FY 16 Q2 - 04.02...2004/02/16 · Title FY 16 Q2 - 04.02.16 Created Date 5/23/2016 12:00:00 AM

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549________________________________________________

FORM 10-Q___________________________________________

(Mark One)QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 2, 2016

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to _________

Commission File Number: 1-05129_________________________________________

INC.(Exact name of registrant as specified in its charter)

__________________________________________

New York State 16-0757636(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)

East Aurora, New York 14052-0018(Address of principal executive offices) (Zip Code)

(716) 652-2000 (Telephone number including area code)

__________________________________________________________Former name, former address and former fiscal year, if changed since last report.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

The number of shares outstanding of each class of common stock as of April 26, 2016 was:Class A common stock, $1.00 par value, 32,847,342 sharesClass B common stock, $1.00 par value, 3,361,258 shares

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Moog Inc.QUARTERLY REPORT ON FORM 10-Q

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PART I FINANCIAL INFORMATION PAGEItem 1 Financial Statements:

Consolidated Condensed Balance Sheets as of April 2, 2016 and October 3, 2015

Consolidated Condensed Statements of Earnings for the Three and Six Months Ended April 2, 2016 and April 4, 2015

Consolidated Condensed Statements of Comprehensive Income (Loss) for the Three and Six Months Ended April 2, 2016 and April 4, 2015

Consolidated Condensed Statements of Cash Flows for the Six Months Ended April 2, 2016 and April 4, 2015

Notes to Consolidated Condensed Financial Statements

Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3 Quantitative and Qualitative Disclosures about Market Risk

Item 4 Controls and Procedures

PART II OTHER INFORMATIONItem 2 Unregistered Sales of Equity Securities and Use of Proceeds

Item 6 Exhibits

SIGNATURES

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PART I FINANCIAL INFORMATIONItem 1. Financial Statements

Moog Inc.Consolidated Condensed Balance Sheets

(Unaudited)

(dollars in thousands)April 2,2016

October 3,2015

ASSETSCurrent assets

Cash and cash equivalents $ 348,322 $ 309,853Receivables 703,022 698,419Inventories 500,224 493,360Deferred income taxes 92,127 91,210Prepaid expenses and other current assets 38,096 34,653

Total current assets 1,681,791 1,627,495Property, plant and equipment, net of accumulated depreciation of $701,500 and$677,168, respectively 529,735 536,756

Goodwill 752,826 737,212Intangible assets, net 129,350 143,723Other assets 41,943 41,285Total assets $ 3,135,645 $ 3,086,471LIABILITIES AND SHAREHOLDERS’ EQUITYCurrent liabilities

Short-term borrowings $ 1,370 $ 83Current installments of long-term debt 434 34Accounts payable 155,763 165,973Accrued salaries, wages and commissions 119,204 125,270Customer advances 177,557 167,423Contract loss reserves 29,740 30,422Other accrued liabilities 112,738 116,300

Total current liabilities 596,806 605,505Long-term debt, excluding current installments 1,103,342 1,075,067Long-term pension and retirement obligations 322,407 348,239Deferred income taxes 69,364 60,209Other long-term liabilities 3,211 2,919

Total liabilities 2,095,130 2,091,939Commitments and contingencies (Note 17) — —Redeemable noncontrolling interest 8,377 —Shareholders’ equity

Common stock 51,280 51,280Other shareholders' equity 980,858 943,252

Total shareholders’ equity 1,032,138 994,532Total liabilities and shareholders’ equity $ 3,135,645 $ 3,086,471See accompanying Notes to Consolidated Condensed Financial Statements.

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Moog Inc.Consolidated Condensed Statements of Earnings

(Unaudited)

Three Months Ended Six Months Ended

(dollars in thousands, except per share data)April 2,2016

April 4,2015

April 2,2016

April 4,2015

Net sales $ 611,142 $ 637,246 $ 1,179,599 $ 1,267,769Cost of sales 431,955 463,696 838,952 910,301Gross profit 179,187 173,550 340,647 357,468

Research and development 39,731 31,404 74,529 62,725Selling, general and administrative 82,771 92,158 165,765 189,985Interest 8,935 7,669 17,257 13,037Restructuring 8,069 — 8,342 —Other (936) 921 (1,518) 885

Earnings before income taxes 40,617 41,398 76,272 90,836Income taxes 9,710 9,305 19,205 23,478Net earnings attributable to common shareholders and noncontrolling interest $ 30,907 $ 32,093 $ 57,067 $ 67,358

Net earnings (loss) attributable to noncontrolling interest (143) — (224) —

Net earnings attributable to common shareholders $ 31,050 $ 32,093 $ 57,291 $ 67,358

Net earnings per share attributable to common shareholders

Basic $ 0.85 $ 0.81 $ 1.57 $ 1.68Diluted $ 0.85 $ 0.80 $ 1.55 $ 1.66

Average common shares outstandingBasic 36,481,996 39,601,795 36,597,972 40,116,731Diluted 36,693,190 39,984,668 36,860,760 40,550,814

See accompanying Notes to Consolidated Condensed Financial Statements.

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Moog Inc.Consolidated Condensed Statements of Comprehensive Income (Loss)

(Unaudited)



April 4,2015

April 2,2016

April 4,2015

Net earnings attributable to common shareholders and noncontrolling interest $ 30,907 $ 32,093 $ 57,067 $ 67,358

Other comprehensive income (loss), net of tax:Foreign currency translation adjustment 14,955 (37,373) (8,244) (80,279)Retirement liability adjustment 3,751 5,916 9,083 11,490Change in accumulated income (loss) on derivatives 493 (323) 931 (73)

Other comprehensive income (loss), net of tax 19,199 (31,780) 1,770 (68,862)Comprehensive income (loss) $ 50,106 $ 313 $ 58,837 $ (1,504)

Comprehensive income (loss) attributable to noncontrolling interest (143) — (224) —

Comprehensive income (loss) attributable to common shareholders $ 50,249 $ 313 $ 59,061 $ (1,504)


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Moog Inc.Consolidated Condensed Statements of Cash Flows

(Unaudited)

Six Months Ended


April 4,2015

CASH FLOWS FROM OPERATING ACTIVITIESNet earnings attributable to common shareholders and noncontrolling interest $ 57,067 $ 67,358Adjustments to reconcile net earnings to net cash provided (used) by operating activities:

Depreciation 38,554 40,460Amortization 11,428 12,946Deferred income taxes 2,292 9,071Equity-based compensation expense 1,919 3,966Other 5,991 3,348

Changes in assets and liabilities providing (using) cash:Receivables (5,606) 20,461Inventories (5,330) (7,847)Accounts payable (13,439) 18,934Customer advances 10,888 (3,358)Accrued expenses (5,802) (20,747)Accrued income taxes 2,552 (7,729)Net pension and post retirement liabilities (13,171) (7,014)Other assets and liabilities (8,920) 1,699

Net cash provided by operating activities 78,423 131,548CASH FLOWS FROM INVESTING ACTIVITIES

Acquisitions of businesses, net of cash acquired (11,016) —Purchase of property, plant and equipment (27,685) (37,921)Other investing transactions 1,058 3,551

Net cash used by investing activities (37,643) (34,370)CASH FLOWS FROM FINANCING ACTIVITIES

Net short-term repayments — (3,237)Proceeds from revolving lines of credit 210,320 248,785Payments on revolving lines of credit (182,455) (383,785)Payments on long-term debt (9,660) (5,241)Proceeds from senior notes, net of issuance costs — 294,430Proceeds from sale of treasury stock 2,229 10,542Purchase of outstanding shares for treasury (25,156) (204,958)Proceeds from sale of stock held by SECT 2,897 —Purchase of stock held by SECT (1,515) (8,440)Purchase of stock held by SERP Trust (2,300) —Excess tax benefits from equity-based payment arrangements 471 5,888

Net cash used by financing activities (5,169) (46,016)Effect of exchange rate changes on cash 2,858 (20,796)Increase in cash and cash equivalents 38,469 30,366

Cash and cash equivalents at beginning of period 309,853 231,292Cash and cash equivalents at end of period $ 348,322 $ 261,658


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Moog Inc.Notes to Consolidated Condensed Financial Statements

Six Months Ended April 2, 2016(Unaudited)

(dollars in thousands, except per share data)

Note 1 - Basis of Presentation

The accompanying unaudited consolidated condensed financial statements have been prepared by management in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments consisting of normal recurring adjustments considered necessary for the fair presentation of results for the interim period have been included. The results of operations for the three and six months ended April 2, 2016 are not necessarily indicative of the results expected for the full year. The accompanying unaudited consolidated condensed financial statements should be read in conjunction with the financial statements and notes thereto included in our Form 10-K for the fiscal year ended October 3, 2015. All references to years in these financial statements are to fiscal years.

Recent Accounting Pronouncements

In April 2014, the Financial Accounting Standards Board ("FASB") issued ASU No. 2014-08, "Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity." This ASU is intended to change the criteria for reporting discontinued operations and enhance convergence of the FASB’s and the International Accounting Standard Board’s (IASB) reporting requirements for discontinued operations. The provisions of this ASU are effective for fiscal years beginning after December 15, 2014 and interim periods within those fiscal years. We adopted this amendment in the first quarter of 2016. The adoption of this standard did not have a material impact on our financial statements.

Note 2 - Acquisition and Divestiture

In 2016, we acquired a 70% ownership in Linear Mold and Engineering, a Livonia, Michigan-based company specializing in metal additive manufacturing that provides engineering, manufacturing and production consulting services to customers across a wide range of industries, including aerospace, defense, energy and industrial. The purchase price, net of acquired cash, was $22,765 consisting of $11,016 in cash, issuance of a $1,280 unsecured note and assumption of $10,469 of debt. The acquisition also includes a redeemable noncontrolling interest in the remaining 30%, which is exercisable beginning three years from the date of acquisition. This acquisition is included in of our Aircraft Controls segment. The purchase price allocation is subject to adjustments as we obtain additional information for our estimates during the measurement period.

In 2015, we sold the Rochester, New York and Erie, Pennsylvania life sciences operations of our Medical Devices segment for $2,988 in cash.

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Note 3 - Receivables

Receivables consist of:

April 2,2016

October 3,2015

Accounts receivable $ 295,842 $ 291,188Long-term contract receivables:

Amounts billed 128,129 113,565Unbilled recoverable costs and accrued profits 272,439 286,395

Total long-term contract receivables 400,568 399,960Other 10,597 12,557Total receivables 707,007 703,705Less allowance for doubtful accounts (3,985) (5,286)Receivables $ 703,022 $ 698,419

We securitize certain trade receivables in transactions that are accounted for as secured borrowings (Securitization Program). We maintain a subordinated interest in a portion of the pool of trade receivables that are securitized. The retained interest, which is included in Receivables in the consolidated condensed balance sheets, is recorded at fair value, which approximates the total amount of the designated pool of accounts receivable. Refer to Note 6, Indebtedness, for additional disclosures related to the Securitization Program.

Note 4 - Inventories

Inventories, net of reserves, consist of:

April 2,2016

October 3,2015

Raw materials and purchased parts $ 189,455 $ 188,843Work in progress 239,035 243,373Finished goods 71,734 61,144Inventories $ 500,224 $ 493,360

There are no material inventoried costs relating to long-term contracts where revenue is accounted for using the percentage of completion, cost-to-cost method of accounting as of April 2, 2016 or October 3, 2015.

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Note 5 - Goodwill and Intangible Assets

The changes in the carrying amount of goodwill are as follows:

AircraftControls

Spaceand

DefenseControls

IndustrialSystems Components

MedicalDevices Total

Balance at October 3, 2015 $ 188,525 $ 158,213 $ 110,843 $ 217,763 $ 61,868 $ 737,212Acquisitions 20,235 — — — — 20,235Foreign currency translation (3,812) 169 (2,450) 1,318 154 (4,621)Balance at April 2, 2016 $ 204,948 $ 158,382 $ 108,393 $ 219,081 $ 62,022 $ 752,826

Goodwill at April 2, 2016, in our Medical Devices reporting unit, is net of a $38,200 accumulated impairment loss.

The components of intangible assets are as follows:

April 2, 2016 October 3, 2015

Weighted-Average

Life (years)Gross Carrying

AmountAccumulatedAmortization

Gross CarryingAmount

AccumulatedAmortization

Customer-related 11 $ 169,285 $ (113,787) $ 171,779 $ (110,697)Program-related 19 69,801 (26,217) 75,720 (27,463)Technology-related 9 70,804 (50,334) 73,299 (49,723)Marketing-related 9 25,491 (17,039) 25,997 (16,648)Other 9 4,839 (3,493) 4,772 (3,313)Intangible assets 12 $ 340,220 $ (210,870) $ 351,567 $ (207,844)

Substantially all acquired intangible assets other than goodwill are being amortized. Customer-related intangible assets primarily consist of customer relationships. Program-related intangible assets consist of long-term programs represented by current contracts and probable follow on work. Technology-related intangible assets primarily consist of technology, patents, intellectual property and software. Marketing-related intangible assets primarily consist of trademarks, trade names and non-compete agreements.

Amortization of acquired intangible assets was $5,485 and $11,296 for the three and six months ended April 2, 2016 and $6,134 and $12,794 for the three and six months ended April 4, 2015. Based on acquired intangible assets recorded at April 2, 2016, amortization is expected to be approximately $21,500 in 2016, $18,100 in 2017, $17,300 in 2018, $15,800 in 2019 and $14,000 in 2020.

