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


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

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


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

New York ~~State~~

16-0757636

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

400 Jamison Road

East Aurora,

New York

14052-0018

(Address of ~~principal executive offices)~~Principal Executive Offices)

(Zip Code)

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

~~(716) 652-2000~~
~~(Telephone number including area code)~~Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock	MOG.A	New York Stock Exchange
Class B common stock	MOG.B	New York Stock Exchange

Indicate by check mark whether the ~~registrant~~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 ý☒ 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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

~~Large accelerated filer~~ ý ~~Accelerated filer~~ ¨ ~~Non-accelerated filer~~ ¨ ~~(Do not check if smaller reporting company)Smaller reporting company~~ ¨~~Emerging growth company~~ ¨


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for ~~the~~ complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨

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 ~~January 23, 2018~~April 25, 2022 was:

Class A common ~~stock, $1.00 par value, 32,397,457~~stock, 29,001,639 shares

Class B common stock, ~~$1.00 par value, 3,380,636~~2,932,822 shares

QUARTERLY REPORT ON FORM 10-Q

PART I FINANCIAL INFORMATION

Item 1. Financial Statements


	Three Months Ended				Six Months Ended
(dollars in thousands, except share and per share data)	April 2, 2022		April 3, 2021		April 2, 2022		April 3, 2021
Net sales	$	770,787	$	736,402	$	1,494,873	$	1,420,356
Cost of sales	556,070		536,493		1,085,776		1,030,804
Inventory write-down	1,705		—		3,205		—
Gross profit	213,012		199,909		405,892		389,552
Research and development	30,720		30,453		58,428		58,461
Selling, general and administrative	111,019		105,131		222,816		204,734
Interest	8,263		8,629		16,245		17,049
Asset impairment	15,236		—		15,236		—
Restructuring	7,793		—		7,793		—
Gain on sale of business	—		—		(16,146)		—
Other	1,268		(6,432)		1,384		(3,191)
Earnings before income taxes	38,713		62,128		100,136		112,499
Income taxes	9,626		13,440		24,784		25,969




Net earnings	$	29,087	$	48,688	$	75,352	$	86,530

Net earnings per share
Basic	$	0.91	$	1.51	$	2.35	$	2.69
Diluted	$	0.91	$	1.51	$	2.34	$	2.68

Average common shares outstanding
Basic	31,984,674		32,146,247		32,021,036		32,110,365
Diluted	32,120,726		32,325,494		32,154,442		32,281,158
See accompanying Notes to Consolidated Condensed Financial Statements.

Three Months Ended
(dollars in thousands, except per share data) December 30,
2017 December 31,
2016
Net sales $ 627,535
$ 589,670
Cost of sales 443,426
417,164
Gross profit 184,109
172,506
Research and development 32,420
34,564
Selling, general and administrative 95,950
85,063
Interest 8,646
8,486
Other (741 ) 7,905
Earnings before income taxes 47,834
36,488
Income taxes 46,535
6,430
Net earnings attributable to Moog and noncontrolling interest 1,299
30,058

Net earnings (loss) attributable to noncontrolling interest —
(506 )

Net earnings attributable to Moog $ 1,299
$ 30,564

Net earnings per share attributable to Moog
Basic $ 0.04
$ 0.85
Diluted $ 0.04
$ 0.84

Average common shares outstanding
Basic 35,772,406
35,869,052
Diluted 36,201,054
36,272,767
See accompanying Notes to Consolidated Condensed Financial Statements.


	Three Months Ended				Six Months Ended
(dollars in thousands)	April 2, 2022		April 3, 2021		April 2, 2022		April 3, 2021
Net earnings	$	29,087	$	48,688	$	75,352	$	86,530
Other comprehensive income (loss) ("OCI"), net of tax:
Foreign currency translation adjustment	(18,283)		(12,935)		(24,843)		20,562
Retirement liability adjustment	4,538		4,322		8,628		5,918
Change in accumulated loss on derivatives	(295)		(702)		(160)		(604)
Other comprehensive income (loss), net of tax	(14,040)		(9,315)		(16,375)		25,876



Comprehensive income	$	15,047	$	39,373	$	58,977	$	112,406
See accompanying Notes to Consolidated Condensed Financial Statements.

Three Months Ended
(dollars in thousands) December 30,
2017 December 31,
2016
Net earnings attributable to Moog and noncontrolling interest $ 1,299
$ 30,058
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment 10,364
(41,509 )
Retirement liability adjustment 4,256
8,572
Change in accumulated income (loss) on derivatives 1,234
574
Other comprehensive income (loss), net of tax 15,854
(32,363 )
Comprehensive income (loss) 17,153
(2,305 )
Comprehensive income (loss) attributable to noncontrolling interest —
(506 )
Comprehensive income (loss) attributable to Moog $ 17,153
$ (1,799 )
See accompanying Notes to Consolidated Condensed Financial Statements.


(dollars in thousands)	April 2, 2022		October 2, 2021
ASSETS
Current assets
Cash and cash equivalents	$	120,395	$	99,599
Restricted cash	1,736		1,315
Receivables, net	931,297		945,929
Inventories, net	591,601		613,095
Prepaid expenses and other current assets	67,802		58,842
Total current assets	1,712,831		1,718,780
Property, plant and equipment, net	668,602		645,778
Operating lease right-of-use assets	61,659		60,355
Goodwill	842,203		851,605
Intangible assets, net	104,608		106,095
Deferred income taxes	16,022		17,769
Other assets	35,568		32,787
Total assets	$	3,441,493	$	3,433,169
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities

Current installments of long-term debt	$	372	$	80,365
Accounts payable	222,986		200,602
Accrued compensation	79,709		112,703
Contract advances	321,594		263,686

Accrued liabilities and other	217,780		212,005
Total current liabilities	842,441		869,361
Long-term debt, excluding current installments	832,391		823,355
Long-term pension and retirement obligations	157,962		162,728
Deferred income taxes	70,636		64,642
Other long-term liabilities	107,415		112,939
Total liabilities	2,010,845		2,033,025


Shareholders’ equity
Common stock - Class A	43,804		43,803
Common stock - Class B	7,476		7,477
Additional paid-in capital	543,292		509,622
Retained earnings	2,296,849		2,237,848
Treasury shares	(1,028,414)		(1,007,506)
Stock Employee Compensation Trust	(94,548)		(79,776)
Supplemental Retirement Plan Trust	(73,876)		(63,764)
Accumulated other comprehensive loss	(263,935)		(247,560)
Total shareholders’ equity	1,430,648		1,400,144


Total liabilities and shareholders’ equity	$	3,441,493	$	3,433,169
See accompanying Notes to Consolidated Condensed Financial Statements.

(dollars in thousands) December 30,
2017 September 30,
2017
ASSETS
Current assets
Cash and cash equivalents $ 394,980
$ 368,073
Receivables 739,731
727,740
Inventories 511,653
489,127
Prepaid expenses and other current assets 38,800
41,499
Total current assets 1,685,164
1,626,439
Property, plant and equipment, net of accumulated depreciation of $791,388 and $771,160, respectively 527,356
522,991
Goodwill 776,156
774,268
Intangible assets, net 104,914
108,818
Deferred income taxes 11,395
26,558
Other assets 33,510
31,518
Total assets $ 3,138,495
$ 3,090,592
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Short-term borrowings $ 89
$ 89
Current installments of long-term debt 259
295
Accounts payable 156,967
170,878
Accrued compensation 122,763
148,406
Customer advances 179,598
159,274
Contract loss reserves 41,786
43,214
Other accrued liabilities 112,072
107,278
Total current liabilities 613,534
629,434
Long-term debt, excluding current installments 962,006
956,653
Long-term pension and retirement obligations 260,741
271,272
Deferred income taxes 40,782
13,320
Other long-term liabilities 33,483
5,609
Total liabilities 1,910,546
1,876,288
Commitments and contingencies (Note 18) —
—
Shareholders’ equity
Common stock - Class A 43,716
43,704
Common stock - Class B 7,564
7,576
Additional paid-in capital 498,699
492,246
Retained earnings 1,849,118
1,847,819
Treasury shares (739,210 ) (739,157 )
Stock Employee Compensation Trust (98,990 ) (89,919 )
Supplemental Retirement Plan Trust (13,311 ) (12,474 )
Accumulated other comprehensive loss (319,637 ) (335,491 )
Total Moog shareholders’ equity 1,227,949
1,214,304
Total liabilities and shareholders’ equity $ 3,138,495
$ 3,090,592
See accompanying Notes to Consolidated Condensed Financial Statements.

(1) Cash dividends were $0.26 and $0.51 per share for the three and six months ended April 2, 2022, respectively. Cash dividends were $0.25 and $0.50 per share for three and six months ended April 3, 2021, respectively.


	Three Months Ended		Six Months Ended
(share data)	April 2, 2022	April 3, 2021	April 2, 2022	April 3, 2021
COMMON STOCK - CLASS A
Beginning of period	43,803,236	43,802,229	43,803,236	43,799,229
Conversion of Class B to Class A	625	—	625	3,000
End of period	43,803,861	43,802,229	43,803,861	43,802,229
COMMON STOCK - CLASS B
Beginning of period	7,476,477	7,477,484	7,476,477	7,480,484
Conversion of Class B to Class A	(625)	—	(625)	(3,000)
End of period	7,475,852	7,477,484	7,475,852	7,477,484
TREASURY SHARES - CLASS A COMMON STOCK
Beginning of period	(14,326,118)	(14,018,121)	(14,157,721)	(13,959,998)

Class A shares issued related to compensation	6,987	3,108	29,029	17,560
Class A shares purchased	(57,943)	(96,878)	(248,382)	(169,453)
End of period	(14,377,074)	(14,111,891)	(14,377,074)	(14,111,891)
TREASURY SHARES - CLASS B COMMON STOCK
Beginning of period	(3,154,267)	(3,366,679)	(3,179,055)	(3,344,877)
Class B shares issued related to compensation	140,834	175,994	199,172	247,053
Class B shares purchased	(68,834)	(646)	(102,384)	(93,507)
End of period	(3,082,267)	(3,191,331)	(3,082,267)	(3,191,331)
SECT - CLASS A COMMON STOCK



Beginning and end of period	(425,148)	(425,148)	(425,148)	(425,148)
SECT - CLASS B COMMON STOCK
Beginning of period	(603,707)	(561,951)	(600,880)	(557,543)
Issuance of shares	68,763	—	93,763	4,135
Purchase of shares	(97,116)	(23,633)	(124,943)	(32,176)
End of period	(632,060)	(585,584)	(632,060)	(585,584)
SERP - CLASS B COMMON STOCK



Beginning and end of period	(826,170)	(826,170)	(826,170)	(826,170)
See accompanying Notes to Consolidated Condensed Financial Statements.

Three Months Ended
(dollars in thousands) December 30,
2017 December 31,
2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings attributable to Moog and noncontrolling interest $ 1,299
$ 30,058
Adjustments to reconcile net earnings to net cash provided (used) by operating activities:
Depreciation 17,487
17,918
Amortization 4,674
4,541
Deferred income taxes 37,617
1,371
Equity-based compensation expense 2,001
2,168
Other 1,563
9,868
Changes in assets and liabilities providing (using) cash:
Receivables (10,350 ) (11,012 )
Inventories (22,236 ) 6,996
Accounts payable (14,393 ) 6,737
Customer advances 19,888
8,287
Accrued expenses (27,233 ) (17,479 )
Accrued income taxes 6,965
(8,885 )
Net pension and post retirement liabilities (4,562 ) (1,295 )
Other assets and liabilities 31,450
1,309
Net cash provided by operating activities 44,170
50,582
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (21,084 ) (14,849 )
Other investing transactions (537 ) (976 )
Net cash (used) by investing activities (21,621 ) (15,825 )
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from revolving lines of credit 103,500
62,400
Payments on revolving lines of credit (108,610 ) (67,400 )
Proceeds from long-term debt 10,000
—
Payments on long-term debt (44 ) (50 )
Proceeds from sale of treasury stock 1,048
2,135
Purchase of outstanding shares for treasury (2,734 ) (5,211 )
Proceeds from sale of stock held by SECT —
867
Purchase of stock held by SECT (3,823 ) (5,709 )
Net cash (used) by financing activities (663 ) (12,968 )
Effect of exchange rate changes on cash 5,021
(15,253 )
Increase in cash and cash equivalents 26,907
6,536
Cash and cash equivalents at beginning of period 368,073
325,128
Cash and cash equivalents at end of period $ 394,980
$ 331,664
See accompanying Notes to Consolidated Condensed Financial Statements.

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 ~~December 30, 2017~~April 2, 2022 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 ~~September 30, 2017.~~October 2, 2021. All references to years in these financial statements are to fiscal years.

COVID-19 Impacts On Our Business

~~Certain prior year amounts~~The spread of the COVID-19 outbreak has disrupted businesses on a global scale. On March 11, 2020, the World Health Organization classified the outbreak as a pandemic. As we entered this crisis, the Company established two clear priorities: first and foremost the health and safety of our employees and their families, and second, continuing to meet the needs of our customers and secure the financial well-being of the Company. Substantially all of our operations and production activities have, to-date, remained operational. COVID-19 is discussed in more detail throughout “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Impairment of Assets

Long-lived assets, including acquired intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of those assets may not be recoverable. We estimate fair value using undiscounted cash flows to determine whether impairment exists and measure any impairment loss using discounted cash flows, or with another comparable method.

