UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________
Commission File Number: 1-5129
MOOG INC.
(Exact name of registrant as specified in its charter)
New York State 16-0757636
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(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
East Aurora, New York 14052-0018
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(Address of principal executive offices) (Zip code)
Telephone number including area code: (716) 652-2000
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Former name, former address and former fiscal year, if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No __
The number of shares outstanding of each class of common stock as of August 8,
2000 were:
Class A Common Stock, $1.00 par value 7,242,543 shares
Class B Common Stock, $1.00 par value 1,517,079 shares
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<PAGE>
MOOG INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
Page
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Condensed Balance Sheets
June 30, 2000 and September 25, 1999 3
Consolidated Condensed Statements of Earnings
Three and Nine Months Ended June 30, 2000 and 1999 4
Consolidated Condensed Statements of Cash Flows
Nine Months Ended June 30, 2000 and 1999 5
Notes to Consolidated Condensed Financial
Statements 6-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-13
Item 3. Quantitative and Qualitative Disclosures about
Market Risk 13
PART II. OTHER INFORMATION 14
SIGNATURES 15
<PAGE>
MOOG INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(dollars in thousands)
Unaudited Audited
As of As of
June 30, September 25,
2000 1999
-------------------------------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 9,694 $ 9,780
Receivables 214,439 212,279
Inventories (note 2) 152,651 152,246
Other current assets 32,600 32,510
------------ ----------------
TOTAL CURRENT ASSETS 409,384 406,815
PROPERTY, PLANT AND EQUIPMENT, net 186,971 188,918
GOODWILL, net 182,380 184,368
OTHER ASSETS 17,954 18,375
------------ ----------------
TOTAL ASSETS $ 796,689 $ 798,476
============ ================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 2,588 $ 5,831
Current installments of
long-term debt 18,968 20,787
Accounts payable 37,776 36,373
Accrued liabilities 81,387 86,282
Contract loss reserves 21,323 24,741
Customer advances 10,060 7,834
------------ ----------------
TOTAL CURRENT LIABILITIES 172,102 181,848
LONG-TERM DEBT, excluding current installments
Senior debt 229,297 229,492
Senior subordinated notes 120,000 120,000
OTHER LONG-TERM LIABILITIES 54,810 55,366
------------ ----------------
TOTAL LIABILITIES 576,209 586,706
------------ ----------------
SHAREHOLDERS' EQUITY (note 4)
Preferred stock 100 100
Common stock 10,889 10,889
Other shareholders' equity 209,491 200,781
------------ ----------------
TOTAL SHAREHOLDERS' EQUITY 220,480 211,770
------------ ----------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 796,689 $ 798,476
============ ================
See accompanying Notes to Consolidated Condensed Financial Statements.
<PAGE>
MOOG INC.
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Unaudited)
(dollars in thousands except per share data)
<TABLE>
<S> <C> <C>
Three Months Ended Nine Months Ended
June 30, June 30,
2000 1999 2000 1999
------------------------------ ------------------------------
Net sales $ 159,769 $ 160,528 $ 478,114 $ 470,881
Cost of sales 111,783 109,633 332,585 322,937
------------- ------------ ------------- -------------
Gross profit 47,986 50,895 145,529 147,944
Research and development 4,592 7,722 16,818 25,948
Selling, general and administrative 25,538 26,306 75,335 74,762
Interest 8,327 7,584 24,583 20,349
Other expense, net (56) (219) 19 (87)
-------------- ------------- ------------- --------------
Earnings before income taxes 9,585 9,502 28,774 26,972
Income taxes 3,259 3,180 9,874 9,029
-------------- ------------- ------------- -------------
Net earnings $ 6,326 $ 6,322 $ 18,900 $ 17,943
================ ============= ============= =============
Net earnings per share (note 3)
Basic $ 0.72 $ 0.71 $ 2.14 $ 2.01
================ ============= ============= =============
Diluted $ 0.71 $ 0.70 $ 2.12 $ 1.98
================ ============= ============ =============
