8-K
MOOG INC. (MOG-A)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
November 3, 2020
Date of Report (date of earliest event reported)
MOOG Inc.
(Exact name of registrant as specified in its charter)
| NY | 1-05129 | 16-0757636 | |
|---|---|---|---|
| (State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) | |
| 400 Jamison Rd | East Aurora, | New York | 14052-0018 |
| (Address of Principal Executive Offices) | (Zip Code) |
(716) 652-2000
Registrant's telephone number, including area code
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Class A common stock | MOG.A | New York Stock Exchange |
| Class B common stock | MOG.B | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
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| Item 2.02 | Results of Operations and Financial Condition |
|---|
On November 6, 2020, Moog Inc. (the “Company”) issued a press release discussing results of operations for the quarter and year ended October 3, 2020. A copy of the press release is included as exhibit 99.1 of this report.
The information in this report is being furnished pursuant to Item 2.02 of Form 8-K and shall not be deemed to be “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934 (the “Exchange Act”) or otherwise be subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Exchange Act or the Securities Act of 1933, except as expressly stated by specific reference in such a filing.
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers |
|---|
On November 3, 2020, the Executive Compensation Committee (the “Committee”) of the Board of Directors amended the Moog Inc. Management Short Term Incentive Plan (amended and restated, effective September 29, 2017) (the “Plan”) to reinstate the discretion feature of the original plan adopted in 2015, allowing for Committee discretion concerning the payout amount (the "Amendment"). The Amendment will allow the Committee to consider changes in circumstances during the fiscal year and adjust the STI bonus payable.
The actions of the Committee were ratified by the Board of Directors on November 3, 2020. The foregoing description is qualified in its entirety by the full text of the Amendment, which is attached hereto as Exhibit 10.1.
| Item 8.01 | Other Events |
|---|
On November 6, 2020, the Company issued a press release announcing that the Company’s Board of Directors declared a quarterly dividend of $.25 per share on the Company's issued and outstanding shares of Class A common stock and Class B common stock. The dividend will be paid on December 7, 2020 to all shareholders of record as of the close of business on November 20, 2020. A copy of the press release is included as Exhibit 99.2 of this report.
| Item 9.01 | Financial Statements and Exhibits |
|---|---|
| (d) | Exhibits. |
| --- | --- |
| 10.1 | Second Amendment to the Moog Inc. Management Short Term Incentive Plan, effective as of November 3, 2020. |
| --- | --- |
| 99.1 | Press release dated November 6, 2020, announcing Moog Inc.’s results of operations for the quarter and year ended October 3, 2020. |
| 99.2 | Press release dated November 6, 2020, announcing cash dividend. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| MOOG INC. | |||
|---|---|---|---|
| Dated: | November 6, 2020 | By: | /s/ Michael J. Swope |
| Name: | Michael J. Swope | ||
| Controller |
Exhibit
Exhibit 10.1
SECOND AMENDMENT
TO THE
MOOG INC.
MANAGEMENT SHORT TERM INCENTIVE PLAN
(Effective as of September 29, 2017)
WHEREAS, Moog Inc. (the “Company”) maintains the Moog Inc. Management Short Term Incentive Plan (the “Plan”); and
WHEREAS, the Company reserved the right to amend the Plan at any time; and
WHEREAS, the Company wishes to amend the Plan in certain respects.
NOW, THEREFORE, the Plan is amended, effective as of November 3, 2020, and applicable to any payments made under the Plan after this Amendment’s effective date, as follows:
1.The Plan is amended to add the following provisions at the end of the section entitled “General”:
Notwithstanding the formula described below for determining the amount of Bonus payable, the determination to make a payment under the Plan and, if made, its allocation, are discretionary. The Committee with respect to executive officers and the Chief Executive Officer with respect to all other eligible employees may make to the extent it or he deemed appropriate in view of events occurring during the Plan Year an increase or a decrease to any Bonus amount otherwise payable based on the formula described below; provided, however, that any increase shall not result in a Bonus payable exceeding the established annual cap.
In all other respects, the Plan remains unchanged.
Any capitalized terms not otherwise defined in this Second Amendment have
the meaning set forth in the Plan.
IN WITNESS HEREOF, the Company, through is duly authorized officer and at the direction of the Committee, adopts this Second Amendment as of the effective date set forth above.
MOOG INC.
By: /s/ Paul Wilkinson
Title: Chief Human Resources Officer
Exhibit
Exhibit 99.1
Moog Inc. ▪ East Aurora, New York ▪ 14052 ▪ 716-652-2000
Press Information
| Release Date: | IMMEDIATE | Contact: | Ann Marie Luhr |
|---|---|---|---|
| November 6, 2020 | 716-687-4225 |
MOOG REPORTS FOURTH QUARTER AND YEAR END RESULTS
East Aurora, NY -- Moog Inc. (NYSE: MOG.A and MOG.B) announced today financial results for the quarter and fiscal year ended October 3, 2020.