In 2022, we recorded impairment charges on long-lived assets in our Aircraft Controls segment. These charges relate to property, plant and equipment that experienced a significant decline in value due to a slower than expected recovery of our commercial aircraft business. In addition, we have recorded impairment charges on receivables and inventories associated with Russian actions in Ukraine. These charges are included in asset impairment in the Consolidated Condensed Statement of Earnings.

See Note 4 - Receivables, Note 5 - Inventories, Note 6 - Property, Plant and Equipment and Note 12 - Fair Value for additional disclosures relating to impairment charges recorded.

Recent Accounting Pronouncements Adopted

There have been reclassified to conform to current year's presentation. During 2018, we made a change to our segment reporting structure and merged our former Components segment into Space and Defense Controls and Industrial Systems. The Goodwill and Segment footnotes have been restated to reflect these changes.no accounting pronouncements adopted for the six months ended April 2, 2022.

Recent Accounting Pronouncements Not Yet Adopted

~~Revenue from Contracts with Customers~~

~~(And All Related ASUs)~~

We plan to adopt the standard using the modified retrospective method, under which prior years' results are not restated, but supplemental information will be provided in our disclosures that will present fiscal 2019 results before adoption of the standard. In addition, a cumulative adjustment will be necessary to Shareholder's Equity at the beginning of fiscal 2019. We are assessing the impact of the standard on our financial statements and related disclosures, internal controls and financial policies and information technology systems. We have not yet quantified the impact on our financial statements and related disclosures.

~~Planned date of adoption:~~

~~Recognition and Measurement of Financial Assets and Financial Liabilities~~

~~We are currently evaluating the effect on our financial statements and related disclosures.~~

~~Planned date of adoption:~~

~~(And All Related ASUs)~~

~~Planned date of adoption:~~

~~Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~

~~We are currently evaluating the effect on our financial statements and related disclosures.~~

~~Planned date of adoption:~~

~~Targeted Improvements to Accounting for Hedging Activities~~

~~We are currently evaluating the effect on our financial statements and related disclosures.~~

~~Planned date of adoption:~~

We consider the applicability and impact of all ~~ASUs.~~Accounting Standard Updates ("ASU"). ASUs not listed ~~above~~ were assessed and determined to be either not applicable, or had or are expected to have ~~minimal~~an immaterial impact on our financial statements and related disclosures.

Note 2 - ~~Acquisitions, Divestitures~~Revenue from Contracts with Customers

We recognize revenue from contracts with customers using the five-step model prescribed in ASC 606. The first step is identifying the contract. The identification of a contract with a customer requires an assessment of each party’s rights and ~~Equity Method Investments~~obligations regarding the products or services to be transferred, including an evaluation of termination clauses and presently enforceable rights and obligations. Each party’s rights and obligations and the associated terms and conditions are typically determined in purchase orders. For sales that are governed by master supply agreements under which provisions define specific program requirements, purchase orders are issued under these agreements to reflect presently enforceable rights and obligations for the units of products and services being purchased.

~~On October 3, 2017,~~

Contracts are sometimes modified to account for changes in contract specifications and requirements. When this occurs, we assess the modification as prescribed in ~~collaboration~~ASC 606 and determine whether the existing contract needs to be modified (and revenue cumulatively caught up), whether the existing contract needs to be terminated and a new contract needs to be created, or whether the existing contract remains and a new contract needs to be created. This is determined based on the rights and obligations within the modification as well as the associated transaction price.

The next step is identifying the performance obligations. A performance obligation is a promise to transfer goods or services to a customer that is distinct in the context of the contract, as defined by ASC 606. We identify a performance obligation for each promise in a contract to transfer a distinct good or service to the customer. As part of our assessment, we consider all goods and/or services promised in the contract, regardless of whether they are explicitly stated or implied by customary business practices. The products and services in our contracts are typically not distinct from one another due to their complexity and reliance on each other or, in many cases, we provide a significant integration service. Accordingly, many of our contracts are accounted for as one performance obligation. In limited cases, our contracts have more than one distinct performance obligation, which occurs when we perform activities that are not highly complex or interrelated or involve different product life cycles. Warranties are provided on certain contracts, but do not typically provide for services beyond standard assurances and are therefore not distinct performance obligations under ASC 606.

The third step is determining the transaction price, which represents the amount of consideration we expect to be entitled to receive from a customer in exchange for providing the goods or services. There are times when this consideration is variable, for example a volume discount, and must be estimated. Sales, use, value-added, and excise taxes are excluded from the transaction price, where applicable.

The fourth step is allocating the transaction price. The transaction price must be allocated to the performance obligations identified in the contract based on relative stand-alone selling prices when available, or an estimate for each distinct good or service in the contract when standalone prices are not available. Our contracts with ~~SIA Engineering Company, announced~~customers generally require payment under normal commercial terms after delivery. Payment terms are typically within 30 to 60 days of delivery. The timing of satisfaction of our performance obligations does not significantly vary from the ~~joint venture company, Moog~~typical timing of payment.

The final step is the recognition of revenue. We recognize revenue as the performance obligations are satisfied. ASC 606 provides guidance to help determine if we are satisfying the performance obligation at a point in time or over time. In determining when performance obligations are satisfied, we consider factors such as contract terms, payment terms and whether there is an alternative use of the product or service. In essence, we recognize revenue when, or as control of, the promised goods or services transfer to the customer.

Revenue is recognized either over time using an input method that uses costs incurred to date to measure progress toward completion ("cost-to-cost") method, or point in time method. The over-time method of revenue recognition is predominantly used in Aircraft ~~Services Asia ("MASA"), in Singapore, of which we currently hold a 51% ownership. MASA is intended to provide maintenance,~~Controls and Space and Defense Controls. We use this method for U.S. Government contracts and repair and overhaul ~~services for our manufactured flight control systems. As we hold a majority ownership in MASA, but share voting control,~~arrangements as we are creating or enhancing assets that the customer controls as the assets are being created or enhanced. In addition, many of our large commercial contracts qualify for over-time accounting as our performance does not create an asset with an alternative use and we have an enforceable right to payment for performance completed to date. Our over-time contracts are primarily firm fixed price.

Revenue recognized at the point in time control is transferred to the customer is used most frequently in Industrial Systems. We use this ~~investment~~method for commercial contracts in which the asset being created has an alternative use. We determine the point in time control transfers to the customer by weighing the five indicators provided by ASC 606 - the entity has a present right to payment; the customer has legal title; the customer has physical possession; the customer has significant risks and rewards of ownership; and the customer has accepted the asset. When control has transferred to the customer, profit is generated as cost of sales is recorded and as revenue is recognized. Inventory costs include all product manufacturing costs such as direct material, direct labor, other direct costs and indirect overhead cost allocations. Shipping and handling costs are considered costs to fulfill a contract and not considered performance obligations. They are included in cost of sales as incurred.

Revenue is recognized on contracts using the ~~equity method. At December 30, 2017,~~ cost-to-cost method of accounting as work progresses toward completion as determined by the ratio of cumulative costs incurred to date to estimated total contract costs at completion, multiplied by the total estimated contract revenue, less cumulative revenue recognized in prior periods. We believe that cumulative costs incurred to date as a percentage of estimated total contract costs at completion is an appropriate measure of progress toward satisfaction of performance obligations as this measure most accurately depicts the progress of our work and transfer of control to our customers. Changes in estimates affecting sales, costs and profits are recognized in the period in which the change becomes known using the cumulative catch-up method of accounting, resulting in the cumulative effect of changes reflected in the period. Estimates are reviewed and updated quarterly for substantially all contracts. For the three and six months ended April 2, 2022 we ~~have~~recognized lower revenue of $2,238 and additional revenue of $8,740, respectively, for adjustments made ~~total contributions~~to performance obligations satisfied (or partially satisfied) in previous periods. For the three and six months ended April 3, 2021 we recognized additional revenue of ~~$1,541~~$10,563 and $12,535, respectively, for adjustments made to ~~MASA~~performance obligations satisfied (or partially satisfied) in previous periods.

Contract costs include only allocable, allowable and ~~intend to make~~ ~~two~~ ~~additional contributions during 2018. This operation is~~reasonable costs which are included in cost of sales when incurred. For applicable U.S. Government contracts, contract costs are determined in accordance with the Federal Acquisition Regulations and the related Cost Accounting Standards. The nature of these costs includes development engineering costs and product manufacturing costs such as direct material, direct labor, other direct costs and indirect overhead costs. Contract profit is recorded as a result of the revenue recognized less costs incurred in any reporting period. Variable consideration and contract modifications, such as performance incentives, penalties, contract claims or change orders are considered in estimating revenues, costs and profits when they can be reliably estimated and realization is considered probable. Revenue recognized on contracts for unresolved claims or unapproved contract change orders was not material for the three and six months ended April 2, 2022.

As of April 2, 2022, we had contract reserves of$47,380. For contracts with anticipated losses at completion, a provision for the entire amount of the estimated remaining loss is charged against income in the period in which the loss becomes known. Contract losses are determined considering all direct and indirect contract costs, exclusive of any selling, general or administrative cost allocations that are treated as period expenses. Loss reserves are more common on firm fixed-price contracts that involve, to varying degrees, the design and development of new and unique controls or control systems to meet the customers’ specifications. In accordance with ASC 606, we calculate contract losses at the contract level, versus the performance obligation level. Recall reserves are recorded when additional work is needed on completed products for them to meet contract specifications. Contract-related loss reserves are recorded for the additional work needed on completed and delivered products in order for them to meet contract specifications.

Contract Assets and Liabilities

Unbilled receivables (contract assets) primarily represent revenues recognized for performance obligations that have been satisfied but for which amounts have not been billed. These are included as Receivables on the Consolidated Condensed Balance Sheets. Contract advances (contract liabilities) relate to payments received from customers in advance of the satisfaction of performance obligations for a contract. We do not consider contract advances to be significant financing components as the intent of these payments in advance are for reasons other than providing a significant financing benefit and are customary in our ~~Aircraft Controls segment.~~industry.

~~In 2017,~~Total contract assets and contract liabilities are as follows:


	April 2, 2022		October 2, 2021
Unbilled receivables	$	590,416	$	546,764
Contract advances	321,594		263,686
Net contract assets	$	268,822	$	283,078

The increase in contract assets reflects the net impact of additional unbilled revenues recorded in excess of revenue recognized during the period. The increase in contract liabilities reflects the net impact of additional deferred revenues recorded in excess of revenue recognized during the period. For the three and six months ended April 2, 2022, we ~~sold non-core businesses~~recognized $56,481 and $131,165 of ~~our Space~~revenue, respectively, that was included in the contract liability balance at the beginning of the period.

Remaining Performance Obligations

As of April 2, 2022, the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied (or partially unsatisfied) was $5,100,000. We expect to recognize approximately 45% of that amount as sales over the next twelve months and ~~Defense Controls segment~~the balance thereafter.

Disaggregation of Revenue

See Note 19 - Segments, for ~~$7,210 in cash and recorded losses in other expense of $13,119~~disclosures related to ~~the sales.~~disaggregation of revenue.

Note 3 - Acquisitions and Divestitures

On ~~April 2, 2017,~~February 21, 2022, we acquired ~~Rotary Transfer Systems, a manufacturer of electromechanical systems, located~~TEAM Accessories Limited ("TEAM") based in ~~Germany and France~~Dublin, Ireland for a purchase price, net of acquired cash, of ~~$42,593,~~$14,890, consisting of ~~$40,545~~$11,837 in cash and ~~$2,048~~contingent consideration with an initial fair value of $3,053. TEAM specializes in ~~assumed pension obligations.~~Maintenance, Repair and Overhaul ("MRO") of engine and airframe components. This operation is included in our ~~Industrial Systems~~Aircraft Controls segment. The purchase price allocation is subject to adjustments as we obtain additional information for our estimates during the measurement period.

On December 18, 2020, we acquired Genesys Aerosystems Group, Inc. ("Genesys"), headquartered in Mineral Wells, Texas for a purchase price of $77,600, net of acquired cash. Genesys designs and manufactures a full suite of electronic flight instrument systems and autopilot solutions. This operation is included in our Aircraft Controls segment.

On December 3, 2021, we sold the assets of our Navigation Aids ("NAVAIDS") business based in Salt Lake City, Utah previously included in our Aircraft Controls segment to THALES USA Inc. We received proceeds at closing of $38,611, which are included in other investing transactions on the Consolidated Condensed Statements of Cash Flows and recorded a gain of $16,146, net of transaction costs. The sale is subject to customary post closing working capital and other adjustments, including amounts currently held in escrow.

In the first quarter of 2021, we sold a non-core business in our Aircraft Controls segment for $2,081 in net consideration in other investing transactions and recorded a loss of $683.

Note 34 - Receivables

Receivables consist of:

December 30,
2017 September 30,
2017
Accounts receivable $ 275,939
$ 286,773
Long-term contract receivables:
Amounts billed 130,452
148,087
Unbilled recoverable costs and accrued profits 289,784
282,154
Total long-term contract receivables 420,236
430,241
Other 48,139
15,077
Total receivables 744,314
732,091
Less allowance for doubtful accounts (4,583 ) (4,351 )
Receivables $ 739,731
$ 727,740


	April 2, 2022		October 2, 2021
Accounts receivable	$	335,755	$	395,674


Unbilled receivables	590,416		546,764

Other	9,536		7,842
Less allowance for credit losses	(4,410)		(4,351)
Receivables, net	$	931,297	$	945,929

Net receivables disclosed above reflects the non-cash write-down of $642 recorded for the three months ended April 2, 2022 associated with Russian actions in Ukraine.

