GR » Topics » 2008 Outlook

This excerpt taken from the GR 10-K filed Feb 17, 2009.
2009 Outlook
 
We expect the following approximate results for the year ending December 31, 2009:
 
         
   
2009 Outlook
 
2008 Actual
 
Sales
  $7.1 to $7.2 billion   $7.1 billion
Diluted EPS — Net
Income
  $4.50 to $4.90 per share   $5.39 per share
Capital Expenditures
  $230 to $270 million   $285 million
Operating Cash Flow net of
Capital Expenditures
  Exceed 75% of net income   74% of net income
 
Our 2009 outlook assumes, among other factors:
 
  •  A full-year effective tax rate of 31% to 32%;
 
  •  Higher pre-tax pension expense of $110 million compared to 2008, or $0.55 per diluted share. The higher pension expense incorporates our return on U.S. plan assets of approximately negative 19% in 2008 and the lowering of the long-term U.S. rate of return on assets to 8.75% for 2009 partially offsetting a 2009 U.S. discount rate of approximately 6.5% compared to a rate of 6.3% for 2008; and
 
  •  Favorable foreign exchange translation costs of approximately $5 million.
 
This excerpt taken from the GR 10-K filed Feb 19, 2008.
2008 Outlook
 
We expect the following results for the year ending December 31, 2008:
 
         
   
2008 Outlook
 
2007 Actual
 
Sales
  $7.1-$7.2 billion   $6.4 billion
Diluted EPS — Net Income
  $4.15-$4.30 per share   $3.78 per share
Capital Expenditures
  $250-$270 million   $282.6 million
Operating Cash Flow net of Capital Expenditures
  Exceed 75% of net income   64% of net income
 
The 2008 outlook assumes, among other factors, a full-year effective tax rate of 33% to 35%, which includes the benefit of an extension of the U.S. research tax credit. This compares with an effective tax rate of 31% for 2007.
 
We expect net cash provided by operating activities, net of capital expenditures, to be in excess of 75 percent of net income in 2008. This outlook reflects a continuation of cash investments to support the Boeing 787 and the Airbus A350 XWB programs and capital expenditures for low cost country manufacturing and productivity initiatives that are expected to enhance margins over the near and long-term. We expect capital expenditures for 2008 to be in a range of $250 to $270 million.
 
Our 2008 sales outlook and market assumptions for each of our major market channels compared with the full year 2007 include the following:
 
  •  Large commercial airplane OE sales are expected to increase by approximately 20%;
 
  •  Regional, business and general aviation airplane OE sales are expected to increase by approximately 13%;
 
  •  Large commercial, regional, business and general aviation airplane aftermarket sales are expected to increase by approximately 8% to 10%; and
 
  •  Defense and space sales of both OE and aftermarket products and services are expected to increase by approximately 5% to 8%.


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This excerpt taken from the GR 10-K filed Feb 20, 2007.
2007 Outlook
 
We expect the following results for the year ending December 31, 2007:
 
         
   
2007 Outlook
 
2006 Actual
 
Sales
  $6.2-$6.4 billion   $5.9 billion
Diluted EPS — Net Income
  $2.95-$3.15 per share   $3.81 per share*
Capital Expenditures
  $270-$290 million   $256.8 million
Operating Cash Flow net of Capital Expenditures
  60%-75% of income from continuing operations   4% of income from continuing operations
 
 
* includes a tax benefit of $1.15 related primarily to the Rohr and Coltec settlements.
 
We expect that 2007 will be another year of strong sales growth with improving segment operating income margins. We expect that full year 2007 sales will be in the range of $6.2 to $6.4 billion and 2007 net income per diluted share to be $2.95 to $3.15.
 
The 2007 outlook assumes, among other factors, an effective tax rate of 32% to 33% and successful completion of negotiations of a new long-term agreement to supply landing gear to Boeing. The benefit of the slightly lower tax rate for 2007 is likely to be offset by higher costs associated with pension expense and foreign exchange translation.
 
To provide the most meaningful comparison between net income per diluted share for 2006 and 2007 expected net income per diluted share, we believe that the net income per diluted share of $3.81 for 2006 should be adjusted to remove the $1.15 per diluted share related primarily to the Rohr and Coltec tax settlements since tax benefits of this magnitude are not expected to recur in 2007. Excluding these tax settlements, net income per diluted share for 2006 was $2.66, compared to expected results of $2.95 to $3.15 for 2007.
 
We expect net cash provided by operating activities, minus capital expenditures, to be in the range of 60% to 75% of net income in 2007. This outlook reflects a continuation of cash expenditures for investments in the Boeing 787 and the Airbus A350 XWB and capital expenditures for facility expansions to support increased aftermarket demand, low cost country manufacturing and productivity initiatives designed to enhance margins over the near and long-term. We expect capital expenditures for 2007 to be in a range of $270 to $290 million. Of these capital expenditures, approximately 40% are expected to be associated with investments in low cost country manufacturing, previously announced maintenance, repair and overhaul (MRO) facility expansions and new facilities to support aftermarket sales growth, and expenditures related to the company-wide implementation of an Enterprise Resource Planning (ERP) system. Also included are worldwide pension contributions of $100 million to $125 million, most of which are voluntary contributions.
 
The sales, net income and net cash provided by operating activities outlook for 2007 do not include the impact of acquisitions or divestitures or resolution of an A380 claim against Northrop.
 