Average common shares outstanding (note 3)
Basic 8,784,583 8,933,995 8,854,050 8,931,184
================ ============= ============= =============
Diluted 8,855,367 9,046,109 8,930,824 9,057,196
================ ============= ============= =============
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
<PAGE>
MOOG INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(dollars in thousands)
<TABLE>
<S> <C> <C>
Nine Months Ended
June 30,
2000 1999
------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 18,900 $ 17,943
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Depreciation and amortization 22,720 22,984
Other (15,214) (16,276)
---------------- ----------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 26,406 24,651
---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of businesses, net of cash acquired - (171,710)
Acquisition of minority interest (note 7) (1,051) (2,133)
Purchase of property, plant and equipment (16,854) (19,349)
Proceeds from sale of assets 554 3,015
Other - 71
---------------- ----------------
NET CASH USED BY INVESTING ACTIVITIES (17,351) (190,106)
---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from (repayments of) notes payable (4,605) 1,549
Net proceeds from revolving lines of credit 12,000 96,700
Proceeds from long-term debt 39 76,198
Payments on long-term debt (12,051) (9,249)
Purchase of outstanding shares for treasury (4,377) (2,262)
Other 349 370
---------------- ----------------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (8,645) 163,306
---------------- ----------------
Effect of exchange rate changes on cash (496) (554)
---------------- ----------------
DECREASE IN CASH AND CASH EQUIVALENTS (86) (2,703)
Cash and cash equivalents at beginning of period 9,780 11,625
---------------- ----------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 9,694 $ 8,922
================ ================
CASH PAID FOR:
Interest $ 28,138 $ 19,485
Income taxes 8,136 7,934
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Leases capitalized, net of leases terminated $ - $ 50
Acquisitions of businesses:
Fair value of assets acquired $ 222,976
Cash paid 171,710
----------------
Liabilities assumed $ 51,266
================
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
<PAGE>
MOOG INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NINE MONTHS ENDED JUNE 30, 2000
(Unaudited)
(dollars in thousands)
1. Basis of Presentation
The accompanying unaudited consolidated condensed financial statements have been
prepared by management in accordance with generally accepted accounting
principles and in the opinion of management contain all adjustments, consisting
of normal recurring adjustments, necessary to present fairly the financial
position of Moog Inc. as of June 30, 2000 and the results of its operations for
the three and nine months ended June 30, 2000 and 1999 and its cash flows for
each of the nine months ended June 30, 2000 and 1999. The results of operations
for the three and nine months ended June 30, 2000 are not necessarily indicative
of the results expected for the full year. The accompanying unaudited
consolidated condensed financial statements should be read in conjunction with
the financial statements and notes thereto included in the Company's Form 10-K
for the fiscal year ended September 25, 1999.
2. Inventories
Inventories are comprised of the following:
June 30, September 25,
2000 1999
---- ----
Raw materials and purchased parts $ 51,369 $ 40,684
Work in process 80,026 87,925
Finished goods 21,256 23,637
--------- ---------
$ 152,651 $ 152,246
======= =======
<PAGE>
3. Earnings per Share
Basic and diluted weighted-average shares outstanding are as follows:
<TABLE>
<S> <C> <C> <C> <C>
Three Months Ended Nine Months Ended
June 30, June 30,
2000 1999 2000 1999
------------ ------------ ------------ ------------
Weighted-average shares
outstanding - Basic 8,784,583 8,933,995 8,854,050 8,931,184
Stock options 63,592 104,636 69,582 118,200
Convertible preferred stock 7,192 7,478 7,192 7,812
--------- --------- --------- ---------
Shares outstanding - Diluted 8,855,367 9,046,109 8,930,824 9,057,196
========= ========= ========= =========
</TABLE>
Preferred stock dividends are deducted from net earnings to calculate income
available to common stockholders for basic earnings per share.
