended December 31, 1999
Outstanding at beginning of Year ....... 7,093.4 $ 30.18
Granted ............................ 1,480.1 35.85
Exercised .......................... (477.7) 25.67
Forfeited .......................... (193.5) 36.92
Expired ............................ (91.2) 42.22
--------
Outstanding at end of year ............. 7,811.1 30.10
========
</TABLE>

The following table summarizes information about the Company's stock options
outstanding at December 31, 2001:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------- -------------------
NUMBER WEIGHTED
OUTSTANDING WEIGHTED AVERAGE AVERAGE NUMBER WEIGHTED
RANGE OF (IN REMAINING EXERCISE EXERCISABLE AVERAGE
EXERCISE PRICES THOUSANDS) CONTRACTUAL LIFE PRICE (IN THOUSANDS) EXERCISE PRICE
- --------------- ----------- ---------------- -------- -------------- --------------
<S> <C> <C> <C> <C> <C>

$11.96--$24.44............. 1,366.6 3.3 years $ 19.76 1,355.0 $ 19.73
$25.53--$29.11............. 1,799.6 7.8 years 26.68 868.3 26.78
$30.18--$38.03............. 1,712.0 7.1 years 35.47 1,072.9 35.26
$38.62--$39.88............. 1,917.9 8.2 years 38.85 772.2 39.19
$40.13--$49.06............. 1,349.8 5.7 years 41.27 1,340.9 41.26
------- -------
Total...................... 8,145.9 5,409.3
======= =======
</TABLE>

During 2001, 2000 and 1999, restricted stock awards for 8,150; 12,300 and 89,810
shares, respectively, were made including those made to employees of
discontinued operations. Restricted stock awards may be subject to conditions
established by the Board of Directors. Under the terms of the restricted stock
awards, the granted stock vests two years and ten months after the award date.
The cost of these awards, determined as the market value of the shares at the
date of grant, is being amortized over the vesting period. In 2001, 2000 and
1999, $0.3 million, $0.3 million and $3.2 million, respectively, was charged to
expense of continuing operations for restricted stock awards. Of the $3.2
million of expense recognized in 1999, $2.8 million related to acceleration of
vesting in connection with the Coltec merger.

58
<PAGE>

The Stock Option Plan also provides that shares of common stock may be awarded
as performance shares to certain key executives having a critical impact on the
long-term performance of the Company. The plan is a phantom performance share
plan. Dividends accrue on phantom shares and are reinvested in additional
phantom shares. Under this plan, compensation expense is recorded based on the
extent performance objectives are expected to be met. During 2001, 2000 and
1999, the Company issued 318,800, 856,800 and 304,780 phantom performance shares
including those made to employees of discontinued operations, respectively.
During 2001, 2000 and 1999, 221,200; 50,500 and 34,263 performance shares,
respectively, were forfeited. In 2001, 2000 and 1999, $5.1 million, $8.9 million
and $3.1 million, respectively, was charged to expense of continuing operations
for performance shares. If the provisions of SFAS 123 had been used to account
for awards of performance shares, the weighted-average grant-date fair value of
performance shares granted in 2001, 2000 and 1999 would have been $38.62, $23.12
and $35.66 per share, respectively.

In 2000, a final pro rata payout (approximately 127,000 shares) of the 1998 and
1999 awards was made in connection with the Company's adoption of new
performance measures (approximately 10,000 of these shares were not issued as
they were deferred by recipients). In 1999, a partial payout (approximately
83,000 shares) of the 1998 awards was made under change in control provisions as
a result of the Coltec merger.

S. DISCONTINUED OPERATIONS - The disposition of the Performance Materials and
Engineered Industrial Products segments represent the disposal of segments under
APB Opinion No. 30 ("APB 30"). Accordingly, the revenues, costs and expenses,
assets and liabilities, and cash flows of Performance Materials and Engineered
Industrial Products have been segregated in the Consolidated Statement of
Income, Consolidated Balance Sheet and Consolidated Statement of Cash Flows.

The following summarizes the results of discontinued operations:

<TABLE>
<CAPTION>
(DOLLARS IN MILLIONS) 2001 2000 1999
---------- ---------- ----------
<S> <C> <C> <C>
Sales:
Performance Materials $ 187.0 $ 1,167.7 $ 1,217.7
Engineered Industrial Products 641.9 663.3 673.6
---------- ---------- ----------
$ 828.9 $ 1,831.0 $ 1,891.3
========== ========== ==========

Pretax income (loss) from operations:
Performance Materials $ (3.6) $ 69.0 $ 52.3
Engineered Industrial Products 46.1 94.4 97.2
---------- ---------- ----------
42.5 163.4 149.5
Income tax expense (15.8) (64.8) (57.9)
Distributions on trust preferred securities (7.9) (7.9) (7.9)
Gain on sale of Performance Materials (net of
income tax expense of $54.9 million) 93.5 -- --
---------- ---------- ----------
Income from discontinued operations $ 112.3 $ 90.7 $ 83.7
========== ========== ==========
</TABLE>

PERFORMANCE MATERIALS

On February 28, 2001, the Company completed the sale of its Performance
Materials segment to an investor group led by AEA Investors, Inc. for
approximately $1.4 billion. Total net proceeds, after anticipated tax payments
and transaction costs, included approximately $1 billion in cash and $172
million in debt securities issued by the buyer. The transaction resulted in an
after-tax gain of $93.5 million and is subject to certain post closing
adjustments (e.g. working capital adjustments).