On November 4, 2021, Moog Receivables LLC (the "Receivables Subsidiary"), a wholly owned bankruptcy remote special purpose subsidiary of Moog Inc. (the "Company"), as seller, the Company, as master servicer, Wells Fargo Bank, N.A., as administrative agent (the "Agent") and certain purchasers (collectively, the "Purchasers") entered into an Amended and Restated Receivables Purchase Agreement (the "RPA"). The RPA matures on November 4, 2024 and is subject to customary termination events related to transactions of this type.

Under the RPA, the Receivables Subsidiary may sell receivables to the Purchasers in amounts up to a $100,000 limit. The receivables will be sold to the Purchasers in consideration for the Purchasers making payments of cash, which is referred to as "capital" for purposes of the RPA, to the Receivables Subsidiary in accordance with the terms of the RPA. The Receivables Subsidiary may sell receivables to the Purchasers so long as certain conditions are satisfied, including that, at any date of determination, the aggregate capital paid to the Receivables Subsidiary does not exceed a "capital coverage amount", equal to an adjusted net receivables pool balance minus a required reserve. Each Purchaser's share of capital accrues yield at a floating rate plus an applicable margin.

The parties intend that the conveyance of receivables to the Agent, for the ratable benefit of the Purchasers will constitute a purchase and sale of receivables and not a pledge for security. The Receivables Subsidiary has guaranteed to each Purchaser and Agent the prompt payment of sold receivables, and to secure the prompt payment and performance of such guaranteed obligations, the Receivables Subsidiary has granted a security interest to the Agent, for the benefit of the Purchasers, in all assets of the Receivables Subsidiary. The assets of the Receivables Subsidiary are not available to pay our creditors or any affiliate thereof. In our capacity as master servicer under the RPA, we are responsible for administering and collecting receivables and have made customary representations, warranties, covenants and indemnities. We ~~securitize~~also provided a performance guarantee for the benefit of the Purchaser.

The proceeds of the RPA are classified as operating activities in our Consolidated Condensed Statement of Cash Flows and were used to pay off the outstanding balance of the Securitization Program. Cash received from collections of sold receivables is used by the Receivables Subsidiary to fund additional purchases of receivables on a revolving basis or to return all or any portion of outstanding capital of the Purchaser. Subsequent collections on the pledged receivables, which have not been sold, will be classified as operating cash flows at the time of collection. Total receivables sold under the RPA were $122,947 and $255,716 for the three and six months ended April 2, 2022, respectively. Total cash collections under the RPA were $112,518 and $155,716 for the three and six months ended April 2, 2022, respectively. The fair value of the sold receivables approximated book value due to their credit quality and short-term nature, and as a result, no gain or loss on sale of receivables was recorded.

As of April 2, 2022, the amount sold to the Purchasers was $100,000, which was derecognized from the Consolidated Condensed Balance Sheets. As collateral against sold receivables, the Receivables Subsidiary maintains a certain level of unsold receivables, which was $596,419 as of April 2, 2022.

Previously we securitized certain trade receivables in transactions that ~~are~~were accounted for as secured borrowings ~~(Securitization Program)~~(the "Securitization Program"). We ~~maintain~~maintained a subordinated interest in a portion of the pool of trade receivables that ~~are~~were securitized. The retained interest, which is included in Receivables in the ~~consolidated condensed balance sheets,~~Consolidated Condensed Balance Sheets, is recorded at fair value, which approximates the total amount of the designated pool of accounts receivable. Refer to Note 6,9 - Indebtedness, for additional disclosures related to the Securitization Program.

The allowance for credit losses is based on our assessment of the collectability of customer accounts. The allowance is determined by considering factors such as historical experience, credit quality, age of the accounts receivable, current economic conditions and reasonable forecasted financial information that may affect a customer’s ability to pay.

Note 45 - Inventories

Inventories, net of reserves, consist of:

There are no material inventoried costs relating to ~~long-term~~over-time contracts where revenue is accounted for using the ~~percentage of completion,~~ cost-to-cost method of accounting as of ~~December 30, 2017~~April 2, 2022 and October 2, 2021.

We have recorded impairment charges on inventory of $1,705 for the three months ended April 2, 2022 associated with Russian actions in Ukraine.

Note 6 - Property, Plant and Equipment

Property, plant and equipment consists of:


	April 2, 2022		October 2, 2021
Land	$	37,194	$	35,762
Buildings and improvements	513,316		506,450
Machinery and equipment	809,641		791,984
Computer equipment and software	193,818		179,066
Property, plant and equipment, at cost	1,553,969		1,513,262
Less accumulated depreciation and amortization	(885,367)		(867,484)
Property, plant and equipment, net	$	668,602	$	645,778

We have recorded impairment charges on property, plant and equipment totaling $14,594 for the three months ended April 2, 2022, based on expected cash flows over the remaining life of the assets in relation to the impairment taken by the Company associated with a slower than expected recovery of our commercial aircraft business.

We lease certain manufacturing facilities, office space and machinery and equipment globally. At inception we evaluate whether a contractual arrangement contains a lease. Specifically, we consider whether we control the underlying asset and have the right to obtain substantially all the economic benefits or ~~September 30, 2017.~~outputs from the asset. If the contractual arrangement contains a lease, we then determine the classification of the lease, operating or finance, using the classification criteria described in ASC 842. We then determine the term of the lease based on terms and conditions of the contractual arrangement, including whether the options to extend or terminate the lease are reasonably certain to be exercised. We have elected to not separate lease components from non-lease components, such as common area maintenance charges and instead, account for the lease and non-lease components as a single component.

Our lease right-of-use ("ROU") assets represent our right to use an underlying asset for the lease term and our lease liabilities represent our obligation to make lease payments. Operating lease ROU assets are included in Operating lease right-of-use assets and operating lease liabilities are included in Accrued liabilities and other and Other long-term liabilities on the Consolidated Condensed Balance Sheets. Finance lease ROU assets are included in Property, plant and equipment and finance lease liabilities are included in Accrued liabilities and other and Other long-term liabilities on the Consolidated Condensed Balance Sheets. Operating lease cost is included in Cost of sales and Selling, general and administrative on the Consolidated Condensed Statements of Earnings. Finance lease cost is included in Cost of sales, Selling, general and administrative and Interest on the Consolidated Condensed Statements of Earnings.

The ROU assets and lease liabilities for both operating and finance leases are recognized as of the commencement date at the net present value of the fixed minimum lease payments over the term of the lease, using the discount rate described below. Variable lease payments are recorded in the period in which the obligation for the payment is incurred. Variable lease payments based on an index or rate are initially measured using the index or rate as of the commencement date of the lease and included in the fixed minimum lease payments. For short-term leases that have a term of 12 months or less as of the commencement date, we do not recognize a ROU asset or lease liability on our balance sheet; we recognize expense as the lease payments are made over the lease term.

The discount rate used to calculate the present value of our leases is the rate implicit in the lease. If the information necessary to determine the rate implicit in the lease is not available, we use our incremental borrowing rate for collateralized debt, which is determined using our credit rating and other information available as of the lease commencement date.

The components of lease expense were as follows:


	Three Months Ended				Six Months Ended
	April 2, 2022		April 3, 2021		April 2, 2022		April 3, 2021
Operating lease cost	$	7,218	$	8,208	$	14,158	$	15,092

Finance lease cost:
Amortization of right-of-use assets	$	672	$	557	$	1,259	$	1,051
Interest on lease liabilities	247		166		464		327
Total finance lease cost	$	919	$	723	$	1,723	$	1,378

Supplemental cash flow information related to leases was as follows:


	Six Months Ended
	April 2, 2022		April 3, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flow for operating leases	$	14,615	$	14,194
Operating cash flow for finance leases	464		327
Financing cash flow for finance leases	1,085		1,042
Assets obtained in exchange for lease obligations:
Operating leases	9,744		5,893
Finance leases	7,904		3,540

Supplemental balance sheet information related to leases was as follows:


	April 2, 2022			October 2, 2021
Operating Leases
Operating lease right-of-use assets	$	61,659		$	60,355

Accrued liabilities and other	$	13,204		$	14,176
Other long-term liabilities	58,986			57,277
Total operating lease liabilities	$	72,190		$	71,453

Finance Leases
Property, plant, and equipment, at cost	$	27,345		$	19,861
Accumulated depreciation	(4,159)			(3,375)
Property, plant, and equipment, net	$	23,186		$	16,486

Accrued liabilities and other	$	2,783		$	2,014
Other long-term liabilities	22,013			15,904
Total finance lease liabilities	$	24,796		$	17,918

Weighted average remaining lease term in years
Operating leases	7.4			7.4
Finance leases	18.7			15.5

Weighted average discount rate
Operating leases	4.6		%	4.7		%
Finance leases	4.6		%	5.0		%

Maturities of ~~Contents~~lease liabilities were as follows:

Note 58 - Goodwill and Intangible Assets

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

In 2018, we changed our segment reporting structure as our former Components segment was separated and merged into Space and Defense Controls and Industrial Systems. As a result, the September 30, 2017 balances for those segments were restated to reflect this change. Goodwill for Space and Defense Controls and Industrial Systems increased by $86,995 and $224,194, respectively, than what was previously reported.


	Aircraft Controls		Space and Defense Controls		Industrial Systems		Total
Balance at October 2, 2021	$	210,779	$	261,767	$	379,059	$	851,605
Acquisition	6,367		—		—		6,367

Divestiture	(6,961)		—		—		(6,961)
Foreign currency translation	(1,729)		(28)		(7,051)		(8,808)
Balance at April 2, 2022	$	208,456	$	261,739	$	372,008	$	842,203

Goodwill in our Space and Defense Controls segment is net of a $4,800 accumulated impairment loss at ~~December 30, 2017.~~

April 2, 2022. Goodwill in our Medical Devices reporting unit, included in our Industrial Systems segment, is net of a $38,200 accumulated impairment loss at ~~December 30, 2017.~~April 2, 2022.

The components of intangible assets are as follows:


		April 2, 2022				October 2, 2021
	Weighted- Average Life (years)	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Customer-related	12	$	167,896	$	(110,915)	$	163,215	$	(108,844)
Technology-related	9	81,757		(59,571)		82,716		(58,119)
Program-related	23	39,331		(20,140)		40,211		(19,707)
Marketing-related	8	28,662		(22,638)		28,590		(22,212)
Other	10	1,873		(1,647)		1,963		(1,718)
Intangible assets	12	$	319,519	$	(214,911)	$	316,695	$	(210,600)

December 30, 2017 September 30, 2017
Weighted-
Average
Life (years) Gross Carrying
Amount Accumulated
Amortization Gross Carrying
Amount Accumulated
Amortization
Customer-related 11 $ 177,239
$ (131,433 ) $ 175,872
$ (128,019 )
Technology-related 9 72,215
(56,018 ) 71,924
(55,069 )
Program-related 19 66,889
(31,876 ) 66,458
(30,675 )
Marketing-related 9 26,659
(19,727 ) 26,552
(19,251 )
Other 10 4,445
(3,479 ) 4,379
(3,353 )
Intangible assets 12 $ 347,447
$ (242,533 ) $ 345,185
$ (236,367 )

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

Amortization of acquired intangible assets ~~was $4,600 for the three months ended December 30, 2017 and $4,477 for the three months ended December 31, 2016.~~ is as follows:


	Three Months Ended				Six Months Ended
	April 2, 2022		April 3, 2021		April 2, 2022		April 3, 2021
Acquired intangible asset amortization	$	3,329	$	3,586	$	6,727	$	6,419

Based on acquired intangible assets recorded at ~~December 30, 2017,~~April 2, 2022, amortization is ~~expected~~estimated to be ~~approximately $18,400 in 2018, $17,300 in 2019, $15,100 in 2020, $9,400 in 2021 and $7,200 in 2022.~~ approximately:


	2022		2023		2024		2025		2026
Estimated future amortization of acquired intangible assets	$	13,500	$	13,100	$	12,300	$	11,200	$	11,000

Note 69 - Indebtedness

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:

Our U.S. revolving credit facility, which matures on ~~June 28, 2021. Our U.S. revolving credit facility~~October 15, 2024, has a capacity of $1,100,000 and provides an expansion option, which permits us to request an increase of up to ~~$200,000~~$400,000 to the credit facility upon satisfaction of certain conditions. The credit facility is secured by substantially all of our U.S. assets. The loan agreement contains various covenants which, among others, specify interest coverage and maximum ~~leverage and capital expenditures.~~leverage. We are in compliance with all covenants.

The SECT has a revolving credit facility with a borrowing capacity of $35,000, maturing on July 26, 2024. Interest is based on LIBOR plus an applicable margin. A commitment fee is also charged based on a percentage of the unused amounts available and is not material.