Fourth Quarter Highlights
| • | Sales of $707 million, down 8% from a year ago; |
|---|---|
| • | GAAP diluted loss per share of ($2.40) includes $0.36 per share in pandemic-related charges and a $2.85 per share non-cash charge related to settlement accounting on the U.S defined benefit pension plan; |
| --- | --- |
| • | Non-GAAP adjusted earnings per share of $0.81; |
| --- | --- |
| • | Operating margins of 6.1% with adjusted operating margins of 8.3%; and |
| --- | --- |
| • | $91 million cash flow from operating activities. |
| --- | --- |
Full-Year 2020 Highlights
| • | Sales of $2.9 billion, down 1% from a year ago; |
|---|---|
| • | GAAP diluted earnings per share of $0.28 includes $1.68 per share in pandemic-related charges and $2.85 per share charge related to settlement accounting on the U.S defined benefit pension plan; |
| --- | --- |
| • | Non-GAAP adjusted earnings per share of $4.81; |
| --- | --- |
| • | Operating margins of 7.5% with adjusted operating margins of 10.0%; and |
| --- | --- |
| • | $279 million cash flow from operating activities. |
| --- | --- |
Fiscal 2021 Outlook
Given the considerable uncertainty around the extent and duration of business disruptions related to the pandemic, the Company is not providing guidance for fiscal year 2021.
Segment Results
Aircraft Controls segment sales in the quarter were $275 million, down 19% year over year. Military OEM aircraft sales of $129 million were 21% higher, tied to very strong F-35 Joint Strike Fighter sales which increased 59%. Military aftermarket sales of $65 million increased 27%, the result of higher sustainment activity across the full portfolio of platforms.
Total commercial aircraft revenues were $81 million, 56% lower. Sales to commercial OEM customers were down 61%, the result of declining production rates and actions taken by OEMs to reduce inventory. Commercial aftermarket sales decreased 34% on lower repair activity.
Full-year Aircraft Controls sales were $1.2 billion, down 7%. Military aircraft sales of $721 million were 16% higher. Military OEM sales increased 13%, to $470 million, led by F-35 program sales and funded development work. Military aftermarket sales were 21% higher, led by increased F-35 repair volume reflecting the size of the aircraft’s active fleet.
Exhibit 99.1
Space and Defense segment sales in the quarter were $207 million, up 9% year over year. Space sales of $84 million increased 40% on strength across the space portfolio, led by hypersonics, propulsion, avionics, and satellite programs. Defense sales were down 5%, at $123 million, mostly tied to weaker sales of security products and missile steering controls.
Space and Defense sales for the year increased 13%, to $770 million. Space sales were 34% higher, at $294 million, driven by increases across all categories. Defense sales increased 2%, to $476 million, as higher sales for naval programs and components used in a variety of ground vehicle markets were partially offset by lower sales of security products.
Industrial Systems segment sales were $225 million, 4% lower compared to last year’s fourth quarter. Medical product sales increased 22% on very strong sales of IV and enteral feeding pumps. Energy market sales decreased 5%, on softness in offshore exploration products. Sales of industrial automation products were off 10%, with the decrease attributed to reduced capital spending globally and exacerbated by the effects of the pandemic. Sales into simulation and test applications declined 30%, mostly due to reduced demand for flight simulators.
Full-year Industrial Systems sales were $909 million, down 1%. Sales of medical pumps and associated products increased 20%, to $273 million, tied to market share gains for the full portfolio of pump products and breathing equipment components. Energy sales were up 6%, to $128 million, the result of the acquired sales from the GAT acquisition. Industrial automation sales of $405 million were off 9% as second half sales were depressed by the pandemic. Simulation and test sales were 17% lower, at $103 million.
Total backlog was $2.6 billion, with 12-month backlog at $1.7 billion, an increase of 10% from a year ago.
“Fiscal ’20 was a year of records for our company, divided into 2 halves,” said John Scannell, Chairman and CEO. “The first half was characterized by record sales, record net earnings and record earnings per share. In the second half we generated record free cash flow. I believe you see the true strength of a company during times of adversity. On that measure, fiscal ’20 was a record year for our company in every way. Our employees across the globe did an outstanding job managing through an unprecedented crisis. It was definitely not the year we planned for 12 months ago, and to say it was a challenge would be an understatement. However, our long-term strategy of diversity across end markets and financial prudence served us well.”
In conjunction with today’s release, Moog will host a conference call beginning at 10:00 a.m. ET, which will be broadcast live over the Internet. John Scannell, Chairman and CEO, and Jennifer Walter, CFO, will host the call. Listeners can access the call live or in replay mode at www.moog.com/investors/communications. Supplemental financial data will be available on the webcast web page approximately 90 minutes prior to the conference call.