59
<PAGE>

Pursuant to the terms of the transaction, the Company retained certain assets
and liabilities (primarily pension, postretirement and environmental
liabilities) of the Performance Materials segment. The Company has also agreed
to indemnify the buyer for liabilities arising from certain events as defined in
the agreement. Such indemnification is not expected to be material to the
Company's financial condition, but could be material to the Company's results of
operations in a given period. During 2001, the Company also completed the sale
of the segment's Electronic Materials business which had been included in the
retained assets noted above.

ENGINEERED INDUSTRIAL PRODUCTS

The EIP segment is currently owned by Coltec Industries Inc ("Coltec"), a
wholly-owned subsidiary of Goodrich. Prior to the Distribution, Coltec's
aerospace business will assume all intercompany balances outstanding between
Coltec and Goodrich and Coltec will then transfer to Goodrich by way of a
dividend all of the assets, liabilities and operations of Coltec's aerospace
business, including these assumed balances. Following the spin-off, Coltec will
be a wholly-owned subsidiary of EnPro and Coltec's aerospace businesses will be
owned by Goodrich.

It is anticipated that the $150 million of outstanding Coltec Capital Trust
convertible trust preferred securities will remain outstanding as a part of the
EnPro capital structure. Certain payments with respect to these securities are
guaranteed by Coltec and the Company, and are expected to be guaranteed by
EnPro. Following the spin-off, these securities will be convertible into a
combination of Goodrich and EnPro common stock. Separately, the Company expects
that it will offer to exchange the $300 million of Coltec's 7.5% Senior Notes
due 2008 for similar Company debt securities prior to the spin-off. Assuming
this exchange offer is fully subscribed, EnPro will have total debt and
convertible trust preferred securities of approximately $165 million at the time
of the spin-off. The Company also contemplates that a new EnPro senior secured
revolving credit facility will be in place after the spin-off.

ENGINEERED INDUSTRIAL PRODUCTS - CONTINGENCIES

Asbestos

60
<PAGE>

The Company believes that Garlock and Anchor are in a favorable position
compared to many other asbestos defendants because, among other things, the
asbestos-containing products sold by Garlock and Anchor are encapsulated, which
means the asbestos fibers are incorporated into the product during the
manufacturing process and sealed in a binder. They are also nonfriable, which
means they cannot be crumbled by hand pressure. The Occupational Safety and
Health Administration, which began generally requiring warnings on
asbestos-containing products in 1972, has never required that a warning be
placed on products such as Garlock's gaskets. Notwithstanding that no warning
label has been required, Garlock included one on all of its asbestos-containing
products beginning in 1978. Further, gaskets such as those previously
manufactured and sold by Garlock are one of the few asbestos-containing products
permitted to be manufactured under regulations of the EPA. Since the mid-1980s,
U.S. sales of asbestos-containing industrial sealing products have not been a
material part of Garlock's sales and those sales have been predominantly to
sophisticated purchasers such as the U.S. Navy and large petrochemical
facilities. These purchasers generally have extensive health and safety
procedures and are familiar with the risks associated with the use and handling
of industrial sealing products that contain asbestos. Garlock discontinued
distributing asbestos-containing products in the U.S. during 2000 and world-wide
in mid-2001.

61
<PAGE>

Arrangements with Garlock's insurance carriers limit the amount that can be
received by it in any one year. The amount of insurance available to cover
claims paid by Garlock was limited to $80 million per year in 2001 and 2000 ($60
million in 1999), covering both settlements and reimbursements of legal fees.
This limit automatically increases by 8% every three years. Amounts paid by
Garlock in excess of this annual limit that would otherwise be recoverable from
insurance may be collected from the insurance companies in subsequent years so
long as insurance is available but subject to the annual limit in each
subsequent year. As a result, Garlock is required to pay out of its own cash any
amounts paid to settle or dispose of asbestos-related claims in excess of the
annual limit and collect these amounts from its insurance carriers in subsequent
years. Various options, such as raising the annual limit, are being pursued to
ensure as close a match as possible between payments by Garlock and recoveries
received from insurance. There can be no assurance that Garlock will be
successful as to any or all of these options.

The Company records an accrual for liabilities related to Garlock and Anchor
asbestos-related matters that are deemed probable and can be reasonably
estimated, which consist of settled claims and actions in advanced stages of
processing. The Company also records an asset equal to the amount of those
liabilities that is expected to be recovered by insurance. These amounts are
reflected within discontinued operations in the Company's consolidated balance
sheet and statement of cash flows. A table is provided below depicting
quantitatively the items discussed above.