At ~~December 30, 2017,~~April 2, 2022, we had ~~$300,000~~$500,000 aggregate principal amount of ~~5.25%~~4.25% senior notes due December ~~1, 2022~~15, 2027 with interest paid semiannually on June 115 and December 115 of each ~~year.~~year, which commenced on June 15, 2020. 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 were used to repay indebtedness under our U.S. revolving credit facility, thereby increasing the unused portion of our U.S. revolving credit facility.

The Securitization Program was extended on October ~~23, 2017 and now matures on October 23, 2019. The Securitization Program provides~~29, 2021, effectively increasing our borrowing capacity by up to ~~$130,000 of borrowing capacity.~~$80,000. Under the Securitization Program, we ~~sell~~sold certain trade receivables and related rights to an affiliate, which in turn ~~sells~~sold 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 iswas based on 30-day LIBOR plus an applicable margin. A commitment fee iswas also charged based on a percentage of the unused amounts available and iswas not material. The agreement governing the Securitization Program ~~contains~~contained restrictions and covenants which ~~include~~included 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~~had a minimum borrowing requirement equal to the lesser of either 80% of our borrowing capacity or 100% of our borrowing base, which iswas a subset of the trade receivables sold under this agreement. ~~As of December 30, 2017, our minimum borrowing requirement was $104,000.~~See Note 4 - Receivables, for information related to the amended and restated RPA, which replaced the Securitization Program.

Note 710 - ~~Product Warranties~~Other Accrued Liabilities

Other accrued liabilities consists of:


	April 2, 2022		October 2, 2021
Contract reserves	$	47,380	$	58,857
Employee benefits	61,345		54,146
Warranty accrual	24,471		26,602
Accrued income taxes	17,412		12,908
Other	67,172		59,492
Other accrued liabilities	$	217,780	$	212,005

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:


	Three Months Ended				Six Months Ended
	April 2, 2022		April 3, 2021		April 2, 2022		April 3, 2021
Warranty accrual at beginning of period	$	25,026	$	29,338	$	26,602	$	27,707
Additions from acquisitions	—		—		—		990
Warranties issued during current period	2,835		3,724		3,400		7,788
Adjustments to pre-existing warranties	(42)		(249)		(66)		(213)
Reductions for settling warranties	(3,139)		(3,363)		(4,854)		(7,146)
Divestiture adjustment	(38)		—		(368)		—
Foreign currency translation	(171)		(212)		(243)		112
Warranty accrual at end of period	$	24,471	$	29,238	$	24,471	$	29,238

Three Months Ended
December 30,
2017 December 31,
2016
Warranty accrual at beginning of period $ 25,848
$ 21,363
Warranties issued during current period 4,757
3,414
Adjustments to pre-existing warranties (70 ) (265 )
Reductions for settling warranties (2,915 ) (1,044 )
Foreign currency translation 128
(585 )
Warranty accrual at end of period $ 27,748
$ 22,883

Note 811 - 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.~~transactions and interest rate risk associated with long-term debt. We enter into derivative financial instruments with a number of major financial institutions to minimize counterparty credit risk.

Derivatives designated as hedging instruments

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, including the Philippine peso and the British pound, we had outstanding foreign currency contracts with notional amounts of $51,047 at April 2, 2022. These contracts mature at various times through September 1, 2023.

We use forward currency contracts to hedge our net investment in certain foreign subsidiaries. As of April 2, 2022, we had no outstanding net investment hedges.

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 ~~December 30, 2017,~~April 2, 2022, we had no outstanding interest rate swaps.

Foreign currency contracts, net investment hedges and interest rate swaps with notional amounts totaling $150,000. The interest rate swaps effectively convert this amount of variable-rate debt to fixed-rate debt at 2.62%, including the applicable margin of 1.38% as of December 30, 2017. 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 through June 23, 2020.

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, including the Philippine peso and the British pound, we had outstanding foreign currency forwards with notional amounts of $51,608 at December 30, 2017. These contracts mature at various times through November 29, 2019.

~~These interest rate swaps and foreign currency contracts~~ are recorded in the ~~consolidated condensed balance sheets~~Consolidated Condensed Balance Sheets at fair value and the related gains or losses are deferred in ~~shareholders’ equity~~Shareholders’ Equity as a component of Accumulated Other Comprehensive Income ~~(Loss) (AOCIL)~~("AOCIL"). These deferred gains and losses are reclassified into the ~~consolidated condensed statements~~Consolidated Condensed Statements of ~~earnings~~Earnings, as necessary, during the periods in which the related payments or receipts affect earnings. However, to the extent the foreign currency contracts and 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 ~~three~~six months of ~~2018~~2022 or ~~2017.~~

Derivatives not designated as hedging instruments

We also have foreign currency exposure on balances, primarily intercompany, that are denominated in a foreign ~~currencies~~currency and are adjusted to current values using period-end exchange rates. The resulting gains or losses are recorded in the ~~consolidated condensed statements~~Consolidated Condensed Statements of ~~earnings.~~Earnings. To minimize foreign currency exposure, we had foreign currency contracts with notional amounts of ~~$107,528~~$101,673 at ~~December 30, 2017.~~April 2, 2022. The foreign currency contracts are recorded in the ~~consolidated condensed balance sheets~~Consolidated Condensed Balance Sheets at fair value and resulting gains or losses are recorded in the ~~consolidated condensed statements~~Consolidated Condensed Statements of ~~earnings.~~Earnings. We recorded the following gains orand 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:

Summary of derivatives

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


	Balance Sheets location	April 2, 2022		October 2, 2021
Derivatives designated as hedging instruments:
Foreign currency contracts	Other current assets	$	559	$	325
Foreign currency contracts	Other assets	414		104



	Total asset derivatives	$	973	$	429
Foreign currency contracts	Accrued liabilities and other	$	1,610	$	1,235
Foreign currency contracts	Other long-term liabilities	270		537



	Total liability derivatives	$	1,880	$	1,772
Derivatives not designated as hedging instruments:
Foreign currency contracts	Other current assets	$	587	$	226
Foreign currency contracts	Accrued liabilities and other	$	595	$	480

December 30,
2017 September 30,
2017
Derivatives designated as hedging instruments:
Foreign currency contracts Other current assets $ 639
$ 551
Foreign currency contracts Other assets 298
50
Interest rate swaps Other current assets 989
552
Interest rate swaps Other assets 471
314
Total asset derivatives $ 2,397
$ 1,467
Foreign currency contracts Other accrued liabilities $ 601
$ 1,434
Foreign currency contracts Other long-term liabilities —
244
Interest rate swaps Other accrued liabilities —
10
Interest rate swaps Other long-term liabilities —
15
Total liability derivatives $ 601
$ 1,703
Derivatives not designated as hedging instruments:
Foreign currency contracts Other current assets $ 314
$ 95
Foreign currency contracts Other accrued liabilities $ 515
$ 383

Note 912 - 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.

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 2.2, except for the acquisition contingent consideration, which is classified as Level 3:


	Balance Sheets location	April 2, 2022		October 2, 2021
Foreign currency contracts	Other current assets	$	1,146	$	551
Foreign currency contracts	Other assets	414		104



	Total assets	$	1,560	$	655
Foreign currency contracts	Accrued liabilities and other	$	2,205	$	1,715
Foreign currency contracts	Other long-term liabilities	270		537



Acquisition contingent consideration	Accrued liabilities and other	989		—
Acquisition contingent consideration	Other long-term liabilities	2,095		—
	Total liabilities	$	5,559	$	2,252

Classification December 30,
2017 September 30,
2017
Foreign currency contracts Other current assets $ 953
$ 646
Foreign currency contracts Other assets 298
50
Interest rate swaps Other current assets 989
552
Interest rate swaps Other assets 471
314
Total assets $ 2,711
$ 1,562
Foreign currency contracts Other accrued liabilities $ 1,116
$ 1,817
Foreign currency contracts Other long-term liabilities —
244
Interest rate swaps Other accrued liabilities —
10
Interest rate swaps Other long-term liabilities —
15
Total liabilities $ 1,116
$ 2,086
The changes in financial liabilities classified as Level 3 within the fair value hierarchy are as follows:


	Three Months Ended				Six Months Ended
	April 2, 2022		April 3, 2021		April 2, 2022		April 3, 2021
Balance at beginning of period	$	—	$	—	$	—	$	—
Additions from acquisitions	3,053		—		3,053		—
Increase in discounted future cash flows recorded as interest expense	31		—		31		—


Balance at end of period	$	3,084	$	—	$	3,084	$	—

Our only financial instrument for which the carrying value differs from its fair value is long-term debt. At ~~December 30, 2017,~~April 2, 2022, the fair value of long-term debt was ~~$974,451~~$816,825 compared to its carrying value of ~~$965,263.~~$838,200. 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.

Property, plant and equipment, inventories and receivables have been measured at fair values on a nonrecurring basis using future discounted cash flows and other observable inputs (Level 3) and are not included in the fair value tables above. Impairment losses of $16,941 for the three months ended April 2, 2022, are recorded as a result of these measurements and are described in Note 4 - Receivables, Note 5 - Inventories and Note 6 - Property, Plant and Equipment.

Note 13 - Restructuring

In 2022, we initiated restructuring actions in relation to portfolio shaping activities in our Space and Defense and Industrial Systems segments and for slower than expected business recovery in our Aircraft Controls segment. These actions have and will result in workforce reductions, principally in the U.S., U.K. and Europe. The 2022 restructuring charge consists of non-cash charges related to an inventory write-down of $1,500, equipment of $969 and severance of $6,824 for businesses we are no longer pursuing. Restructuring activity for severance and other costs by segment and reconciliation to consolidated amounts is as follows:


	Aircraft Controls		Space and Defense Controls		Industrial Systems		Total
Balance at October 2, 2021	$	179	$	—	$	5,486	$	5,665


Charged to expense - 2022 plan	4,232		3,337		1,724		9,293
Non-cash charges - 2022 plan	—		(2,469)		—		(2,469)



Cash payments - 2022 plan	—		(305)		(43)		(348)
Cash payments - 2020 plan	—		—		(444)		(444)
Cash payments - 2018 plan	—		—		(198)		(198)
Foreign currency translation	—		—		(14)		(14)
Balance at April 2, 2022	$	4,411	$	563	$	6,511	$	11,485

As of April 2, 2022, the restructuring accrual consists of $6,477 for the 2022 plan, $3,177 for the 2020 plan and $1,831 for the 2018 plan. Restructuring is expected to be paid within a year, except portions classified as long-term liabilities based on the nature of the reserve.

Note 1014 - Employee Benefit Plans

Pension expense for our defined contribution plans consists of:


	Three Months Ended				Six Months Ended
	April 2, 2022		April 3, 2021		April 2, 2022		April 3, 2021
U.S. defined contribution plans	$	11,169	$	8,918	$	21,714	$	17,491
Non-U.S. defined contribution plans	2,386		2,340		4,538		3,934
Total expense for defined contribution plans	$	13,555	$	11,258	$	26,252	$	21,425

Net periodic benefit costs for our defined benefit pension plans are as follows:


	Three Months Ended				Six Months Ended
	April 2, 2022		April 3, 2021		April 2, 2022		April 3, 2021
U.S. Plans
Service cost	$	4,956	$	5,622	$	9,913	$	11,244
Interest cost	4,561		4,276		9,123		8,552
Expected return on plan assets	(7,450)		(7,636)		(14,901)		(15,272)

Amortization of actuarial loss	3,897		3,431		7,793		6,861
Expense for U.S. defined benefit plans	$	5,964	$	5,693	$	11,928	$	11,385
Non-U.S. Plans
Service cost	$	1,107	$	1,219	$	2,229	$	2,887
Interest cost	627		526		1,261		1,231
Expected return on plan assets	(886)		(990)		(1,783)		(2,133)
Amortization of prior service cost	15		16		30		14
Amortization of actuarial loss	1,004		1,403		2,026		2,790
Curtailment gain	—		(5,830)		—		(5,830)

Expense for non-U.S. defined benefit plans	$	1,867	$	(3,656)	$	3,763	$	(1,041)

Three Months Ended
December 30,
2017 December 31,
2016
U.S. Plans
Service cost $ 5,634
$ 6,022
Interest cost 8,073
7,636
Expected return on plan assets (13,576 ) (13,628 )
Amortization of prior service cost (credit) 47
47
Amortization of actuarial loss 6,902
8,419
Pension expense for U.S. defined benefit plans $ 7,080
$ 8,496
Non-U.S. Plans
Service cost $ 1,470
$ 1,532
Interest cost 1,055
751
Expected return on plan assets (1,243 ) (1,131 )
Amortization of prior service cost (credit) (14 ) (27 )
Amortization of actuarial loss 624
1,120
Pension expense for non-U.S. defined benefit plans $ 1,892
$ 2,245

~~Pension expense for our defined contribution plans consists of:~~

~~In 2018, expected contributions for our U.S. defined benefit pension plans is approximately $149,000.~~

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Note ~~11 - Restructuring~~

~~Restructuring activity for severance and other costs is as follows:~~

Total
Balance at September 30, 2017 $ 1,168
Cash payments - 2016 plan (254 )
Balance at December 30, 2017 $ 914

~~Restructuring is expected to be paid by July 1, 2019 and is classified as current or long-term liabilities based on payment arrangements.~~

~~Note 12~~15 - Income Taxes

~~The effective tax rate for the three months endedDecember 30, 2017 was 97.3%. The effective rate for this period was significantly impacted by the enactment of the Tax Cuts and Jobs Act (the "Act") of 2017.~~

The Act was enacted on December 22, 2017. It reduces the US federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and creates new taxes on certain foreign sourced earnings. As of December 30, 2017, we have not completed the accounting for the tax effects of enactment of the Act; however, as described below, we have made a reasonable estimate of the effects on the one-time transition tax, withholding taxes deemed to be repatriated and existing deferred tax balances. These amounts are provisional and subject to change as the determination of the impact of the income tax effects will require additional analysis of historical records, annual data and further interpretation of the Act from yet to be issued U.S. Treasury regulations.