Moog Inc. is a worldwide designer, manufacturer, and integrator of precision control components and systems. Moog’s high-performance systems control military and commercial aircraft, satellites and space vehicles, launch vehicles, missiles, automated industrial machinery, marine and medical equipment. Additional information about the company can be found at www.moog.com.
Exhibit 99.1
Cautionary Statement
Information included or incorporated by reference in this report that does not consist of historical facts, including statements accompanied by or containing words such as “may,” “will,” “should,” “believes,” “expects,” “expected,” “intends,” “plans,” “projects,” “approximate,” “estimates,” “predicts,” “potential,” “outlook,” “forecast,” “anticipates,” “presume” and “assume,” are forward-looking statements. Such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the Company’s current views with respect to certain current and future events and financial performance and are not guarantees of future performance. This includes but is not limited to, the Company’s expectation and ability to pay a quarterly cash dividend on its common stock in the future, subject to the determination by the board of directors, and based on an evaluation of company earnings, financial condition and requirements, business conditions, capital allocation determinations and other factors, risks and uncertainties. The impact or occurrence of these could cause actual results to differ materially from the expected results described in the forward-looking statements. These important factors, risks and uncertainties include:
COVID-19 Pandemic Risks
| ▪ | We face various risks related to health pandemics such as the global COVID-19 pandemic, which may have material adverse consequences on our operations, financial position, cash flows, and those of our customers and suppliers. |
|---|
Strategic Risks
| ▪ | We operate in highly competitive markets with competitors who may have greater resources than we possess; |
|---|---|
| ▪ | Our new products and technology research and development efforts are substantial and may not be successful which could reduce our sales and earnings; |
| --- | --- |
| ▪ | Our inability to adequately enforce and protect our intellectual property or defend against assertions of infringement could prevent or restrict our ability to compete; and |
| --- | --- |
| ▪ | Our sales and earnings may be affected if we cannot identify, acquire or integrate strategic acquisitions, or as we conduct divestitures. |
| --- | --- |
Market Condition Risks
| ▪ | The markets we serve are cyclical and sensitive to domestic and foreign economic conditions and events, which may cause our operating results to fluctuate; |
|---|---|
| ▪ | We depend heavily on government contracts that may not be fully funded or may be terminated, and the failure to receive funding or the termination of one or more of these contracts could reduce our sales and increase our costs; |
| --- | --- |
| ▪ | The loss of The Boeing Company as a customer or a significant reduction in sales to The Boeing Company could adversely impact our operating results; and |
| --- | --- |
| ▪ | We may not realize the full amounts reflected in our backlog as revenue, which could adversely affect our future revenue and growth prospects. |
| --- | --- |
Operational Risks
| ▪ | Our business operations may be adversely affected by information systems interruptions, intrusions or new software implementations; |
|---|---|
| ▪ | We may not be able to prevent, or timely detect, issues with our products and our manufacturing processes which may adversely affect our operations and our earnings; |
| --- | --- |
| ▪ | If our subcontractors or suppliers fail to perform their contractual obligations, our prime contract performance and our ability to obtain future business could be materially and adversely impacted; and |
| --- | --- |
| ▪ | The failure or misuse of our products may damage our reputation, necessitate a product recall or result in claims against us that exceed our insurance coverage, thereby requiring us to pay significant damages. |
| --- | --- |
Financial Risks
| ▪ | We make estimates in accounting for over-time contracts, and changes in these estimates may have significant impacts on our earnings; |
|---|---|
| ▪ | We enter into fixed-price contracts, which could subject us to losses if we have cost overruns; |
| --- | --- |
| ▪ | Our indebtedness and restrictive covenants under our credit facilities could limit our operational and financial flexibility; |
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| ▪ | The phase out of LIBOR may negatively impact our debt agreements and financial position, results of operations and liquidity; |
| --- | --- |
| ▪ | Significant changes in discount rates, rates of return on pension assets, mortality tables and other factors could adversely affect our earnings and equity and increase our pension funding requirements; |
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| ▪ | A write-off of all or part of our goodwill or other intangible assets could adversely affect our operating results and net worth; and |
| --- | --- |
| ▪ | Unforeseen exposure to additional income tax liabilities may affect our operating results. |
| --- | --- |
Exhibit 99.1
Legal and Compliance Risks
| ▪ | Contracting on government programs is subject to significant regulation, including rules related to bidding, billing and accounting standards, and any false claims or non-compliance could subject us to fines, penalties or possible debarment; |
|---|---|
| ▪ | Our operations in foreign countries expose us to political and currency risks and adverse changes in local legal and regulatory environments; |
| --- | --- |
| ▪ | Government regulations could limit our ability to sell our products outside the United States and otherwise adversely affect our business; |
| --- | --- |
| ▪ | We are involved in various legal proceedings, the outcome of which may be unfavorable to us; and |
| --- | --- |
| ▪ | Our operations are subject to environmental laws, and complying with those laws may cause us to incur significant costs. |
| --- | --- |
General Risks
| ▪ | The United Kingdom's decision to exit the European Union may result in short-term and long-term adverse impacts on our results of operations; |
|---|---|
| ▪ | Escalating tariffs, restrictions on imports or other trade barriers between the United States and various countries may impact our results of operations; |
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| ▪ | Future terror attacks, war, natural disasters or other catastrophic events beyond our control could negatively impact our business; and |
| --- | --- |
| ▪ | Our performance could suffer if we cannot maintain our culture as well as attract, retain and engage our employees. |
| --- | --- |
These factors are not exhaustive. New factors, risks and uncertainties may emerge from time to time that may affect the forward-looking statements made herein. Given these factors, risks and uncertainties, investors should not place undue reliance on forward-looking statements as predictive of future results. We disclaim any obligation to update the forward-looking statements made in this report.