<TABLE>
<CAPTION>
2001 2000 1999
<S> <C> <C> <C>
(NUMBER OF CASES)
New Actions Filed During the Year (1) 37,600 36,200 30,200
Actions in Advanced Stages at Year-End 2,500 5,800 8,300
Open Actions at Year-End 95,400 96,300 96,000

(DOLLARS IN MILLIONS AT YEAR-END)
Estimated Liability for Settled Claims and Actions in
Advanced Stages of Processing (2) $ 170.9 $ 231.2 $ 163.1
Estimated Amounts Recoverable From Insurance (2)(3) $ 293.7 $ 285.7 $ 188.2

(DOLLARS IN MILLIONS)
Payments (2) $ 162.7 $ 119.7 $ 84.5
Insurance Recoveries (2) 87.9 83.3 65.2
----------- ----------- -----------
Net Cash Flow (3) $ (74.8) $ (36.4) $ (19.3)
=========== =========== ===========
</TABLE>

(1) Consists only of actions actually filed with a court of competent
jurisdiction. To the extent that a particular action names both Garlock
and Anchor as defendants, for purposes of this table the action is treated
as a single action.
(2) Includes amounts with respect to all claims settled, whether or not an
action has actually been filed with a court of competent jurisdiction,
claims which have been dismissed or tried and claims otherwise closed
during the period.
(3) Payments made during the period for which Garlock does not receive a
corresponding insurance recovery due to the annual limit imposed under
Garlock's insurance policies will be recovered in future periods to the
extent insurance is available. When estimating the amounts recoverable,
Garlock only includes insurance coverage available from carriers believed
to be solvent.

62
<PAGE>

As shown in the table above, the number of new actions filed during 2001
increased slightly over 2000, while the number of new actions filed during 2000
increased significantly over 1999. The Company believes this increase represents
the acceleration of claims from future periods mostly attributable to
bankruptcies of other asbestos defendants. The acceleration of claims may have
the impact of accelerating the associated settlement payments. The Company
believes the number of new actions will decrease in future years due, in part,
to the previously-described acceleration of future claims and because the
largest asbestos exposures occurred prior to the mid-1970s. However, there can
be no assurance that the number of new claims filed will not remain at current
levels or increase in future years.

Considering the foregoing, as well as the experience of the Company's
subsidiaries and other defendants in asbestos litigation, the likely sharing of
judgments among multiple responsible defendants, recent bankruptcies of other
defendants, legislative efforts and given the substantial amount of insurance
coverage that Garlock expects to be available from its solvent carriers, the
Company believes that pending actions against Garlock and Anchor are not likely
to have a material adverse effect on the Company's consolidated financial
condition, but could be material to the Company's consolidated results of
operations or cash flows in a given period. However, because of the uncertainty
as to the number and timing of potential future actions, as well as the amount
that will have to be paid to settle or satisfy any such actions in the future,
there can be no assurance that those future actions will not have a material
adverse effect on the Company's consolidated financial condition, results of
operations and cash flows.

Coltec and some of its subsidiaries (other than Garlock and Anchor) have also
been named as defendants in various actions by plaintiffs alleging injury or
death as a result of exposure to asbestos fibers. The number of claims to date
has not been significant and insurance coverage is available to Coltec. Based on
the above, the Company believes that these pending and reasonably anticipated
future actions are not likely to have a material adverse effect on the Company's
consolidated financial condition, results of operations and cash flows and are
therefore not discussed above.

Coltec, Garlock, Anchor and some of Coltec's other subsidiaries are also
defendants in other asbestos-related lawsuits or claims involving maritime
workers, medical monitoring claimants and co-defendants. Based on past
experience, the Company believes that these categories of claims are not likely
to have a material adverse effect on the Company's consolidated financial
condition, results of operations and cash flows and are therefore not discussed
above.

Other Matters

63
<PAGE>

NOTE T: CONTINGENCIES

GENERAL

ENVIRONMENTAL

The timing of expenditures depends on a number of factors that vary by site,
including the nature and extent of contamination, the number of potentially
responsible parties, the timing of regulatory approvals, the complexity of the
investigation and remediation, and the standards for remediation. The Company
expects that it will expend present accruals over many years, and will complete
remediation of all sites with which it has been identified in up to thirty
years. This period includes operation and monitoring costs which are generally
incurred over 15 years.

64
<PAGE>

TOLO LITIGATION

DISCONTINUED OPERATIONS

65
<PAGE>

QUARTERLY FINANCIAL DATA (UNAUDITED) (1)