During the three months ended December 30, 2017 we recorded a $31,000, one-time transition tax on undistributed foreign earnings deemed to be repatriated and a tax charge of $15,250 as an additional provision for withholding taxes on undistributed earnings not considered to be permanently reinvested. No additional income taxes have been provided for any remaining undistributed foreign earnings not subject to the transition tax, or any additional outside basis difference inherent in these entities, as these amounts continue to be indefinitely reinvested in foreign operations. Determining the amount of unrecognized deferred tax liability related to any remaining undistributed foreign earnings not subject to the transition tax and additional outside basis difference in these entities is not practicable. These charges are partially offset by a $12,225 benefit due to the remeasurement of deferred tax assets and liabilities arising from a lower U.S. corporate tax rate, which took into account our decision to accelerate pension contributions into our 2017 pension plan year. This allows the pension contribution tax deduction to be taken in our 2017 federal income tax return which is taxed at the 35% federal rate.

The effective tax rate for the three and six months ended ~~December 31, 2016 was 17.6%.~~April 2, 2022 were 24.9% and 24.8%, respectively. The effective tax rate for ~~this period~~the three and six months ended April 2, 2022 is ~~lower~~higher than ~~would be~~ expected byfrom applying the U.S. federal statutory tax rate of 21% to earnings before income taxes ~~primarily~~due to tax on earnings generated outside the U.S.

The effective tax rate for the three and six months ended April 3, 2021 were 21.6% and 23.1%, respectively. The effective tax rate for the three and six months ended April 3, 2021 is higher than expected from applying the U.S. federal statutory tax ~~benefits~~rate of 21% to earnings before income taxes due to tax on earnings generated outside the U.S., partially offset by the benefit of a curtailment gain associated with ~~selling our European space businesses.~~the termination of a foreign defined benefit pension plan with no associated tax expense in the second quarter.

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Note 1316 - Accumulated Other Comprehensive Income (Loss)

The changes in AOCIL, net of tax, by component for the ~~three~~six months ended ~~December 30, 2017~~April 2, 2022 are as follows:


	Accumulated foreign currency translation		Accumulated retirement liability		Accumulated gain (loss) on derivatives		Total
AOCIL at October 2, 2021	$	(92,989)	$	(153,210)	$	(1,361)	$	(247,560)
OCI before reclassifications	(24,798)		1,598		(624)		(23,824)
Amounts reclassified from AOCIL	(45)		7,030		464		7,449
OCI, net of tax	(24,843)		8,628		(160)		(16,375)
AOCIL at April 2, 2022	$	(117,832)	$	(144,582)	$	(1,521)	$	(263,935)

Accumulated foreign currency translation Accumulated retirement liability Accumulated gain (loss) on derivatives Total
AOCIL at September 30, 2017 $ (83,166 ) $ (251,865 ) $ (460 ) $ (335,491 )
Other comprehensive income (loss) before reclassifications 10,364
(363 ) 905
10,906
Amounts reclassified from AOCIL —
4,619
329
4,948
Other comprehensive income (loss) 10,364
4,256
1,234
15,854
AOCIL at December 30, 2017 $ (72,802 ) $ (247,609 ) $ 774
$ (319,637 )
Net gains and losses on net investment hedges are recorded in Accumulated foreign currency translation to the extent that the instruments are effective in hedging the designated risk.

The amounts reclassified from AOCIL into earnings are as follows:


		Three Months Ended				Six Months Ended
	Statements of Earnings location	April 2, 2022		April 3, 2021		April 2, 2022		April 3, 2021
Retirement liability:
Prior service cost		$	15	$	16	$	30	$	14

Actuarial losses		4,583		4,705		9,183		9,394
Curtailment gain		—		(5,830)		—		(5,830)

Reclassification from AOCIL into earnings		4,598		(1,109)		9,213		3,578
Tax effect		(1,090)		(1,121)		(2,183)		(2,239)
Net reclassification from AOCIL into earnings		$	3,508	$	(2,230)	$	7,030	$	1,339
Derivatives:
Foreign currency contracts	Sales	$	176	$	(80)	$	244	$	(52)
Foreign currency contracts	Cost of sales	299		(548)		349		(1,105)

Reclassification from AOCIL into earnings		475		(628)		593		(1,157)
Tax effect		(105)		145		(129)		271
Net reclassification from AOCIL into earnings		$	370	$	(483)	$	464	$	(886)

Three Months Ended
Statement of earnings classification December 30,
2017 December 31,
2016
Retirement liability:
Prior service cost (credit) $ (85 ) $ 19
Actuarial losses 7,396
9,417
Reclassification from AOCIL into earnings ⁽¹⁾
7,311
9,436
Tax effect (2,692 ) (3,427 )
Net reclassification from AOCIL into earnings $ 4,619
$ 6,009
Derivatives:
Foreign currency contracts Sales $ (118 ) $ 1,297
Foreign currency contracts Cost of sales 696
467
Interest rate swaps Interest (14 ) 115
Reclassification from AOCIL into earnings 564
1,879
Tax effect (235 ) (591 )
Net reclassification from AOCIL into earnings $ 329
$ 1,288

⁽¹⁾~~The reclassifications~~Reclassification from AOCIL into earnings for the Retirement liability are included in the computation of ~~net periodic~~non-service pension ~~cost and postretirement benefit cost.~~expense, which is included in Other on the Consolidated Condensed Statement of Earnings.

The effective portion of amounts deferred in AOCIL are as follows:


	Three Months Ended				Six Months Ended
	April 2, 2022		April 3, 2021		April 2, 2022		April 3, 2021
Foreign currency contracts	$	(857)	$	(283)	$	(802)	$	348

Net gain (loss)	(857)		(283)		(802)		348
Tax effect	192		64		178		(66)
Net deferral in AOCIL of derivatives	$	(665)	$	(219)	$	(624)	$	282

Net deferral in AOCIL - effective portion
Three Months Ended
December 30,
2017 December 31,
2016
Foreign currency contracts $ 828
$ (1,786 )
Interest rate swaps 617
694
Net gain (loss) 1,445
(1,092 )
Tax effect (540 ) 378
Net deferral in AOCIL of derivatives $ 905
$ (714 )

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Note 1417 - Stock Employee Compensation Trust and Supplemental Retirement Plan Trust

The ~~Stock Employee Compensation Trust (SECT)~~SECT assists in administering and provides funding for equity-based compensation plans and benefit programs, including the Moog Inc. Retirement Savings Plan ~~(RSP)~~("RSP") and the Employee Stock Purchase Plan ("ESPP"). ~~The Supplemental Retirement Plan (SERP)~~SERP Trust provides funding for benefits under the SERP provisions of the Moog Inc. ~~SERP.~~Plan to Equalize Retirement Income and Supplemental Retirement Income. Both the SECT and the SERP Trust hold Moog 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 1518 - Earnings per Share

Basic and diluted weighted-average shares outstanding, as well as shares considered to be anti-dilutive, are as follows:


	Three Months Ended		Six Months Ended
	April 2, 2022	April 3, 2021	April 2, 2022	April 3, 2021
Basic weighted-average shares outstanding	31,984,674	32,146,247	32,021,036	32,110,365
Dilutive effect of equity-based awards	136,052	179,247	133,406	170,793
Diluted weighted-average shares outstanding	32,120,726	32,325,494	32,154,442	32,281,158



Anti-dilutive shares from equity-based awards	54,057	57,751	58,204	72,940

Three Months Ended
December 30,
2017 December 31,
2016
Basic weighted-average shares outstanding 35,772,406
35,869,052
Dilutive effect of equity-based awards 428,648
403,715
Diluted weighted-average shares outstanding 36,201,054
36,272,767

For the three months ended December 30, 2017 and December 31, 2016, there were 13,530 and 111,574 common shares from equity-based awards, respectively, excluded from the calculation of diluted earnings per share as they would be anti-dilutive.

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Note 1619 - ~~Segment Information~~Segments

Effective October 1, 2017, we made changes to our segment reporting structure that resulted in three reporting segments. Our former Components segment has been separated and merged into Space and Defense Controls and Industrial Systems. All amounts have been restated to reflect this change.

~~Below are~~Disaggregation of net sales ~~and operating profit~~ by segment for the three and six months ended ~~December 30, 2017~~April 2, 2022 and ~~December 31, 2016 and a reconciliation~~April 3, 2021 are as follows:


	Three Months Ended				Six Months Ended
Market Type	April 2, 2022		April 3, 2021		April 2, 2022		April 3, 2021
Net sales:
Military	$	192,089	$	201,520	$	378,038	$	407,218
Commercial	119,179		102,841		236,547		183,917
Aircraft Controls	311,268		304,361		614,585		591,135
Space	87,074		87,837		174,657		165,648
Defense	136,275		118,331		256,548		228,682
Space and Defense Controls	223,349		206,168		431,205		394,330
Energy	32,316		28,247		63,782		56,891
Industrial Automation	110,411		111,206		212,554		206,437
Simulation and Test	29,625		19,774		51,800		39,900
Medical	63,818		66,646		120,947		131,663
Industrial Systems	236,170		225,873		449,083		434,891
Net sales	$	770,787	$	736,402	$	1,494,873	$	1,420,356


	Three Months Ended				Six Months Ended
Customer Type	April 2, 2022		April 3, 2021		April 2, 2022		April 3, 2021
Net sales:
Commercial	$	119,179	$	102,841	$	236,547	$	183,917
U.S. Government (including OEM)	138,026		151,479		281,905		308,156
Other	54,063		50,041		96,133		99,062
Aircraft Controls	311,268		304,361		614,585		591,135
Commercial	28,554		37,019		52,877		68,153
U.S. Government (including OEM)	180,109		157,955		350,124		296,127
Other	14,686		11,194		28,204		30,050
Space and Defense Controls	223,349		206,168		431,205		394,330
Commercial	235,165		218,052		442,400		420,005
U.S. Government (including OEM)	153		4,428		3,939		10,749
Other	852		3,393		2,744		4,137
Industrial Systems	236,170		225,873		449,083		434,891
Commercial	382,898		357,912		731,824		672,075
U.S. Government (including OEM)	318,288		313,862		635,968		615,032
Other	69,601		64,628		127,081		133,249
Net sales	$	770,787	$	736,402	$	1,494,873	$	1,420,356

Table of ~~segment operating profit to earnings before income taxes.~~ Contents


	Three Months Ended				Six Months Ended
Revenue Recognition Method	April 2, 2022		April 3, 2021		April 2, 2022		April 3, 2021
Net sales:
Over-time	$	239,720	$	241,935	$	486,369	$	472,055
Point in time	71,548		62,426		128,216		119,080
Aircraft Controls	311,268		304,361		614,585		591,135
Over-time	207,309		189,434		399,755		363,745
Point in time	16,040		16,734		31,450		30,585
Space and Defense Controls	223,349		206,168		431,205		394,330
Over-time	40,287		29,367		69,312		57,101
Point in time	195,883		196,506		379,771		377,790
Industrial Systems	236,170		225,873		449,083		434,891
Over-time	487,316		460,736		955,436		892,901
Point in time	283,471		275,666		539,437		527,455
Net sales	$	770,787	$	736,402	$	1,494,873	$	1,420,356

Operating profit is net sales less cost of sales and other operating expenses, excluding interest expense, equity-based compensation expense, non-service pension 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~~manpower or profit.

Three Months Ended
December 30,
2017 December 31,
2016
Net sales:
Aircraft Controls $ 278,534
$ 268,450
Space and Defense Controls 133,393
122,590
Industrial Systems 215,608
198,630
Net sales $ 627,535
$ 589,670
Operating profit:
Aircraft Controls $ 30,768
$ 23,111
Space and Defense Controls 16,289
9,088
Industrial Systems 19,246
20,163
Total operating profit 66,303
52,362
Deductions from operating profit:
Interest expense 8,646
8,486
Equity-based compensation expense 2,001
2,168
Corporate and other expenses, net 7,822
5,220
Earnings before income taxes $ 47,834
$ 36,488

~~The amounts reclassified for net sales and operating~~ Operating profit ~~as a result of the revised~~by segment ~~reporting structure~~ for the three and six months ended ~~December 31, 2016~~April 2, 2022 and April 3, 2021 and a reconciliation of segment operating profit to earnings before income taxes are as follows:


				Three Months Ended				Six Months Ended
	December 31, 2016			April 2, 2022		April 3, 2021		April 2, 2022		April 3, 2021
Net sales:
Operating profit:			Operating profit:
Aircraft Controls			Aircraft Controls	$	12,441	$	22,018	$	54,356	$	49,940
Space and Defense Controls	$	29,660	Space and Defense Controls	24,075		26,652		45,374		49,698
Industrial Systems	86,231		Industrial Systems	20,723		23,813		37,914		43,711
Total	$	115,891
Total operating profit			Total operating profit	57,239		72,483		137,644		143,349
Deductions from operating profit:			Deductions from operating profit:
Interest expense			Interest expense	8,263		8,629		16,245		17,049
Equity-based compensation expense			Equity-based compensation expense	1,920		2,127		4,578		4,629
Non-service pension expense (income)			Non-service pension expense (income)	1,472		(4,901)		2,957		(3,981)
Corporate and other expenses, net			Corporate and other expenses, net	6,871		4,500		13,728		13,153
Earnings before income taxes			Earnings before income taxes	$	38,713	$	62,128	$	100,136	$	112,499

Operating profit:
Space and Defense Controls $ 1,992
Industrial Systems 9,462
Total $ 11,454

Segment assets for Space and Defense Controls and Industrial Systems are approximately $613,000 and $1,142,000, respectively, as of December 30, 2017 as a result of the change to our segment reporting structure.