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Note 6 - Indebtedness

Short-term borrowings consist of:

April 2,2016

October 3,2015

Lines of credit $ 90 $ 83Other short-term debt 1,280 —Short-term borrowings $ 1,370 $ 83

We maintain short-term line of credit facilities with banks throughout the world that are principally demand lines subject to revision by the banks.

Long-term debt consists of:

April 2,2016

October 3,2015

U.S. revolving credit facility $ 702,865 $ 675,000Senior notes 300,000 300,000Securitization program 100,000 100,000Obligations under capital leases 911 101Senior debt 1,103,776 1,075,101Less current installments (434) (34)Long-term debt $ 1,103,342 $ 1,075,067

Our U.S. revolving credit facility has a capacity of $1,100,000 and matures on May 22, 2019. It also provides an expansion option, which permits us to request an increase of up to $200,000 to the credit facility upon satisfaction of certain conditions. The credit facility is secured by substantially all of our U.S. assets.

On November 21, 2014, we completed the sale of $300,000 aggregate principal amount of 5.25% senior notes due December 1, 2022 at par with interest paid semiannually on June 1 and December 1 of each year. The aggregate net proceeds of $294,430 were used to repay indebtedness under our U.S. bank credit facility, thereby increasing the unused portion of our revolving credit facility.

The Securitization Program was extended on April 15, 2016 and matures on April 13, 2018 and increases our borrowing capacity to $120,000. Under the Securitization Program, we sell certain trade receivables and related rights to an affiliate, which in turn sells an undivided variable percentage ownership interest in the trade receivables to a financial institution, while maintaining a subordinated interest in a portion of the pool of trade receivables. Interest for the Securitization Program is based on 30-day LIBOR plus an applicable margin. A commitment fee is also charged based on a percentage of the unused amounts available and is not material. The agreement governing the Securitization Program contains restrictions and covenants which include limitations on the making of certain restricted payments, creation of certain liens, and certain corporate acts such as mergers, consolidations and sale of substantially all assets. The Securitization Program has a minimum borrowing requirement equal to the lesser of either 80% of our borrowing capacity or 100% of our borrowing base, which is a subset of the trade receivables sold under this agreement. As of April 2, 2016, our minimum borrowing requirement is $80,000.

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Note 7 - Product Warranties

In the ordinary course of business, we warrant our products against defects in design, materials and workmanship typically over periods ranging from twelve to sixty months. We determine warranty reserves needed by product line based on historical experience and current facts and circumstances. Activity in the warranty accrual is summarized as follows:


April 2,2016

April 4,2015

April 2,2016

April 4,2015

Warranty accrual at beginning of period $ 19,391 $ 18,326 $ 18,660 $ 19,953Warranties issued during current year 2,925 2,234 5,343 3,699Adjustments to pre-existing warranties (215) (452) (349) (1,584)Reductions for settling warranties (1,795) (1,918) (3,048) (3,156)Foreign currency translation 92 (572) (208) (1,294)Warranty accrual at end of period $ 20,398 $ 17,618 $ 20,398 $ 17,618

Note 8 - Derivative Financial Instruments

We principally use derivative financial instruments to manage interest rate risk associated with long-term debt and foreign exchange risk related to foreign operations and foreign currency transactions. We enter into derivative financial instruments with a number of major financial institutions to minimize counterparty credit risk.

Derivatives designated as hedging instruments

Interest rate swaps are used to adjust the proportion of total debt that is subject to variable and fixed interest rates. The interest rate swaps are designated as hedges of the amount of future cash flows related to interest payments on variable-rate debt that, in combination with the interest payments on the debt, convert a portion of the variable-rate debt to fixed-rate debt. At April 2, 2016, we had interest rate swaps with notional amounts totaling $200,000. The interest rate swaps effectively convert this amount of variable-rate debt to fixed-rate debt at 2.64%, including the applicable margin of 1.88% as of April 2, 2016. The interest will revert back to variable rates based on LIBOR plus the applicable margin upon the maturity of the interest rate swaps. These interest rate swaps mature at various times between June 6, 2016 and June 5, 2017.

We use foreign currency contracts as cash flow hedges to effectively fix the exchange rates on future payments and revenue. To mitigate exposure in movements between various currencies, primarily the Philippine peso, we had outstanding foreign currency forwards with notional amounts of $50,569 at April 2, 2016. These contracts mature at various times through March 2, 2018.

These interest rate swaps and foreign currency contracts are recorded in the consolidated condensed balance sheets at fair value and the related gains or losses are deferred in shareholders’ equity as a component of Accumulated Other Comprehensive Income (Loss) (AOCI). These deferred gains and losses are reclassified into expense during the periods in which the related payments or receipts affect earnings. However, to the extent the interest rate swaps and foreign currency contracts are not perfectly effective in offsetting the change in the value of the payments and revenue being hedged, the ineffective portion of these contracts is recognized in earnings immediately. Ineffectiveness was not material in the first six months of 2016 or 2015.

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Derivatives not designated as hedging instruments

We also have foreign currency exposure on balances, primarily intercompany, that are denominated in foreign currencies and are adjusted to current values using period-end exchange rates. The resulting gains or losses are recorded in the consolidated condensed statements of earnings. To minimize foreign currency exposure, we had foreign currency contracts with notional amounts of $132,597 at April 2, 2016. The foreign currency contracts are recorded in the consolidated condensed balance sheets at fair value and resulting gains or losses are recorded in the consolidated condensed statements of earnings. We recorded the following gains or losses on foreign currency contracts which are included in other income or expense and generally offset the gains or losses from the foreign currency adjustments on the intercompany balances that are also included in other income or expense:


April 2,2016

April 4,2015

April 2,2016

April 4,2015

Net gain (loss) $ 3,069 $ (2,348) $ 3,959 $ (1,415)

Summary of derivatives

The fair value and classification of derivatives is summarized as follows:

April 2,2016

October 3,2015

Derivatives designated as hedging instruments:Foreign currency contracts Other current assets $ 527 $ 12Foreign currency contracts Other assets 317 39

Total asset derivatives $ 844 $ 51Foreign currency contracts Other accrued liabilities $ 1,351 $ 1,755Foreign currency contracts Other long-term liabilities 175 572Interest rate swaps Other accrued liabilities 383 756Interest rate swaps Other long-term liabilities 45 268

Total liability derivatives $ 1,954 $ 3,351Derivatives not designated as hedging instruments:

Foreign currency contracts Other current assets $ 1,481 $ 115Foreign currency contracts Other accrued liabilities $ 1,103 $ 429

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Note 9 - Fair Value

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Depending on the nature of the asset or liability, various techniques and assumptions can be used to estimate fair value. The definition of the fair value hierarchy is as follows:

Level 1 – Quoted prices in active markets for identical assets and liabilities.

Level 2 – Observable inputs other than quoted prices in active markets for similar assets and liabilities.

Level 3 – Inputs for which significant valuation assumptions are unobservable in a market and therefore value is based on the best available data, some of which is internally developed and considers risk premiums that a market participant would require.

Our derivatives are valued using various pricing models or discounted cash flow analyses that incorporate observable market data, such as interest rate yield curves and currency rates, and are classified as Level 2 within the valuation hierarchy. Our Level 3 fair value liabilities represent contingent consideration recorded for acquisitions to be paid if various financial targets are met. The amounts recorded were calculated for each payment scenario in each period using an estimate of the probability of the future cash outflows. The varying contingent payments were then discounted to the present value at the weighted average cost of capital. Fair value is assessed on a quarterly basis, or whenever events or circumstances change that indicates an adjustment is required. The assessment includes an evaluation of the performance of the acquired business compared to previous expectations, changes to future projections and the probability of achieving the earn out targets.

The following table presents the fair values and classification of our financial assets and liabilities measured on a recurring basis, all of which are classified as Level 2.

ClassificationApril 2,2016

October 3,2015

Foreign currency contracts Other current assets $ 2,008 $ 127Foreign currency contracts Other assets 317 39

Total assets $ 2,325 $ 166Foreign currency contracts Other accrued liabilities $ 2,454 $ 2,184Foreign currency contracts Other long-term liabilities 175 572Interest rate swaps Other accrued liabilities 383 756Interest rate swaps Other long-term liabilities 45 268

Total liabilities $ 3,057 $ 3,780

Our only financial instrument for which the carrying value differs from its fair value is long-term debt. At April 2, 2016, the fair value of long-term debt was $1,098,526 compared to its carrying value of $1,103,776. The fair value of long-term debt is classified as Level 2 within the fair value hierarchy and was estimated based on quoted market prices.

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Note 10 - Employee Benefit Plans

Net periodic benefit costs for U.S. defined benefit pension plans consist of:


April 2,2016

April 4,2015

April 2,2016

April 4,2015

Service cost $ 5,910 $ 5,908 $ 11,819 $ 11,817Interest cost 9,414 8,508 18,829 17,015Expected return on plan assets (12,596) (11,784) (25,192) (23,568)Amortization of prior service cost (credit) 47 38 94 75Amortization of actuarial loss 6,542 5,589 13,084 11,178Pension expense for defined benefit plans $ 9,317 $ 8,259 $ 18,634 $ 16,517

Net periodic benefit costs for foreign defined benefit pension plans consist of:


April 2,2016

April 4,2015

April 2,2016

April 4,2015

Service cost $ 1,325 $ 1,385 $ 2,638 $ 2,976Interest cost 1,226 1,104 2,466 2,369Expected return on plan assets (1,211) (1,205) (2,440) (2,544)Amortization of prior service cost (credit) (19) (12) (38) (25)Amortization of actuarial loss 647 484 1,297 1,071Pension expense for defined benefit plans $ 1,968 $ 1,756 $ 3,923 $ 3,847

Net periodic benefit costs for the post-retirement health care benefit plan consists of:


April 2,2016

April 4,2015

April 2,2016

April 4,2015

Service cost $ 41 $ 57 $ 81 $ 113Interest cost 117 144 234 288Amortization of actuarial gain (143) (27) (286) (53)Net periodic postretirement benefit cost $ 15 $ 174 $ 29 $ 348

Pension expense for the defined contribution plans consists of:

Three Months Ended Six Months EndedApril 2,2016

April 4,2015

April 2,2016

April 4,2015

U.S. defined contribution plans $ 3,359 $ 3,409 $ 6,800 $ 6,943Foreign defined contribution plans 1,471 1,613 3,109 3,299Total pension expense for defined contribution plans $ 4,830 $ 5,022 $ 9,909 $ 10,242

Actual contributions for the six months ended April 2, 2016 and anticipated additional 2016 contributions to our defined benefit pension plans are as follows:

U.S. Plans Foreign Plans TotalActual $ 31,351 $ 4,376 $ 35,727Anticipated 36,610 2,700 39,310Total expected contributions $ 67,961 $ 7,076 $ 75,037

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Note 11 - Restructuring

In 2016, we initiated further restructuring actions in conjunction with exiting a product line within Aircraft Controls in the U.S. We have also taken actions as a result of the business outlook in specific markets and locations in Components and Industrial Systems that resulted in workforce reductions in Canada, Europe and the U.S. The expense for all of these actions consists of $4,581 of non-cash charges, primarily for writing off intangible assets, $3,281 for severance and $480 for facility closure.

In 2015, we initiated additional restructuring plans as a result of ongoing reviews of our lines of business and operations. The restructuring actions taken resulted in workforce reductions, primarily in the U.S., Europe and Asia.

In 2014, we initiated restructuring plans in response to the business outlook, which includes a change in the mix of sales and delays and cancellations of orders for certain product lines. The restructuring actions taken resulted in workforce reductions, primarily in the U.S. and Europe.

Restructuring activity for severance and other costs by segment is as follows:

AircraftControls

Space andDefenseControls

IndustrialSystems Components

MedicalDevices Total

Balance at October 3, 2015 $ 3,047 $ 7,237 $ 4,003 $ 117 $ 142 $ 14,546Charged to expense - 2016 plan 5,923 — 1,165 1,254 — 8,342Adjustments to provision (160) (53) 29 — — (184)Cash payments - 2014 plan (11) (429) — — — (440)Cash payments - 2015 plan (2,445) (4,800) (2,527) (47) (43) (9,862)Cash payments - 2016 plan (549) — (508) (781) — (1,838)Non-cash charges - 2016 plan (4,581) — — — — (4,581)Foreign currency translation (23) (11) 75 — — 41Balance at April 2, 2016 $ 1,201 $ 1,944 $ 2,237 $ 543 $ 99 $ 6,024

As of April 2, 2016, the restructuring accrual consists of $1,013 for the 2014 plan, $3,035 for the 2015 plan and $1,976 for the 2016 plan. Restructuring for all plans is expected to be paid by October 1, 2016, except portions classified as long-term liabilities based on payment arrangements.

Note 12 - Income Taxes

The effective tax rates for the three and six months ended April 2, 2016 were 23.9% and 25.2%, respectively. The effective tax rates for the three and six months ended April 4, 2015 were 22.5% and 25.8%, respectively. The effective tax rates for these periods are lower than the U.S. federal statutory tax rate primarily due to a significant portion of our earnings that come from foreign operations with lower tax rates and the recognition and timing of U.S. research and development tax credits. In addition, we also benefited from the reversal of accruals for certain tax exposures outside the U.S. whose statutes of limitations expired during these periods.