Exhibit 99.1
| Moog Inc. | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) | ||||||||||
| (dollars in thousands, except per share data) | ||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| October 3, <br>2020 | September 28, <br>2019 | October 3, <br>2020 | September 28, <br>2019 | |||||||
| Net sales | $ | 706,895 | $ | 765,207 | $ | 2,884,554 | $ | 2,904,663 | ||
| Cost of sales | 530,581 | 558,197 | 2,118,150 | 2,088,831 | ||||||
| Inventory write-down | 3,913 | — | 22,708 | — | ||||||
| Gross profit | 172,401 | 207,010 | 743,696 | 815,832 | ||||||
| Research and development | 28,562 | 31,935 | 110,865 | 126,453 | ||||||
| Selling, general and administrative | 95,430 | 104,812 | 397,947 | 404,653 | ||||||
| Interest | 8,974 | 9,868 | 38,897 | 39,269 | ||||||
| Long-lived asset impairment | 5,968 | — | 37,839 | — | ||||||
| Restructuring | 5,394 | — | 10,700 | — | ||||||
| Pension settlement | 121,324 | — | 121,324 | — | ||||||
| Other | 6,413 | 3,860 | 20,707 | 18,505 | ||||||
| Earnings (loss) before income taxes | (99,664 | ) | 56,535 | 5,417 | 226,952 | |||||
| Income taxes (benefit) | (21,687 | ) | 11,980 | (3,788 | ) | 52,404 | ||||
| Net earnings (loss) | $ | (77,977 | ) | $ | 44,555 | $ | 9,205 | $ | 174,548 | |
| Net earnings (loss) per share | ||||||||||
| Basic | $ | (2.40 | ) | $ | 1.28 | $ | 0.28 | $ | 5.01 | |
| Diluted | $ | (2.40 | ) | $ | 1.27 | $ | 0.28 | $ | 4.96 | |
| Average common shares outstanding | ||||||||||
| Basic | 32,539,248 | 34,811,076 | 33,257,684 | 34,854,614 | ||||||
| Diluted | 32,539,248 | 35,107,997 | 33,437,801 | 35,178,968 |
Exhibit 99.1
Results shown in the previous table includes charges associated with the COVID-19 pandemic, as well as a charge associated with the purchase of a single premium non-participating group annuity contract from Metropolitan Tower Life Insurance Company and the related transfer of future benefit obligations and annuity administration for certain retirees and beneficiaries under the Moog Inc. Employees' Retirement Plan. COVID-19 impacts include inventory write-down, long-lived asset impairment and restructuring charges. The table below adjusts the income taxes (benefit), net earnings (loss) and diluted net earnings (loss) per share to exclude these impacts.