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Note 1720 - Related Party Transactions

~~On November 20, 2017,~~ John Scannell, ~~was elected to~~Moog's Chairman of the Board of Directors and Chief Executive Officer, is a member of the Board of Directors of M&T Bank Corporation and M&T Bank. We currently engage with M&T Bank in the ordinary course of business for various financing activities, all of which were initiated prior to the election of Mr. Scannell to the Board. M&T Bank provides credit extension for routine purchases, which for the three and six months ended ~~December 30, 2017~~April 2, 2022 totaled ~~$5,459.~~$4,220 and $7,863, respectively. Credit extension for the three and six months ended April 3, 2021 totaled $3,521 and $6,950, respectively. At ~~December 30, 2017,~~April 2, 2022, we held ~~a $15,000 interest rate swap with M&T Bank and~~ outstanding leases with a total original cost of ~~$27,955.~~$16,925. At April 2, 2022, outstanding deposits on our behalf for future equipment leases totaled $2,419. M&T ~~Bank~~Bank also maintains an interest of ~~approximately~~approximately 12% in our U.S. revolving credit facility. Further details of the U.S. revolving credit facility can be found in Note 6,9 - Indebtedness. Wilmington Trust, a subsidiary of M&T Bank, is the trustee of the pension assets for our qualified U.S. defined benefit plan.

Note 1821 - 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 ~~may~~is still be significant effort required to complete the ultimate deliverable. Future variability in internal cost ~~as well as~~and 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~~liable for ~~$48,793 of~~$24,109 of standby letters of credit issued by a bank to third parties on our behalf at ~~December 30, 2017.~~April 2, 2022.

Note 22 - Subsequent Event

On April 28, 2022, we declared a $0.26 per share quarterly dividend payable on issued and outstanding shares of our Class A and Class B common stock on May 31, 2022 to shareholders of record at the close of business on May 13, 2022.

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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 ~~September 30, 2017.~~October 2, 2021. In addition, the following should be read in conjunction with our Consolidated Financial Statements and Notes to Consolidated Condensed Financial Statements contained herein. 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, turreted weapon systems, 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~~as well as integrated space launch vehicles.

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

•Industrial automation market - components and systems for injection and blow molding machinery, heavy industry applications for steel and aluminum production, metal forming ~~heavy industry,~~presses, flight simulation motion control systems and material and automotive structural and fatigue testing ~~and pilot training simulators.~~systems.

~~Energy~~•Medical market - ~~power generation, oil~~components and ~~gas exploration and wind energy.~~

~~Medical market -~~systems for enteral clinical nutrition and infusion therapy pumps, CT scan medical equipment, ultrasonic sensors and surgical handpieces and ~~CT scanners.~~sleep apnea equipment.

•Energy market - control and safety components for steam and gas power generation turbines and oil and gas exploration components and systems.

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

~~We have long-term contracts with some~~Under ASC 606, 63% of ~~our customers. These contracts are predominantly within Aircraft Controls and Space and Defense Controls and represent 38%, 34% and 33% of our sales in 2017, 2016 and 2015, respectively. We recognize~~ revenue ~~on these contracts~~was recognized over time for the quarter ended April 2, 2022, using the ~~percentage of completion,~~ cost-to-cost method of ~~accounting as work progresses toward completion.~~accounting. 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. Thisover-time method of revenue recognition is predominantly used ~~within~~in Aircraft Controls and Space and Defense Controls. We use this method for U.S. Government contracts and repair and overhaul arrangements as we are creating or enhancing assets that the customer controls. In addition, many of our large commercial contracts qualify for over-time accounting as our performance does not create an asset with an alternative use and we have an enforceable right to payment for performance completed to date.

For the quarter ended April 2, 2022, 37% of revenue was recognized at the point in time control transferred to the customer. This method of revenue recognition is used most frequently in Industrial ~~Systems segment,~~Systems. We use this method for commercial contracts in which the asset being created has an alternative use. We determine the point in time control transfers to the customer by weighing the five indicators provided by ASC 606. When control has transferred to the customer, profit is generated as ~~well~~cost of sales is recorded and as ~~with aftermarket activity.~~revenue is recognized.

We concentrate on providing our customers with products designed and manufactured to the highest quality standards. Our technical experts work collaboratively around the world, delivering capabilities for mission-critical solutions. These core operational principles are necessary as our products are applied in demanding applications, "When Performance Really ~~Matters~~^®Matters®." WeBy capitalizing on these core foundational strengths, we believe we have achieved a leadership position in the high performance, precision controls market, by capitalizing on our core foundational strengths, which are our technical experts working collaboratively around the world and the capabilities we deliver for mission-critical solutions. Thesemarket. Additionally, these strengths yield a broad control product portfolio, across a diverse base of customers and end markets.

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By focusing on customer intimacy and commitment to solving ~~their~~our customers' most demanding technical problems, we have been able to ~~innovate~~expand our control product franchise ~~from one market~~ to ~~another,~~multiple markets; organically growing from a high-performance components ~~supplier~~manufacturer to a high-performance systems ~~supplier.~~designer, manufacturer and systems integrator. In addition, we continue ~~achieving substantial~~expanding our content positions on ~~the~~our current platforms, ~~on which we currently participate,~~ seeking to be the ~~dominant~~market-leading supplier in the ~~current~~ niche markets we serve. We also look for innovation in all aspects of our business, employing new technologies to improve productivity and ~~to develop innovative business models.~~

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operational performance.

Our fundamental long-term strategies to achieve our goals center around talent, lean and innovation and include:

•a strong leadership team that has positioned the ~~company~~Company for growth,

•utilizing our global capabilities and strong engineering heritage to innovate,


•	~~maintaining our technological excellence by solving our customers’ most demanding technical problems in applications "When Performance Really Matters~~^®,"

•maintaining our technological excellence by solving our customers’ most demanding technical problems in applications "When Performance Really Matters®,"

•continuing to invest in talent development to strengthen employee performance, and

~~and~~ •maximizing customer value by implementing lean enterprise principles.

These activities will help us achieve our financial objective of increasing shareholder value with sustainable competitive advantages across our segments. In doing so, we expect to maintain a balanced, diversified portfolio in terms of markets served, product applications, customer ~~base~~bases and geographic presence.

We focus on improving shareholder value through strategic revenue growth, both ~~acquired~~organic and ~~organic,~~acquired, through improving operating efficiencies and manufacturing initiatives and through utilizing low cost manufacturing facilities without compromising quality. ~~Additionally,~~Historically, we ~~take~~have taken 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. These activities have included strategic acquisitions, share buybacks and dividend payments. We are well positioned to invest in our business. By accelerating the pace of internal investments, both in terms of capital expenditures as well as investments in new market opportunities, we believe we can create more long term value for our shareholders. We will also continue to explore opportunities to make strategic acquisitions and return capital to shareholders.

Acquisitions and Divestitures

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~~Consolidated Condensed Statements of ~~earnings~~Earnings from the respective dates of acquisition. Under purchase accounting, we record assets and liabilities at fair value and such amounts are reflected in the respective captions on the ~~consolidated balance sheets.~~Consolidated Condensed Balance Sheets. The purchase price described for each acquisition below is net of any cash acquired, includes debt issued or assumed and the fair value of contingent consideration.

~~In 2017,~~Acquisitions

On February 21, 2022, we acquired ~~Rotary Transfer Systems,~~TEAM Accessories Limited ("TEAM") based in Dublin, Ireland for a ~~manufacturer~~purchase price, net of ~~electromechanical systems, located~~acquired cash of $15 million, consisting of $12 million in ~~Germany~~cash and ~~France for $43~~contingent consideration with an initial fair value of $3 million. TEAM specializes in Maintenance, Repair and Overhaul ("MRO") of engine and airframe components. This ~~acquisition~~operation is included in our ~~Industrial Systems~~Aircraft Controls segment. ~~We also sold non-core businesses~~

On December 18, 2020, we acquired Genesys Aerosystems Group, Inc. ("Genesys"), headquartered in Mineral Wells, Texas for a purchase price of $78 million. Genesys designs and manufactures a full suite of electronic flight instrument systems and autopilot solutions. This operation is included in our ~~Space~~Aircraft Controls segment.

Divestitures

On December 3, 2021, we sold the assets of our Navigation Aids ("NAVAIDS") business based in Salt Lake City, Utah previously included in our Aircraft Controls segment to Thales. We received proceeds of $39 million at closing and ~~Defense~~recorded a gain of $16 million, net of transaction costs. The sale is subject to customary post closing working capital and other adjustments, including amounts currently held in escrow.

In the first quarter of 2021, we sold a non-core business in our Aircraft Controls segment for $7$2 million in net consideration and recorded ~~losses in other expense~~a minimal loss.

Table of ~~$13 million related to the sales.~~Contents

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 ~~and contract-related loss~~ reserves, reserves for inventory valuation, reviews for impairment of goodwill, reviews for impairment of long-lived assets, pension assumptions and income taxes. ~~See Note 12 of the Consolidated Condensed Financial Statements included in Item 1, Financial Statements of this report for the impact of the enactment of the Tax Cuts and Jobs Act of 2017.~~

~~Other than that described below, there have been no material changes in critical accounting policies in the current year from those disclosed in our 2017 Annual Report on Form 10-K.~~

~~Reviews for Impairment of Goodwill~~

~~Interim Test~~

Effective October 1, 2017, we changed our segment reporting structure from four to three reporting segments. The former Components reporting segment has been divided and merged into the Space and Defense Controls and Industrial Systems reporting segments. This change also impacted the reporting units we use to review goodwill for impairment. Based on the accounting rules that require aggregation of components with similar economic characteristics, we have changed the number of reporting units from five to four - Aircraft Controls, Space and Defense Controls, Industrial Systems and Medical Devices.

We transferred or allocated the assets and liabilities of the former Components business including the proportionate share of goodwill based on the relative fair value of the business to the new respective reporting units - Space and Defense Controls and Industrial Systems. We then compared the fair values to the carrying values of the reporting units and the resulting fair values exceeded the carrying values, so we determined that goodwill was not impaired.

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The fair value of each of these two reporting units exceeded the carrying amounts by over 100%. While any individual assumption could differ from those that we used, we believe the overall fair values of these reporting units are reasonable, as the values are derived from a mix of reasonable assumptions. Had we used discount rates that were 100 basis points higher or a terminal growth rate that was 100 basis points lower than those we assumed, the fair values of each of these reporting units would have continued to exceed their carrying amounts by at least 80%.

RECENT ACCOUNTING PRONOUNCEMENTS

See Note 1 - Basis of Presentation in the Consolidated Condensed Financial Statements included in Item 1, Financial Statements of this report for further information regarding Financial Accounting Standards Board issued ~~Accounting Standards Updates ("ASU").~~ASU.

COVID-19 IMPACTS ON OUR BUSINESS

On March 11, 2020, the World Health Organization classified the COVID-19 outbreak as a pandemic. The spread of the COVID-19 pandemic disrupted businesses on a global scale, led to significant volatility in financial markets and affected the aviation and industrial industries. Substantially all of our operations and production activities have, to-date, remained operational. However, the impacts of the pandemic have placed labor and supply chain pressures on our business and we have been impacted by customer demand variability. Although we saw stable and growing backlogs during the first half of 2022 across a number of our end markets, COVID-19 related disruptions are ongoing and continue to adversely challenge our business. The demand variability is most notable in our commercial aircraft business. While we remain bullish about the commercial aircraft business, we believe the recovery to pre-pandemic activity will take longer than originally anticipated. As economic activity continues to recover, we will continue to monitor the situation, assessing further possible implications on our operations, supply chain, liquidity, cash flow and customer orders.

