The accompanying unaudited consolidated condensed financial statements have been prepared by management in accordance with generally accepted accounting principles and in the opinion of management contain all adjustments, consisting of normal recurring adjustments, necessary to present fairly the financial position of Moog Inc. as of December 25, 2004 and September 25, 2004 and the results of its operations for the three months ended December 25, 2004 and December 31, 2003 and its cash flows for the three months ended December 25, 2004 and December 31, 2003. The results of operations for the three months ended December 25, 2004 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 the Company's Form 10-K for the fiscal year ended September 25, 2004. All references to years in these financial statements are to fiscal years.

In December 2004, the FASB issued SFAS No. 123 R (revised 2004), "Share-Based Payment," which is a revision of FASB Statement No. 123, "Accounting for Stock-Based Compensation." This statement will provide investors and other users of financial statements with more complete and neutral financial information by requiring that the compensation cost relating to share-based payment transactions be recognized in the financial statements. Statement 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. This statement covers a wide range of share-based compensation arrangements including share options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans, and replaces FASB SFAS No. 123, "Accounting for Stock-Based Compensation," and supersedes APB Opinion No. 25, "Accounting for Stock Issued to Employees." Statement 123, as originally issued in 1995, established as preferable a fair-value-based method of accounting for share-based payment transactions with employees. However, that statement permitted entities the option of continuing to apply the guidance in APB No. 25, as long as the footnotes to financial statements disclosed what net income would have been had the preferable fair-value-based method been used. Statement 123(R) is effective for public companies (excluding small business issuers) at the beginning of the first interim or annual report period beginning after June 15, 2005. Upon adoption, prior periods may be, but are not required to be, restated. The Company is evaluating the effect that this statement will have on its results of operations and financial conditions.

In November 2004, the FASB issued SFAS No. 151 "Inventory Costs, an amendment of ARB No. 43, Chapter 4." The amendments made by this statement clarify that abnormal amounts of idle facility expense, freight, handling costs and wasted materials (spoilage) should be recognized as current-period charges and require the allocation of fixed production overheads to inventory based on the normal capacity of the production facilities. The provisions of this statement are effective for inventory costs incurred during fiscal years beginning after June 15, 2005. Earlier application is permitted for inventory costs incurred during fiscal years beginning after November 2004. The Company believes the adoption of this standard will not have a material impact on its results of operations or financial position.

In October 2004, President Bush signed the American Job Creation Act of 2004, which contains provisions related to the distribution of the earnings of foreign subsidiaries. Although preliminary guidance has been issued by the IRS, the Company is still evaluating the effect that this new tax legislation will have on its results of operations and financial condition. Therefore, while the impact of the provisions could be significant, the Company is not able at this time to determine the impact, if any, of future repatriations.

The Company accounts for stock options under the intrinsic value method as prescribed by Accounting Principles Board Opinion No. 25. The exercise price equals the market price of the underlying common shares on the date of grant and, therefore, no compensation expense is recognized. The following table illustrates the effect on net earnings and earnings per share as if the fair value method had been applied to all outstanding awards in each period.

The Company uses derivative financial instruments to manage the risk associated with changes in interest rates that affect the amount of future interest payments. At December 25, 2004, the Company had outstanding interest rate swaps with a $180,000 notional amount, effectively converting that amount of variable-rate debt to fixed-rate debt. Of the $180,000 notional amount, $90,000 matures in the second quarter of 2005, $55,000 matures in the second quarter of 2006 and $35,000 matures in the first quarter of 2007. Based on the applicable margin at December 25, 2004, the interest rate swaps effectively convert these amounts of variable-rate debt to fixed-rate debt at 3.5%, 4.1% and 3.8%, respectively, through their maturities, at which time the interest will revert back to variable rates based on LIBOR plus the applicable margin.

Activity in Accumulated Other Comprehensive Loss (AOCL) related to derivatives held by the Company during the first three months of fiscal 2005 is summarized below:

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

Preferred stock dividends are deducted from net earnings to calculate income available to common stockholders for earnings per share. On January 2, 2004, the 83,771 outstanding shares of Series B Preferred Stock automatically converted into 16,182 shares of Class A Common Stock.

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 Form 10-K for the fiscal year ended September 25, 2004. All references to years in this Management's Discussion and Analysis of Financial Condition and Results of Operations are to fiscal years.

