UPDATE 1-Goodrich earnings off, warns on future profit

(Adds details throughout, CEO quote)

CHARLOTTE, N.C., Oct 28 (Reuters) - Aerospace and industrial products maker Goodrich Corp. said on Monday that quarterly earnings fell as its commercial aircraft business slumped in the weak economy and warned that the softness in the travel industry would cut into future profits.

The company also said it expected to take a non-cash charge to equity because the lagging stock market will likely cause its pension plan to be underfunded. Based on the plan's value in mid-October, the charge would be $285 million.

Pension funds, which were a source of strength in the bull market of the late 1990s, have darkened the forecast for many U.S. aerospace companies but Goodrich is particularly vulnerable because of its commercial exposure. Defense contractors are able to pass along some of their pension expense to the government.

"Goodrich, as well as the entire industry, continues to experience weak market conditions in commercial aerospace that have negatively impacted our customers and demand for our products," Chairman and Chief Executive David Burner said in a statement.

The company, which makes landing gear and de-icing systems for airplanes, said third-quarter net profit fell to $46.0 million, or 45 cents per share, from $88.0 million, or 83 cents a share last year. Sales fell to $882.1 million from $1.05 billion, Goodrich said.

Excluding items such as a loss provisions for some Boeing Co. contracts and a gain from reserve adjustments, the company said it earned $51 million, or 50 cents per share in the third quarter. A year ago, the company's earnings excluding items were $83 million, or 77 cents a share.

Analysts were expecting the company to earn between 58 cents per share and 67 cents per share, with a mean estimate of 64 cents per share, according to research firm Thomson First Call.

Sales in all the company's segments dropped. The firm's aerostructures and aviation technical services unit, its largest business, saw revenue fall 27 percent to $269 million on the building slowdown in the commercial aircraft sector.

Goodrich forecast 2002 earnings per share excluding items of $2.30 on sales between $3.90 billion and $3.95 billion. The company said 2003 sales were expected to grow to $4.3 billion to $4.4 billion on the acquisition of TRW Inc.'s aeronautical systems unit but earnings per share should fall another 5 percent to 10 percent.

First Call listed analysts' 2002 earnings per share estimates in a range of $2.36 to $2.54, with a mean of $2.47. It said 2002 estimates were in a range of $2.10 to $2.90, with a mean of $2.50.

The integration of the TRW unit will hurt Goodrich's bottom line in 2003 but is expected to save the company $30 million to $40 million starting in 2005. Goodrich said it will not make any more significant acquisitions until the integration is complete.

The company's ongoing restructuring is expected to slash a total of 3,200 workers from Goodrich's payroll by the end of the year, saving the company more than $170 million before taxes. The company said it would look for more ways to cut costs because of the economic environment.

Shares of Goodrich fell 61 cents, or 3.57 percent, to close at $16.49 on Friday on the New York Stock Exchange. The stock dropped 30.9 percent during the third quarter, underperforming the Standard & Poor's Aerospace and Defense index , which fell 17.6 percent during the same time period.