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Note 13 - Shareholders’ Equity

The changes in shareholders’ equity for the six months ended April 2, 2016 are summarized as follows:

Number of Shares

AmountClass A

Common StockClass B

Common StockCOMMON STOCKBeginning of period $ 51,280 43,638,618 7,641,095Conversion of Class B to Class A — 15,183 (15,183)End of Period 51,280 43,653,801 7,625,912

ADDITIONAL PAID-IN CAPITALBeginning of period 456,512Equity-based compensation expense 1,919Issuance of treasury shares (264)Adjustment to market - SECT, SERP and other (7,521)End of period 450,646

RETAINED EARNINGSBeginning of period 1,579,794Net earnings attributable to common shareholders 57,291End of period 1,637,085

TREASURY STOCKBeginning of period (701,771) (10,318,431) (3,323,926)Issuance of treasury shares 2,493 84,625 —Purchase of treasury shares (25,156) (572,653) —End of period (724,434) (10,806,459) (3,323,926)

STOCK EMPLOYEE COMPENSATION TRUST (SECT)Beginning of period (44,211) (828,381)Issuance of shares 2,897 64,676Purchase of shares (1,515) (27,023)Adjustment to market 7,128 —End of period (35,701) — (790,728)

SUPPLEMENTAL RETIREMENT PLAN (SERP) TRUSTBeginning of period (5,337) (100,000)Purchase of shares (2,300) (50,000)Adjustment to market 864 —End of period (6,773) — (150,000)

ACCUMULATED OTHER COMPREHENSIVE LOSSBeginning of period (341,735)Other comprehensive income (loss) 1,770End of period (339,965)TOTAL SHAREHOLDERS' EQUITY $ 1,032,138 32,847,342 3,361,258

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The changes in AOCI, net of tax, by component for the six months ended April 2, 2016 are as follows:

Accumulatedforeign

currencytranslation

Accumulatedretirement

liability

Accumulatedgain (loss) on

derivatives TotalAOCI at October 3, 2015 $ (72,788) $ (266,910) $ (2,037) $ (341,735)Other comprehensive income (loss) before reclassifications (8,244) 159 (301) (8,386)Amounts reclassified from AOCI — 8,924 1,232 10,156Other comprehensive income (loss) (8,244) 9,083 931 1,770AOCI at April 2, 2016 $ (81,032) $ (257,827) $ (1,106) $ (339,965)

The amounts reclassified from AOCI into earnings are as follows:


Statement of earningsclassification

April 2,2016

April 4,2015

April 2,2016

April 4,2015

Retirement liability:Prior service cost $ 28 $ 124 $ 56 $ 417Actuarial losses 7,011 8,062 14,056 15,614

Reclassification from AOCI into earnings 7,039 8,186 14,112 16,031Tax effect (2,591) (2,270) (5,188) (4,541)Net reclassification from AOCI into earnings $ 4,448 $ 5,916 $ 8,924 $ 11,490Derivatives:

Foreign currency contracts Sales $ 196 $ 36 $ 274 $ 36Foreign currency contracts Cost of sales 594 413 1,070 918Interest rate swaps Interest 169 335 470 740

Reclassification from AOCI into earnings 959 784 1,814 1,694Tax effect (288) (283) (582) (627)Net reclassification from AOCI into earnings $ 671 $ 501 $ 1,232 $ 1,067

The amounts deferred in AOCI are as follows:

Net deferral in AOCI - effective portionThree Months Ended Six Months Ended

Statement of earningsclassification

April 2,2016

April 4,2015

April 2,2016

April 4,2015

Foreign currency contracts Sales $ (281) $ (401) $ (515) $ (401)Foreign currency contracts Cost of sales 525 452 257 573Interest rate swaps Interest (359) (1,132) 88 (1,761)

Net loss (115) (1,081) (170) (1,589)Tax effect (63) 257 (131) 449Net deferral in AOCI of derivatives $ (178) $ (824) $ (301) $ (1,140)

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Note 14 - Stock Employee Compensation Trust and Supplemental Retirement Plan Trust

The Stock Employee Compensation Trust (SECT) assists in administering and provides funding for equity-based compensation plans and benefit programs, including the Moog Inc. Retirement Savings Plan (RSP). The Supplemental Retirement Plan (SERP) Trust provides funding for benefits under the Moog Inc. SERP. Both the SECT and the SERP Trust hold shares as investments. The shares in the SECT and SERP Trust are not considered outstanding for purposes of calculating earnings per share. However, in accordance with the trust agreements governing the SECT and SERP Trust, the trustees vote all shares held by the SECT and SERP Trust on all matters submitted to shareholders.

Note 15 - Earnings per Share

Basic and diluted weighted-average shares outstanding are as follows:


April 2,2016

April 4,2015

April 2,2016

April 4,2015

Basic weighted-average shares outstanding 36,481,996 39,601,795 36,597,972 40,116,731Dilutive effect of equity-based awards 211,194 382,873 262,788 434,083Diluted weighted-average shares outstanding 36,693,190 39,984,668 36,860,760 40,550,814

For the three and six months ended April 2, 2016, there were 148,867 and 64,868 common shares subject to equity-based awards, respectively, excluded from the calculation of diluted earning per share as they would be anti-dilutive. There were no material anti-dilutive equity-based awards outstanding for the three and six months ended April 4, 2015.

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Note 16 - Segment Information

During 2015, we made a change to our segment reporting. Our Components segment now includes our sensors and handpieces product line, which we previously included in the Medical Devices segment. This product line consists of manufactured ultrasonic and optical sensors as well as surgical handpieces distributed to medical OEMs. Since the customer base is different from the sale of medical pumps directly to end users, the chief operating decision maker is now reviewing performance and assessing the allocation of resources of this product line as part of the Components segment. All historical amounts have been restated to conform to this new organization.

Below are sales and operating profit by segment for the three and six months ended April 2, 2016 and April 4, 2015 and a reconciliation of segment operating profit to earnings before income taxes. Operating profit is net sales less cost of sales and other operating expenses, excluding interest expense, equity-based compensation expense and other corporate expenses. Cost of sales and other operating expenses are directly identifiable to the respective segment or allocated on the basis of sales, number of employees or profit.


April 2,2016

April 4,2015

April 2,2016

April 4,2015

Net sales:Aircraft Controls $ 275,769 $ 274,396 $ 530,604 $ 540,764Space and Defense Controls 89,175 93,256 171,815 193,211Industrial Systems 128,244 129,145 253,423 262,511Components 93,813 115,062 173,388 222,766Medical Devices 24,141 25,387 50,369 48,517

Net sales $ 611,142 $ 637,246 $ 1,179,599 $ 1,267,769Operating profit:

Aircraft Controls $ 19,042 $ 22,336 $ 37,173 $ 46,794Space and Defense Controls 13,357 4,909 25,173 13,635Industrial Systems 13,270 12,685 26,903 25,904Components 8,385 15,900 13,085 32,862Medical Devices 2,554 716 5,833 3,052

Total operating profit 56,608 56,546 108,167 122,247Deductions from operating profit:

Interest expense 8,935 7,669 17,257 13,037Equity-based compensation expense 983 568 1,919 3,966Corporate and other expenses, net 6,073 6,911 12,719 14,408

Earnings before income taxes $ 40,617 $ 41,398 $ 76,272 $ 90,836

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Note 17 - Commitments and Contingencies

From time to time, we are involved in legal proceedings. We are not a party to any pending legal proceedings which management believes will result in a material adverse effect on our financial condition, results of operations or cash flows.

We are engaged in administrative proceedings with governmental agencies and legal proceedings with governmental agencies and other third parties in the normal course of our business, including litigation under Superfund laws, regarding environmental matters. We believe that adequate reserves have been established for our share of the estimated cost for all currently pending environmental administrative or legal proceedings and do not expect that these environmental matters will have a material adverse effect on our financial condition, results of operations or cash flows.

In the ordinary course of business we could be subject to ongoing claims or disputes from our customers, the ultimate settlement of which could have a material adverse impact on our consolidated results of operations. While the receivables and any loss provisions recorded to date reflect management's best estimate of the projected costs to complete a given project, there is still significant effort required to complete the ultimate deliverable. Future variability in internal cost and as well as future profitability is dependent upon a number of factors including deliveries, performance and government budgetary pressures. The inability to achieve a satisfactory contractual solution, further unplanned delays, additional developmental cost growth or variations in any of the estimates used in the existing contract analysis could lead to further loss provisions. Additional losses could have a material adverse impact on our financial condition, results of operations or cash flows in the period in which the loss may be recognized.

We are contingently liable for $18,494 of standby letters of credit issued by a bank to third parties on our behalf at April 2, 2016.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in the Company’s Annual Report filed on Form 10-K for the fiscal year ended October 3, 2015. All references to years in this Management’s Discussion and Analysis of Financial Condition and Results of Operations are to fiscal years and amounts may differ from reported values due to rounding.

OVERVIEW

We are a worldwide designer, manufacturer and systems integrator of high performance precision motion and fluid controls and control systems for a broad range of applications in aerospace and defense and industrial markets. Within the aerospace and defense market, our products and systems include:

• Defense market - primary and secondary flight controls for military aircraft, stabilization and automatic ammunition loading controls for armored combat vehicles, tactical and strategic missile steering controls and gun aiming controls.

• Commercial aircraft market - primary and secondary flight controls for commercial aircraft.• Commercial space market - satellite positioning controls and thrust vector controls for launch vehicles.

In the industrial market, our products are used in a wide range of applications including:

• Industrial automation market - injection molding, metal forming, heavy industry, material and automotive testing, pilot training simulators and surveillance systems.

• Energy market - oil and gas exploration, wind energy and power generation.• Medical market - sleep apnea devices, surgical handpieces, CT scanners, as well as enteral clinical

nutrition and infusion therapy solutions.

We operate under five segments, Aircraft Controls, Space and Defense Controls, Industrial Systems, Components and Medical Devices. Our principal manufacturing facilities are located in the United States, United Kingdom, Philippines, Germany, Italy, Netherlands, China, Costa Rica, Japan, Luxembourg, India, Canada and Ireland.

We have long-term contracts with some of our customers. These contracts are predominantly within Aircraft Controls and Space and Defense Controls and represent 33%, 34% and 33% of our sales in 2015, 2014 and 2013, respectively. We recognize revenue on these contracts using the percentage of completion, cost-to-cost method of accounting as work progresses toward completion. The remainder of our sales are recognized when the risks and rewards of ownership and title to the product are transferred to the customer, principally as units are delivered or as service obligations are satisfied. This method of revenue recognition is predominantly used within the Industrial Systems, Components and Medical Devices segments, as well as with aftermarket activity.

We concentrate on providing our customers with products designed and manufactured to the highest quality standards. Our products are applied in demanding applications, "When Performance Really Matters®." We believe we have achieved a leadership position in the high performance, precision controls market, by capitalizing on our strengths, which include:

• superior technical competence in delivering mission-critical solutions,• an innovative customer-intimacy approach,• a diverse base of customers and end markets served by a broad product portfolio, • well-established international presence serving customers worldwide, and• a proven ability to successfully undertake investments designed to enhance our control systems product

franchise and drive continued growth.

These strengths have afforded us the ability to expand our current solutions into new, complimentary technologies, which provide us with the opportunity to develop our product scope supply from one market to another and from component to systems supplier, as well as achieve substantial content positions on the platforms on which we currently participate. As we seek to be the dominant supplier in the current niche markets we serve, we will also look for innovation in all aspects of our business, employing new technologies to improve productivity and to develop progressive business models.

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Our financial objectives include increasing our revenue base and improving our long term profitability and cash flow from operations while continuously focusing on internal cost improvement initiatives. In doing so, we expect to maintain a balanced, diversified portfolio in terms of markets served, product applications, customer base and geographic presence. Our fundamental strategies to achieve our objectives include:

• maintaining our technological excellence by building upon our systems integration capabilities while solving our customers’ most demanding technical problems in applications "When Performance Really Matters®,"

• utilizing our global capabilities and strong engineering heritage to innovate new solutions,• maximizing customer value by implementing lean enterprise principles, and• investing in talent development to accelerate our leadership capability and employee performance.

We focus on improving shareholder value through strategic revenue growth, both acquired and organic, through improving operating efficiencies and manufacturing initiatives and through utilizing low cost manufacturing facilities without compromising quality. Additionally, we take a balanced approach to capital deployment, which may include strategic acquisitions or further share buyback activity in order to maximize shareholder returns over the long-term. We face numerous challenges to improving shareholder value. These include, but are not limited to, adjusting to dynamic global economic conditions that are influenced by governmental, industrial and commercial factors, pricing pressures from customers, strong competition, foreign currency fluctuations and increases in employee benefit costs. Based on periodic strategy reviews, including the financial outlook of our business, we may also engage in restructuring activities, including reducing overhead, consolidating facilities, exiting some product lines and divesting operations.

Acquisition and Divestiture

All of our acquisitions are accounted for under the purchase method and, accordingly, the operating results for the acquired companies are included in the consolidated statements of earnings from the respective dates of acquisition. Under purchase accounting, we record assets and liabilities at fair value on the consolidated balance sheet. The purchase price described for each acquisition below is net of any cash acquired and includes debt issued or assumed.

In 2016, we acquired a 70% ownership in Linear Mold and Engineering, a Livonia, Michigan-based company specializing in metal additive manufacturing that provides engineering, manufacturing and production consulting services to customers across a wide range of industries, including aerospace, defense, energy and industrial. We acquired Linear Mold and Engineering for $23 million. The acquisition also includes a redeemable noncontrolling interest in the remaining 30%, which is exercisable beginning three years from the date of acquisition. This acquisition is included in of our Aircraft Controls segment.

In 2015, we sold the Rochester, New York and Erie, Pennsylvania life sciences operations of our Medical Devices segment for $3 million.

