Fitch Affirms Goodrich Corporation IDR at 'BBB'.

NEW YORK -- Fitch Ratings has affirmed the following Goodrich Corporation (GR) credit ratings:

--Issuer Default Rating at 'BBB';

--Senior unsecured debt at 'BBB';

--Bank credit facility at 'BBB'.

The Rating Outlook is Stable. Approximately $1.8 billion of debt is covered by these ratings.

Goodrich's ratings reflect its position as a leading supplier to the aerospace industry; its strong content in both commercial and military aircraft; the company's diversified customer base; and a balanced mix between original equipment manufacturer (OEM) and aftermarket sales. Goodrich is presently benefiting and should continue to benefit from increased global air traffic, which drives higher margin commercial aftermarket sales; the aging of Airbus and regional jet (RJ) fleets, which also benefits aftermarket sales; increased production at The Boeing Company (Boeing) and Airbus S.A.S. (Airbus); healthy military budgets; and planned new aircraft platform introductions through at least 2013, with higher GR content than those being replaced. Free cash flow has been declining due to discretionary events such as the retirement of the 2006 accounts receivable securitization program and voluntary pension contributions; tax refunds in 2003 versus tax settlements requiring payments this year; and cyclical working capital needs and capital expenditures to fund new program investments. Goodrich's solid cash flow generation capacity over a cycle, however, provides additional support for the ratings. Fitch expects GR's cash flow to improve significantly in 2007.

Concerns center on the shift in Goodrich's cash deployment strategy away from deleveraging; landing gear contract negotiations with Boeing; and underfunded pension plans. Delays in the A380 program are expected to have a modest impact on working capital this year and next, but should reverse when the A380 reaches full production. With OEM sales normally at or close to breakeven, the delays should have a minimal impact on operating income, but will delay more lucrative aftermarket revenues. Like all suppliers to the commercial airline industry, Goodrich is subject to the industry's exposure to exogenous shocks such as terrorism and disease, e.g. avian flu. Fitch considers the company's risk to be more closely tied to shocks that would result in permanent declines in air travel versus short-term reductions.

From the time of its acquisition of Aeronautical Systems in the fourth quarter of 2002 until the third quarter of 2005, the company had been focused on de-levering. Having achieved its target of 2.0x-2.5x Debt/EBITDA, GR has indicated that it has no plans to further reduce its term debt. Its statements are supported by refinancing some nearer term maturities. In June GR exchanged notes coming due in 2008 and 2009 for approximately $291 million of notes coming due in 2016 and also exchanged notes due in 2012 for approximately $255 million of notes due in 2036. The exchange has resulted in a more balanced debt profile, with no one year having maturities in excess of $300 million. GR has indicated that it intends to utilize excess cash for share repurchases - a $300 million program that it intends to execute over a three year period was announced in October; bolt-on acquisitions; and discretionary pension contributions.

Fitch also has some concerns regarding GR's landing gear contract negotiations with Boeing. Its expiring contract as the exclusive provider of original equipment and spare landing gear for Boeing's commercial aircraft has yet to be renewed, but this is expected shortly. Losing this contract is highly unlikely but would have significant negative long-term consequences for GR. Although not expected, the new contract could also be less favorable to GR.

The underfunded global pension plans (79% funded, with a $709 million funding deficit as of Dec. 31, 2005) remain a concern, but Fitch considers this to be manageable due to Goodrich's financial position and the increase in interest rates since last year. The company has taken action to reduce its future defined benefit obligations. Since the beginning of this year, new non-union U.S. employees have not participated in GR's defined benefit plan and have been offered an enhanced defined contribution plan. In addition, approximately 40% of existing non-union U.S. employees chose to stop accruing service in the defined benefit plan and to continue in the defined contribution plan but with a higher company contribution level. Fitch does not expect a material effect from the reduction of employees in the defined benefits program in the short term, but it should result in savings to the company in the longer term.

As of September 30, 2006, GR's liquidity consisted of $140 million in cash and $387 million in availability under its up to $500 million revolving credit facility, offset by $34 million in current maturities and short-term debt that are not drawings under the revolver, for a net liquidity position of approximately $493 million. GR also maintains $75 million in uncommitted domestic money market facilities and $128 million of uncommitted and committed foreign working capital facilities to meet short-term borrowing needs. As of September 30, 2006, there was $32 million outstanding in borrowings under the overseas facilities. For the latest 12 months (LTM) ended September 30, 2006, GR's leverage, as defined by debt to operating EBITDA and adjusted debt to operating EBITDAR, was 2.3 times (x) and 2.6x, respectively, versus 2.5x and 3.0x in 2005. Interest coverage as defined by operating EBITDA to interest expense was 6.3x for the 12 months ended September 30, 2006, versus 5.4x in 2005.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.