<PAGE>
4. Shareholders' Equity
The changes in shareholders' equity for the nine months ended June 30, 2000 are
summarized as follows:
<TABLE>
<S> <C> <C> <C> <C>
Number of Shares
------------------
Class A Class B
Preferred Common Common
Amount Shares Stock Stock
PREFERRED STOCK
Beginning and end of period $ 100 100,000
------- ---------
COMMON STOCK
Beginning of period 10,889 8,427,311 2,461,812
Conversion of Class B to Class A - 151 (151)
------- --------- ----------
End of period 10,889 8,427,462 2,461,661
------- --------- ----------
ADDITIONAL PAID-IN CAPITAL
Beginning of period 102,778
Issuance of Treasury shares at
Less than cost (109)
--------
End of period 102,669
--------
RETAINED EARNINGS
Beginning of period 132,104
Net earnings 18,900
Preferred stock dividends (6)
--------
End of period 150,998
--------
TREASURY STOCK
Beginning of period (32,589) (16,229) (1,101,418) (878,176)
Treasury stock issued 457 - 31,780 2,469
Treasury stock purchased (4,377) - (115,281) (57,929)
-------- ---------- ----------- ----------
End of period (36,509) (16,229) (1,184,919) (933,636)
-------- ---------- ----------- ----------
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Beginning of period (1,512)
Foreign currency translation (6,155)
-------
End of period (7,667)
-------
---------- ---------- ----------- ----------
TOTAL SHAREHOLDERS' EQUITY $ 220,480 83,771 7,242,543 1,528,025
========== ========== =========== ==========
</TABLE>
5. Comprehensive Income
For the three months ended June 30, 2000 and 1999, comprehensive income was
$3,652 and $5,012, respectively. For the nine months ended June 30, 2000 and
1999, comprehensive income was $12,745 and $13,472, respectively. The only item
of comprehensive income that is not included in net earnings is foreign currency
translation.
<PAGE>
6. Severance Liability
In connection with the November 1998 acquisition of Raytheon Aircraft Montek
Company (Montek), the Company finalized a formal plan for integrating the
operations of Montek and informed the affected employees. The Company
established a $3,800 liability for severance and other related costs associated
with involuntary termination of employees. The balance of the liability at June
30, 2000 was $892. Activity during the first nine months of 2000 included $709
of payments and a $1,260 reduction to the liability with a corresponding
adjustment to goodwill. The plan is expected to be completed by May 2001.
7. Acquisition of Minority Interest
On June 15, 2000, the Company purchased the remaining 33-1/3% minority interest
of Microset Srl for $1 million. The impact of this acquisition on the Company's
results of operations and financial condition is not significant.
8. Segment Information
Below are the sales and operating profit by segment for the three and nine
months ended June 30, 2000 and 1999 and a reconciliation of segment operating
profit to earnings before income taxes.
<TABLE>
<S> <C> <C> <C> <C>
Three Months Ended Nine Months Ended
-------------------------- --------------------------
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
-------------------------- --------------------------
Sales
Aircraft Controls $ 74,482 $ 75,772 $ 227,295 $ 226,498
Satellite and Launch Vehicle Controls 30,204 28,837 87,374 81,686
Industrial Controls 55,083 55,919 163,445 162,697
----------- ---------- ----------- -----------
Total sales $ 159,769 $ 160,528 $ 478,114 $ 470,881
=========== ========== =========== ===========
Operating Profit and Margins
Aircraft Controls $ 10,707 $ 9,597 $ 31,440 $ 27,516
14.4% 12.7% 13.8% 12.1%
Satellite and Launch Vehicle Controls 3,100 3,481 10,311 9,149
10.3% 12.1% 11.8% 11.2%
Industrial Controls 6,183 5,972 17,991 17,399
11.2% 10.7% 11.0% 10.7%
----------- ---------- ----------- -----------
Total operating profit 19,990 19,050 59,742 54,064
12.5% 11.9% 12.5% 11.5%
Deductions from Operating Profit
Interest expense 8,327 7,584 24,583 20,349
Corporate expenses 2,196 2,089 6,323 6,643
Currency (income) loss (118) (125) 62 100
------------ ----------- ----------- -----------
Earnings before Income Taxes $ 9,585 $ 9,502 $ 28,774 $ 26,972
============ =========== =========== ===========
</TABLE>
Total segment assets at June 30, 2000 were $764,331 compared to $769,643 at
September 25, 1999.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations [The following should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations
contained in the Company's Form 10-K for the fiscal year ended September 25,
1999 and its Quarterly Reports on Form 10-Q for the quarters ended December 31,
1999 and March 31, 2000.]
Results of Operations
Consolidated
Sales for the third quarter of 2000 were $160 million compared to $161 million
in the third quarter of 1999. Increased sales in Satellite and Launch Vehicle
Controls of $1 million was more than offset by decreases of $1 million each in
both Aircraft Controls and Industrial Controls. For the first nine months of
2000, sales were $478 million compared to $471 million for the same period of
1999. Sales increased by $6 million in Satellite and Launch Vehicle Controls and
$1 million in Aircraft Controls.