CRITICAL ACCOUNTING POLICIES

On a regular basis, we evaluate the critical accounting policies used to prepare our consolidated financial statements, including, but not limited to, revenue recognition on long-term contracts, contract loss reserves, reserves for inventory valuation, reviews for impairment of goodwill, purchase price allocations for business combinations, pension assumptions and deferred tax asset valuation allowances.

There have been no material changes in critical accounting policies in the current year from those disclosed in our 2015 Annual Report on Form 10-K. However, we have expanded our disclosure for reviews for impairment of goodwill. The disclosure below includes key assumptions and circumstances that, if changed, could negatively impact our assessment of goodwill in reporting units for which the fair value is not significantly in excess of carrying value.

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Reviews for Impairment of Goodwill

We performed an interim test on goodwill for impairment for our Medical Devices reporting unit in the fourth quarter of 2015. This reporting unit had $62 million of goodwill at October 3, 2015. The fair value of the Medical Devices reporting unit exceeded its carrying amount by 18%. Had we used a discount rate that was 100 basis points higher or a terminal growth rate that was 100 basis points lower than those we assumed, the fair value of this reporting unit would have exceeded its carrying amount by 4% and 10%, respectively.

The primary factor causing the fair value of this reporting unit to not be substantially greater than the carrying value is that the Medical Devices segment was created through a series of acquisitions between 2006 and 2009. The creation of this reporting unit resulted in recording substantial goodwill, which increased the carrying value. The key assumptions that drive the estimated fair value are the projected revenue and operating margins, which are used to project future cash flows. Our expectation for this reporting unit is for revenue growth over the five year projection period to be driven by the overall market growth of the home healthcare segment of the infusion therapy market and by capturing market share due to new product offerings. Additionally, our expectation is that operating margins improve throughout the five year projection period, driven by improved sales, as well as continued cost containment activities. If cash flows generated by our Medical Devices reporting unit were to decline in the future, or if there were adverse revisions to key assumptions, we may be required to record impairment charges. There are specific circumstances that would pose risk to the fair value of this reporting unit. Lower than projected growth rates of the home healthcare segment of the infusion therapy market, changes in provider capital purchase cycles, changes in healthcare legislation, changes in private insurance plans, as well as changes in treatment therapies may negatively affect the fair value of this reporting unit. Also, our projected market share capture rates may be lower due to delayed or unsuccessful new product offerings, which would negatively affect the fair value of this reporting unit. In addition, the fair value of this reporting unit may be negatively impacted based on the results of strategic reviews and courses of action that we may decide to pursue.

RECENT ACCOUNTING PRONOUNCEMENTS

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. This ASU requires revenue recognition to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and assets recognized from costs incurred to obtain or fulfill a contract. This ASU can be adopted using either a full retrospective or modified retrospective approach. In March 2016, the FASB issued ASU No. 2016-08, "Revenue from Contracts with Customers (Topic 606): Principal Versus Agent Considerations." This ASU clarifies implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU No. 2016-10, "Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing." This ASU clarifies implementation guidance on licensing arrangements as well as the process of identifying performance obligations. The provisions of each ASU are effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years, pursuant to the issuance of ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of Effective Date,” in August 2015. These amendments are applicable to us beginning in the first quarter of 2019. We are currently evaluating the adoption of these standards on our financial statements.

In August 2014, the FASB issued ASU No. 2014-13, “Consolidation (Topic 810): Measuring the Financial Assets and Financial Liabilities of a Consolidated Collateralized Financing Entity.” This ASU allows a reporting entity to elect to measure the financial assets and the financial liabilities of a consolidated collateralized financing entity using either the measurement alternative included in the ASU or Topic 820. The provisions of this ASU are effective for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years. Early adoption is permitted as of the beginning of an annual period. This amendment is applicable to us beginning in the first quarter of 2017. The adoption of this standard is not expected to have a material impact on our financial statements.

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In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” This ASU requires management to evaluate whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued or are available to be issued. This ASU also requires management to disclose certain information depending on the results of the going concern evaluation. The provisions of this ASU are effective for fiscal years ending after December 15, 2016 and for interim periods within those fiscal years thereafter. Early adoption is permitted. This amendment is applicable to us beginning in the first quarter of 2017. The adoption of this standard is not expected to have a material impact on our financial statements.

In January 2015, the FASB issued ASU No. 2015-01, "Income Statement - Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items." This ASU eliminates from GAAP the concept of extraordinary items. The ASU retains and expands the existing presentation and disclosure guidance for items that are unusual in nature or occur infrequently to also include items that are both unusual in nature and infrequently occurring. The provisions of this ASU are effective for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years. Early adoption is permitted, provided that presentation applied to the beginning of the fiscal year of adoption. This amendment is applicable to us beginning in the first quarter of 2017. The adoption of this standard is not expected to have a material impact on our financial statements.

In April 2015, the FASB issued ASU No. 2015-03, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” This ASU requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. In August 2015, the FASB issued ASU No. 2015-15, “Interest - Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements.” This ASU provides additional guidance on ASU No. 2015-03, specific to debt issuance costs arising from line-of-credit arrangements. This ASU provides an option to either apply the provisions of ASU No. 2015-03 to line-of-credit arrangements or to defer and instead present debt issuance costs as an asset and subsequently amortize the deferred debt issuance costs ratably over the term of the line-of-credit arrangement. The provisions of each ASU are effective for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years. Early adoption is permitted, and retrospective application is required. These amendments are applicable to us beginning in the first quarter of 2017. The adoption of these standards are not expected to have a material impact on our financial statements.

In May 2015, the FASB issued ASU No. 2015-07, “Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities that Calculate Net Asset Value per Share (or Its Equivalent).” This ASU removes the requirement to make certain disclosures as well as categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient. The provisions of this ASU are effective for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years. Early adoption is permitted, and retrospective application is required. This amendment is applicable to us beginning in the first quarter of 2017. Other than requiring a change to our disclosures, the adoption of this standard is not expected to have a material impact on our financial statements.

In July 2015, the FASB issued ASU No. 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory.” This ASU requires inventory to be measured at the lower of cost or net realizable value. The provisions of this ASU are effective for fiscal years beginning after December 15, 2016 and interim periods within those fiscal years. Early adoption is permitted, and the amendment is required to be applied prospectively. This amendment is applicable to us beginning in the first quarter of 2018. The adoption of this standard is not expected to have a material impact on our financial statements.

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In September 2015, the FASB issued ASU No. 2015-16, “Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments.” This ASU eliminates the requirement to retrospectively account for changes to provisional amounts initially recorded in a business acquisition opening balance sheet. The provisions of this ASU are effective for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years. Early adoption is permitted as of the effective date for financial statements that have not yet been made available for issuance. This amendment is applicable to us beginning in the first quarter of 2017. The adoption of this standard is not expected to have a material impact on our financial statements.

In November 2015, the FASB issued ASU No. 2015-17, "Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes." This ASU amends existing guidance to require presentation of deferred tax assets and liabilities as noncurrent within the balance sheet. The provisions of the ASU are effective for fiscal years beginning after December 15, 2016 and interim periods within those fiscal years. Early adoption is permitted, and may be applied either prospectively or retrospectively. This amendment is applicable to us beginning in the first quarter of 2018. We are currently evaluating the adoption of this standard on our financial statements.

In January 2016, the FASB issued ASU No. 2016-01, "Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities." This ASU requires most equity investments be measured at fair value, with subsequent changes in fair value recognized in net income. The amendment also impacts the measurement of financial liabilities under the fair value option as well as certain presentation and disclosure requirements for financial instruments. The provisions of this ASU are effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. Early adoption is permitted for some, but not all, provisions. The amendment requires certain provisions to be applied prospectively and others to be applied by means of a cumulative-effect adjustment. This amendment is applicable to us beginning in the first quarter of 2019. We are currently evaluating the adoption of this standard on our financial statements.

In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)." This ASU requires most lease arrangements to be recognized in the balance sheet as lease assets and lease liabilities. The ASU also requires additional disclosures about the leasing arrangements. The provisions of this ASU are effective for fiscal years beginning after December 15, 2018 and interim periods within those years. Early adoption is permitted. This amendment is applicable to us beginning in the first quarter of 2020. We are currently evaluating the adoption of this standard on our financial statements.

In March 2016, the FASB issued ASU No. 2019-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share Based Payment Accounting." This ASU simplifies several aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards and classification on the statement of cash flows. The provisions of this ASU are effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. This amendment is applicable to us beginning in the first quarter of 2018. We are currently evaluating the adoption of this standard on our financial statements.

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CONSOLIDATED RESULTS OF OPERATIONS AND OUTLOOK


(dollars and shares in millions, except per share data)

April 2,2016

April 4,2015

$Variance

% Variance

April 2,2016

April 4,2015

$Variance

%Variance

Net sales $ 611 $ 637 $ (26) (4%) $ 1,180 $ 1,268 $ (88) (7%)Gross margin 29.3% 27.2% 28.9% 28.2%Research and developmentexpenses $ 40 $ 31 $ 8 27% $ 75 $ 63 $ 12 19%Selling, general andadministrative expenses as apercentage of sales 13.5% 14.5% 14.1% 15.0%Interest expense $ 9 $ 8 $ 1 17% $ 17 $ 13 $ 4 32%Restructuring expense $ 8 $ — $ 8 n/a $ 8 $ — $ 8 n/aEffective tax rate 23.9% 22.5% 25.2% 25.8%Net earnings attributable to common shareholders $ 31 $ 32 $ (1) (3%) $ 57 $ 67 $ (10) (15%)Diluted average common shares outstanding 37 40 (3) (8%) 37 41 (4) (9%)Diluted earnings per share attributable to common shareholders $ 0.85 $ 0.80 $ 0.05 6% $ 1.55 $ 1.66 $ (0.11) (7%)

Net sales decreased in the second quarter of 2016 compared to the second quarter of 2015 driven by a $21 million decline in our Components segment. Weaker foreign currencies, in particular the British Pound, the Brazilian Real and the Euro relative to the U.S. dollar, contributed 29% of the sales decline in the second quarter of 2016.

Net sales decreased in the first half of 2016 compared to the first half of 2015. Our Components and Space and Defense segments contributed 80% of the sales decline. Weaker foreign currencies, in particular the Euro and the British Pound relative to the U.S. dollar, contributed 27% of the sales decline in the first half of 2016.

Gross margin increased in the second quarter of 2016 compared to the second quarter of 2015. In the second quarter of 2016, we benefited from the absence of last year's $7 million correction of an out-of-period accounting error in our Space and Defense Controls segment. Additionally, we had an improved sales mix from higher amounts of foreign military sales in Aircraft Controls and from higher sales volumes in Medical Devices. The improvements were partly offset by an adverse sales mix in both Components and in Industrial Systems due to lower energy related sales.

Research and development expenses increased in the second quarter and the first half of 2016 compared to the same periods of 2015. Within Aircraft Controls, research and development expenses increased $9 million and $14 million, respectively. In both the second quarter and first half of 2016, we had higher activity on the Embraer E-2 and the Airbus A350 programs.

Selling, general and administrative expenses as a percentage of sales decreased in the second quarter and in the first half of 2016 compared to the same periods of 2015. Most of the decline is attributable to an on-going focus on expense reduction across our segments. Additionally, we benefited from our 2015 restructuring activities.

In 2015, we incurred $15 million of restructuring expenses, primarily in Industrial Systems, Space and Defense Controls and Aircraft Controls. Through the first half of 2016, the total savings were $10 million, or 46% of our projected benefits for the year, and were primarily in selling, general and administrative expenses. In the second quarter of 2016, we incurred $8 million of restructuring expenses, primarily related to exiting a product line in Aircraft Controls. We expect the restructuring activities from the second quarter of 2016 will result in $11 million of cost savings over the next four quarters.

In the first half of 2016 compared to the first half of 2015, interest expense increased $2 million due to higher interest rates following the issuance of our $300 million senior notes. Additionally, interest expense increased $2 million due to higher levels of debt attributable to the funding of our share repurchase program.

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In comparison to the U.S. statutory tax rate, our effective tax rates in 2016 and 2015 differ as a result of earnings being taxed in foreign jurisdictions with lower statutory tax rates. Additionally, our effective tax rates reflect the reversal of accruals for certain tax exposures outside of the U.S. whose statutes of limitations have expired, as well as the timing of enactment of the U.S. research and development tax credit.

Average common shares outstanding decreased in the second quarter and in the first half of 2016 compared to the same periods of 2015 due to our share buyback program. Since the Board of Directors amended the program in January 2014, we have repurchased nine million shares, and have four million additional shares available for repurchase under this program.

Other comprehensive income increased in the second quarter and in the first half of 2016 compared to same periods of 2015 due to foreign currency translation adjustments. In total, other comprehensive income related to the translation of the Euro and the Canadian Dollar increased $50 million in the second quarter and $58 million in the first half of 2016 compared to the same periods a year ago.

2016 Outlook – We expect sales in 2016 to decrease 2% from fiscal 2015 to $2.47 billion. We expect sales declines in Components and Industrial Systems, as they are negatively impacted by global macro-economic conditions, particularly in our energy market and in our industrial market. Partly offsetting the declines is growth in Aircraft Controls as the Airbus A350 program continues to ramp up. We expect operating margin to decrease slightly to 9.6%. The benefits of our 2015 and 2016 cost containment strategies will drive margin expansion; however, the improvement will be offset by unfavorable sales mix in Aircraft Controls and Components. We expect net earnings attributable to common shareholders will decrease 7% to $123 million. Average diluted shares outstanding will decrease 6% to 37 million due to shares already repurchased under our current share buyback program. We expect diluted earnings per share will range between $3.20 and $3.50, with a midpoint of $3.35, which would be unchanged from 2015.