We intend to increase our revenue base and improve our profitability and cash flows from operations by building on our market leadership positions and by strengthening our niche market positions in the principal markets that we serve. We also expect to maintain a balanced, diversified portfolio in terms of markets served, product applications, customer base and geographic presence. Our strategy to achieve our objective includes maintaining our technological excellence by building upon our systems integration capabilities while solving our customers' most demanding technical problems, growing our profitable aftermarket business, entering and developing new markets by using our broad expertise as a designer and supplier of precision controls, taking advantage of our global engineering, selling and manufacturing capabilities, striving for continuing cost improvements and capitalizing on strategic acquisition opportunities.

Challenges facing us include improving shareholder value through increased profitability while experiencing pricing pressures from customers, strong competition and increases in certain costs, such as health care, retirement and corporate governance costs. We address these challenges by focusing on strategic revenue growth and by continuing to improve operating efficiencies through various process and manufacturing initiatives and using low cost manufacturing facilities without compromising quality.

Net sales increased 10% in the first quarter of 2005 from the first quarter of 2004. Sales increased in each of our segments, with the largest increase occurring in Industrial Controls.

The gross margin improved in the first quarter of 2005. In Space and Defense Controls, we benefited from increased volume. Our margin was low in Space and Defense Controls in the first quarter of 2004 due to a $1.8 million contract loss reserve established for the recall and repair of attitude control valves used on satellites. We were also negatively impacted in the first quarter of 2004 by $1.8 million of inventory sold that was stepped up to fair value as part of the Poly-Scientific acquisition. These factors were partially offset by a $1.8 million favorable scope change adjustment on a business jet development contract in the first quarter of 2004.

Gross margins can also be influenced by activity in contract loss reserves, especially additions to loss reserves associated with new loss contracts or substantial increases in cost estimates on existing contracts. During the first quarter of 2005, we had $4 million of additions to contract loss reserves compared to $5 million in the first quarter of 2004, when we established the contract loss reserve for the recall and repair of attitude control valves on satellites.

Research and development expenses increased in the first quarter of 2005, primarily related to increasing development activities on Boeing's next generation commercial aircraft, the 7E7 Dreamliner, and on Northrop Grumman's X-47 Unmanned Combat Air System.

Selling, general and administrative expenses as a percentage of sales decreased slightly in the first quarter of 2005 from the first quarter of 2004. In the first quarter of 2004, we had higher bid and proposal efforts, principally on Boeing's 7E7.

Interest expense was lower in the first quarter of 2005 compared to the first quarter of 2004. The lower level of interest expense resulted from our generation of strong cash flows during the past year that we have used to reduce our outstanding borrowings.

Our effective tax rate was higher in the first quarter of 2005 compared to the first quarter of 2004 due to reduced foreign tax benefits.

Net earnings increased 18% and diluted earnings per share increased 19% in the first quarter of 2005 compared to the first quarter of 2004.

The Space Controls segment has been renamed Space and Defense Controls and now includes the defense controls product line, which was previously included in Industrial Controls. All amounts have been restated to present defense controls within Space and Defense Controls.

Operating profit, as presented below, is net sales less cost of sales and other operating expenses. Cost of sales and other operating expenses are directly identifiable to the respective segment or allocated on the basis of sales or manpower. Operating profit is reconciled to earnings before income taxes in Note 13 of the Notes to Consolidated Condensed Financial Statements, included in this report.

Net sales in Aircraft Controls increased 3% in the first quarter of 2005 from the first quarter of 2004, and the increase was within both military and commercial aircraft. Within military aircraft, sales increased by $4 million on the Indian Light Combat Aircraft program in part due to a new order and increased by $2 million in military aftermarket. These increases were partially offset by an expected $4 million decline in sales on the Joint Strike Fighter program as we shift from design and development towards integration testing. The increase in sales within commercial aircraft is primarily due to higher commercial aftermarket sales.

Our operating margin for Aircraft Controls decreased from the first quarter of 2004 to the first quarter of 2005. This decrease is primarily attributable to a favorable scope change negotiation on a business jet development program in the first quarter of 2004.

Net sales in Space and Defense Controls increased 17% in the first quarter of 2005 from the first quarter of 2004. Sales of controls for satellites increased by $4 million related to recent orders for military satellites and by $2 million for defense controls. These increases were partially offset by a $2 million decrease in sales of controls for tactical missiles as there were strong cost inputs on tactical missile programs in the first quarter of 2004, including on the Maverick, Hellfire and VT-1 programs.

Our operating margin for Space and Defense Controls improved in the first quarter of 2005 from a low operating margin in the first quarter of 2004. Increased volume, most notably on military satellite programs, was responsible for the solid operating margins in the first quarter of 2005. In the first quarter of 2004, our operating margin was negatively impacted by a $1.8 million contract loss reserve established for the recall and repair of attitude control valves used on satellites.