Cost of sales as a percentage of sales for the third quarter and the first nine
months of 2000 was 70.0% and 69.6%, respectively, compared to 68.3% and 68.6%,
respectively, for the comparable periods in 1999. The increases in the current
year are due primarily to the redeployment of resources in Aircraft Controls
from research and development (R&D) activities to production.
R&D decreased to $5 million in the third quarter of 2000 compared to $8 million
in the same quarter a year ago. Year-to-date, R&D decreased to $17 million in
2000 compared to $26 million in 1999. The decreases were primarily due to
reduced efforts for the development of next generation aircraft flight controls.
A portion of the costs associated with those efforts has been redirected to
either production or sales-support.
Interest expense increased $1 million in the third quarter to $8 million from a
year ago. The increase is due primarily to higher interest rates associated with
the Company's variable-rate indebtedness. On a year-to-date basis, interest
expense increased $4 million compared to the first three quarters of 1999 to $25
million in 2000. Approximately half of the increase is attributable to
indebtedness incurred to finance the 1999 first quarter acquisitions. The
remainder is due primarily to the current year increase in interest rates.
Backlog at June 30, 2000 was $335 million compared to $347 million at June 30,
1999. The decrease primarily relates to controls for the Titan IV launch vehicle
program nearing completion.
Segment Operating Review
(dollars in millions)
Three Months Ended Nine Months Ended
June 30, June 30,
2000 1999 2000 1999
------------------ -----------------
Sales
Aircraft Controls $ 75 $ 76 $227 $226
Satellite and Launch Vehicle Controls 30 29 88 82
Industrial Controls 55 56 163 163
------------------ -----------------
Total sales $160 $161 $478 $471
================== =================
<PAGE>
Three Months Ended Nine Months Ended
June 30, June 30,
2000 1999 2000 1999
------------------ -----------------
Operating Profit
Aircraft Controls $ 11 $ 10 $ 32 $ 28
14.4% 12.7% 13.8% 12.1%
Satellite and Launch Vehicle Controls 3 3 10 9
10.3% 12.1% 11.8% 11.2%
Industrial Controls 6 6 18 17
11.2% 10.7% 11.0% 10.7%
------ ------ ------ ------
Total operating profit $ 20 $ 19 $ 60 $ 54
====== ====== ====== ======
12.5% 11.9% 12.5% 11.5%
Aircraft Controls
Sales in Aircraft Controls in the third quarter of 2000 were $75 million
compared to $76 million in the same quarter a year ago. A $3 million increase in
aftermarket sales, primarily associated with the F-15 and C5B military aircraft,
and a $1 million increase in sales on regional and business aircraft, due
primarily to development work on the Bombardier BD-100, were more than offset by
a decline of $5 million in OEM sales to Boeing related to lower production
levels. Sales in Aircraft Controls for the first three quarters of 2000 were
$227 million compared to $226 million in the same period of 1999. A $14 million
increase in aftermarket sales, primarily associated with military aircraft, and
a $6 million increase in development work on the Bombardier BD-100 were
partially offset by a decrease in OEM sales to Boeing of $8 million, a decline
of $7 million on the F-15 program, and a decrease of $4 million on the B-2
program.
Operating margins for Aircraft Controls were 14.4% in the third quarter of 2000
compared to 12.7% in the same period last year. On a year-to-date basis, margins
were 13.8% in 2000 compared to 12.1% in 1999. The improvements in margins are
attributable to reductions in R&D related to the development of next generation
flight controls and increased military aircraft aftermarket sales that typically
carry strong margins.
Satellite and Launch Vehicle Controls
Sales in Satellite and Launch Vehicle Controls were $30 million in the third
quarter of 2000 compared to $29 million in the same period a year ago as a
result of tactical missile sales. Sales in Satellite and Launch Vehicles
Controls increased from $82 million in the first three quarters of 1999 to $88
million in the first nine months of 2000, primarily due to the Titan IV launch
vehicle program, which is now beginning to wind down towards its completion in
early 2001.
Operating margins for Satellite and Launch Vehicle Controls were 10.3% in the
third quarter of 2000 compared to 12.1% in the same period a year ago. The
decrease is due to a less favorable mix of tactical missile sales. Year-to-date,
operating margins were 11.8% in 2000 compared to 11.2% in 1999. The margin
improvement is due to the mix of sales favoring higher margin launch vehicle
programs offset by a less favorable mix of tactical missile programs.