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SEGMENT RESULTS OF OPERATIONS AND OUTLOOK

During 2015, we made a change to our segment reporting. Our Components segment now includes our sensors and handpieces product line, which we previously included in the Medical Devices segment. This product line consists of manufactured ultrasonic and optical sensors as well as surgical handpieces distributed to medical OEMs. Since the customer base is different from the sale of medical pumps directly to end users, the chief operating decision maker is now reviewing performance and assessing the allocation of resources of this product line as part of the Components segment. Sales of sensors and handpieces were $25 million in 2015. All amounts have been restated to present sensors and handpieces within Components.

Operating profit, as presented below, is net sales less cost of sales and other operating expenses, excluding interest expense, equity-based compensation expense and other corporate expenses. Cost of sales and other operating expenses are directly identifiable to the respective segment or allocated on the basis of sales, number of employees or profit. Operating profit is reconciled to earnings before income taxes in Note 16 of the Notes to Consolidated Condensed Financial Statements included in this report.

Aircraft Controls


(dollars in millions)April 2,2016

April 4,2015

$ Variance

% Variance

April 2,2016

April 4,2015

$ Variance

% Variance

Net sales - military aircraft $ 132 $ 134 $ (3) (2%) $ 252 $ 260 $ (8) (3%)Net sales - commercial aircraft 144 140 4 3% 279 281 $ (2) (1%)

$ 276 $ 274 $ 1 1% $ 531 $ 541 $ (10) (2%)Operating profit $ 19 $ 22 $ (3) (15%) 37 47 $ (10) (21%)Operating margin 6.9% 8.1% 7.0% 8.7%Backlog $ 625 $ 691 $ (66) (9%)

Aircraft Controls' net sales were comparable in the second quarters of 2016 and 2015; however, net sales decreased in the first half of 2016 compared to the first half of 2015.

In the second quarter of 2016 compared to the second quarter of 2015, commercial OEM sales to Airbus increased $8 million, due to the ramp up of the A350 program. This increase was partially offset by $3 million of lower sales to Boeing and $3 million of lower business jet sales. Also, sales in military aircraft decreased. Sales decreased $5 million due to lower volumes for the V-22 program and decreased $3 million due to slowdowns in various aftermarket programs. However, sales for foreign military aircraft increased $6 million compared to the prior year's quarter.

In the first half of 2016 compared to the first half of 2015, military aircraft sales decreased. The V-22 program decreased $10 million and various aftermarket programs decreased, in aggregate, $5 million. These declines were partially offset by $4 million of higher sales for foreign military aircraft. Additionally, sales in our commercial market decreased as Boeing and business jet programs each decreased $5 million. However, sales to Airbus increased $10 million, driven by higher A350 program sales.

Operating margin for the second quarter and for the first half of 2016 declined compared to the second quarter and the first half of 2015. Research and development expenses increased $9 million and $14 million, respectively, largely associated with the ramp up of the Embraer E-2 and Airbus A350 programs. Additionally, we incurred $6 million of restructuring charges related to exiting a product line in the second quarter of 2016. We expect these actions will provide an aggregate benefit of $5 million over the next four quarters. However, an improved sales mix due to higher amounts of foreign military sales and lower operating costs partially offset the margin pressures. The operating profit in the first half of 2016 also included $2 million of benefits from restructuring activities in 2015. The year-to-date savings of last year's restructuring activities are approximately half of our total expected annual benefits. Our expected annual benefits are approximately 80% of our original annual expected benefits as we have revised our workforce planning.

The decrease of twelve-month backlog for Aircraft Controls at April 2, 2016 compared to April 4, 2015 is primarily due to the timing of certain commercial orders as well as work completed on military programs.

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2016 Outlook for Aircraft Controls – We expect sales in Aircraft Controls to increase 4% to $1.13 billion in 2016. Commercial OEM aircraft sales are expected to increase 11%, due primarily to the continued ramp up of the Airbus A350 program. We expect that commercial aftermarket sales will continue to decline due to the lower levels of Boeing 787 initial provisioning sales. We expect military sales will decline 2% in 2016, as lower V-22 and military aftermarket sales offset higher F-35 production sales. We expect our operating margin will decrease to 8.5% in 2016 from 9.2% in 2015. Our operating margin will be negatively affected by our second quarter restructuring expenses, as well as continued unfavorable sales mix associated with lower amounts of military and commercial aftermarket sales. Additionally, our research and development costs will increase due to the continued spend on the A350 and the Embraer E-2 programs. However, we expect that lower costs, including the benefits from both of our recent restructuring actions, will offset some of the margin pressures.

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Space and Defense Controls



April 4,2015

$ Variance

% Variance

April 2,2016

April 4,2015

$ Variance

% Variance

Net sales $ 89 $ 93 $ (4) (4%) $ 172 $ 193 $ (21) (11%)Operating profit $ 13 $ 5 $ 8 172% $ 25 $ 14 $ 12 85%Operating margin 15.0% 5.3% 14.7% 7.1%Backlog $ 254 $ 238 $ 16 7%

Space and Defense Controls' net sales decreased in the second quarter and in the first half of 2016 compared to the same periods of 2015 due to declines in our space market.

Sales in our space market decreased $6 million in the second quarter of 2016 compared to the second quarter of 2015, due primarily to the completion of prior year satellite contracts. Higher sales for military vehicles increased our defense market sales $2 million.

For the first half of 2016 compared to the first half of 2015, sales in our space market decreased $19 million, due primarily to satellite and launch vehicle contracts winding down. Within our defense market, sales decreased $3 million due to lower sales volumes on missile systems and security products, partially offset by higher defense controls sales for military vehicles.

Operating margin increased in the second quarter of 2016 compared to the second quarter of 2015. Contributing to the increase was the absence of an $8 million out-of-period adjustment to correct an accounting error in the second quarter of 2015. Additionally, operating margin increased as we had lower operating expenses in 2016 due to various cost containment activities. Partly offsetting the increases was a decline in operating margin due to the lower sales volumes.

Operating margin increased in the first half of 2016 compared to the first half of 2015, primarily due to the absence of last year's out-of-period adjustment as well as the absence of an inventory obsolescence charge. Additionally, we benefited from an improved sales mix in 2016. The operating profit in the first half of 2016 also included $3 million of benefits from restructuring activities in 2015. These year-to-date savings are approximately 60% of our original total expected annual benefits and are in line with our expectations.

The higher level of twelve-month backlog for Space and Defense Controls at April 2, 2016 compared to April 4, 2015 is due to higher orders in launch vehicles and naval programs.

2016 Outlook for Space and Defense Controls – We expect sales in Space and Defense Controls to decrease 2% to $375 million in 2016. We expect sales declines in our space market as sales for satellite programs are lower. Partially offsetting the declines are expected increases in our defense market, driven by increased naval sales. We expect our operating margin will increase to 12.7% in 2016 from 8.7% in 2015 as the 2015 accounting correction does not repeat and as we benefit from our 2015 restructuring actions.

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Industrial Systems



April 4,2015

$ Variance

% Variance

April 2,2016

April 4,2015

$ Variance

% Variance

Net sales $ 128 $ 129 $ (1) (1%) $ 253 $ 263 $ (9) (3%)Operating profit $ 13 $ 13 $ 1 5% $ 27 $ 26 $ 1 4%Operating margin 10.3% 9.8% 10.6% 9.9%Backlog $ 175 $ 185 $ (10) (5%)

Industrial Systems' net sales decreased slightly in the second quarter of 2016 compared to the second quarter of 2015. Weaker foreign currencies, in particular the Brazilian Real relative to the U.S. dollar, resulted in $3 million of the sales decline. Excluding the currency effects, sales increased $3 million due to higher sales volumes to flight simulation customers.

Industrial Systems' net sales decreased in the first half of 2016 compared to the first half of 2015. Weaker foreign currencies, in particular the Euro and the Brazilian Real relative to the U.S. dollar, resulted in a $14 million sales decline. Excluding the currency effects, Industrial Systems' sales increased $5 million, as simulation programs increased $10 million, but were partially offset by $3 million of lower energy sales and $2 million of lower industrial automation sales. Simulation programs increased due to higher sales volumes to flight simulation customers. Sales in our energy market decreased due to the continued unfavorable macro-economic conditions related to the significant decline in the price of crude oil. Additionally, sales decreased in our industrial automation market due to the continuing economic weakness in our markets resulting in lower demand for our products.

Operating margin increased in both the second quarter and the first half of 2016 compared to the same periods of 2015. Operating profit included $2 million and $3 million, respectively, of benefits from our 2015 restructuring activities. These year-to-date savings are approximately 45% of our original total expected annual benefits and are in line with our expectations. Partly offsetting the operating margin improvements was an unfavorable sales mix in our energy and industrial automation markets in the first half of 2016 compared to the first half of 2015. We also incurred $1 million of additional restructuring expense in the second quarter of 2016.

The lower level of twelve-month backlog in Industrial Systems at April 2, 2016 compared to April 4, 2015 is due the completion of simulation orders as well as lower energy orders related to the decline in the energy market.

2016 Outlook for Industrial Systems – We expect sales in Industrial Systems to decrease 5% to $495 million in 2016. We expect that the impacts of the weaker foreign currencies relative to the U.S. dollar, as well as the evolving global economic conditions, will continue to reduce our sales. We expect our operating margin will increase to 9.2% in 2016 from 8.6% in 2015, as we benefit from both our recent restructuring actions and our cost containment actions.

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Components



April 4,2015

$ Variance

% Variance

April 2,2016

April 4,2015

$ Variance

% Variance

Net sales $ 94 $ 115 $ (21) (18%) $ 173 $ 223 $ (49) (22%)Operating profit $ 8 $ 16 $ (8) (47%) $ 13 $ 33 $ (20) (60%)Operating margin 8.9% 13.8% 7.5% 14.8%Backlog $ 165 $ 175 $ (10) (6%)

Components' net sales decreased across all of our markets in the second quarter and in the first half of 2016 compared to the same periods of 2015.

Within our non-aerospace and defense market, sales decreased $15 million in the second quarter of 2016 and $36 million in the first half of 2016 compared to the same periods of 2015. Sales in our energy market declined $10 million and $20 million, respectively, due to the macro-economic conditions centered around the significant decline in the price of crude oil and the resulting lower demand for our marine products. Additionally, sales declined $3 million and $9 million, respectively, in our medical market due in part to a lower price point for a key customer's next generation sleep apnea product that we will continue to support. Also, sales declined $3 million and $7 million, respectively, in our industrial market due to unfavorable macro-economic industrial conditions. Within our aerospace and defense market, sales decreased $6 million and $13 million, respectively, due primarily to lower amounts of aftermarket sales.

Operating margin declined in the second quarter and in the first half of 2016 compared to the same periods of 2015. The decreases are due, in part, to lower demand for our marine energy products resulting from the significant decline in the price of crude oil. Operating margin in the first half of 2016 was also negatively affected by lower sales in our medical market and unfavorable timing of sales in our military market. Additionally, we incurred $1 million of restructuring expense in the second quarter of 2016.

The twelve-month backlog at April 2, 2016 declined compared to the level at April 4, 2015 due to reduced orders for our aircraft, marine energy and industrial products.

2016 Outlook for Components – We expect sales to decrease 17% to $365 million in 2016 due to continued declines in our energy, medical and industrial markets. Partially offsetting these declines is expected growth in our space and defense market, driven by improved defense vehicle sales. We expect our operating margin will decrease to 10.0% in 2016 from 13.4% in 2015. We will continue to be negatively impacted by macro-economic conditions reducing the demand for products in our energy and industrial markets in 2016.

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Medical Devices



April 4,2015

$ Variance

% Variance

April 2,2016

April 4,2015

$ Variance

% Variance

Net sales $ 24 $ 25 $ (1) (5%) $ 50 $ 49 $ 2 4%Operating profit $ 3 $ 1 $ 2 257% $ 6 $ 3 $ 3 91%Operating margin 10.6% 2.8% 11.6% 6.3%Backlog $ 8 $ 7 $ — 5%

Medical Devices' net sales in the second quarter and first half of 2016 were negatively affected by lost sales from operations sold in 2015. These operations contributed $2 million of sales in the second quarter of 2015 and $3 million of sales in the first half of 2015.

In the first half of 2016 compared to the first half of 2015, sales for IV products increased $3 million, due to higher shipments of IV pumps, as we continued the replacement of competitors' older products in the U.S. home healthcare market. Enteral sales also increased $2 million, due to higher sales volumes of enteral pumps.

Operating margin in the second quarter and in the first half of 2016 increased compared to the second quarter and the first half of 2015 due to the absence of last year's $1 million loss on the sale of two small operations. In addition, we benefited from higher sales volumes, primarily for our IV products, a more favorable sales mix across both of our IV and enteral products and lower material costs.

Twelve-month backlog for Medical Devices is not as substantial relative to sales as compared to our other segments, reflecting the shorter order-to-shipment cycle for this line of business.

2016 Outlook for Medical Devices – We expect sales to increase slightly to $102 million in 2016. We expect that sales will increase due to improved enteral and IV product sales. However, this growth will be offset by a reduction related to the operations we sold in 2015. We expect our operating margin will increase to 11.4% in 2016 from 8.7% in 2015 as we continue to benefit from an improved cost structure and incremental margin contribution from higher sales volumes.