Twelve-month backlog for Space and Defense Controls was higher at December 25, 2004 compared to December 31, 2003, primarily reflecting strong military satellites orders.

2005 Outlook for Space and Defense Controls - We expect sales in Space and Defense Controls to increase to $128 million in 2005 from $116 million in 2004. The increase primarily relates to work on military satellite programs that is expected to continue throughout most of 2005. We expect our operating margin to improve to 8.0% in 2005 from 2.8% in 2004, reflecting a higher level of sales of controls for military satellites and not having the significant negative impacts of the recall and repair efforts and establishing a loss reserve for the Joint Common Missile program that we had in 2004.

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Our operating margins for Industrial Controls were comparable in the first quarters of 2005 and 2004.

Net sales in Components increased 13% in the first quarter of 2005 from the first quarter of 2004. The sales increase relates to brushless DC motors used in sleep apnea equipment, fiber optic slip rings used in CT scan equipment and slip rings and electric motors used in other industrial applications.

Our operating margins increased in the first quarter of 2005 compared to the first quarter of 2004. The improvement primarily relates to a $1.8 million charge in the first quarter of 2004 for the step-up in inventory as part of acquisition accounting that did not affect any other quarters.

Twelve-month backlog for Components was higher at December 25, 2004 compared to December 31, 2003 reflecting strong orders on military aircraft programs and growth in industrial markets.

2005 Outlook for Components - We expect net sales in Components to increase to $140 million in 2005 from $130 million in 2004. We expect the industrial markets to benefit from higher demand for our products used on medical equipment and increased sales efforts in Europe and Asia. We also expect sales of defense controls to increase. Our operating margin is anticipated to increase to 13.3%, a level we achieved this quarter, related in part to $1.8 million of costs for the step-up in inventory as part of acquisition accounting that were included in the 2004 12.0% operating profit.

Cash flow from operations and available borrowing capacity provide us with resources needed to run our operations, continually invest in our business and take advantage of acquisition opportunities as they may arise.

Net cash provided by operating activities increased in the first three months of 2005 from the first three months of 2004. Approximately half of this increase relates to a higher level of customer advances, including the receipt of $13 million for our recently restarted work on the Indian Light Combat Aircraft and for our work on deliveries of F-15 hardware for the Japanese. The remaining increase in net cash provided by operating activities relates to higher earnings and strong collections on receivables. Depreciation and amortization was $9 million in the first three months of 2005 and 2004. Provisions for losses were $8 million in 2005 and 2004.

Net cash used by investing activities consists of $9 million of capital expenditures in the first quarter of 2005. In the first quarter of 2004, capital expenditures were $11 million, including $4 million financed by capital leases. Cash used by investing activities in 2004 also included the acquisition of Poly-Scientific for $158 million.

Net cash used by financing activities in the first quarter of 2005 primarily consists of paydowns of borrowings as a result of strong operating cash flows. Cash provided by financing activities in 2004 included financing a portion of the Poly-Scientific acquisition with $80 million of borrowings on the credit facility and a $21 million bridge loan.

The Company does not have any material off balance sheet arrangements that have or are reasonably likely to have a material future effect on its results of operations or financial condition.

The Company's contractual obligations and commercial commitments have not changed materially from the disclosures in the Company's Form 10-K for the year ended September 25, 2004.

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

Our largest credit facility is our U.S. facility that consists of a $75 million term loan and a $315 million revolver that had outstanding balances of $49 million and $226 million, respectively, at December 25, 2004. Interest on outstanding credit facility borrowings is based on LIBOR plus the applicable margin, which is currently 150 basis points. The credit facility expires on March 31, 2008 and requires quarterly principal payments on the term loan of $3.75 million. The credit facility is secured by substantially all of our U.S. assets.

The U.S. credit facility contains various covenants. The covenant for minimum consolidated net worth, defined as the sum of capital stock and additional paid-in capital plus retained earnings, adjusts over the term of the facility and was $265 million at December 25, 2004. The covenant for minimum interest coverage ratio, defined as the ratio of adjusted EBITDA to total interest expense for the most recent four quarters, is 3.0. The covenant for minimum fixed charge coverage ratio, defined as the ratio of (i) adjusted EBITDA minus capital expenditures to (ii) the sum of interest expense, income tax expense and regularly scheduled principal payments on debt, all for the most recent four quarters, is 1.2. The covenant for the maximum leverage ratio, defined as the ratio of total debt (including letters of credit) less cash to adjusted EBITDA for the most recent four quarters, is 3.5. The covenant for maximum capital expenditures is $50 million in any one fiscal year. Adjusted EBITDA is defined in the agreement as (i) the sum of net income, interest expense, income tax expense, depreciation expense, amortization expense and other non-cash items reducing net income minus (ii) other non-cash items increasing net income. At December 25, 2004, we were in compliance with all covenants.

