FY 2010

First Quarter Conference Call, Fiscal Year 2010

February 1, 2010

Before we begin, we call your attention to the fact that we may make forward-looking statements during the course of this conference call. These forward-looking statements are not guarantees of our future performance and are subject to risks, uncertainties and other factors that could cause actual performance to differ materially from such statements. A description of these risks, uncertainties and other factors is contained in our news release of February 1, 2010, our most recent Form 8-K filed on February 1, 2010 and in certain of our other public filings with the SEC.

We've provided some financial schedules to help our listeners better follow along with the prepared comments. For those of you who do not already have the document, a copy of today's financial presentation is available on our investor relations home page and webcast page at www.moog.com.

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Medical Devices Q1 2010

Those of you who follow us closely may remember that our Medical Devices Segment got off to a strong start in fiscal '08. Sales were up 16% from the previous quarter. Sales volume was up in pumps, in administration sets, in sensors and in surgical hand pieces. We theorized that one of the positive factors was a tendency in hospitals to use up their capital budget at year end and buy things like infusion pumps. Margins at 13.2% were also pretty good in that quarter.

By comparison, the first quarter of fiscal '09 was a train wreck. Total sales of $20 million were down 26% from a year ago. Sales of pumps at $5.9 million were about half of what they were last year. Sales of sensors, hand pieces and other associated equipment were down a third. The only bright spot was sales of administration sets which, at $9 million, were up 20%.

I said at our Annual Meeting that when we entered the market for medical devices a few years ago, we were mindful that healthcare was the one industry that had grown consistently over the previous decade. We made the presumption that the market for medical devices, if it wasn't recession proof, would at least be recession resistant. This quarter puts the lie to that notion.

We believe that the low level of orders for both IV and enteral pumps reflects the fact that hospitals and outpatient clinics were conserving capital. It may reflect an inability to access capital or a reluctance to pay the increased cost. At the moment, we believe that we're experiencing a deferral of purchases and order activity in the first three weeks of January suggests that the second quarter will be back to a more normal level.

Sales of administration sets, although increased from last year, failed to meet our budget projection. Normally we deliver administration sets with new pump deliveries and we sold half as many pumps as we planned.

In our sensor product line, we supply ultrasonic sensors to other manufacturers of infusion pumps. Our shortfall in order intake reflects an overall decline in the infusion pump market.

As you know, we have a product line of hand pieces used in cataract surgeries. We have two principal customers and they both describe an effort to rebalance their inventories.

So in terms of revenue, the first quarter of '09 was certainly a cold shower. We are expecting that the second quarter will be much better based on the trend in orders for pumps, what we hope will be growing demand for administration sets, and the resumption of deliveries of hand pieces.

Medical Devices Margins

You may recall that in fiscal ’09 Medical Devices margins were in negative territory; we have projected a turnaround for the year. In the first quarter we at least broke into the black in terms of operating profit; we generated about $100K. As I just mentioned, we’re projecting a modest increase in sales over the balance of the year so that should provide some marginal profitability. In addition, we’re anticipating that we’ll have some cost improvement in the back half of the year as our new production facility for disposables comes on-line. So we’re still optimistic that Medical Devices will be in the black for the year. We’re now projecting operating profit for the year of 3.5%.

Summary of Guidance for Fiscal '10

So in summary, we’re holding our sales forecast for 2010 at $2.12 billion. We’ve revised our overall operating margin forecast ever so slightly. We’re now at 9.6%, our previous guidance was 9.5%. That increase will cover a modest increase in corporate expense and we’re still projecting net earnings of $102.9 million, or $2.25 a share, which we’ll remind you is a 14% increase over fiscal 2009. We still think that a range of ± $.10 should be adequate. We had forecasted EPS for the next three quarters at $.53, $.59 and then $.66. Considering the seasonality in the wind business and some other potential program delays, it’s possible that quarter two could be $.50 and quarter three $.62. Time will tell.

John has some interesting news on our cash flow. Here’s John.

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