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FINANCIAL CONDITION AND LIQUIDITY

Six Months Ended


April 4,2015

$Variance

%Variance

Net cash provided (used) by:Operating activities $ 78 $ 132 $ (53) (40%)Investing activities (38) (34) (3) 10%Financing activities (5) (46) 41 (89%)

Our available borrowing capacity and our cash flow from operations provide us with the financial resources needed to run our operations, reinvest in our business and make strategic acquisitions.

At April 2, 2016, our cash balance was $348 million, which is primarily held outside of the U.S. Cash flow from our U.S. operations, together with borrowings on our credit facility, fund on-going activities, debt service requirements and future growth investments. We reinvest the cash generated from foreign operations locally and such international balances are not available to pay down debt in the U.S. unless we decide to repatriate such amounts. If we determined repatriation of foreign funds was necessary, we would then be required to pay U.S. income taxes on those funds.

Operating activities

Net cash provided by operating activities decreased in the first half of 2016 compared to the same period of 2015. Unfavorable timing of payments and collections across our segments used $58 million more of cash compared to a year ago. Additionally, we made $8 million more in pension contributions. Partially offsetting the increases in these uses of cash was $14 million more of cash provided by customer advances, primarily in Aircraft Controls.

Investing activities

Net cash used by investing activities in the first half of 2016 included $28 million for capital expenditures and $11 million as partial payment for the Linear acquisition. Net cash used by investing activities in the first half of 2015 included $38 million for capital expenditures.

We expect our 2016 capital expenditures to be approximately $80 million, as we support major program-related tooling and test equipment expenditures, primarily in commercial aircraft.

Financing activities

In the six months ending April 2, 2016, we repurchased 0.5 million shares through our stock repurchase program for $22 million, which was funded by our credit facility.

In the first six months ending April 4, 2015, we repurchased 2.6 million shares through our stock repurchase program for $186 million, which was funded by our credit facility as well as cash from operations.

Off Balance Sheet Arrangements

We do not have any material off balance sheet arrangements that have or are reasonably likely to have a material future effect on our results of operations or financial condition.

Contractual Obligations and Commercial Commitments

Our contractual obligations and commercial commitments have not changed materially from the disclosures in our 2015 Annual Report on Form 10-K.

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CAPITAL STRUCTURE AND RESOURCES

We maintain bank credit facilities to fund our short and long-term capital requirements, including for acquisitions. From time to time, we also sell debt and equity securities to fund acquisitions or take advantage of favorable market conditions.

On November 21, 2014, we completed the sale of $300 million aggregate principal amount of 5.25% senior notes due December 1, 2022 at par with interest paid semiannually on June 1 and December 1 of each year. The senior notes are unsecured obligations, guaranteed on a senior unsecured basis by certain subsidiaries and contain normal incurrence-based covenants and limitations such as the ability to incur additional indebtedness, pay dividends, make other restricted payments and investments, create liens and certain corporate acts such as mergers and consolidations. The aggregate net proceeds of $294 million were used to repay indebtedness under our U.S. bank credit facility, thereby increasing the unused portion of our U.S. revolving credit facility.

Our U.S. revolving credit facility has a capacity of $1,100 million and matures on May 22, 2019. It also provides an expansion option, which permits us to request an increase of up to $200 million to the credit facility upon satisfaction of certain conditions. The U.S. revolving credit facility had an outstanding balance of $703 million at April 2, 2016. Interest on the outstanding credit facility borrowings is principally based on LIBOR plus the applicable margin, which was 1.88% at April 2, 2016 and will decrease to 1.63% during the third quarter of 2016. The credit facility is secured by substantially all of our U.S. assets.

The U.S. revolving credit facility contains various covenants. The covenant for minimum interest coverage ratio, defined as the ratio of EBITDA to interest expense for the most recent four quarters, is 3.0. The covenant for the maximum leverage ratio, defined as the ratio of net debt, including letters of credit, to EBITDA for the most recent four quarters, is 3.5. The covenant for maximum capital expenditures is $185 million for 2016 and increases by $10 million each year thereafter. We are in compliance with all covenants. EBITDA is defined in the loan agreement as (i) the sum of net income, interest expense, income taxes, depreciation expense, amortization expense, other non-cash items reducing consolidated net income and non-cash equity-based compensation expenses minus (ii) other non-cash items increasing consolidated net income.

We are generally not required to obtain the consent of lenders of the U.S. revolving credit facility before raising significant additional debt financing; however, certain limitations and conditions may apply that would require consent to be obtained. In recent years, we have demonstrated our ability to secure consents to access debt markets. We have also been successful in accessing equity markets from time to time. We believe that we will be able to obtain additional debt or equity financing as needed.

At April 2, 2016, we had $391 million of unused capacity, including $379 million from the U.S. revolving credit facility after considering standby letters of credit. However, our leverage ratio covenant limits our borrowing capacity to $324 million as of April 2, 2016.

We have a trade receivables securitization facility (the "Securitization Program"), which terminates on April 13, 2018. Under the Securitization Program, we sell certain trade receivables and related rights to an affiliate, which in turn sells an undivided variable percentage ownership interest in the trade receivables to a financial institution, while maintaining a subordinated interest in a portion of the pool of trade receivables. The Securitization Program effectively increases our borrowing capacity by up to $120 million and lowers our cost to borrow funds as compared to the U.S. revolving credit facility. We had an outstanding balance of $100 million at April 2, 2016. The Securitization Program has a minimum borrowing requirement, which was $80 million at April 2, 2016. Interest on the secured borrowings under the Securitization Program was 1.19% at April 2, 2016 and is based on 30-day LIBOR plus an applicable margin.

Net debt to capitalization was 42% at April 2, 2016 and 44% at October 3, 2015. The decrease in net debt to capitalization is primarily due to our net earnings and positive cash flow.

We believe that our cash on hand, cash flows from operations and available borrowings under short and long-term arrangements will continue to be sufficient to meet our operating needs.

The Board of Directors authorized a share repurchase program beginning in January 2014 that includes both Class A and Class B common shares, and allows us to buy up to an aggregate 13.0 million common shares. Under this program, we have purchased approximately 9.3 million shares for $633 million as of April 2, 2016.

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ECONOMIC CONDITIONS AND MARKET TRENDS

We operate within the aerospace and defense and industrial markets. Our aerospace and defense markets are affected by market conditions and program funding levels, while our industrial markets are influenced by general capital investment trends and economic conditions. A common factor throughout our markets is the continuing demand for technologically advanced products.

Aerospace and Defense

Approximately 64% of our 2015 sales were generated in aerospace and defense markets. Within aerospace and defense, we serve three end markets: defense, commercial aircraft and space.

The defense market is dependent on military spending for development and production programs. Aircraft production programs are typically long-term in nature, offering predictability as to capacity needs and future revenues. We maintain positions on numerous high priority programs, including the Lockheed Martin F-35 Joint Strike Fighter, FA-18E/F Super Hornet and V-22 Osprey. The large installed base of our products leads to attractive aftermarket sales and service opportunities. The tactical and strategic missile, missile defense and defense controls markets are dependent on many of the same market conditions as military aircraft, including overall military spending and program funding levels. Our security and surveillance product line is dependent on government funding at federal and local levels, as well as private sector demand.

Reductions in the U.S. Department of Defense's mandatory and discretionary budgeted spending, which became effective on March 1, 2013, resulting from the Budget Control Act of 2011, will have ongoing ramifications for the domestic aerospace and defense market for the near future. The automatic spending limitations (which is generally referred to as sequestration) of approximately $500 billion through the Federal Government's 2021 fiscal year will present challenges over the next decade, as uncertainty remains with respect to the levels of defense spending. We believe that lower U.S. defense spending is affecting our military sales. Currently, we expect approximately $670 million of U.S. defense sales in 2016.

The commercial aircraft market is dependent on a number of factors, including global demand for air travel, which generally follows underlying economic growth. As such, the commercial aircraft market has historically exhibited cyclical swings which tend to track the overall economy. In recent years, the development of new, more fuel-efficient commercial air transports has helped drive increased demand in the commercial aircraft market, as airlines replace older, less fuel-efficient aircraft with newer models in an effort to reduce operating costs. The aftermarket is driven by usage of the existing aircraft fleet and the age of the installed fleet, and is impacted by fleet re-sizing programs for passenger and cargo aircraft. Changes in aircraft utilization rates affect the need for maintenance and spare parts and impact aftermarket sales. Boeing and Airbus have historically adjusted production in line with air traffic volume. Demand for our commercial aircraft products is in large part dependent on new aircraft production, which is increasing as Boeing and Airbus work to fulfill large backlogs of unfilled orders.

The commercial space market is comprised of large satellite customers, traditionally communications companies. Trends for this market, as well as for commercial launch vehicles, follow demand for increased capacity. This in turn, tends to track with underlying demand for increased consumption of telecommunication services, satellite replacement and global navigation needs. The space market is also partially dependent on the governmental-authorized levels of funding for satellite communications, as well as investment for commercial and exploration activities.

Industrial

Approximately 36% of our 2015 sales were generated in industrial markets. Within industrial, we serve three end markets: industrial automation, energy and medical.

The industrial automation market we serve is influenced by several factors including capital investment, product innovation, economic growth, cost-reduction efforts and technology upgrades. We experience challenges from the need to react to the demands of our customers, who are in large part sensitive to international and domestic economic conditions.

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The energy market we serve is affected by changing oil and natural gas prices, global urbanization, the resulting change in supply and demand for global energy and the political climate and corresponding public support for investments in renewable energy generation capacity. Historically, drivers for global growth include investments in power generation infrastructure, including renewable energy, and exploration in search of new oil and gas resources. However, the recent significant decline in the price of crude oil has reduced investment in exploration activities. This reduced investment has directly affected our energy business in Components and in Industrial Systems. Currently, we expect approximately $40 million of oil exploration-related sales in 2016, down from approximately $100 million in 2014.

The medical market we serve is influenced by economic conditions, regulatory environments, hospital and outpatient clinic spending on equipment, population demographics, medical advances, patient demands and the need for precision control components and systems. Advances in medical technology and medical treatments have had the effect of extending the average life spans, in turn resulting in greater need for medical services. These same technology and treatment advances also drive increased demand from the general population as a means to improve quality of life. Access to medical insurance, whether through government funded health care plans or private insurance, also affects the demand for medical services.

Foreign Currencies

We are affected by the movement of foreign currencies compared to the U.S. dollar, particularly in Industrial Systems. About one-quarter of our 2015 sales were denominated in foreign currencies. During the first six months of 2016, average foreign currency rates generally weakened against the U.S. dollar compared to 2015. The translation of the results of our foreign subsidiaries into U.S. dollars decreased sales by $24 million compared to the same period one year ago.

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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 statements are not guarantees of future performance and are subject to several factors, risks and uncertainties, the impact or occurrence of which could cause actual results to differ materially from the expected results described in the forward-looking statements. These important factors, risks and uncertainties include:

• 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 operate in highly competitive markets with competitors who may have greater resources than we possess;

• 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;

• we make estimates in accounting for long-term 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; • we may not realize the full amounts reflected in our backlog as revenue, which could adversely affect our

future revenue and growth prospects;• 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; • contracting on government programs is subject to significant regulation, including rules related to bidding,

billing and accounting kickbacks and false claims, and any non-compliance could subject us to fines and penalties or possible debarment;

• 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;

• our new product research and development efforts 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;

• our business operations may be adversely affected by information systems interruptions, intrusions or new software implementations;

• our indebtedness and restrictive covenants under our credit facilities could limit our operational and financial flexibility;

• 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;

• our sales and earnings may be affected if we cannot identify, acquire or integrate strategic acquisitions, or if we engage in divesting activities;

• our operations in foreign countries expose us to political and currency risks and adverse changes in local legal and regulatory environments;

• unforeseen exposure to additional income tax liabilities may affect our operating results;• government regulations could limit our ability to sell our products outside the United States and otherwise

adversely affect our business;• governmental regulations and customer demands related to conflict minerals may adversely impact our

operating results;• 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;• future terror attacks, war, natural disasters or other catastrophic events beyond our control could negatively

impact our business;• our operations are subject to environmental laws, and complying with those laws may cause us to incur

significant costs; and• we are involved in various legal proceedings, the outcome of which may be unfavorable to us.

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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.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Refer to the Company’s Annual Report on Form 10-K for the year ended October 3, 2015 for a complete discussion of our market risk. There have been no material changes in the current year regarding this market risk information.

Item 4. Controls and Procedures.

(a) Disclosure Controls and Procedures. We carried out an evaluation, under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e) and 15d-15(e). Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures are effective as of the end of the period covered by this report, to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

(b) Changes in Internal Control over Financial Reporting. There have been no changes in our internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(c) The following table summarizes our purchases of our common stock for the quarter ended April 2, 2016.

Period

(a) TotalNumber of

SharesPurchased

(1)(2)

(b) AveragePrice PaidPer Share

(c) Total numberof Shares

Purchased asPart of Publicly

Announced Plans

or Programs (3)

(d) MaximumNumber

(or Approx.Dollar Value) ofShares that May

Yet BePurchased

Under Plans orPrograms (3)

January 3, 2016 - January 31, 2016 2,579 $ 57.92 — 4,202,555February 1, 2016 - February 29, 2016 371,659 40.74 366,200 3,836,355March 1, 2016 - April 2, 2016 162,582 45.05 160,000 3,676,355Total 536,820 $ 42.13 526,200 3,676,355

(1) Reflects purchases by the SECT of shares of Class B common stock from the Moog Inc. RSP as follows: 2,421 shares at $57.91 per share during January; 5,459 shares at $43.78 per share during February; and 2,582 shares at $44.70 per share during March. Excluded above is the SERP Trust purchase of 50,000 shares from the SECT.