We are required to obtain the consent of lenders of the U.S. credit facility before raising significant additional debt financing. On December 29, 2004, we modified the U.S. credit facility to permit the issuance of our 6 ¼% senior subordinated notes due 2015. We also modified the U.S. credit facility to preserve our borrowing availability under the revolving credit portion of the facility, to permit our Moog Components subsidiary to borrow funds under the facility and to increase the maximum limit for capital expenditures in anyone fiscal year from $40 million to $50 million. In recent years, we have demonstrated our ability to secure consents and modifications to access debt and capital markets. In addition, we have shown strong, consistent financial performance. We believe that we will be able to obtain additional debt or equity financing as needed.

On January 10, 2005, we completed the sale of $150 million aggregate principal amount of senior subordinated notes due 2015 with a coupon interest rate of 6 ¼%, with interest paid semiannually. We used the net proceeds to repay indebtedness under our U.S. credit facility.

At December 25, 2004, we had $100 million of unused borrowing capacity, including $72 million from the U.S. credit facility after considering standby letters of credit. Our borrowing capacity on the U.S. credit facility increased by $147 million after repaying indebtedness with the net proceeds from the sale of senior subordinated notes in January 2005.

Long-term debt to capitalization was 35% at December 25, 2004 compared to 38% at September 25, 2004.

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

Nearly half of our consolidated sales relate to global military defense or government funded programs. Most of these sales are within Aircraft Controls and Space and Defense Controls.

The military aircraft market is dependent on military spending for development and production programs. Military spending is expected to remain strong over the next few years. Production programs are typically long-term in nature, offering greater predictability as to capacity needs and future revenues. We maintain positions on numerous high priority programs, including the F/A-18E/F Super Hornet, F-35 and V-22. These and other government programs can be reduced, delayed or terminated. In 2004, we were awarded a contract to develop fin controls for the Joint Common Missile program and the production portion of the program is being considered for termination already. If this program continues, we will be positioned on it. If it is terminated, production may continue for the alternative Hellfire missile program that we are also positioned on. The large installed base of our products leads to attractive aftermarket sales and service opportunities. Aftermarket revenues are expected to continue to grow, due to a number of scheduled military retrofit programs and increased flight hours resulting from increased military activity.

The military and government space market is primarily dependent on the authorized levels of funding for satellite communications needs. We believe that government spending on military satellites will rise as the military's need for improved intelligence gathering increases.

The tactical 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.

Approximately one-third of our sales are generated in industrial markets. The industrial markets we serve are influenced by several factors, including capital investment, product innovation, economic growth, cost-reduction efforts and technology upgrades. However, due to the high degree of sophistication of our products and the niche markets we serve, we believe we may be less susceptible to overall macro-industrial trends. Diversification of customers, product applications and geography help to soften the impact of sales changes within our business. Opportunities for growth include automotive manufacturers that are upgrading their metal forming, injection molding and material test capabilities, steel manufacturers that are seeking to reduce energy costs, injection molding machine manufacturers that need exacting precision in the production of CDs and DVDs and advancements in medical technology.

Nearly fifteen percent of our sales are on commercial aircraft programs. The commercial OEM aircraft market has historically exhibited cyclical swings and sensitivity to economic conditions, while the aftermarket, which is driven by usage of the existing aircraft fleet, has proven to be more stable. Higher aircraft utilization rates result in the need for increased maintenance and spare parts and improve aftermarket sales. Boeing and Airbus both plan to increase production over the next few years since air traffic growth has returned to historical average rates. Over the last four years, annual orders have been below the long-term delivery average. Boeing Commercial Airplanes is an important customer, representing approximately 3% of our sales, down from over 10% a few years ago. We have contract coverage through 2012 with Boeing for the existing 7-series aircraft and are also developing the primary flight control actuation system for Boeing's 7E7 Dreamliner, its next generation commercial aircraft. In the business jets market, our flight controls are baselined on a couple of newer jets approaching their initial production phases.

We are affected by the movement of foreign currencies compared to the U.S. dollar, particularly in Industrial Controls. Nearly one-third of our sales is denominated in foreign currencies including the euro, Japanese yen and British pound. During 2005, these foreign currencies have strengthened against the U.S. dollar and the Company has benefited from the translation of the results of the Company's foreign subsidiaries into U.S. dollars.

