The difficult business environment in 2009 led to a sales decline of five percent to $6.7 billion. This was primarily due to a 16 percent decrease in our sales of spare parts and services to airlines and cargo operators, following a global decline in passenger and cargo traffic. Our commercial original equipment sales held relatively steady, while our defense and space sales grew by 10 percent to 30 percent of the total. Our business mix remains evenly distributed among these three main market sectors.

We intensified our cost containment initiatives in late 2008, when it became apparent that the world was entering a period of severe economic stress. Tremendous effort from employees across the company to reduce costs and improve productivity offset most of the impact of weaker markets and also allowed us to minimize layoffs.

New business wins in 2009 helped to maintain our balanced portfolio and position us for future growth. We enhanced our positions on new commercial aircraft like the Airbus A350 XWB, Bombardier CSeries and Mitsubishi Regional Jet. We expanded our global aftermarket capabilities in Brazil and Dubai, and added to our presence in China.

In defense and space, business wins spanned our capabilities including the strategically important markets of military retrofits, intelligence, surveillance and reconnaissance, and helicopters. We acquired Cloud Cap Technology and Atlantic Inertial Systems, expanding our presence in the unmanned aerial vehicles and sensors markets.

The commercial aftermarket business was our greatest challenge in 2009, but it is also a bright spot that will drive our future growth and profitability. With significant content on new, more fuel-efficient aircraft, especially highly-utilized models like the Airbus A320 and A330 and the Boeing 737NG, we believe we can grow our commercial aftermarket sales faster than market trends as the airline industry recovers.

With our strong balance sheet and excellent liquidity, we are well positioned to take advantage of further acquisition opportunities in 2010 and beyond. We will continue to target strategic, high-growth areas in the commercial aerospace market as well as selected defense markets for additional investment. We are focused on improving cash flow generation and will use all the continuous improvement tools at our disposal to do so.

We are fortunate to have a very strong leadership team. These seasoned executives have a wealth of experience in the aerospace and defense industry, and in business in general. I am very proud of our robust talent management and succession planning process which helped build and grow our leadership team, and enables us to fill the majority of executive roles internally.

Everything we do at Goodrich is within the context of our four core values – ethical behavior, customer-focused improvement, accountability and teamwork, and openness and inclusion. Consistently focusing on these four core values drives our performance on current contracts and our ability to win business on new aerospace and defense programs, which is critical to the long-term sustainability of our company.

I cannot close without emphasizing ethical behavior, which is the foundation of how we do business. In these challenging economic times we have seen a stream of media reports about ethical lapses in business. At times like this it is more important than ever not just to do things right, but to do the right thing.

Finally, I want to thank our highly-skilled, motivated team of 24,000 individuals around the world for their dedication to our great company. Goodrich was founded in 1870 on the drive and talent of one man whose name the company still bears – Dr. Benjamin Franklin Goodrich. As we prepare to celebrate our 140th birthday in 2010, the efforts of our global Goodrich team are laying the foundations for our success tomorrow and for the next 140 years.

Marshall O. Larsen
Chairman, President and Chief Executive Officer
February 16, 2010