<PAGE>
Industrial Controls
Sales in Industrial Controls in the third quarter of 2000 were $55 million
compared to $56 million in the same period in 1999. Sales would have increased
$1 million had certain foreign currencies not weakened against the dollar.
Year-to-date, sales in Industrial Controls were $163 million in both 2000 and
1999. Sales would have increased $7 million had certain foreign currencies not
weakened against the dollar. Sales of hydraulic controls increased $3 million
and $10 million in the third quarter and year-to-date, respectively, compared to
the same periods in 1999 related to controls for plastics-making machinery,
primarily injection molding machines, and controls for industrial
power-generating gas turbines. Sales of controls for electric applications
decreased by $4 million and $10 million in the third quarter and year-to-date,
respectively, compared to the same periods in 1999 due to lower production
levels of controls for military ground vehicles and the completion of the
Universal Spiderman entertainment simulator program.
Operating margins for Industrial Controls were 11.2% in the third quarter of
2000 compared to 10.7% in the same period of 1999. Year-to-date, operating
margins were 11.0% in 2000 compared to 10.7% in 1999. The improved margins are
due to a favorable mix towards hydraulic controls partially offset by lower
margins on certain entertainment platform programs and military ground vehicles.
Financial Condition and Liquidity
Cash on hand was $10 million at June 30, 2000 and September 25, 1999. Cash from
operations was $26 million in the first three quarters of 2000 compared to $25
million in the same period of 1999. Long-term debt remained level at $349
million after the first nine months of 2000 while the percentage of long-term
debt to capitalization decreased from 62% to 61%. At June 30, 2000, the Company
had interest rate swap agreements of $100 million outstanding, effectively
converting this amount into fixed rate debt at 7.27% for the balance of the
year. At various times in 2001, $80 million of these interest rate swap
agreements will expire. For the nine months ended June 30, 2000, the Company
purchased 173,210 shares into treasury at a cost of $4 million.
At June 30, 2000, the Company had $92 million of unused borrowing capacity under
short and long-term lines of credit, including $80 million from the Company's
U.S. revolving credit facility.
Capital expenditures for the first nine months of 2000 were $17 million compared
with depreciation and amortization of $23 million. Capital expenditures for the
first nine months of 1999 were $19 million compared to depreciation and
amortization of $23 million. Capital expenditures in 2000 are expected to
approximate $23 million.
The Company believes its cash on hand, cash flows from operations and available
borrowings under short and long-term lines of credit will continue to be
sufficient to meet its operating needs.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which must be
adopted by fiscal 2001. Under this standard, companies are required to carry all
derivatives in the balance sheet at fair value. The accounting for changes in
the fair value (i.e., gains or losses) of a derivative instrument depends on
whether it has been designated and qualifies as part of a hedging relationship
and, if so, on the reason for holding it. The Company is in the process of
evaluating the impact this standard will have on its financial statements.
The Company has reviewed Securities and Exchange Commission Staff Accounting
Bulletin (SAB) No. 101, "Revenue Recognition in Financial Statements," and is in
the process of evaluating the impact this SAB will have on its financial
statements.
<PAGE>
In March 2000, the Financial Accounting Standards Board issued FASB
Interpretation No. 44, Accounting for Certain Transactions involving Stock
Compensation, an interpretation of APB Opinion No. 25 (FIN No. 44). This
interpretation, which is effective July 1, 2000, clarifies, among other issues,
the definition of employee for the purposes of applying the provisions of APB
Opinion No. 25, the criteria for determining whether a plan qualifies as a
noncompensatory plan, and the accounting consequence of various modifications to
the terms of a previously fixed stock option or award. The adoption of FIN No.
44 does not have an effect on the Company's historical financial position or
results of operations.
Outlook
The Company is expecting sales in 2000 to approximate $643 million, a 2%
increase over 1999. Increases are expected in each of the Company's segments.
