Good morning,

Welcome to our Fiscal ‘97 annual meeting. Once again our sales are up, our earnings are up and our stock price is up. In previous meetings I have suggested that if this trend were to continue, I might someday simply stand up, sing Hallelujah, and then sit down and say no more. Well, this year I’ll say a little more than Hallelujah, but we do have a change of pace for you. The presentation of our business will be made by the folks who provide the leadership for the various segments.

Before we go any further, though, I’d like to introduce our Officers and Directors. I’ll start with the Directors.......

As you can see in our annual report, we describe our business these days in terms of five product and market areas. In Fiscal ‘97, nearly half of our business was airplane business, military and commercial. A little over one third was industrial, including hydraulics and electronics and electric drives, and 14% of our revenues was in a segment we call satellites and launch vehicles. It’s the fastest growing segment and, as of a couple of weeks ago, it became the home of the Schaeffer Magnetics Division. Our organization lines up with this product breakdown to a large degree, but not precisely. Bob Maskrey is responsible for almost all of our airplane business, but there is a portion that’s done in Steve Huckvale’s International operation. Bing Sherrill is responsible for the Systems Group which is home for not only our satellite and launch vehicle business and all our missile business, but also the simulator product line which is included in the electronics and drives segment. Ignoring for the moment those organizational anomalies, let me ask Bob and Bing and Steve to convey, in a very much over-simplified fashion, some of the important aspects of our current business.

Bob Maskrey heads up our Aircraft Controls Group. Bob and I went to the same college at the same time. I was a year ahead of Bob and I’m slightly older, that’s why in the Company I’m "old Bob" and he’s "young Bob". He actually got to Moog before I did. He came directly out of a graduate program at MIT and during my first tour of the Moog facilities, his was the only familiar face.

Bob Maskrey then makes the following points, among others:

The military aircraft business was 27% of our total revenues in Fiscal ‘97.

We make primary and secondary flight control actuators and engine controls.

We’re the technology leader in this area - evidenced by the work we did on the B-2 bomber and our more recent experience on the Joint Strike Fighter

We expect to resume revenue growth in this area in Fiscal ‘98 and that will continue for the foreseeable future.

From a commercial point of view, the most important program in the next couple of years will be the F/A-18E/F and the V-22. On the F/A-18 E/F we have $900,000 worth of hardware per aircraft and we’re delivering 11 shipsets in Fiscal ‘98 and hope to increase to a rate of 33 over the next three years. On the V-22 we have $1 million worth of product content and we’re delivering four shipsets this year which we hope will increase to 24 over the next three years.

The commercial airplane business was 22% of our total revenues in Fiscal ‘97.

Our major customer is Boeing to whom we deliver about 44% of our commercial airplane revenues. The commercial airplane revenues and our revenues with Boeing have been growing consistently since we made the acquisition of the AlliedSignal product line in the third quarter of Fiscal ‘94.

In the period ‘96 to ‘99 our schedule of deliveries to Boeing in number of shipsets will have practically doubled as will our revenue. The Fiscal ‘99 schedule shown is the schedule that Boeing has announced for the period now until 2002 - in spite of all of the industry talk of production problems at Boeing and the worries of cancellation by Asian carriers.

The most profitable part of our business in the commercial airplane sector is the aftermarket which has grown very nicely over this period and has been one of the major contributors to the increase of aftermarket business that Bob Brady referred to earlier.

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