Annual Meeting Remarks, 1/12/05

01 / 12 / 2005

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Moog Is Sole Source Supplier for Respironics’ Sleep Apnea Products

I am proud to say that we are a Preferred Supplier and the only Respironics’ supplier to achieve that status in 2004. To obtain that status, Moog shipped over 700,000 motors in 2004, that’s over 3,000 per day, with 100% on-time-delivery and less than 500 parts per million defects. That’s a quality rating of 99.9%. As a result, we have in place a three-year exclusive supply agreement with Respironics which includes co-development of future sleep apnea products. This all translates into other opportunities with Respironics, and we are now beginning to supply motors into their other businesses such as their Hospital Products division.

How can I sum up the importance of our partnership with Respironics? Just look at the revenue generated over the past five years. Shipments of our motors to Respironics have grown from nearly $11 million in 2001 to 18 million in 2004 to over $20 million estimated for 2005. That represents solid, 17% compounded annual growth for Moog.

Bob Brady, Chairman and CEO resumes:
Thanks, Larry.
Today, we're a company of almost 6,000 people. We have seven locations in the U. S. and we operate in 24 countries. The highlights we've described in the last few minutes are by no means a summary of all the important things that happened in fiscal '04. They are simply a sample of some of the more notable of the many things that we're accomplished in this terrific year.

As you can tell, I really enjoyed fiscal '04. It was a great year and I hate to say goodbye. But it's time to move on. So, let's talk a little bit about what's going to happen in fiscal '05.

FY05 Forecast

Sales in the Aircraft Group in ’05 will be only slightly larger than '04. We'll see a nice increase, about $17 million, in our commercial businesses, a little bit of a pickup at Boeing, some additional revenue in business jets, and the aftermarket. However, in the military business, as we move into integration testing, we'll generate less revenue on the Joint Strike Fighter than in '04, and our revenues on the V-22 will be lower since we're no longer retrofitting actuators on the first 25 aircraft. So, in '05, we're looking for an increase in the Aircraft segment from $412 million to $417 million.

In Space and Defense, we're seeing some increased activity in military satellites and in defense controls. The effect will be sales growth from $116 million to $124 million.

In our Industrial segment, the increased simulator business that we've discussed will drive a major step forward and we're seeing continuing increases in our other major product lines. Controls for plastics machines and metal forming equipment, turbines, steel mill gauge controls, material test, all will see some growth in '05. So, we're looking for about a 9% increase to $306 million.

Our Components Group should move from $130 million to $136 million, in large part based on increased deliveries to Respironics and to Philips and Hitachi for slip rings used on CAT scan equipment.

All in all, we're anticipating sales in '05 of $984 million, plus or minus $10 million, and net earnings in the range of $62.6 million to $65 million. The mid point of the range would be $63.7 million, or $2.43 a share. If we achieve that projection, and I expect that we will, it will be our eleventh consecutive year of growth in earnings per share. In ten of those years, our EPS growth was 10% or more. Also, over those years, we've made great strides in improving our balance sheet. Last week, we took another step in strengthening our financial structure. Bob Banta will describe that.

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