| Reconciliation to non-GAAP adjusted income taxes (benefit), net earnings (loss) and diluted net earnings (loss) per share are as follows: | Three Months Ended | Twelve Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| October 3, <br>2020 | September 28, <br>2019 | October 3, <br>2020 | September 28, <br>2019 | ||||||||||
| As Reported: | |||||||||||||
| Earnings (loss) before income taxes | $ | (99,664 | ) | $ | 56,535 | $ | 5,417 | $ | 226,952 | ||||
| Income taxes (benefit) | (21,687 | ) | 11,980 | (3,788 | ) | 52,404 | |||||||
| Effective income tax rate | 21.8 | % | 21.2 | % | (69.9 | )% | 23.1 | % | |||||
| Net earnings (loss) | (77,977 | ) | 44,555 | 9,205 | 174,548 | ||||||||
| Diluted net earnings (loss) per share | $ | (2.40 | ) | $ | 1.27 | $ | 0.28 | $ | 4.96 | ||||
| COVID-19 Pandemic Charges: | |||||||||||||
| Earnings before income taxes | $ | 15,275 | $ | — | $ | 71,247 | $ | — | |||||
| Income taxes | 3,494 | — | 16,506 | — | |||||||||
| Net earnings | 11,781 | — | 54,741 | — | |||||||||
| Diluted net earnings per share | $ | 0.36 | $ | — | $ | 1.68 | $ | — | |||||
| Pension Settlement: | |||||||||||||
| Earnings before income taxes | $ | 121,324 | $ | — | $ | 121,324 | $ | — | |||||
| Income taxes | 28,632 | — | 28,632 | — | |||||||||
| Net earnings | 92,692 | — | 92,692 | — | |||||||||
| Diluted net earnings per share | $ | 2.85 | $ | — | $ | 2.85 | $ | — | |||||
| As Adjusted: | |||||||||||||
| Earnings before income taxes | $ | 36,935 | $ | 56,535 | $ | 197,988 | $ | 226,952 | |||||
| Income taxes | 10,439 | 11,980 | 41,350 | 52,404 | |||||||||
| Effective income tax rate | 28.3 | % | 21.2 | % | 20.9 | % | 23.1 | % | |||||
| Net earnings | 26,496 | 44,555 | 156,638 | 174,548 | |||||||||
| Diluted net earnings per share | $ | 0.81 | $ | 1.27 | $ | 4.81 | $ | 4.96 | |||||
| The diluted net earnings per share associated with the charges have been calculated using the quarterly average outstanding shares in the period in which the charges were incurred. |
Exhibit 99.1
| Moog Inc. | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| CONSOLIDATED SALES AND OPERATING PROFIT | ||||||||||||
| (dollars in thousands) | ||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| October 3, <br>2020 | September 28, <br>2019 | October 3, <br>2020 | September 28, <br>2019 | |||||||||
| Net sales: | ||||||||||||
| Aircraft Controls | $ | 275,001 | $ | 341,565 | $ | 1,205,750 | $ | 1,302,972 | ||||
| Space and Defense Controls | 206,958 | 189,530 | 770,114 | 683,468 | ||||||||
| Industrial Systems | 224,936 | 234,112 | 908,690 | 918,223 | ||||||||
| Net sales | $ | 706,895 | $ | 765,207 | $ | 2,884,554 | $ | 2,904,663 | ||||
| Operating profit: | ||||||||||||
| Aircraft Controls | $ | 3,430 | $ | 27,896 | $ | 34,670 | $ | 122,701 | ||||
| 1.2 | % | 8.2 | % | 2.9 | % | 9.4 | % | |||||
| Space and Defense Controls | 29,443 | 25,880 | 101,667 | 88,990 | ||||||||
| 14.2 | % | 13.7 | % | 13.2 | % | 13.0 | % | |||||
| Industrial Systems | 10,548 | 26,023 | 80,025 | 109,451 | ||||||||
| 4.7 | % | 11.1 | % | 8.8 | % | 11.9 | % | |||||
| Total operating profit | 43,421 | 79,799 | 216,362 | 321,142 | ||||||||
| 6.1 | % | 10.4 | % | 7.5 | % | 11.1 | % | |||||
| Deductions from operating profit: | ||||||||||||
| Interest expense | 8,974 | 9,868 | 38,897 | 39,269 | ||||||||
| Equity-based compensation expense | 1,000 | 1,334 | 5,661 | 6,464 | ||||||||
| Pension settlement | 121,324 | — | 121,324 | — | ||||||||
| Non-service pension expense | 3,791 | 4,886 | 15,231 | 19,552 | ||||||||
| Corporate and other expenses, net | 7,996 | 7,176 | 29,832 | 28,905 | ||||||||
| Earnings (loss) before income taxes | $ | (99,664 | ) | $ | 56,535 | $ | 5,417 | $ | 226,952 |
Exhibit 99.1
Operating Profit and Margins - as adjusted are as follows:
| Three Months Ended | Twelve Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| October 3, <br>2020 | September 28, <br>2019 | October 3, <br>2020 | September 28, <br>2019 | |||||||||