<TABLE>
<CAPTION>
2001 QUARTERS 2000 QUARTERS
(DOLLARS IN MILLIONS, ------------- -------------
EXCEPT PER SHARE AMOUNTS) FIRST SECOND THIRD FOURTH FIRST SECOND THIRD FOURTH
- ------------------------- --------- ---------- ---------- --------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BUSINESS SEGMENT SALES:
Aerostructures and Aviation
Technical Services ..... $ 359.8 $ 405.5 $ 374.0 $ 375.1 $357.6 $348.4 $375.4 $374.1
Landing Systems ........... 289.6 280.1 293.1 286.3 260.1 259.0 265.9 272.7
Engine and Safety Systems . 183.9 202.3 190.0 186.4 154.9 160.0 158.7 170.8
Electronic Systems ........ 174.4 184.2 194.8 205.0 127.5 139.3 132.4 143.7
-------- --------- --------- -------- ------ ------ ------ ------
TOTAL SALES ............ $1,007.7 $ 1,072.1 $ 1,051.9 $1,052.8 $900.1 $906.7 $932.4 $961.3
======== ========= ========= ======== ====== ====== ====== ======
GROSS PROFIT(2) ............. $ 292.6 $ 303.5 $ 299.0 $ 161.8 $244.6 $252.9 $259.0 $267.8
======== ========= ========= ======== ====== ====== ====== ======
OPERATING INCOME (LOSS):
Aerostructures and Aviation
Technical Services ..... $ 52.6 $ 63.3 $ 60.7 $ 47.1 $ 48.9 $ 49.0 $ 57.3 $ 53.8
Landing Systems ........... 40.8 33.5 40.9 37.9 37.3 35.1 35.7 40.9
Engine and Safety Systems . 29.9 39.1 35.4 27.5 28.0 30.8 28.3 30.4
Electronic Systems ........ 31.4 33.0 29.9 41.1 25.2 27.6 33.1 32.2
Corporate ................. (13.6) (15.3) (12.3) (16.5) (13.9) (13.7) (14.2) (17.9)
Merger-Related and
Consolidation Costs ...... (5.8) (7.6) (1.5) (92.4) (5.4) (15.4) (8.3) (15.1)
Unusual Inventory
Adjustments ............. -- -- -- (94.5) -- -- -- --
-------- --------- --------- -------- ------ ------ ------ ------
TOTAL OPERATING INCOME (LOSS) $ 135.3 $ 146.0 $ 153.1 $ (49.8) $120.1 $113.4 $131.9 $124.3
======== ========= ========= ======== ====== ====== ====== ======
INCOME (LOSS) FROM:
Continuing Operations ..... $ 70.2 $ 75.9 $ 81.9 $ (51.1) $ 58.7 $ 54.2 $ 61.1 $ 61.2
Discontinued Operations ... 102.1 7.4 6.1 (3.3) 27.4 27.5 18.8 17.0
-------- --------- --------- -------- ------ ------ ------ ------
NET INCOME (LOSS) ........... $ 172.3 $ 83.3 $ 88.0 $ (54.4) $ 86.1 $ 81.7 $ 79.9 $ 78.2
======== ========= ========= ======== ====== ====== ====== ======
Basic Earnings (Loss)
Per Share:
Continuing operations ..... $ 0.68 $ 0.73 $ 0.79 $ (0.50) $ 0.54 $ 0.51 $ 0.60 $ 0.60
Discontinued Operations ... 1.00 0.07 0.06 (0.03) 0.25 0.26 0.19 0.17
-------- --------- --------- -------- ------ ------ ------ ------
Net income ................ $ 1.68 $ 0.80 $ 0.85 $ (0.53) $ 0.79 $ 0.77 $ 0.79 $ 0.77
======== ========= ========= ======== ====== ====== ====== ======
Diluted Earnings (Loss)
Per Share:
Continuing operations ..... $ 0.66 $ 0.70 $ 0.76 $ (0.50) $ 0.52 $ 0.49 $ 0.57 $ 0.57
Discontinued Operations ... 0.96 0.08 0.07 (0.03) 0.26 0.26 0.20 0.18
-------- --------- --------- -------- ------ ------ ------ ------
Net income ................ $ 1.62 $ 0.78 $ 0.83 $ (0.53) $ 0.78 $ 0.75 $ 0.77 $ 0.75
======== ========= ========= ======== ====== ====== ====== ======
</TABLE>

(1) The historical amounts presented above have been restated to present
the Company's Performance Materials and Engineered Industrial Products
businesses as discontinued operations.
(2) Gross profit represents sales less cost of sales.

The first quarter of 2001 includes a $5.8 million pre-tax charge for
merger-related and consolidation costs. The first quarter also includes a $7.2
million pre-tax gain in other income (expense) from the sale of a portion of the
Company's interest in a business.

The second quarter of 2001 includes a $7.6 million pre-tax charge for
merger-related and consolidation costs.

The third quarter of 2001 includes a $1.5 million pre-tax charge for
merger-related and consolidation costs.

The fourth quarter of 2001 includes a $92.4 million pre-tax charge for
merger-related and consolidation costs and a $94.5 million pre-tax charge
recorded in cost of sales for inventory adjustments.

The first quarter of 2000 includes a $5.4 million pre-tax charge for
merger-related and consolidation costs.

The second quarter of 2000 includes a $15.4 million pre-tax charge for
merger-related and consolidation costs.

The third quarter of 2000 includes a $8.3 million pre-tax charge for
merger-related and consolidation costs.

The fourth quarter of 2000 includes a $15.1 million pre-tax charge for
merger-related and consolidation costs. The fourth quarter also includes a $2.5
million pre-tax charge in other income (expense) related to a write-down of a
business held for sale to its net realizable value.

