Annual Meeting Remarks by Robert T. Brady, Chairman and CEO, 1/9/2008

01 / 09 / 2008

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In our presentation, this morning, I'm going to do a very brief review of fiscal '07, another great year. I'll review the results in each of the segments and representatives of each of the segments will make a presentation. They are by no means going to describe everything that's going on in that segment. Instead, they've selected one product line that they'll describe. We're hoping that this approach will at least give you a flavor for what's going on in our business. I'll then come back and review the guidance that we've provided for fiscal '08. We'll have the election of directors, the vote on the Stock Appreciation Rights plan, the selection of auditors, and finally we'll have some closing remarks by Bob Banta, the man, who as you know, is closing his career as the CFO of our Company.

Fiscal '07 was another in a series of terrific years for our Company. During '07, we made a lot of progress on many fronts and we also generated some really good numbers. Sales were up 19%. Net earnings of $101 million were up 24%. Earnings per share at $2.34 were up 19%, exceeding our average growth rate over the last ten years of 15%. It's remarkable that we were able to achieve this earnings increase in '07, a year in which we invested so heavily in R&D. R&D for the year was $103 million, up almost 50% from the year previous. During '07, we spent $46 million on the 787 alone. We believe that this outlay will pay off handsomely in years to come and it's a level of expenditure that would have been beyond our capabilities just a few years ago. Because sales are growing and margins are improving in all our other segments, we're able to make this kind of investment in the future of our airplane business and at the same time maintain our consistent pattern of earnings growth.

There have been times in our history when the Company was doing well, but our market capitalization was not responding. This hasn't been the case in the last couple of years. Last year, our market cap. increased by about $470 million and our total firm value ended the year at $2.5 billion. At the annual meeting two years ago, I was musing that our stock price seemed to be stuck in the range of $28 to $30 a share. It has moved nicely since then and last Friday, it closed at over $44.

Now, let me turn to some of the segment highlights.

During fiscal '07, Aircraft Group sales were up $60 million to a total of $587 million. The sales growth was all in the commercial side. Business jet sales were up $13 million. The commercial airplane aftermarket was up $11 million. But the big growth in '07 was at Boeing. Our OEM sales to Boeing Commercial were up 80% or $37 million to a new total of $83 million and of that increase $20 million came in revenue on the 787. To tell you more about the development of our commercial aircraft product line at Boeing and at Airbus, let me introduce Gary Klas.

Gary is the Group Vice President for the Commercial Aircraft Sector in our Aircraft Group. Gary is a Buffalo boy. He received a B.S. in Industrial Engineering from the State University College at Buffalo and went to work for Buffalo Forge. He started his career with Moog in 1982 in Quality Engineering. In '85, he became a program manager and in '94 he was promoted to Product Line Manager for Moog's Commercial Aircraft business.

Here's Gary.

Thanks Gary.

Our Space and Defense segment had a great year in fiscal '07. Sales were up 25% to $185 million. A big part of the sales growth was in Defense Controls, a product line that we discussed at last year's annual meeting. Fiscal '07 was also strengthened by a resurgence of demand for commercial satellites, but the big news of the year was the very strong position we established on the Constellation program. Constellation will be the replacement for the Space Shuttle. It's a program that includes the Ares I Crew Launch Vehicle and the Orion Crew Exploration Vehicle. In 2015 this system will carry astronauts and cargo to the Space Station and then to the moon and Mars. We've won a number of very important positions on the various elements of the Constellation system. We'll likely be describing this program in more detail in years to come. This year, however, we want to describe an acquisition that came as a result of our strategic interest in the Homeland Defense market. The acquisition is a Chicago company, QuickSet International, and it'll be described by Bill Egger.

Bill is currently Product Line Director, Homeland Defense for Moog's Space and Defense Group.

Bill is also a Western New Yorker, born in North Tonawanda, raised in Clarence. Bill has an MBA and both a Bachelor's and a Master's degree in Electrical Engineering all from the State University of New York at Buffalo. Bill has been with Moog since 1991. Prior to Moog, Bill held various engineering and management positions at General Electric in Syracuse and in the Electronetics Corporation. During his career at Moog, Bill has held a variety of positions in sales, marketing and business development. At one time, he was the Manager of a Commercial Systems product line, which included Moog's electric motion simulators, which you'll hear more about later in this meeting. More recently, he was Director of Business Development for the Space and Defense Group and, in that position, Bill led our initial Homeland Defense efforts. He was a member the team responsible for the QuickSet acquisition.

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