Other than pension assumptions, there have been no other changes in critical accounting policies in the current year from those disclosed in our 2004 Form 10-K.

In December 2004, the FASB issued SFAS No. 123 R (revised 2004), "Share-Based Payment," which is a revision of FASB Statement No. 123, "Accounting for Stock-Based Compensation." This statement will provide investors and other users of financial statements with more complete and neutral financial information by requiring that the compensation cost relating to share-based payment transactions be recognized in the financial statements. Statement 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. This statement covers a wide range of share-based compensation arrangements including share options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans, and replaces FASB SFAS No. 123, "Accounting for Stock-Based Compensation," and supersedes APB Opinion No. 25, "Accounting for Stock Issued to Employees." Statement 123, as originally issued in 1995, established as preferable a fair-value-based method of accounting for share-based payment transactions with employees. However, that statement permitted entities the option of continuing to apply the guidance in APB No. 25, as long as the footnotes to financial statements disclosed what net income would have been had the preferable fair-value-based method been used. Statement 123(R) is effective for public companies (excluding small business issuers) at the beginning of the first interim or annual report period beginning after June 15, 2005. Upon adoption, prior periods may be, but are not required to be, restated. The Company is evaluating the effect that this statement will have on its results of operations and financial conditions.

In November 2004, the FASB issued SFAS No. 151 "Inventory Costs, an amendment of ARB No. 43, Chapter 4." The amendments made by this statement clarify that abnormal amounts of idle facility expense, freight, handling costs and wasted materials (spoilage) should be recognized as current period charges and require the allocation of fixed production overheads to inventory based on the normal capacity of the production facilities. The provisions of this statement are effective for inventory costs incurred during fiscal years beginning after June 15, 2005. Earlier application is permitted for inventory costs incurred during fiscal years beginning after November 2004. We believe the adoption of this standard will not have a material impact on our results of operations or financial position.

In October 2004, President Bush signed the American Job Creation Act of 2004, which contains provisions related to the distribution of the earnings of foreign subsidiaries. Although preliminary guidance has been issued by the IRS, we are still evaluating the effect that this new tax legislation will have on our results of operations and financial condition. Therefore, while the impact of the provisions could be significant, we are not able at this time to determine the impact, if any, of future repatriations.

Information included herein or incorporated by reference 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," "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 (i) fluctuations in general business cycles for commercial aircraft, military aircraft, space and defense products and industrial capital goods, (ii) our dependence on government contracts that may not be fully funded or may be terminated, (iii) our dependence on certain major customers, such as The Boeing Company and Lockheed Martin, for a significant percentage of our sales, (iv) the possibility that the demand for our products may be reduced if we are unable to adapt to technological change, (v) intense competition which may require us to lower prices or offer more favorable terms of sale, (vi) our significant indebtedness which could limit our operational and financial flexibility, (vii) the possibility that new product and research and development efforts may not be successful which could reduce our sales and profits, (viii) higher pension costs and increased cash funding requirements, which could occur in future years if future actual plan results differ from assumptions used for our defined benefit pension plans, including returns on plan assets and discount rates, (ix) a write-off of all or part of our goodwill, which could adversely affect our operating results and net worth and cause us to violate covenants in our bank agreements, (x) the potential for substantial fines and penalties or suspension or debarment from future contracts in the event we do not comply with regulations relating to defense industry contracting, (xi) the potential for cost overruns on development jobs and fixed price contracts and the risk that actual results may differ from estimates used in contract accounting, (xii) the possibility that our subcontractors may fail to perform their contractual obligations, which may adversely affect our contract performance and our ability to obtain future business, (xiii) our ability to successfully identify and consummate acquisitions and integrate the acquired businesses, (xiv) our dependence on our management team and key personnel, (xv) the possibility of a catastrophic loss of one or more of our manufacturing facilities, (xvi) the possibility that future terror attacks, war or other civil disturbances could negatively impact our business, (xvii) our operations in foreign countries could expose us to political risks and adverse changes in local, legal, tax and regulatory schemes, (xviii) the possibility that government regulation could limit our ability to sell our products outside the United States, (xix) the impact of product liability claims related to our products used in applications where failure can result in significant property damage, injury or death and in damage to our reputation, (xx) the possibility that litigation may result unfavorably to us, (xxi) foreign currency fluctuations in those countries in which we do business and other risks associated with international operations and (xxii) the cost of compliance with environmental laws. The factors identified above 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.

Refer to the Company's Annual Report on Form 10-K for the year ended September 25, 2004 for a complete discussion of the Company's market risk. There have been no material changes in the current year regarding this market risk information.

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.