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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John Scannell, CFO on Cash Flow

Thanks Bob ... Good Morning.

This quarter we can report very strong cash flow. Net debt decreased by $47 million while our free cash flow in the quarter was positive $44 million. Reductions in inventories and receivables produced $38 million of cash, offset someOther Itemswhat by a decrease in payables of $11 million. Capital expenditures in the quarter were relatively low at $12 million while depreciation and amortization was $23 million. This very strong performance was helped by some favorable timing of receipts and expenditures. These will reverse in the next quarter. Interest payments totaled $11 million while our cash tax payments were $4 million.

Other Items

Our effective tax rate in the quarter was a pretty normal 26.8%. The non-cash stock compensation expense was $2.8 million. Contract reserves decreased by $6 million from the prior quarter, primarily the result of the utilization of reserves associated with the Wolverhampton business we purchased from GE at the end of Q4 ’09. We continued funding our US pension obligations at our $6 million per quarter run rate. Our leverage ratio under our bank credit facility, defined as Net Debt divided by adjusted EBITDA, decreased this quarter to under 2.75, down from 2.94 at the end of Q4. We anticipate that our ratio will continue to improve over the balance of FY10 as our earnings recover and our free cash flow continues. At the end of December, our Net Debt to Total Capitalization stood at 39.3%.

Fiscal 2010 Forecast (more)

Given the strong performance in the first quarter we are increasing our forecast of free cash flow for the year to $75 million, up from our last forecast of $60 million just 90 days ago. We anticipate capital expenditures will accelerate from the low point in Q1 as we move through the year so we are maintaining our full year forecast at $75 million. Depreciation and amortization should end the year at $93 million. We are revising our effective tax rate down slightly to 27.1%. Finally, there is no change in our forecast for interest expense, at $39 million.

Now let me pass you back to Bob to lead the Q&A discussion.

(Note: Q&A is not available online)

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