(2) In connection with the exercise of equity-based compensation awards, we accept delivery of shares to pay for the exercise price and withhold shares for tax withholding obligations. In January, we accepted delivery of 158 shares at $58.03 per share, in connection with the exercise of equity-based awards.

(3) In August 2014, the Board of Directors authorized a share repurchase program. The program permitted the purchase of up to 5,000,000 shares of Class A or Class B common stock in open market or privately negotiated transactions at the discretion of management. In August 2015, the Board of Directors authorized an additional repurchase of up to 4,000,000 shares of Class A or Class B common stock at management's discretion, under identical terms and conditions. In February, we purchased 366,200 Class A shares at an average price of $40.70 per share. In March, we purchased 160,000 Class A shares at an average price of $45.06 per share.

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Item 6. Exhibits.

(a) Exhibits10.1 Moog Inc. Defined Contribution Supplemental Executive Retirement Plan.31.1 Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a) as adopted

pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2 Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a) as adopted

pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the

Sarbanes-Oxley Act of 2002.101 Interactive Date files (submitted electronically herewith)

(101.INS) XBRL Instance Document

(101.SCH) XBRL Taxonomy Extension Schema Document

(101.CAL) XBRL Taxonomy Extension Calculation Linkbase Document

(101.DEF) XBRL Taxonomy Extension Definition Linkbase Document

(101.LAB) XBRL Taxonomy Extension Label Linkbase Document

(101.PRE) XBRL Taxonomy Extension Presentation Linkbase Document

In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section and shall not be part of any registration or other document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

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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 thereunto duly authorized.

Moog Inc.

(Registrant)

Date: May 2, 2016 By /s/ John R. ScannellJohn R. Scannell

Chairman Chief Executive Officer

(Principal Executive Officer)

Date: May 2, 2016 By /s/ Donald R. FishbackDonald R. Fishback

Vice President Chief Financial Officer

(Principal Financial Officer)

Date: May 2, 2016 By /s/ Jennifer WalterJennifer Walter

Controller(Principal Accounting Officer)

MOOG INC. DEFINED CONTRIBUTION

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

ARTICLE 1 PURPOSE, DEFINITIONS AND EFFECTIVE DATE

Section 1.1. Purpose. The purpose of the Moog Inc. Defined Contribution Supplemental Executive Retirement Plan (the “Plan”) is to reward a select group of management or highly compensated employees for their valuable services to Moog Inc. (the “Company”) by providing them with the ability to receive nonqualified deferred compensation on the terms established in this Plan.

Section 1.2. Definitions. For purposes of the Plan, the following terms have the definitions stated below, unless the context clearly indicates otherwise:

(a) “Account” means the bookkeeping Account established by the Company to record the amount of a Participant’s Benefit in accordance with Article 4.

(b) “Base Salary” means a Participant’s regular base pay from the Company for a payroll period, including any amount that (i) is contributed by the Company pursuant to a salary reduction agreement, is not includable in the gross income of the Participant under Code Section 125, 132(f)(4), 402(e)(3), or 402(h)(1)(B), and that would otherwise constitute regular base pay, or (ii) that is credited to a Participant’s account as an elective deferral contribution under any other nonqualified deferred compensation plan and that would otherwise constitute regular base pay. Base Salary does not include any employer matching or other contributions (other than elective deferrals) made for the Participant’s benefit to any qualified or nonqualified plans, or any bonuses, incentive pay, equity compensation, or other special form of allowance or compensation paid or payable to the Participant.

(c) “Beneficiary” means any one or more persons, corporations or trusts, or any combination thereof, last designated by a Participant to receive any Benefit provided under the Plan upon his or her death. Any designation made under this Plan will be revocable, must be in writing, and will be effective when delivered to the Company at its principal office. If the Company determines, in its sole discretion, that there is no valid designation, the Beneficiary will be the Participant’s estate.

(d) “Benefit” means all benefits provided under this Plan. The Benefit, with respect to any Participant, consists of all amounts in the Participant’s Account, as adjusted in accordance with Article 4.

(e) “Board” means the Board of Directors of the Company.

(f) “Change in Control” means the first to occur of any of the following events:

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(1) The date any one person, or more than one person acting as a group, acquires ownership of Common Stock that, together with Common Stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of Common Stock.

(2) The date any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons), ownership of Common Stock possessing 30% or more of the total voting power of Common Stock.

(3) The date a majority of the members of the Company’s Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company’s Board before the date of the appointment or election.

(4) The date of a merger or consolidation by the Company with or into another person that results in the shareholders of the Company (determined immediately prior to the merger or consolidation) owning less than 50% of the surviving company.

For purposes of this Plan, a “Change in Control” will not be considered to have occurred unless the event constitutes a change in control event under Code Section 409A. Further, for purposes of Sections 1.2(f)(1) and (2), the acquisition of Common Stock by the following persons will not result in a Change in Control: (i) any employee benefit plan (or related trust) sponsored or maintained by the Corporation, or (ii) any trust, the assets of which are considered owned by the Corporation under subpart E of Part I of subchapter J of the Code.

(g) “Code” means the Internal Revenue Code of 1986, as amended.

(h) “Common Stock” means the Class A and Class B $1.00 par value shares of the capital stock of the Company, as well as any other class of capital stock of the Company, including voting or nonvoting common stock or preferred stock.

(i) “Company Contribution” means a contribution made by the Company to an Account in accordance with Section 3.1.

(j) “Compensation Committee” means the Executive Compensation Committee of the Board.

(k) “Contribution Category” means the category assigned to a Participant under Section 3.1 and Appendix A for purposes of determining the level of Company Contributions made to the Participant under the Plan.

(l) “Corporation” means the Company and its subsidiaries and affiliates.

(m) “Disability” means a mental or physical disability that renders a Participant unable to perform his or her regular duties for the Company, as determined by the

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Compensation Committee in its sole discretion. The Compensation Committee may, in its sole discretion, retain an expert to advise it with regard to the existence of a Participant’s Disability.

(n) “Discretionary Contribution” means a contribution made by the Company to an Account in accordance with Section 3.2.

(o) “Employee” means an employee of the Corporation.

(p) “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

(q) “Executive” means an Employee who is elected as a corporate officer of the Company at a level of vice president or above.

(r) “Participant” means an Employee selected to participate in the Plan in accordance with Article 2.

(s) “Payment Commencement Date” means the date a Participant’s Benefit is paid or commences to be paid, as provided in Sections 5.1 and 6.1.

(t) “Plan Year” means the 12-month period beginning October 1 and ending the following September 30, except that the first Plan Year will be the period beginning on the Effective Date and ending on September 30, 2016.

(u) “Rabbi Trust” means the rabbi trust, if any, established by the Company under Section 4.4.

(v) “Separation Date” means the date a Participant incurs a Separation from Service.

(w) “Separation from Service” means the termination of a Participant’s employment with the Company for any reason other than death. A Separation from Service under this Plan must be interpreted to comply with the requirements for a “separation from service” under Code Section 409A.

(x) “Year of Service” means a consecutive 12-month period during which an Employee continuously performs services for the Corporation as an Employee. For purposes of the Plan, Years of Service are measured in years and completed months, beginning with a Participant’s last date of hire with the Corporation. A Participant will receive credit for services performed as an Employee prior to the Effective Date, and with respect to any Years of Service in which the Participant was not an Executive. A Participant who becomes an Employee as a result of the acquisition of an acquired business by the Company will be granted Years of Service credit for prior employment with the acquired business.

Section 1.3. Effective Date. Except as otherwise provided, the effective date of this Plan is April 1, 2016.

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ARTICLE 2 PARTICIPATION AND VESTING

Section 2.1. Eligibility for Participation. An Executive will be eligible to participate in the Plan as of the later of (a) the Effective Date of the Plan, or (b) the date that he or she is selected for participation in the Plan by the Board.

Section 2.2. Period of Participation. An Executive selected for participation in the Plan will become a Participant on the date established by the Board. A Participant will cease to be an active Participant on the earliest to occur of (i) the Participant’s Separation Date, (ii) the date the Participant otherwise ceases to be an Executive, (iii) the date of the Participant’s death, (iv) the date the Participant’s eligibility is terminated by the Board in its sole discretion, or (v) the date the Participant attains age 65, unless the Board in its sole discretion determines that the Participant will continue to be an active Participant following his or her attainment of age 65.

Section 2.3. Vesting.

(a) In General. A Participant will become 100% vested in his or her Benefit as of the later of the date the Participant commences participation in the Plan or completes 3 Years of Service. Except as otherwise provided in this Section 2.3, if a Participant incurs a Separation from Service prior to completing 3 Years of Service, the Participant will automatically forfeit his or her entire Benefit without any further action required by the Company.

(b) Death. If an unvested Participant dies before incurring a Separation from Service, the Participant will become 100% vested in his or her Benefit as of his or her date of death.

(c) Disability. If an unvested Participant incurs a Separation from Service on account of Disability, the Participant will become 100% vested in his or her Benefit as of his or her Separation Date.

(d) Change in Control. If there is a Change in Control before an unvested Participant incurs a Separation from Service, a Participant will become 100% vested in his or her Benefit as of the date of the Change in Control.

ARTICLE 3 CONTRIBUTIONS

Section 3.1. Company Contributions. Each Participant will be assigned by the Board to a Contribution Category for purposes of determining the level of Company Contributions made on his or her behalf under the Plan. For each payroll period during which a Participant is an active Participant in the Plan, the Company will make a Company Contribution on behalf of the Participant in an amount equal to the percentage of Base Salary specified for the Participant’s Contribution Category in the attached Appendix A, which may be amended from

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time to time in the Board’s discretion. Company Contributions with respect to a Participant will commence as of the first full payroll period that begins after the expiration of the 30-day election period described in Section 5.1.

Section 3.2. Discretionary Contributions. The Board, in its sole discretion, may authorize a Discretionary Contribution to be made on behalf of one or more Participants for a Plan Year in an amount to be determined by the Board in its sole discretion. The fact that the Board authorizes a Discretionary Contribution to be made on behalf of one or more Participants does not obligate the Board to authorize a Discretionary Contribution to be made on behalf of any other Participant. Further, the fact that the Board authorizes a Discretionary Contribution to be made on behalf of a Participant for a Plan Year does not obligate the Board to authorize a Discretionary Contribution to be made on behalf of the Participant for any other Plan Year.

ARTICLE 4 ACCOUNTS AND INVESTMENTS

Section 4.1. Establishment of Account. The Company will establish and maintain for each Participant a bookkeeping Account to which it will credit all Company Contributions and Discretionary Contributions made on behalf of the Participant under Article 3. Company Contributions will be credited to a Participant’s Account coincident with, or as soon as administratively practicable following, the payroll date to which the Company Contribution relates. Discretionary Contributions will be credited to a Participant’s Account as of the date determined by the Board in its sole discretion.

At no time may any Participant be deemed to have any right, title, or interest, legal or equitable, in any asset of the Company, including but not limited to any assets or investments held in the Participant’s Account. The Participant will have no more rights to the assets and investments in the Account than any other unsecured creditor.

Section 4.2. Investment of Account. Participants will be permitted to direct the Company as to the investment of their Accounts in accordance with administrative rules established by the Company. In this regard, a Participant will be permitted to select from among the investment options made available from time-to-time by the Company. The Company may establish one or more default investment funds that a Participant’s Account will be invested in if a Participant fails to direct the Company as to the investment of his or her Account. Notwithstanding anything else in this Section, the Company may, in its sole discretion, limit investment of a Participant’s Account to a single investment fund or vehicle. In addition, the Company may, but is not required, to invest amounts equal to the value of a Participant’s Account in the investment(s) selected by the Participant. However, earnings or losses with respect to a Participant’s Account will be determined in accordance with the investment performance of the Participant’s selected investments, regardless of whether or not the Company actually invests amounts equal to the Participant’s Account in the investment(s) selected by the Participant. The Company will not be liable to any Participant or Beneficiary for any loss or other claim arising out of investments under the Plan except for that caused by the Company’s gross negligence or willful misconduct.

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Section 4.3. Adjustments to Account. Each Participant’s Account will be adjusted by the Company no less often than monthly to reflect (a) the value of the contributions credited to the Account, (b) any earnings or losses on the Account balance in accordance with Section 4.2, and (c) any payments made to the Participant or the Participant’s Beneficiary. The amounts allocated and the adjustments made comprise the Participant’s Account at any time.

Section 4.4. Rabbi Trust. Except as otherwise provided in this Section, the Company may, but is not required to establish a Rabbi Trust to which the Company will contribute all amounts credited to a Participant’s Account in accordance with Articles 3 and 4. A Participant’s interest in the Account and in the Rabbi Trust, if any, is limited to the right to receive payments as provided under this Plan and the Rabbi Trust, if any, and the Participant’s position is that of general unsecured creditor of the Company.

ARTICLE 5 PAYMENT ELECTIONS

Section 5.1. Payment Election. During the 30-day period that commences on the date a Participant first becomes eligible to participate in the Plan under Article 2, the Participant may elect to receive payment of his or her vested Benefit on account of a Separation from Service in a lump sum or in 5, 10, or 15 annual installments. During that same 30-day period, the Participant, subject to the rules of Section 8.12(c), may also elect to have payment of that vested Benefit commence or be paid within 90 days of the Participant’s Separation Date, or on the six-month or 12-month anniversary of the Participant’s Separation Date. If a Participant fails to submit a timely payment election in a form acceptable to the Company in its sole discretion, then the Participant will be deemed to have elected to have payment of his or her vested Benefit paid, subject to the rules of Section 8.12(c), in a lump sum within 90 days of the Participant’s Separation Date. Subject to Section 5.2, the Participant’s election (or deemed election) will become irrevocable at the expiration of the election period.

