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Annual Meeting Remarks, 1/12/05

01 / 12 / 2005

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Highlights

Robert T. Brady, Chairman and CEO:Record Financial ResultsBoeing Supplier of the YearRespironics Preferred Supplier AwardJoint Common MissileHellfire Will Substitute if JCM DiscontinuedMark Trabert, Deputy General Manager of Aircraft GroupLow Rate Initial Production to Begin 2007$1 million per shipsetJohn Scannell, 7E7 Program DirectorRedefining the Passenger Experience90-100 Planes Per Year During Full ProductionJohn Swiatowy, Product Line Sales Manager, Launch VehiclesDave Fijas, Deputy General Manager of Industrial Controls DivisionFlight School XXI DFTotal Market for Flight Simulation Is $2 Billion, Growing at 6% a YearLarry Ball, Vice President and General Manager of the Components GroupRespironics’ Sleep Apnea$1 Billion Equipment Market, Growing Annually > 20%Moog Is Sole Source Supplier for Respironics’ Sleep Apnea ProductsFY05 ForecastBob Banta, EVP and Chief Financial Officer$150M at 6 ¼%Achieved Tightest Spread in Last Ten YearsOversubscribed$250M in Cash and Unused Facility for Acquisitions Activities

Past

Thanks, John.
Now, I’d like to introduce Dave Fijas, our Deputy General Manager for the Industrial Controls Division. Dave is another Western New Yorker. He has a B.S. in Mechanical Engineering and an M.B.A. from S.U.N.Y. Buffalo. Before Dave joined Moog, he worked as an engineer at HSC Controls, a servovalve company founded by one of our alumni, Harv Kolm. Then, Dave worked at Enidine where he became Chief Engineer. We hired him seven years ago as an Engineering Manager in the Industrial Controls Division, and in '03 Dave was promoted to Deputy General Manager. Here's Dave.

Dave Fijas, Deputy General Manager of Industrial Controls Division

I’m pleased to talk with you today about exciting new business opportunities that we have in full flight simulation utilizing advanced electromechanical actuation technology. The primary purpose of flight simulation is to provide pilot training safely on the ground. It provides the opportunity to experience various weather conditions and emergency situations, in addition to routine flying, such that pilot response becomes nearly automatic. Secondarily, training can occur more frequently and at much lower cost than utilizing training aircraft. In fact, a recent study suggested that a simulator sortie is between five and twenty times cheaper than the real thing.

There are various levels of flight simulation that range from desktop units utilized for classroom instruction to full flight simulation, which is the next best thing to actually flying. Full flight simulation provides for the highest fidelity and most realistic training possible. This is accomplished by wrapping a high fidelity visual graphic system around the cockpit of the airplane. When inside the simulator cabin, the pilot is sitting in the cockpit with real flight controls and gauges. The view out the cockpit windows is nearly identical to what one would see when flying a real aircraft. This system is mounted on a motion base, which provides the motion cueing, timed precisely to match the visual system. Motion cueing is necessary to add the feel associated with flight, including acceleration and deceleration of the aircraft, as well as external effects such as buffeting from air turbulence.

Military and commercial aircraft flight trainers have adopted full flight simulation both domestically and internationally. It is used for both helicopters and fixed wing aircraft. The FAA and other similar international agencies have recognized the importance of full flight simulation. They mandate a certain number of hours of flight training for all commercial pilots each year regardless of the flight time they realize. In fact, the FAA provides performance specifications and certifies a flight simulator for use based upon successful performance testing and pilot concurrence that the simulation is identical to the real aircraft. Moog’s products are designed to be used in trainers certified to meet the most stringent FAA requirements.

For the last 40 years, motion bases have been designed with a hydraulic motion control system. Moog has provided hydraulic servovalves and servoactuators to this market for 20 years. In the past year, Moog has begun offering a motion control electronics cabinet, a hydraulic power unit, and upper and lower joints, which are used to mount the actuators to the frame of the motion base. Historically, hydraulics have been the only way to achieve the combination of 32,000 lb payload capacity, high response of the base, and low noise transmission into the cabin. The natural characteristics of hydraulics provided for extremely smooth and well-behaved motion. In addition, the hydraulic system provided for a failsafe feature where the platform returns to a neutral position without additional costly components.

Approximately 10 years ago, Moog developed smaller all electric motion bases to support ground vehicle training and entertainment applications. These bases were limited to lower payloads. However, this gave us the opportunity to develop experience with complete motion base systems including the control electronics and motion control software. The technology did not exist to extend the designs to carry the full flight simulator payload or provide the performance required for the FAA.

Over the years, we’ve been involved in the migration of several industries from hydraulic control to all electric control including, but not limited to, machine tools, robotics, and packaging. This technology shift was motivated by factors such as higher energy efficiency, lower maintenance costs, and environmental concerns with hydraulic fluid. No company had yet been successful in developing an electromechanical full flight simulator. The first company to develop this solution to replace hydraulics would have a real competitive advantage. Even though this would substitute sales of our hydraulic valves and actuators, our scope of supply, and thus incremental business, would substantially increase. We believed that the combination of Moog’s expertise in motor design, electronics, advanced software control and systems capability, and actuator design capability, would enable us to be that company.

The result of this internal R&D is an all-electric motion base system capable of meeting FAA requirements. This system includes a patent-pending electric actuator and motion control electronics. The product is customized to meet the unique requirements of various full flight simulation customers as well as specific aircraft requirements. The all-electric actuators are advanced technology incorporating Moog's custom motors directly driving a Moog designed precision ballscrew. The electric flight simulator actuator has been designed for ultra smooth motion and audible noise levels below existing hydraulic actuators.

The completely self-contained motion control cabinet includes power electronics, safety circuits, and the motion control computer. Our system offers complete motion base control, system diagnostics, motion cueing algorithms, and a Windows™-based user interface.

A key component in our all-electric motion base has been the development of a high performance motion drive. This drive offers the highest fidelity in this power range on the market today

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