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CONSOLIDATED RESULTS OF OPERATIONS												CONSOLIDATED RESULTS OF OPERATIONS

	Three Months Ended												Three Months Ended										Six Months Ended
(dollars and shares in millions, except per share data)	December 30, 2017			December 31, 2016			$ Variance			% Variance		(dollars and shares in millions, except per share data)	April 2, 2022			April 3, 2021			$ Variance		% Variance		April 2, 2022			April 3, 2021			$ Variance		% Variance
Net sales	$	628		$	590		$	38		6	%	Net sales	$	771		$	736		$	34	5	%	$	1,495		$	1,420		$	75	5	%
Gross margin	29.3		%	29.3		%						Gross margin	27.6		%	27.1		%					27.2		%	27.4		%
Research and development expenses	$	32		$	35		$	(2	)	(6	%)	Research and development expenses	$	31		$	30		$	—	1	%	$	58		$	58		$	—	—	%
Selling, general and administrative expenses as a percentage of sales	15.3		%	14.4		%						Selling, general and administrative expenses as a percentage of sales	14.4		%	14.3		%					14.9		%	14.4		%
Interest expense	$	9		$	8		$	—		2	%	Interest expense	$	8		$	9		$	—	(4	%)	$	16		$	17		$	(1)	(5	%)
Asset impairment												Asset impairment	$	15		$	—		$	15	—	%	$	15		$	—		$	15	—	%
Restructuring expense												Restructuring expense	$	8		$	—		$	8	—	%	$	8		$	—		$	8	—	%
Gain on sale of business												Gain on sale of business	$	—		$	—		$	—	—	%	$	(16)		$	—		$	(16)	n/a
Other	$	(1	)	$	8		$	(9	)	(109	%)	Other	$	1		$	(6)		$	8	(120	%)	$	1		$	(3)		$	5	(143	%)
Effective tax rate	97.3		%	17.6		%						Effective tax rate	24.9		%	21.6		%					24.8		%	23.1		%
Net earnings attributable to Moog	$	1		$	31		$	(29	)	(96	%)
Diluted average common shares outstanding	36			36			—			—	%
Diluted earnings per share attributable to Moog	$	0.04		$	0.84		$	(0.80	)	(95	%)

Net earnings												Net earnings	$	29		$	49		$	(20)	(40	%)	$	75		$	87		$	(11)	(13	%)

Diluted earnings per share												Diluted earnings per share	$	0.91		$	1.51		$	(0.60)	(40	%)	$	2.34		$	2.68		$	(0.34)	(13	%)

Twelve-month backlog												Twelve-month backlog											$	2,300		$	1,900		$	400	21	%

Net sales increased in the second quarter and in the first half of 2022 compared to the same periods of 2021 across all of our segments, particularly in our defense and commercial aftermarket programs.

Gross margin in the second quarter of 2022 increased compared to the second quarter of 2021. The increase was driven by a more favorable sales mix within both Aircraft Controls and Industrial Systems. Gross margin decreased in the first half of 2022 compared to the first half of 2021. The second quarter's favorable sales mix was offset by operational inefficiencies across our segments in the first quarter of ~~2018 compared to the first quarter of 2017.~~2022.

Gross margin was unchanged in the first quarter of 2018 compared to the same period of 2017. Aircraft Controls' gross margin increased due primarily to a more favorable sales mix from foreign military sales; however, Space and Defense Controls' gross margin decreased due to the reduced amount of last year's favorable defense controls sales.

Research and development expenses ~~decreased~~in the second quarter and in the first ~~quarter~~half of ~~2018 compared to~~2022 were in line with the same ~~period~~periods of ~~2017. Within Aircraft Controls, research and development expenses decreased $4 million, as we had lower~~2021. Higher investment activity ~~across our major commercial OEM programs. The reduced spend~~in Industrial Systems was offset by ~~increases~~reduced spending in ~~research~~Aircraft Controls and ~~development activities across our remaining two segments.~~Space and Defense Controls.

~~Selling,~~

During the first half of 2022, selling, general and administrative expenses ~~as a percentage of sales~~ increased ~~in the first quarter of 2018~~as compared to the first half of 2021. These increases were attributable to increased investments in operations to support the current business environment.

The first quarter of ~~2017. Administrative expense increased $3~~2022 included a $16 million benefit from the sale of our NAVAIDS business. Our portfolio shaping activities, primarily due to the ~~timing~~NAVAIDS business sale, contributed a net $0.33 of ~~expenses in~~diluted earnings per share. In the ~~prior year's quarter, and we had higher planned selling expense in select growth markets.~~

~~Other expense in the first~~second quarter of ~~2017 includes $9~~2022, we incurred $15 million of ~~losses~~asset impairments and $8 million of restructuring expenses, primarily in Aircraft Controls, due to business resizing and continued portfolio shaping activities. In addition, we recognized $2 million in asset impairments and inventory write-down charges associated with ~~selling our European space businesses.~~Russian actions in Ukraine. These charges had an impact of $0.59 on diluted earnings per share. We expect the second quarter's restructuring and impairment benefits to average $4 million per quarter for the next four quarters.

The ~~effective tax rate~~change in twelve-month backlog at April 2, 2022 as compared with the ~~first quarter of 2018~~twelve-month backlog at April 3, 2021 was ~~impacted~~driven by ~~the enactment of the Tax Cuts~~increases in all segments. Twelve-month backlog increased in Industrial Systems due to recovering demand for our core industrial products. The increase in backlog within Space and ~~Jobs Act of 2017. We recorded a $31 million, one-time transition tax on undistributed foreign earnings deemed~~Defense Controls was due to ~~be repatriated~~increases in space satellite programs and ~~a tax charge of $15 million as an additional provision~~by higher orders for ~~withholding taxes on undistributed earnings not considered to be permanently reinvested. No additional income taxes have been provided for any remaining undistributed foreign earnings not subject~~defense control programs. Backlog also increased in Aircraft Controls due to the ~~transition tax, or any additional outside basis difference inherent in these entities, as these amounts continue to be indefinitely reinvested in foreign operations. Determining the amount~~receipt of unrecognized deferred tax liability related to any remaining undistributed foreign earnings not subject to the transition tax and additional outside basis difference in these entities is not practicable. These charges arecommercial OEM orders, which was partially offset by a $12 million benefit due to the remeasurement of deferred tax assets and liabilities arising from a lower U.S. corporate tax rate, which took into account our decision to accelerate pension contributions into our 2017 pension plan year. This allows the pension contribution tax deduction to be taken in our 2017 federal income tax return which is taxed at the 35% federal rate. Excluding all of the impacts due to the Act, the effective tax rate for the first quarter of 2018 was 29.6%.

Our effective tax rate in 2017 is lower than the U.S. statutory tax rate, as it included the tax benefits associated with divesting our European space businesses. Excluding the impact of the divestiture, the effective tax rate for the first quarter of 2017 was 28.7%.

Other comprehensive income in the first quarter of 2018 includes $10 million of foreign currency translation income. Other comprehensive loss in the first quarter of 2017 includes $42 million of foreign currency translation loss. Foreign currency translation adjustments increased $52 million during this period, primarily attributable to changes in the Euro and the British Pound.

various military programs.

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SEGMENT RESULTS OF OPERATIONS

Effective October 1, 2017, we changed our segment reporting structure to three reporting segments. Our former Components segment has been separated and merged into Space and Defense Controls and Industrial Systems. All amounts have been restated to conform to the current presentation.

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, manpower or profit. Operating profit is reconciled to earnings before income taxes in Note ~~16 of~~19 - Segments in the Notes to Consolidated Condensed Financial Statements included in this report.

Aircraft Controls


	Three Months Ended												Three Months Ended										Six Months Ended
(dollars in millions)	December 30, 2017			December 31, 2016			$ Variance			% Variance		(dollars in millions)	April 2, 2022			April 3, 2021			$ Variance		% Variance		April 2, 2022			April 3, 2021			$ Variance		% Variance
Net sales - military aircraft	$	124		$	128		$	(4	)	(3	%)	Net sales - military aircraft	$	192		$	202		$	(9)	(5	%)	$	378		$	407		$	(29)	(7	%)
Net sales - commercial aircraft	154			141			14			10	%	Net sales - commercial aircraft	119			103			16		16	%	237			184			53		29	%
	$	279		$	268		$	10		4	%		$	311		$	304		$	7	2	%	$	615		$	591		$	23	4	%
Operating profit	$	31		$	23		$	8		33	%	Operating profit	$	12		$	22		$	(10)	(43	%)	$	54		$	50		$	4	9	%
Operating margin	11.0		%	8.6		%						Operating margin	4.0		%	7.2		%					8.8		%	8.4		%
Backlog	$	590		$	610		$	(20	)	(3	%)

Aircraft Controls' net sales increased in ~~commercial aircraft programs~~the second quarter of 2022 and in the first ~~quarter~~half of ~~2018~~2022 as compared to the ~~first quarter~~same periods of ~~2017, but were partially offset by military aircraft sales declines.~~

~~Commercial OEM and~~2021. These increases are attributed to stronger commercial aftermarket sales, ~~each~~somewhat offset by a decrease in military OEM program sales.

In the second quarter of 2022 compared to the second quarter of 2021, sales increased $7$16 million in commercial aftermarket, with $12 million on the 787. The 787 aftermarket growth reflects recovering international travel and one-time test equipment sales. Our commercial OEM programs were up marginally in the second quarter, as increased sales across our business jets and legacy Boeing programs were mostly offset by lower 787 OEM sales.

Military OEM sales decreased $16 million from the second quarter of 2021. The timing of orders and material receipts affecting F-35 and foreign military programs decreased sales $16 million. The prior year's quarter included $5 million of sales from our NAVAIDS business, which we divested in the first quarter of ~~2018~~2022. These decreases were partially offset by $7 million of increased sales across our helicopter programs. Within military aftermarket, sales increased $7 million. Higher repair volume increased V-22 and F-15 sales $3 million each.

The sales increases in the first half of 2022 compared to the first ~~quarter~~half of ~~2017. OEM sales for the Airbus A350 increased $5 million~~2021 were largely due to the ~~program's production volume ramp up, while aftermarket~~same factors as the second quarter. As we continue to see recovery within the commercial aircraft market, OEM sales ~~for~~increased $28 million. OEM sales to Airbus, primarily driven by the A350, increased $4$14 million, ~~due to higher initial provisioning. Additionally, aftermarket~~business jet sales increased $12 million and sales for ~~legacy Boeing~~Genesys programs increased $4 million. Commercial aftermarket sales also increased $25 million across all of our programs. Somewhat offsetting these increases was a $29 million decrease in military OEM sales, primarily on the F-35 and foreign military programs.

Operating margin increased slightly through the first half of 2022 compared to the same period of 2021. Included in this increase was the divestiture of our NAVAIDS business completed as part of our portfolio shaping activities, resulting in a $16 million gain. Offsetting this increase in the second quarter of 2022 was $15 million of impairment and $4 million of restructuring expenses. We made adjustments to our staffing and asset base due to ~~higher repair activity.~~

~~Military aftermarket sales declined $5~~delays in our major customers' expected volume recoveries. The benefits from these actions are expected to average $3 million per quarter for the next four quarters. Excluding the charges in the second quarter, adjusted operating margin was 10.0%. Adjusted operating margin for the first half of 2022 was 9.3% excluding both the second quarter ~~of 2018~~charges and the gain from the NAVAIDS sale. The adjusted operating margin increase, as compared to the first ~~quarter~~half of ~~2017 due primarily to production delays on the V-22 program. Military OEM~~2021, was driven by a more favorable sales were relatively flat, as higher foreign military sales were mostly offset by lower F-35 sales. In the first quarter of 2017, F-35 sales were high due to a production increase ahead of an upcoming milestone delivery.


									Three Months Ended				Six Months Ended
				Number of Shares
(dollars in thousands, except per share data)	Amount			Class A Common Stock		Class B Common Stock
(dollars in thousands)								(dollars in thousands)	April 2, 2022		April 3, 2021		April 2, 2022		April 3, 2021
COMMON STOCK								COMMON STOCK
Beginning of period	$	51,280		43,704,286		7,575,427
Conversion of Class B to Class A	—			11,300		(11,300	)
End of period	51,280			43,715,586		7,564,127
Beginning and end of period								Beginning and end of period	$	51,280	$	51,280	$	51,280	$	51,280
ADDITIONAL PAID-IN CAPITAL								ADDITIONAL PAID-IN CAPITAL
Beginning of period	492,246							Beginning of period	518,857		505,038		509,622		472,645
Issuance of treasury shares	(1,633		)					Issuance of treasury shares	5,854		3,421		7,609		6,539
Equity-based compensation expense	2,001							Equity-based compensation expense	1,594		1,955		3,999		4,367
Adjustment to market - SECT, SERP and other	6,085

Adjustment to market - SECT and SERP								Adjustment to market - SECT and SERP	16,987		8,592		22,062		35,455
End of period	498,699							End of period	543,292		519,006		543,292		519,006
RETAINED EARNINGS								RETAINED EARNINGS
Beginning of period	1,847,819							Beginning of period	2,276,082		2,142,566		2,237,848		2,112,734
Net earnings attributable to Moog	1,299
Net earnings								Net earnings	29,087		48,688		75,352		86,530
Dividends (1)								Dividends (1)	(8,320)		(8,036)		(16,351)		(16,046)

End of period	1,849,118							End of period	2,296,849		2,183,218		2,296,849		2,183,218
TREASURY SHARES AT COST								TREASURY SHARES AT COST
Beginning of period	(739,157		)	(10,933,003	)	(3,333,927	)	Beginning of period	(1,023,086)		(1,000,795)		(1,007,506)		(990,783)
Class A and B shares issued related to equity awards	2,681			64,486		5,878

