A billion dollars worth of materials

BFGoodrich has signed a definitive agreement to sell its Performance Materials business for approximately $1.4 billion to an investor group.

BFGoodrich has signed a definitive agreement to sell its Performance Materials business for approximately $1.4 billion to an investor group led by AEA Investors, and including an affiliate of DLJ Merchant Banking Partners and DB Capital Partners.

This amount consists of $1.2 billion in cash and $200 million in debt securities issued by the new company, and will net $1.2 billion after anticipated tax payments. The company’s Board of Directors has approved the transaction and closing is expected in the first quarter of 2001. Morgan Stanley Dean Witter assisted BFGoodrich with the sale of the business.

In commenting on today’s announcement, David L. Burner, BFGoodrich’s Chairman and CEO, said, ‘We are pleased to announce the agreement to sell Performance Materials and look forward to completing the transaction. As thisprocess moves forward, we will announce our plans for use of the proceeds. As indicated previously, possibilities include debt repayment, additional share repurchases and acquisitions which increase shareholder value, such as the company’s recently announced purchase of Raytheon’s optical systems unit.’

Burner added, ‘The divestiture of Performance Materials will complete BFGoodrich’s transformation into an aerospace and industrial products company, position the company to continue to create shareholder value, and enable us to leverage competencies and processes across these two complementary businesses.’

BFGoodrich will treat the Performance Materials segment as a discontinued operation when the company reports its fourth quarter and full-year results for 2000. Under this treatment, the company anticipates reporting 2000 revenues of $4.4 billion, and full-year earnings per share from continuing operations of around $2.91, excluding special items.

This EPS estimate reflects a six percent increase over the restated 1999 earnings per share of $2.75, excluding special items. The company’s previous estimate of $5.6 billion in revenues in 2000 and around $3.30 in earnings per share, excluding special items, included Performance Materials. Restated year-to-date and previous year results are included as an attachment to this release.

The $200 million in debt securities issued by the new company will be in the form of unsecured notes with interest payable in cash or payment in kind, at the option of the investor group.The loan period will be 10.5 years. The BFGoodrich Company is on the web at www.bfgoodrich.com