| Aircraft Controls operating profit - as reported | $ | 3,430 | $ | 27,896 | $ | 34,670 | $ | 122,701 | ||||
| Inventory write-down | 3,913 | — | 22,448 | — | ||||||||
| Long-lived asset impairment | (268 | ) | — | 31,262 | — | |||||||
| Restructuring | 444 | — | 3,340 | — | ||||||||
| Aircraft Controls operating profit - as adjusted | $ | 7,519 | $ | 27,896 | $ | 91,720 | $ | 122,701 | ||||
| 2.7 | % | 8.2 | % | 7.6 | % | 9.4 | % | |||||
| Space and Defense Controls operating profit - as reported | $ | 29,443 | $ | 25,880 | $ | 101,667 | $ | 88,990 | ||||
| Long-lived asset impairment | — | — | 341 | — | ||||||||
| Restructuring | — | — | 185 | — | ||||||||
| Space and Defense Controls operating profit - as adjusted | $ | 29,443 | $ | 25,880 | $ | 102,193 | $ | 88,990 | ||||
| 14.2 | % | 13.7 | % | 13.3 | % | 13.0 | % | |||||
| Industrial Systems operating profit - as reported | $ | 10,548 | $ | 26,023 | $ | 80,025 | $ | 109,451 | ||||
| Inventory write-down | — | — | 260 | — | ||||||||
| Long-lived asset impairment | 6,236 | — | 6,236 | — | ||||||||
| Restructuring | 4,950 | — | 7,175 | — | ||||||||
| Industrial Systems operating profit- as adjusted | $ | 21,734 | $ | 26,023 | $ | 93,696 | $ | 109,451 | ||||
| 9.7 | % | 11.1 | % | 10.3 | % | 11.9 | % | |||||
| Total operating profit - as adjusted | $ | 58,696 | $ | 79,799 | $ | 287,609 | $ | 321,142 | ||||
| 8.3 | % | 10.4 | % | 10.0 | % | 11.1 | % |
Exhibit 99.1
| Moog Inc. | ||||||
|---|---|---|---|---|---|---|
| CONSOLIDATED BALANCE SHEETS | ||||||
| (dollars in thousands) | ||||||
| October 3, <br>2020 | September 28, <br>2019 | |||||
| --- | --- | --- | --- | --- | --- | --- |
| ASSETS | ||||||
| Current assets | ||||||
| Cash and cash equivalents | $ | 84,583 | $ | 89,702 | ||
| Restricted cash | 489 | 2,846 | ||||
| Receivables, net | 855,535 | 954,355 | ||||
| Inventories, net | 623,043 | 534,974 | ||||
| Prepaid expenses and other current assets | 49,837 | 47,096 | ||||
| Total current assets | 1,613,487 | 1,628,973 | ||||
| Property, plant and equipment, net | 600,498 | 586,767 | ||||
| Operating lease right-of-use assets | 68,393 | — | ||||
| Goodwill | 821,856 | 784,240 | ||||
| Intangible assets, net | 85,046 | 79,646 | ||||
| Deferred income taxes | 18,924 | 19,992 | ||||
| Other assets | 17,627 | 14,619 | ||||
| Total assets | $ | 3,225,831 | $ | 3,114,237 | ||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
| Current liabilities | ||||||
| Current installments of long-term debt | $ | 350 | $ | 249 | ||
| Accounts payable | 176,868 | 257,677 | ||||
| Accrued compensation | 109,510 | 143,765 | ||||
| Contract advances | 203,338 | 137,242 | ||||
| Accrued liabilities and other | 220,488 | 188,725 | ||||
| Total current liabilities | 710,554 | 727,658 | ||||
| Long-term debt, excluding current installments | 929,982 | 832,984 | ||||
| Long-term pension and retirement obligations | 183,366 | 160,034 | ||||
| Deferred income taxes | 40,474 | 40,528 | ||||
| Other long-term liabilities | 118,372 | 30,552 | ||||
| Total liabilities | 1,982,748 | 1,791,756 | ||||
| Shareholders’ equity | ||||||
| Common stock - Class A | 43,799 | 43,795 | ||||
| Common stock - Class B | 7,481 | 7,485 | ||||
| Additional paid-in capital | 472,645 | 510,546 | ||||
| Retained earnings | 2,112,734 | 2,128,739 | ||||
| Treasury shares | (990,783 | ) | (769,569 | ) | ||
| Stock Employee Compensation Trust | (64,242 | ) | (111,492 | ) | ||
| Supplemental Retirement Plan Trust | (53,098 | ) | (71,546 | ) | ||
| Accumulated other comprehensive loss | (285,453 | ) | (415,477 | ) | ||
| Total shareholders’ equity | 1,243,083 | 1,322,481 | ||||
| Total liabilities and shareholders’ equity | $ | 3,225,831 | $ | 3,114,237 |
Exhibit 99.1
| Moog Inc. | ||||||
|---|---|---|---|---|---|---|
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
| (dollars in thousands) | ||||||
| Twelve Months Ended | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| October 3, <br>2020 | September 28, <br>2019 | |||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||