Our 2007 outlook is based on certain market assumptions, including the following:
 
  •  We expect deliveries of Airbus and Boeing large commercial aircraft to increase by about 8% to 10% in 2007 compared to 2006. Our sales of large commercial aircraft OE products are projected to increase by about the same rate as the increase in deliveries in 2007.
 
  •  Capacity in the global airline system, as measured by ASMs, is expected to grow at about 4% to 5% in 2007. Our sales to airlines and package carriers for large commercial and regional aircraft aftermarket parts and services are expected to grow at a higher rate than the overall market growth in 2007 compared to 2006.


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  •  Total regional and business aircraft production is expected to increase slightly in 2007 compared to 2006. Deliveries to Embraer in support of its Embraer 190 aircraft, which includes a significant amount of our content, are expected to enable us to increase sales in this market channel by approximately 10% in 2007 compared to 2006.
 
  •  Defense and space sales (OE and aftermarket) are expected to grow by approximately 3% to 5% in 2007 compared to 2006, reflecting continued strong growth for defense and space products in our Electronic Systems segment, and a resumption of growth in the Engine Systems segment.
 
This excerpt taken from the GR 10-K filed Feb 22, 2006.
2006 Outlook
 
We expect the following results for the year ending December 31, 2006:
 
         
   
2006 Outlook
 
2005 Actual
 
Sales
  $5.6-5.7 billion   $5.4 billion
Diluted EPS — Continuing Operations
  $2.20-2.40 per share   $1.97 per share
Diluted EPS — Net Income
  $2.20-2.40 per share   $2.13 per share
Capital Expenditures
  $240-260 million   $215.5 million
Operating Cash Flow net of Capital Expenditures
  50-75% of income from
continuing operations
  53% of income from
continuing operations
 
Our 2006 outlook is based on the following market assumptions:
 
  •  We expect deliveries of Airbus and Boeing large commercial airplane to increase by more than 20 percent in 2006, and by a somewhat lesser amount in 2007. Our sales of large commercial airplane OE products are projected to increase by 10 to 15 percent in 2006. This expected growth rate is lower than the growth rate in aircraft deliveries because many of our products are delivered well in advance of manufacturers’ deliveries to their customers, which caused sales to occur in 2005 for planes to be delivered well into 2006.
 
  •  Capacity in the global airline system, as measured by ASMs, is expected to continue to grow at about 5 percent in 2006, compared to 2005. Our sales to airlines and package carriers for commercial airplane aftermarket parts and services are expected to grow at a slightly faster rate of approximately 6 to 7 percent in 2006 as compared to 2005.
 
  •  Total regional and business airplane production is expected to be flat or slightly down in 2006, compared to 2005, as deliveries of business jets are expected to increase, partially offsetting the expected decrease in regional airplane deliveries. Deliveries to Embraer in support of its Embraer 190 airplane, which includes a significant amount of our content, are expected to enable us to increase our OE sales in this market channel for the year 2006 by approximately 5 percent, compared to 2005.


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  •  Defense sales (OE and aftermarket) are expected to be relatively flat to slightly down in 2006, compared to 2005. Sales for the C-5 Reliability Enhancement and Re-engining Program are expected to temporarily decrease in 2006 and sales of military aftermarket products are also expected to decline in the customer services business. These decreases are expected to be largely offset by strong growth in the sales of military and space products in our Electronic Systems segment.
 
The 2006 outlook includes significant increases in costs associated with pension expense, foreign exchange and stock-based compensation. The pension expense assumptions reflect the January 1, 2006 discount rates, actuarial assumptions and asset values. These items are more fully discussed below:
 
  •  Pension expense — Based on pension assumptions as of January 1, 2006, we expect to incur additional pension expense of approximately $19 million before tax ($12 million after tax, or $0.10 per diluted share) during 2006, compared to 2005. This expectation is based on a discount rate assumption of 5.64 percent for the U.S. plans and includes the benefit of voluntary contributions to our U.S. plans during 2005.
 
  •  Foreign exchange — We are currently about 90 percent hedged for our expected 2006 foreign exchange exposure. Based on these hedges and current market conditions, we expect that foreign currency translation related to sales and expenses denominated in currencies other than the U.S. Dollar will have an unfavorable impact of approximately $27 million before tax ($18 million after tax, or $0.14 per diluted share) during 2006 as gains from hedges maturing in 2006 will be less than gains realized in 2005.
 
  •  Stock-based compensation — On January 1, 2004, we implemented FAS 123, prospectively, and a new stock option and restricted stock unit program. The cost of each annual restricted stock unit grant is amortized over a five-year vesting period. Consequently, expense increases year-over-year as each new restricted stock unit grant is added. Also, under the provisions of FAS 123(R), beginning in 2006 we will recognize the value of stock options and restricted stock units granted to all employees who are, or who become, eligible for retirement on an accelerated basis. In total, these items are expected to result in an increase in stock-based compensation expense of approximately $14 million before tax ($9 million after tax, or $0.07 per diluted share) during 2006.
 
The current sales, net income and cash flow from operations outlook for 2006 does not include an estimate for the impact of resolution of the Rohr and Coltec tax litigation, additional acquisitions or divestitures, an estimate for the impact of resolution of potential remaining A380 contractual disputes with Northrop Grumman relating to the Airbus A380 program, or planned changes to our U.S. defined benefit and defined contribution pension plans.
 
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