66
<PAGE>

SELECTED FINANCIAL DATA(1)

<TABLE>
<CAPTION>
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS) 2001 2000 1999 1998 1997
- -------------------------------------------------------- ------- ------- ------- ------- -------

<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Sales .................................................. $ 4,184.5 $ 3,700.5 $ 3,646.2 $ 3,510.3 $ 3,060.3
Operating income ....................................... 384.6 489.7 274.1 440.6
Income from continuing operations ...................... 176.9 235.2 85.9 213.3 67.8
Net Income ............................................. 289.2 325.9 169.6 353.7
BALANCE SHEET DATA:
Total assets ........................................... $ 4,638.1 $ 5,138.9 $ 4,622.6 $ 4,415.8 $ 3,906.7
Total debt ............................................. 1,426.4 2,236.2 1,741.9 1,704.2 1,487.5
Mandatorily redeemable preferred securities of trust ... 125.0 124.5 124.0 123.6
Total shareholders' equity ............................. 1,361.4 1,228.5 1,295.6 1,238.9
OTHER FINANCIAL DATA:
Segment operating income(3) ............................ $ 644.1 $ 593.6 $ 561.7 $ 505.5
EBITDA(2),(3) .......................................... 734.7 668.7 631.6 557.7
Operating cash flow .................................... 382.6 168.2 210.5 341.7
Investing cash flow .................................... (288.8) (349.4) (166.5) (208.8)
Financing cash flow .................................... (936.3) 80.6 (72.2) 199.1
Capital expenditures ................................... 190.5 133.8 144.7 163.0
Depreciation ........................................... 108.5 111.9 96.3 90.2
Dividends .............................................. 113.7 117.6 91.6 75.7
Distributions on trust preferred securities ............ 10.5 10.5 10.5 10.5
PER SHARE OF COMMON STOCK:
Income from continuing operations, diluted ............. $ 1.65 $ 2.16 $ 0.76 $ 1.87 $ 0.61
Diluted EPS(3) ......................................... 2.87 2.43 2.23 1.93
Dividends declared ..................................... 1.10 1.10 1.10 1.10
Book value ............................................. 13.39 12.00 11.74 11.28
RATIOS:
Segment operating income as a percent of sales (%)(3) .. 15.4 16.0 15.4 14.4
Debt-to-capitalization ratio (%) ....................... 47.2 61.4 54.0 54.7
Effective income tax rate (%) .......................... 33.5 33.1 47.9 35.1
OTHER DATA:
Common shares outstanding at end of year (millions) .... 101.7 102.3 110.2 109.7
Number of employees at end of year(4) .................. 24,000 26,300 27,000 27,200
</TABLE>

(1) Except as otherwise indicated, the historical amounts presented above
have been restated to present the Company's Performance Materials and
Engineered Industrial Products businesses as discontinued operations.
(2) "EBITDA" as used herein means income from continuing operations before
distributions on trust preferred securities, income tax expense, net
interest expense, depreciation and amortization and special items. The
Company believes EBITDA provides meaningful additional information on
our operating results and on our ability to service our long-term debt
and other fixed obligations and to fund our continued growth. EBITDA
should not be construed as an alternative to operating income (loss) as
determined in accordance with generally accepted accounting principles
in the United States ("GAAP"), as an alternative to cash flow from
operating activities (as determined in accordance with GAAP), or as a
measure of liquidity. Because EBITDA is not calculated in the same
manner by all companies, our presentation may not be comparable to
other similarly titled measures reported by other companies.
(3) Excludes special items, which for 2001 and 2000 are described on pages
2 and 8 herein. Special items for the year ended December 31, 1999
included a $170.4 million after-tax charge for merger-related and
consolidation costs, a $2.4 million after-tax gain on the sale of a
business and $83.7 million representing the after-tax effect of income
from discontinued operations. Special items for the year ended December
31, 1998 included a $6.5 million after-tax charge for merger-related
and consolidation costs, a $4.3 million after-tax extraordinary loss on
debt extinguishment and $144.7 million representing the after-tax
effect of income from discontinued operations.
(4) Includes employees of the Company's Performance Materials and
Engineered Industrial Products segments, rounded to the nearest
hundred.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>5
<FILENAME>g74381ex21.txt
<DESCRIPTION>SUBSIDIARIES
<TEXT>
<PAGE>
GOODRICH CORPORATION EXHIBIT 21