Aircraft Controls' sales are expected to increase by 1% as increased production
rates on the F/A-18E/F and strong aftermarket sales continue to offset declines
in production rates at Boeing. Sales in Satellites and Launch Vehicles Controls
are expected to increase 5% due to higher sales of controls for launch vehicles
as well as sales increases on tactical missile programs. Notwithstanding further
currency fluctuations, 2000 sales for Industrial Controls are expected to
increase by 2% on the continuing strength of turbine controls and the plastics
industry, partially offset by a decline in the sales of electric motion
simulators as major programs have reached completion. Sales in 2001 are forecast
to grow to $660 million, or a 3% increase compared to 2000. Aircraft Controls'
sales are expected to grow by 5% primarily due to increased production rates of
the F/A-18E/F, V-22 and Boeing 7-series commercial airplanes. Sales in
Satellites and Launch Vehicles Controls are expected to decrease 13% due to the
winding down of the Titan IV launch vehicle program. The decline in sales for
launch vehicle controls is expected to be partially offset by increases in sales
of controls for satellites, Space Station, and tactical missiles. Industrial
Controls' sales are expected to increase 8% based on growth in sales, primarily
turbine controls, controls for plastics machinery and electric drives.
Operating margin for fiscal 2000 is expected to be approximately 12.4% compared
to 11.6% in 1999. The improvement is due to increased higher-margin aftermarket
sales in Aircraft Controls and a favorable product mix in Industrial Controls.
Operating margin for 2001 is expected to be approximately 12.8% due to higher
sales in Aircraft Controls and Industrial Controls. Net earnings for 2000 are
expected to increase by approximately 3% and by approximately 9% in 2001.
Cautionary Statement
The discussion in the "Outlook" paragraph of the Management's Discussion and
Analysis of Financial Condition and Results of Operation section of this Report
consists of "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. There are several important factors,
risks and uncertainties the impact or occurrence of which could cause actual
results to differ materially from the expected results described in the
forward-looking statements. Among these important factors, risks and
uncertainties are (i) that the Company's customers are in industries which are
sensitive to fluctuations in general business cycles and demand for capital
goods and, with respect to the Company's Aircraft Controls and Satellite and
Launch Vehicles Controls segments, to government funding of procurement programs
in which the Company participates, (ii) that the Company is dependent on certain
major customers, such as Boeing and certain U.S. government contractors, for a
significant percentage of its sales, (iii) that competition in the Company's
business is intense and, depending on product line, may require the Company to
compete by lowering prices or by advancing its technologies; several of the
Company's competitors are substantially larger than the Company and have greater
financial resources with which to compete, (iv) the risks associated with
government contracting, including the potential for substantial fines and
penalties or debarment from future contracts in the event the government's
procurement rules are not followed, (v) the potential for cost overruns on
development jobs and actual results differing from estimates inherent in
contract accounting, (vi) the risk that the Company incurs a catastrophic loss
of one or more of its manufacturing facilities, (vii) the impact of product
liability claims given that the Company's products are used in applications
where failure can result in significant property damage, injury and death, and
(viii) foreign currency fluctuations in those countries in which the Company
does business which can adversely affect the Company's results of operations and
financial condition. The factors identified above are not exhaustive. Other
factors are identified in the Company's most recent Annual Report on Form 10-K
for the fiscal year ended September 25, 1999 and its Quarterly Reports on Form
10-Q for the quarters ended December 31, 1999 and March 31, 2000. Moreover, the
Company operates in highly competitive and rapidly changing industries. New
factors, risks and uncertainties may emerge from time to time that may affect
the forward-looking statements made in this Report. Given these risks, factors
and uncertainties, investors should not place undue reliance on forward-looking
statements as predictive of future results. The Company disclaims any obligation
to update the forward-looking statements made in this Report.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Refer to the Company's Annual Report on Form 10-K for the year ended September
25, 1999 for a complete discussion of the Company's market risk. There have been
no material changes in the current year regarding this market risk information.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
-----------------
None.
Item 2. Changes in Securities and Use of Proceeds.
-----------------------------------------
None.
Item 3. Defaults Upon Senior Securities.
-------------------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders.
---------------------------------------------------
None.
Item 5. Other Information.
-----------------
None.
Item 6. Exhibits and Reports on Form 8-K.
--------------------------------
a. Exhibits.
---------
Exhibit 27 - Financial data schedule.
b. Reports on Form 8-K.
--------------------
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Moog Inc.
------------------------
(Registrant)
Date: August 14, 2000 By S/Robert R. Banta/S
--------------- ------------------------
Robert R. Banta
Executive Vice President
Chief Financial Officer
(Principal Financial Officer)
Date: August 14, 2000 By S/Donald R. Fishback/S
--------------- ------------------------
Donald R. Fishback
Controller
(Principal Accounting Officer)