Class A and B shares issued related to compensation								Class A and B shares issued related to compensation	4,496		7,592		5,573		8,442
Class A and B shares purchased	(2,734		)	(33,020	)	(15	)	Class A and B shares purchased	(9,824)		(7,186)		(26,481)		(18,048)
End of period	(739,210		)	(10,901,537	)	(3,328,064	)	End of period	(1,028,414)		(1,000,389)		(1,028,414)		(1,000,389)
STOCK EMPLOYEE COMPENSATION TRUST (SECT)
STOCK EMPLOYEE COMPENSATION TRUST ("SECT")								STOCK EMPLOYEE COMPENSATION TRUST ("SECT")
Beginning of period	(89,919		)	(425,148	)	(654,753	)	Beginning of period	(82,721)		(78,597)		(79,776)		(64,242)
Issuance of shares								Issuance of shares	5,499		—		7,574		274
Purchase of shares	(3,823		)	—		(44,662	)	Purchase of shares	(8,121)		(1,904)		(10,396)		(2,559)
Adjustment to market	(5,248		)	—		—		Adjustment to market	(9,205)		(4,533)		(11,950)		(18,507)
End of period	(98,990		)	(425,148	)	(699,415	)	End of period	(94,548)		(85,034)		(94,548)		(85,034)
SUPPLEMENTAL RETIREMENT PLAN (SERP) TRUST
SUPPLEMENTAL RETIREMENT PLAN ("SERP") TRUST								SUPPLEMENTAL RETIREMENT PLAN ("SERP") TRUST
Beginning of period	(12,474		)			(150,000	)	Beginning of period	(66,094)		(65,986)		(63,764)		(53,098)

Adjustment to market	(837		)			—		Adjustment to market	(7,782)		(4,061)		(10,112)		(16,949)
End of period	(13,311		)			(150,000	)	End of period	(73,876)		(70,047)		(73,876)		(70,047)
ACCUMULATED OTHER COMPREHENSIVE LOSS								ACCUMULATED OTHER COMPREHENSIVE LOSS
Beginning of period	(335,491		)					Beginning of period	(249,895)		(250,262)		(247,560)		(285,453)
Other comprehensive income (loss)	15,854							Other comprehensive income (loss)	(14,040)		(9,315)		(16,375)		25,876

End of period	(319,637		)					End of period	(263,935)		(259,577)		(263,935)		(259,577)
TOTAL MOOG SHAREHOLDERS’ EQUITY	$	1,227,949		32,388,901		3,386,648
TOTAL SHAREHOLDERS’ EQUITY								TOTAL SHAREHOLDERS’ EQUITY	$	1,430,648	$	1,338,457	$	1,430,648	$	1,338,457
See accompanying Notes to Consolidated Condensed Financial Statements.								See accompanying Notes to Consolidated Condensed Financial Statements.


	Six Months Ended
(dollars in thousands)	April 2, 2022		April 3, 2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings	$	75,352	$	86,530
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation	38,316		37,622
Amortization	6,735		6,436
Deferred income taxes	4,834		(1,187)
Equity-based compensation expense	4,578		4,629

Gain on sale of business	(16,146)		—
Asset impairment and Inventory write-down	18,441		—
Other	2,692		(3,115)
Changes in assets and liabilities providing (using) cash:
Receivables	(4,223)		(47,697)
Inventories	6,951		9,301
Accounts payable	24,388		(5,088)
Contract advances	60,392		51,349
Accrued expenses	(28,324)		(1,799)
Accrued income taxes	8,217		12,691
Net pension and post retirement liabilities	8,927		3,846
Other assets and liabilities	(30,933)		(16,151)
Net cash provided by operating activities	180,197		137,367
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of businesses, net of cash acquired	(11,837)		(77,600)
Purchase of property, plant and equipment	(74,087)		(58,019)
Other investing transactions	37,776		1,895
Net cash used by investing activities	(48,148)		(133,724)
CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from revolving lines of credit	463,950		503,200
Payments on revolving lines of credit	(455,476)		(467,700)
Proceeds from long-term debt	—		39,800
Payments on long-term debt	(80,181)		(39,903)



Payments on finance lease obligations	(1,085)		(1,042)
Payment of dividends	(16,351)		(16,046)
Proceeds from sale of treasury stock	8,701		4,230
Purchase of outstanding shares for treasury	(26,481)		(18,844)
Proceeds from sale of stock held by SECT	7,574		274
Purchase of stock held by SECT	(10,396)		(2,559)




Net cash (used) provided by financing activities	(109,745)		1,410
Effect of exchange rate changes on cash	(1,087)		887
Increase in cash, cash equivalents and restricted cash	21,217		5,940
Cash, cash equivalents and restricted cash at beginning of period	100,914		85,072
Cash, cash equivalents and restricted cash at end of period	$	122,131	$	91,012

SUPPLEMENTAL CASH FLOW INFORMATION


Treasury shares issued as compensation	$	4,482	$	10,751
Equipment and property acquired through lease financing	17,648		9,433
See accompanying Notes to Consolidated Condensed Financial Statements.



~~Standard~~	~~Description~~	~~Financial Statement Effect or Other Significant Matters~~
~~ASU no. 2014-09~~ ~~Revenue from Contracts with Customers~~ ~~(And All Related ASUs)~~	The standard 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. The standard also requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. The provisions of the standard, as well as all subsequently issued clarifications to the standard, are effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. The standard can be adopted using either a full retrospective or modified retrospective approach.	We plan to adopt the standard using the modified retrospective method, under which prior years' results are not restated, but supplemental information will be provided in our disclosures that will present fiscal 2019 results before adoption of the standard. In addition, a cumulative adjustment will be necessary to Shareholder's Equity at the beginning of fiscal 2019. We are assessing the impact of the standard on our financial statements and related disclosures, internal controls and financial policies and information technology systems. We have not yet quantified the impact on our financial statements and related disclosures.
		~~Planned date of adoption:~~ ~~Q1 2019~~
~~ASU no. 2016-01~~ ~~Recognition and Measurement of Financial Assets and Financial Liabilities~~	The standard requires most equity investments to 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 the standard 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.	~~We are currently evaluating the effect on our financial statements and related disclosures.~~
		~~Planned date of adoption:~~ ~~Q1 2019~~
~~ASU no. 2016-02~~ ~~Leases~~ ~~(And All Related ASUs)~~	The standard requires most lease arrangements to be recognized in the balance sheet as lease assets and lease liabilities. The standard also requires additional disclosures about the leasing arrangements. The provisions of the standard are effective for fiscal years beginning after December 15, 2018 and interim periods within those years. Early adoption is permitted.	~~We are currently evaluating the effect on our financial statements and related disclosures.~~
		~~Planned date of adoption:~~ ~~Q1 2020~~
~~ASU no. 2017-07~~ ~~Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~	The standard amends existing guidance on the presentation of net periodic benefit cost in the income statement and what qualifies for capitalization on the balance sheet. The provisions of the standard are effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. Early adoption is permitted as of the beginning of an annual period. The amendment requires income statement presentation provisions to be applied retrospectively and capitalization in assets provisions to be applied prospectively.	~~We are currently evaluating the effect on our financial statements and related disclosures.~~
		~~Planned date of adoption:~~ ~~Q1 2019~~
~~ASU no. 2017-12~~ ~~Targeted Improvements to Accounting for Hedging Activities~~	The standard expands the hedging strategies eligible for hedge accounting, while simplifying presentation and disclosure by eliminating separate measurement and reporting of hedge ineffectiveness. The provisions of the standard are effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted.	~~We are currently evaluating the effect on our financial statements and related disclosures.~~
		~~Planned date of adoption:~~ ~~Q1 2020~~


	December 30, 2017		September 30, 2017			April 2, 2022		October 2, 2021
Raw materials and purchased parts	$	201,228	$	189,517	Raw materials and purchased parts	$	232,046	$	231,406
Work in progress	239,875		229,202		Work in progress	300,687		315,762
Finished goods	70,550		70,408		Finished goods	58,868		65,927
Inventories	$	511,653	$	489,127
Inventories, net					Inventories, net	$	591,601	$	613,095


	April 2, 2022
	Operating Leases		Finance Leases
2022	$	8,360	$	1,878
2023	14,871		3,728
2024	11,715		3,691
2025	9,741		3,510
2026	8,512		3,226
Thereafter	33,972		29,283
Total lease payments	87,171		45,316
Less: imputed interest	(14,981)		(20,520)
Total	$	72,190	$	24,796



		December 30, 2017					September 30, 2017
	Weighted- Average Life (years)	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Customer-related	11	$	177,239	$	(131,433	)	$	175,872	$	(128,019	)
Technology-related	9	72,215		(56,018		)	71,924		(55,069		)
Program-related	19	66,889		(31,876		)	66,458		(30,675		)
Marketing-related	9	26,659		(19,727		)	26,552		(19,251		)
Other	10	4,445		(3,479		)	4,379		(3,353		)
Intangible assets	12	$	347,447	$	(242,533	)	$	345,185	$	(236,367	)



	Classification	December 30, 2017		September 30, 2017
Foreign currency contracts	Other current assets	$	953	$	646
Foreign currency contracts	Other assets	298		50
Interest rate swaps	Other current assets	989		552
Interest rate swaps	Other assets	471		314
	Total assets	$	2,711	$	1,562
Foreign currency contracts	Other accrued liabilities	$	1,116	$	1,817
Foreign currency contracts	Other long-term liabilities	—		244
Interest rate swaps	Other accrued liabilities	—		10
Interest rate swaps	Other long-term liabilities	—		15
	Total liabilities	$	1,116	$	2,086



	Total
Balance at September 30, 2017	$	1,168
Cash payments - 2016 plan	(254		)
Balance at December 30, 2017	$	914



		Three Months Ended
	Statement of earnings classification	December 30, 2017			December 31, 2016
Retirement liability:
Prior service cost (credit)		$	(85	)	$	19
Actuarial losses		7,396			9,417
Reclassification from AOCIL into earnings ⁽¹⁾		7,311			9,436
Tax effect		(2,692		)	(3,427		)
Net reclassification from AOCIL into earnings		$	4,619		$	6,009
Derivatives:
Foreign currency contracts	Sales	$	(118	)	$	1,297
Foreign currency contracts	Cost of sales	696			467
Interest rate swaps	Interest	(14		)	115
Reclassification from AOCIL into earnings		564			1,879
Tax effect		(235		)	(591		)
Net reclassification from AOCIL into earnings		$	329		$	1,288



Operating profit:
Space and Defense Controls	$	1,992
Industrial Systems	9,462
Total	$	11,454



CONSOLIDATED AND SEGMENT OUTLOOK

							2018 vs. 2017
(dollars in millions)	2018			2017			$ Variance		% Variance
Net sales:
Aircraft Controls	$	1,175		$	1,125		$	50	4	%
Space and Defense Controls	547			529			18		3	%
Industrial Systems	894			843			51		6	%
	$	2,617		$	2,498		$	119	5	%
Operating profit:
Aircraft Controls	$	125		$	114		$	11	9	%
Space and Defense Controls	63			49			14		30	%
Industrial Systems	100			88			13		14	%
	$	288		$	250		$	38	15	%
Operating margin:
Aircraft Controls	10.6		%	10.1		%
Space and Defense Controls	11.5		%	9.2		%
Industrial Systems	11.2		%	10.4		%
	11.0		%	10.0		%


							2022 vs. 2021
(dollars in millions)	2022 Outlook			2021			$ Variance		% Variance
Net sales:
Aircraft Controls	$	1,245		$	1,161		$	84	7	%
Space and Defense Controls	880			799			81		10	%
Industrial Systems	910			892			18		2	%
	$	3,035		$	2,852		$	183	6	%
Operating profit:
Aircraft Controls	$	123		$	97		$	27	28	%
Space and Defense Controls	98			88			10		11	%
Industrial Systems	82			86			(4)		(5	%)
	$	303		$	271		$	32	12	%
Operating margin:
Aircraft Controls	9.9		%	8.3		%
Space and Defense Controls	11.1		%	11.1		%
Industrial Systems	9.0		%	9.6		%
	10.0		%	9.5		%

Net earnings	$	169		$	157
Diluted earnings per share	$5.04 - $5.44			$	4.87


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


~~(c)~~	~~The following table summarizes our purchases of our common stock for the quarter ended December 30, 2017.~~


Period	(a) Total Number of Shares Purchased (1) (2)(3)	(b) Average Price Paid Per Share		(c) Total number of Shares Purchased as Part of Publicly Announced Plans or Programs (3)	(d) Maximum Number (or Approx. Dollar Value) of Shares that May Yet Be Purchased Under Plans or Programs (3)
January 2, 2022 - January 29, 2022	136,188	$	77.81	52,169	2,521,030
January 30, 2022 - February 26, 2022	4,991	75.36		3,105	2,517,925
February 27, 2022 - April 2, 2022	82,714	84.31		—	2,517,925
Total	223,893	$	80.16	55,274	2,517,925


~~(1)~~	Reflects purchases by the Moog Inc. Stock Employee Compensation Trust Agreement ("SECT") of shares of Class B common stock from the Moog Inc. Retirement Savings Plan ("RSP") at average prices as follows: 17,494 shares at $87.00 per share during October; and 27,168 shares at $84.69 per share during November.


~~(3)~~	The Board of Directors has authorized a share repurchase program. This program has been amended from time to time to authorize additional repurchases up to an aggregate 13 million common shares. The program permits the purchase of shares of Class A or Class B common stock in open market or privately negotiated transactions at the discretion of management.



(a)	Exhibits
	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)