Parent And Subsidiaries Of Registrant
- -------------------------------------

<TABLE>
<CAPTION>
Percentage Of
Place Of Voting Securities
Consolidated Subsidiary Companies Incorporation Owned
- --------------------------------- ------------- --------------------
<S> <C> <C>
Goodrich Corporation (Registrant;
there are no parents of the registrant) New York
Air-Science Engineering, Inc. Arizona 100.00
Coltec Industries Inc Pennsylvania 100.00
AMI Industries, Inc. Colorado 100.00
AMI Industries FSC, Inc. Virgin Islands 100.00
CII Holdings Inc Delaware 100.00
Coltec Canada Inc Delaware 89.00
Coltec Aerospace Canada Ltd Ontario, Canada 100.00
Coltec Luxembourg S.A. Luxembourg 100.00
Goodrich Krosno Ltd Poland 100.00
Coltec (Great Britain) Limited United Kingdom 15.00
Coltec Industries France SAS France 25.00
Liard S.A. France 100.00
Cefilac S.A. France 100.00
Coltec Automotive Inc Delaware 100.00
Coltec do Brasil Produtos Industrias Ltda. Brazil 89.00
Coltec (Great Britain) Limited United Kingdom 85.00
Delavan Limited United Kingdom 100.00
Delavan European Marketing Company Limited United Kingdom 100.00
Delavan Watson Limited United Kingdom 100.00
H. T. Watson Limited United Kingdom 100.00
Garlock (Great Britain) Limited United Kingdom 100.00
Coltec Holdings Inc Delaware 100.00
Coltec Industries International Inc Barbados 100.00
Coltec Industries Korea Inc Korea 89.00
Coltec Industries Pacific Pte Ltd Singapore 100.00
Coltec International Services Co Delaware 100.00
Coltec do Brasil Produtos Industrias Ltda. Brazil 11.00
Coltec Industries Korea Inc Korea 11.00
Coltec Productos y Servicios S.A. de C.V. Mexico 25.00
Coltec North Carolina Inc North Carolina 100.00
CNC Finance LLC North Carolina 100.00
Coltec Productos y Servicios S.A. de C.V. Mexico 75.00
Coltec Technical Services Inc Delaware 100.00
Crucible Materials Corp. Delaware 100.00
Delavan Inc. Delaware 100.00
EnPro Industries, Inc. North Carolina 100.00
EXH Automotive Holdings, Inc. Delaware 100.00
FSS Divestiture Corp. Delaware 100.00
Garlock Sealing Technologies LLC Delaware 100.00
Coltec Industrial Products LLC Delaware 100.00
Garlock Bearings LLC Delaware 96.30
Garlock International Inc Delaware 100.00
Garlock of Canada Ltd. Ontario, Canada 100.00
Garlock de Mexico, S.A. de C.V. Mexico 65.70
</TABLE>

1
<PAGE>

Parent And Subsidiaries Of Registrant
- -------------------------------------

<TABLE>
<CAPTION>
Percentage Of
Place Of Voting Securities
Consolidated Subsidiary Companies Incorporation Owned
- --------------------------------- ------------- --------------------
<S> <C> <C>
Garlock Overseas Corporation Delaware 100.00
Stemco Truck Products Pty Limited Australia 100.00
Garlock Pty Limited Australia 80.00
Garlock S.A. Panama 100.00
Jamco Products, LLC Texas 100.00
Louis Mulas Sucs, S.A. de C.V. Mexico 67.30
Mainland Sealing Products, LLC. North Carolina 100.00
Stemco LLC Delaware 100.00
Garrison Litigation Management Group, Ltd. Delaware 50.00
The Anchor Packing Company Delaware 100.00
Glacier Garlock Bearings, Inc. Delaware 100.00
Glacier do Brasil Limitada Brazil 100.00
GIB Germany GmbH Germany 100.00
GIB Verwaltungsgesellschaft GmbH Germany 100.00
GIB Germany GmbH Germany 100.00
GIB Italy Srl Italy 100.00
GIB Switzerland Switzerland 100.00
Glacier Bearing Netherlands 100.00
GIB Netherlands Netherlands 100.00
GIB Belgium Belgium 100.00
GIB Slovak Slovakia 100.00
GIB Austria Austria 100.00
GIB Holdings UK Limited United Kingdom 100.00
GIB GB Limited United Kingdom 100.00
Coltec Holdings SARL France 100.00
Coltec Bearings SARL France 100.00
Goodrich Pump and Engine Control Systems, Inc. Delaware 100.00
Haber Tool Company Michigan 100.00
Holley Automotive Systems GmbH Germany 85.00
Garlock GmbH Germany 100.00
Coltec Industries France SAS France 75.00
Cefilac, S.A. France 100.00
Liard S.A. France 100.00
Menasco Aerosystems Inc Delaware 100.00
QFM Sales and Services, Inc. Delaware 100.00
Salt Lick Railroad Company Pennsylvania 100.00
Walbar Inc Delaware 100.00
Coltec Canada Inc Delaware 11.00
Delfzijl Resin C.V. The Netherlands 99.00
First Charter Insurance Company Vermont 100.00
FMQ Sales and Services Inc. Delaware 100.00
Freedom Textile Chemical Company (South Carolina), Inc. Delaware 100.00
</TABLE>