| Net earnings | $ | 9,205 | $ | 174,548 | ||
| Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||
| Depreciation | 74,243 | 71,926 | ||||
| Amortization | 12,729 | 13,334 | ||||
| Deferred income taxes | (40,845 | ) | (4,598 | ) | ||
| Equity-based compensation expense | 5,661 | 6,464 | ||||
| Impairment of long-lived assets and inventory write-down | 60,547 | — | ||||
| Pension settlement | 121,324 | — | ||||
| Other | 9,636 | 4,239 | ||||
| Changes in assets and liabilities providing (using) cash: | ||||||
| Receivables | 111,525 | (79,887 | ) | |||
| Inventories | (99,015 | ) | (96,652 | ) | ||
| Accounts payable | (84,065 | ) | 52,499 | |||
| Contract advances | 65,680 | (14,432 | ) | |||
| Accrued expenses | (3,516 | ) | 19,758 | |||
| Accrued income taxes | (17,964 | ) | 3,818 | |||
| Net pension and post retirement liabilities | 33,305 | 32,529 | ||||
| Other assets and liabilities | 20,727 | (2,123 | ) | |||
| Net cash provided by operating activities | 279,177 | 181,423 | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||
| Acquisitions of businesses, net of cash acquired | (54,265 | ) | — | |||
| Purchase of property, plant and equipment | (88,284 | ) | (118,422 | ) | ||
| Other investing transactions | (3,644 | ) | 2,702 | |||
| Net cash used by investing activities | (146,193 | ) | (115,720 | ) | ||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||
| Net short-term repayments | — | (3,653 | ) | |||
| Proceeds from revolving lines of credit | 1,151,550 | 971,658 | ||||
| Payments on revolving lines of credit | (1,187,159 | ) | (998,726 | ) | ||
| Proceeds from long-term debt | 15,128 | — | ||||
| Payments on long-term debt | (74,470 | ) | (411 | ) | ||
| Proceeds from senior notes, net of issuance costs | 491,769 | — | ||||
| Payments on senior notes | (300,000 | ) | — | |||
| Payments on finance lease obligations | (1,167 | ) | — | |||
| Payment of dividends | (25,210 | ) | (34,857 | ) | ||
| Proceeds from sale of treasury stock | 7,014 | 5,268 | ||||
| Purchase of outstanding shares for treasury | (232,290 | ) | (40,955 | ) | ||
| Proceeds from sale of stock held by SECT | 24,721 | 13,990 | ||||
| Purchase of stock held by SECT | (6,774 | ) | (15,288 | ) | ||
| Proceeds from sale of SERP stock | — | 4,293 | ||||
| Other financing transactions | (5,878 | ) | — | |||
| Net cash used by financing activities | (142,766 | ) | (98,681 | ) | ||
| Effect of exchange rate changes on cash | 2,306 | (2,180 | ) | |||
| Decrease in cash, cash equivalents and restricted cash | (7,476 | ) | (35,158 | ) | ||
| Cash, cash equivalents and restricted cash at beginning of period | 92,548 | 127,706 | ||||
| Cash, cash equivalents and restricted cash at end of period | $ | 85,072 | $ | 92,548 |
Exhibit
Exhibit 99.2
Moog Inc. ▪ East Aurora, New York ▪ 14052 ▪ 716-652-2000
Press Information
| Release Date: | IMMEDIATE | Contact: | Ann Marie Luhr |
|---|---|---|---|
| November 6, 2020 | 716-687-4225 |
MOOG ANNOUNCES CASH DIVIDEND
East Aurora, NY - The Board of Directors of Moog Inc. (NYSE: MOG.A and MOG.B) has declared a quarterly dividend of $.25 per share on the Company’s issued and outstanding shares of Class A common stock and Class B common stock. The dividend will be paid on December 7, 2020 to all shareholders of record as of the close of business on November 20, 2020.
The dividend represents a use of cash of approximately $8 million. Future declarations of quarterly dividends are subject to the determination and discretion of Moog’s Board of Directors.
Moog Inc. is a worldwide designer, manufacturer, and integrator of precision control components and systems. Moog’s high-performance systems control military and commercial aircraft, satellites and space vehicles, launch vehicles, missiles, automated industrial machinery, marine and medical equipment. Additional information about the company can be found at www.moog.com.