Section 5.2. Subsequent Changes in Payment Election. If the conditions of this Section 5.2 are satisfied, a Participant may make a one-time election to change the time and form of payment in which his or her vested Benefit is payable on account of a Separation from Service. The requirements of this Section 5.2 are satisfied only if the following conditions are met:

(a) The subsequent election is made in a form that is acceptable to the Company in its sole discretion;

(b) A Participant’s subsequent election will not take effect until at least 12 months after the date the subsequent election is made;

(c) Any payment with respect to which a Participant’s subsequent election applies will be paid to the Participant on a date that is at least 5 years after the date the payment otherwise would have been paid or commence to be paid to the Participant;

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(d) In the case of a payment to be made at a specified time or pursuant to a fixed schedule, the subsequent election is made not less than 12 months before the date the payment is scheduled to be paid or commence to be paid; and

(e) The subsequent election otherwise complies with Code Section 409A.

Section 5.3. Installment Elections. If a Participant elects to receive payment of his or her vested Benefit on account of a Separation from Service in 5, 10, or 15 annual installments, then the first annual installment will be determined by multiplying the value of the Participant’s Account as of the Participant’s Payment Commencement Date (or, if the Company is unable to value the Participant’s Account as of the Participant’s Payment Commencement Date, the most recent date preceding the Participant’s Payment Commencement Date as of which the Participant’s Account was valued pursuant to Section 4.3) by a fraction, (i) the numerator of which is 1, and (ii) the denominator of which is the total number of annual installments payable to the Participant. Any subsequent annual installments will be paid to the Participant as of the anniversary of the Participant’s Payment Commencement Date. The amount to be paid to a Participant for any subsequent annual installment will be determined in the same manner as with the first installment, except (i) the denominator of the fraction will equal the total number of remaining installments payable to the Participant, and (ii) the Participant’s entire remaining Benefit will be paid to the Participant as part of the last installment payment.

ARTICLE 6 TIME OF PAYMENT

Section 6.1. Payment on Account of Separation from Service. Subject to Section 8.12(c), a Participant’s vested Benefit will be paid (or commence to be paid) to the Participant in accordance with the Participant’s election or deemed election under Section 5.1.

Section 6.2. Payment on Account of a Change in Control. If a Change in Control occurs before payment of a Participant’s entire vested Benefit has been made under the Plan, any remaining amounts in the Participant’s Account will be paid to the Participant in a single lump sum payment within 90 days following the occurrence of the Change in Control.

Section 6.3. Death Benefits. If a Participant dies before payment of the Participant’s entire Benefit has been made under the Plan, any remaining amounts in the Participant’s Account will be paid to the Participant’s Beneficiary in a single lump sum payment as soon as reasonably practicable following the date on which the Participant dies, but in no event more than 90 days after the Participant’s death.

Section 6.4. Unforeseeable Emergency. In the event a Participant suffers an Unforeseeable Emergency, the Company, in its sole discretion, may permit the Participant to withdraw a portion of his or her Account under the Plan. The determination of whether an Unforeseeable Emergency exists will be made by the Company based on all relevant facts and circumstances. For purposes of this Plan an “Unforeseeable Emergency” is defined as a severe financial hardship to the Participant (i) resulting from an illness or accident of the Participant, the

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Participant’s spouse, or the Participant’s dependent (as defined in Code Section 152(a) without regard to Code Sections 152(b)(1), (b)(2), and (d)(1)(B)); (ii) loss of the Participant’s property due to casualty; or (iii) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the Participant’s control. The amount of the withdrawal will be limited to the amount needed to satisfy the Unforeseeable Emergency, plus taxes reasonably anticipated to be owed by the Participant as a result of the withdrawal. A withdrawal will not be allowed under this provision to the extent that the emergency is or may be relieved through reimbursement or compensation by insurance or otherwise, or by liquidation of the Participant’s assets (to the extent such liquidation would not itself cause a severe financial hardship). Withdrawals under this Section will be determined by the Company in compliance with Code Section 409A and related regulations, rulings and procedures.

Section 6.5. De Minimis Cash-Outs. Notwithstanding any other provision of this Plan, the Company, in its sole discretion, may pay a Participant’s Benefit to the Participant or the Participant’s Beneficiary in a single lump sum payment at any time, provided that (a) the value of the Participant’s Account at the time of the distribution does not exceed the applicable dollar amount under Code Section 402(g)(1)(B), and (b) the payment complies with the rules of Code Section 409A (including, but not limited to, the requirement that any mandatory lump sum cash out payment result in the termination and liquidation of the Participant’s entire interest under the Plan and any plan required to be aggregated with the Plan under Code Section 409A).

ARTICLE 7 AMENDMENT, SUSPENSION, OR TERMINATION

Section 7.1. Amendment, Suspension, or Termination. The Company may amend, suspend or terminate the Plan, in whole or in part, at any time by action of the Board.

Section 7.2. No Reduction. Except as required by law, no amendment, suspension or termination may adversely affect the Benefit otherwise available to a Participant under the Plan, determined as if the Participant had ceased being a Participant on or before the effective date of such amendment, suspension, or termination. The value of a Participant's Account, if any, determined as of the effective date of any amendment, suspension, or termination will continue to be adjusted in accordance with Section 4.3 and payable in accordance with Article 5. Notwithstanding the preceding sentence, the Board, in its sole discretion, may terminate the Plan and cause the Company to pay all Benefits in a single lump sum payment to Participants and Beneficiaries to the extent permitted by Code Section 409A.

ARTICLE 8 GENERAL PROVISIONS

Section 8.1. Funding. The Plan constitutes an unfunded arrangement and has the status as an unfunded plan maintained for the purpose of providing deferred compensation for a select group of management or highly compensated employees for purposes of Title 1 of ERISA. All Benefits under this Plan are payable solely from the Company’s general assets, and

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a Participant or Beneficiary has only the rights of a general unsecured creditor of the Company with respect to any Benefit payable under this Plan.

Section 8.2. Non-assignability. No Benefit under this Plan may be assigned or alienated, or be subjected by attachment or otherwise to the claims of creditors of any Participant or Beneficiary.

Section 8.3. Withholding. The Company has the right to deduct or withhold from the Benefit paid under the Plan (or from other amounts payable to the Participant, if necessary) all taxes that are required to be deducted or withheld under any provision of law (including, but not limited to, U.S. Social Security and Medicare taxes (FICA) and income tax withholding) now in effect or that may become effective any time during the term of the Plan.

Section 8.4. Administration. The Plan is administered by the Compensation Committee, which has full authority and power to: (a) administer the Plan; (b) construe the Plan terms; (c) make factual determinations; (d) resolve any ambiguities or inconsistencies; (e) determine eligibility for participation or benefits; and (f) decide all questions arising in the Plan administration, interpretation or application.

The Compensation Committee may delegate any of its administrative duties under the Plan to any one or more persons, except that no person will be permitted to participate in any decision affecting his or her entitlement to a Benefit under the Plan.

Section 8.5. Exclusivity of Plan. The Plan is intended solely for the purpose of providing deferred compensation to the Participants to the mutual advantage of the parties. Nothing contained in the Plan in any way affects or interferes with the right of a Participant to participate in any other benefit plan in which he or she may be entitled to participate.

Section 8.6. No Right to Continued Service. Neither the Plan nor any of its provisions may be construed as giving any Participant a right to continued employment with the Corporation.

Section 8.7. Notice. Each notice and other communication concerning the Plan must be in writing and is deemed given only when (a) delivered by hand, (b) transmitted by telex, telecopier, or email (provided that a copy is sent at approximately the same time by registered or certified mail, return receipt requested), or (c) received by the addressee, if sent by registered or certified mail, return receipt requested, or by Express Mail, Federal Express or other overnight delivery service. Notice must be given to the Company at its principal office and to a Participant at his or her last known address (or to such other address or telecopier number as a party may specify by notice given to the other party in accordance with this Section).

Section 8.8. Claims Procedures. If a Participant or the Participant's Beneficiary does not receive the Benefit to which he or she believes he or she is entitled, that person may file a claim in writing with the Compensation Committee. The Compensation Committee will establish a claims procedure with the following provisions:

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(a) Notification of Decision. If the claim is wholly or partially denied, the Compensation Committee will notify the claimant in writing within 90 days after the claim has been received (unless special circumstances require an extension of up to 90 additional days). The written notification must state the specific reasons for the denial of the claim and the specific references to the Plan provisions on which the denial is based. It must describe any additional material the claimant may need to submit to the Compensation Committee to have the claim approved and must give the reasons the material is necessary. In addition, the notice must explain the claim review procedure and be written in a manner calculated to be understood by the Participant or the Beneficiary.

(b) Claim Review Procedure. If the Participant or Beneficiary receives a notice that the claim has been denied, the claimant, or his or her authorized representative, may appeal to the Compensation Committee for a review of the claim. The claimant must submit a request for review in writing to the Compensation Committee no later than 60 days after the date the written notice of the claim denial is received. The claimant, or his or her representative, may then review Plan documents that pertain to the claim and may submit issues and comments in writing to the Compensation Committee. The Compensation Committee must give the claim for review a full and fair review and must deliver to the claimant a written determination of the claim, including specific reasons for the decision, not later than 60 days after the date the Compensation Committee received the request for review (unless special circumstances require an extension of up to 60 additional days). The decision of the Compensation Committee will be final and conclusive.

Section 8.9. New York Law Controlling. The Plan will be construed in accordance with the laws of the State of New York.

Section 8.10. Severability. Every provision of the Plan is intended to be severable. If any provision of the Plan is illegal or invalid for any reason whatsoever, the illegality or invalidity of that provision will not affect the validity or legality of the remainder of the Plan, and the Plan will be construed and enforced as if the illegal or invalid provision had never been made part of the Plan.

Section 8.11. Binding on Successors. The Plan is binding upon the Participants and the Company, their heirs, successors, legal representatives and assigns.

Section 8.12. Code Section 409A Provisions.

(a) 409A Compliance It is intended that all terms and payments under this Plan comply with and be administered in accordance with Code Section 409A so as not to subject a Participant to payment of interest or any additional tax under Code Section 409A. All terms of the Plan that are undefined or ambiguous will be interpreted in a manner that is consistent with Code Section 409A if necessary to comply with Code Section 409A. If payment or provision of any amount or Benefit under this Plan at the time specified would subject such amount or Benefit to any additional tax under Code Section 409A, the payment or provision of such amount or Benefit will be postponed, if possible, to the earliest commencement date on which the payment or provision of such amount or Benefit could be made without incurring such

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additional tax. The Company will, to the extent reasonably possible, amend the Plan in order to comply with Code Section 409A and avoid the imposition of any interest or additional tax under Code Section 409A; provided, however, that no amendment is required if such amendment would change the amount payable by the Company under the Plan.

(b) Single Payment. For any Benefit payable in installments under this Plan, the entire series of installments will be treated as a single payment for purposes of Code Section 409A.

(c) Six-Month Delay. Notwithstanding any other provision of the Plan, if it is determined that a Participant is a Specified Employee and that any Benefit payable under the Plan (a) is subject to Code Section 409A and (b) is payable solely because the Participant has incurred a Separation from Service, then the Participant’s Benefit will not be paid (or begin to be paid) prior to the date that is six months after the Separation Date (or, if earlier, the date of the Participant’s death). Payment of any Benefit to which the Participant would otherwise be entitled during the first six months following the Separation Date will be accumulated and paid on the day that is six months after the Separation Date. For purposes of the Plan, a “Specified Employee” is a Participant who is determined to be a “specified employee” within the meaning of Code Section 409A.

(d) 409A Liability Limitation. Benefits under the Plan are intended to comply with the rules of Code Section 409A and will be construed accordingly. However, the Company will not be liable to any Participant or Beneficiary with respect to any adverse tax consequences arising under Section 409A or other provision of the Code.

Moog Inc.

Date: March 4, 2016 By: /s/ Gary Szakmary Gary SzakmaryVice President & Chief Human Resources Officer

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APPENDIX A

Schedule of Company Contributions

Contribution Category Contribution Level:Percentage of Base Salary

1. Initial Participants:Participants who were firstelected as corporate officersand became Executives in2015

40% of Base Salary

031407.00003 Business 14665247v3

Exhibit 31.1

Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, John R. Scannell, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Moog Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred

during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date May 2, 2016

/s/ John R. Scannell John R. ScannellChief Executive Officer

Exhibit 31.2

Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Donald R. Fishback, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Moog Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred

during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date May 2, 2016

/s/ Donald R. Fishback Donald R. FishbackChief Financial Officer

Exhibit 32.1

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officers of Moog Inc. (the “Company”) hereby certify that:

The Company’s Quarterly Report on Form 10-Q for the quarter ended April 2, 2016 fully complies with the requirements of section 13(a) or 15(d) of the Securities and Exchange Act of 1934 and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 2, 2016

/s/ John R. Scannell John R. ScannellChief Executive Officer

/s/ Donald R. Fishback Donald R. FishbackChief Financial Officer

This certification shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section. This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent specifically incorporated by the Company into such filing.

FY 16 Q2 - 04.02...2004/02/16 · Title FY 16 Q2 - 04.02.16 Created Date 5/23/2016 12:00:00 AM

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