2
<PAGE>

Parent And Subsidiaries Of Registrant
- -------------------------------------

<TABLE>
<CAPTION>
Percentage Of
Place Of Voting Securities
Consolidated Subsidiary Companies Incorporation Owned
- --------------------------------- ------------- --------------------
<S> <C> <C>
GKS, Inc. Delaware 100.00
HEJ Holding, Inc. Delaware 39.70
Goodrich TMM Luxembourg The Netherlands 100.00
Goodrich XCH Luxembourg The Netherlands 100.00
Goodrich Luxembourg SARL Luxembourg 100.00
Goodrich Holding S.A. France 100.00
Goodrich Aerospace Europe S.A. France 100.00
Goodrich Aerospace Services S.A. France 100.00
Rosemount Aerospace S.A.R.L. France 100.00
Goodrich Capital Gibraltar 100.00
Goodrich Ltd. United Kingdom 100.00
Goodrich Holding UK Limited United Kingdom 100.00
A-Chem (U.K.) Limited United Kingdom 100.00
Goodrich Aerospace UK Limited United Kingdom 100.00
Goodrich Landing Systems Services Limited United Kingdom 100.00
Rohr Aero Services Limited United Kingdom 100.00
Rosemount Aerospace Limited United Kingdom 100.00
Simmonds Precision Limited United Kingdom 100.00
Goodrich Holding GmbH Germany 100.00
Rosemount Aerospace GmbH Germany 100.00
Goodrich Aerospace Systems Private Limited India 100.00
Goodrich Aerospace Asia-Pacific, Limited Hong Kong 51.00
Goodrich Aerospace Component
Overhaul & Repair, Inc. Delaware 100.00
Goodrich Aviation Technical Services, Inc. Washington 100.00
Goodrich Aerospace Pte. Ltd. Singapore 100.00
Goodrich Aerospace Pty. Limited Australia 100.00
Goodrich Avionics Systems, Inc. Delaware 100.00
Goodrich Finance LLC Delaware 100.00
Goodrich FlightSystems, Inc. Ohio 100.00
Goodrich Japan, Ltd. Japan 100.00
Goodrich Lighting Systems, Inc. Florida 100.00
Goodrich Lighting Systems Europe, Inc. Delaware 100.00
Goodrich Hella Aerospace Lighting GmbH & Co. KG Germany 100.00
Goodrich Hella Aero Lighting Systems Holding GmbH Germany 95.00
Goodrich Liegenschaften GmbH Germany 100.00
Goodrich Verwaltungs GmbH Germany 100.00
Hella Aerospace Holding, Inc. (LLC) Delaware 100.00
Hella Aerospace LLC Delaware 60.00
Goodrich Performance Materials (Singapore) Pte Ltd Singapore 100.00
</TABLE>

3
<PAGE>

Parent And Subsidiaries Of Registrant
- -------------------------------------

<TABLE>
<CAPTION>
Percentage Of
Place Of Voting Securities
Consolidated Subsidiary Companies Incorporation Owned
- --------------------------------- ------------- --------------------
<S> <C> <C>
HEJ Holding, Inc. Delaware 42.40
Goodrich TMM Luxembourg The Netherlands 100.00
Goodrich XCH Luxembourg The Netherlands 100.00
Goodrich Luxembourg SARL Luxembourg 100.00
Goodrich Holding S.A. France 100.00
Goodrich Aerospace Europe S.A. France 100.00
Goodrich Aerospace Services S.A. France 100.00
Rosemount Aerospace S.A.R.L. France 100.00
Goodrich Capital Gibraltar 100.00
Goodrich Ltd. United Kingdom 100.00
Goodrich Holding UK Limited United Kingdom 100.00
A-Chem (U.K.) Limited United Kingdom 100.00
Goodrich Aerospace UK Limited United Kingdom 100.00
Goodrich Landing Systems Services Limited United Kingdom 100.00
Rohr Aero Services Limited United Kingdom 100.00
Rosemount Aerospace Limited United Kingdom 100.00
Simmonds Precision Limited United Kingdom 100.00
Goodrich Holding GmbH Germany 100.00
Rosemount Aerospace GmbH Germany 100.00
Inrich Corporation New York 100.00
International Goodrich Technology Corporation Delaware 100.00
Goodrich FSC, Inc. Barbados 100.00
Ithaco Space Systems Inc. Delaware 100.00
JcAir, Inc. Kansas 100.00
JMSI Corporation Delaware 100.00
Delfzijl Resin C.V. The Netherlands 1.00
ALA Corporation Delaware 100.00
CMK Corporation Delaware 100.00
Kalama Specialty Chemical, Inc. Washington 100.00
Kinsman Road Realty Corporation Ohio 100.00
Rohr, Inc. Delaware 100.00
Goodrich Aerospace Europe, Inc. Delaware 100.00
Goodrich Aerospace Europe GmbH Germany 100.00
RE Components Inc. Delaware 100.00
Rohr Aero Services-Asia Pte. Ltd. Singapore 70.00
Rohr Finance Corporation Delaware 100.00
Rohr Foreign Sales Corporation Guam 100.00
Rohr, Inc. Maine 100.00
Rohr International Sales Corporation Delaware 100.00
Rohr International Service Corporation Delaware 100.00
Rohr Industries, Inc. Kentucky 100.00
Rohr Southern Industries, Inc. Delaware 100.00
Tolo Incorporated California 100.00
Rohr Aero Services, Inc. Delaware 100.00
Rohr Aero Services Europe France 99.998
Rosemount Aerospace Inc. Delaware 100.00
Safeway Products Inc. Connecticut 100.00
</TABLE>