Cautionary Statement
Information included or incorporated by reference in this report that does not consist of historical facts, including statements accompanied by or containing words such as “may,” “will,” “should,” “believes,” “expects,” “expected,” “intends,” “plans,” “projects,” “approximate,” “estimates,” “predicts,” “potential,” “outlook,” “forecast,” “anticipates,” “presume” and “assume,” are forward-looking statements. Such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the Company’s current views with respect to certain current and future events and financial performance and are not guarantees of future performance. This includes but is not limited to, the Company’s expectation and ability to pay a quarterly cash dividend on its common stock in the future, subject to the determination by the board of directors, and based on an evaluation of company earnings, financial condition and requirements, business conditions, capital allocation determinations and other factors, risks and uncertainties. The impact or occurrence of these could cause actual results to differ materially from the expected results described in the forward-looking statements. These important factors, risks and uncertainties include:
COVID-19 Pandemic Risks
| ▪ | We face various risks related to health pandemics such as the global COVID-19 pandemic, which may have material adverse consequences on our operations, financial position, cash flows, and those of our customers and suppliers. |
|---|
Strategic Risks
| ▪ | We operate in highly competitive markets with competitors who may have greater resources than we possess; |
|---|---|
| ▪ | Our new products and technology research and development efforts are substantial and may not be successful which could reduce our sales and earnings; |
| --- | --- |
| ▪ | Our inability to adequately enforce and protect our intellectual property or defend against assertions of infringement could prevent or restrict our ability to compete; and |
| --- | --- |
| ▪ | Our sales and earnings may be affected if we cannot identify, acquire or integrate strategic acquisitions, or as we conduct divestitures. |
| --- | --- |
Market Condition Risks
| ▪ | The markets we serve are cyclical and sensitive to domestic and foreign economic conditions and events, which may cause our operating results to fluctuate; |
|---|---|
| ▪ | We depend heavily on government contracts that may not be fully funded or may be terminated, and the failure to receive funding or the termination of one or more of these contracts could reduce our sales and increase our costs; |
| --- | --- |
| ▪ | The loss of The Boeing Company as a customer or a significant reduction in sales to The Boeing Company could adversely impact our operating results; and |
| --- | --- |
| ▪ | We may not realize the full amounts reflected in our backlog as revenue, which could adversely affect our future revenue and growth prospects. |
| --- | --- |
Exhibit 99.2
Operational Risks
| ▪ | Our business operations may be adversely affected by information systems interruptions, intrusions or new software implementations; |
|---|---|
| ▪ | We may not be able to prevent, or timely detect, issues with our products and our manufacturing processes which may adversely affect our operations and our earnings; |
| --- | --- |
| ▪ | If our subcontractors or suppliers fail to perform their contractual obligations, our prime contract performance and our ability to obtain future business could be materially and adversely impacted; and |
| --- | --- |
| ▪ | The failure or misuse of our products may damage our reputation, necessitate a product recall or result in claims against us that exceed our insurance coverage, thereby requiring us to pay significant damages. |
| --- | --- |
Financial Risks
| ▪ | We make estimates in accounting for over-time contracts, and changes in these estimates may have significant impacts on our earnings; |
|---|---|
| ▪ | We enter into fixed-price contracts, which could subject us to losses if we have cost overruns; |
| --- | --- |
| ▪ | Our indebtedness and restrictive covenants under our credit facilities could limit our operational and financial flexibility; |
| --- | --- |
| ▪ | The phase out of LIBOR may negatively impact our debt agreements and financial position, results of operations and liquidity; |
| --- | --- |
| ▪ | Significant changes in discount rates, rates of return on pension assets, mortality tables and other factors could adversely affect our earnings and equity and increase our pension funding requirements; |
| --- | --- |
| ▪ | A write-off of all or part of our goodwill or other intangible assets could adversely affect our operating results and net worth; and |
| --- | --- |
| ▪ | Unforeseen exposure to additional income tax liabilities may affect our operating results. |
| --- | --- |
Legal and Compliance Risks
| ▪ | Contracting on government programs is subject to significant regulation, including rules related to bidding, billing and accounting standards, and any false claims or non-compliance could subject us to fines, penalties or possible debarment; |
|---|---|
| ▪ | Our operations in foreign countries expose us to political and currency risks and adverse changes in local legal and regulatory environments; |
| --- | --- |
| ▪ | Government regulations could limit our ability to sell our products outside the United States and otherwise adversely affect our business; |
| --- | --- |
| ▪ | We are involved in various legal proceedings, the outcome of which may be unfavorable to us; and |
| --- | --- |
| ▪ | Our operations are subject to environmental laws, and complying with those laws may cause us to incur significant costs. |
| --- | --- |
General Risks
| ▪ | The United Kingdom's decision to exit the European Union may result in short-term and long-term adverse impacts on our results of operations; |
|---|---|
| ▪ | Escalating tariffs, restrictions on imports or other trade barriers between the United States and various countries may impact our results of operations; |
| --- | --- |
| ▪ | Future terror attacks, war, natural disasters or other catastrophic events beyond our control could negatively impact our business; and |
| --- | --- |
| ▪ | Our performance could suffer if we cannot maintain our culture as well as attract, retain and engage our employees. |
| --- | --- |
These factors are not exhaustive. New factors, risks and uncertainties may emerge from time to time that may affect the forward-looking statements made herein. Given these factors, risks and uncertainties, investors should not place undue reliance on forward-looking statements as predictive of future results. We disclaim any obligation to update the forward-looking statements made in this report.