4
<PAGE>

Parent And Subsidiaries Of Registrant
- -------------------------------------

<TABLE>
<CAPTION>
Percentage Of
Place Of Voting Securities
Consolidated Subsidiary Companies Incorporation Owned
- --------------------------------- ------------- --------------------
<S> <C> <C>
Siltown Realty, Inc. Alabama 100.00
Simmonds Precision Products, Inc. New York 100.00
Simmonds Precision Engine Systems, Inc. New York 100.00
Simmonds Precision Motion Controls, Inc. New Jersey 100.00
TSA Holdings Inc. Delaware 100.00
TSA-rina Holding B.V. The Netherlands 100.00
Prosytec S.A. France 100.00
Prosytec Italia S.R.L. Italy 100.00
Universal Propulsion Company, Inc. Delaware 100.00
Advanced Egress Systems, Inc. Delaware 100.00
AESI/ZVEZDA Delaware 100.00
BFGoodrich Capital Statutory trust
in Delaware 100.00
</TABLE>

All of the above subsidiaries are included in the 2001 consolidated financial
statements.

The Registrant also owns 50% of Goodrich - Messier, Inc., incorporated in
Delaware; 50% of Messier - Goodrich S.A., incorporated in France; 50% of
Telenor S.A., incorporated in France; First Charter Insurance Company owns
4.35% of Tortuga Casualty Co. and 5.56% of United Insurance Co., both
incorporated in the Caymans and 33.3% of Wrenford Insurance Co., incorporated
in Bermuda; and also holds a 3.8% ownership interest in Cordiem, Inc.,
incorporated in Delaware and a 3.8% ownership interest in Cordiem, LLC,
incorporated in Delaware.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.A
<SEQUENCE>6
<FILENAME>g74381ex23-a.txt
<DESCRIPTION>CONSENT OF INDEPENDENT AUDITORS
<TEXT>
<PAGE>
EXHIBIT 23(a)

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Goodrich Corporation of our report dated February 4, 2002, included in the
2001 Annual Report to Shareholders of Goodrich Corporation.

We also consent to the incorporation by reference of our report dated February
4, 2002, with respect to the consolidated financial statements incorporated
herein by reference, in the following Registration Statements and in the
related Prospectuses:

<TABLE>
<CAPTION>
Registration
Number Description of Registration Statement Filing Date
- ------------ ------------------------------------- -----------
<S> <C> <C>

33-20421 The B.F.Goodrich Company Key Employees' March 1, 1988
Stock Option Plan - Form S-8

2-88940 The B.F.Goodrich Company Retirement Plus April 28, 1989
Savings Plan - Post-Effective Amendment
No. 2 to Form S-8

33-29351 The Rohr Industries, Inc. 1988 Non-Employee June 19, 1989
Director Stock Option Plan - Form S-8

33-49052 The B.F.Goodrich Company Key Employees' June 26, 1992
Stock Option Plan - Form S-8

33-59580 The B.F.Goodrich Company Retirement March 15, 1993
Plus Savings Plan for Wage Employees - Form S-8

333-03293 The B.F.Goodrich Company May 8, 1996
Stock Option Plan - Form S-8

333-03343 Common Stock - Form S-3 May 8, 1996

333-19697 The B.F. Goodrich Company Savings January 13, 1997
Benefit Restoration Plan - Form S-8

333-53877 Pretax Savings Plan for the Salaried Employees May 29, 1998
of Rohr, Inc. (Restated 1994) and Rohr, Inc. Savings
Plan for Employees Covered by Collective Bargaining
Agreements (Restated 1994) - Form S-8

333-53879 Directors' Deferred Compensation Plan - Form S-8 May 29, 1998

333-53881 Rohr, Inc. 1982 Stock Option Plan, May 29, 1998
Rohr, Inc. 1989 Stock Incentive Plan and
Rohr, Inc. 1995 Stock Incentive Plan - Form S-8

333-74987 5 1/4% Convertible Preferred Securities Term Income March 24, 1999
Deferrable Equity Securities - Form S-3

333-76297 Coltec Industries Inc. 1992 Stock Option Plan April 14, 1999
Coltec Industries Inc. 1994 Stock Option Plan for
Outside Directors - Form S-8

333-77023 The B.F. Goodrich Company Stock Option April 26, 1999
Plan - Form S-8
</TABLE>

<PAGE>

<TABLE>
<S> <C> <C>
333-95081 Shelf Registration for Common Stock, Series Preferred January 20, 2000
Stock and Debt Securities - Form S-3

333-60210 The B.F. Goodrich Company Stock Option May 4, 2001
Plan - Form S-8

333-60208 The B.F. Goodrich Company Employee May 4, 2001
Stock Purchase Plan - Form S-8

333-82800 Offer to Exchange 7 1/2% Notes due 2008 for 7 1/2% February 14, 2002
Series B Senior Notes due 2008 of
Coltec Industries Inc - Form S-4
</TABLE>

/s/ Ernst & Young LLP

Charlotte, North Carolina
February 20, 2002

</TEXT>
</DOCUMENT>
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