Poly-Scientific, a division of Northrop Grumman, Acquired by Moog Inc.

Poly-Scientific, a division of Northrop Grumman, Acquired by Moog Inc.

Moog Inc. (NYSE: MOG.A and MOG.B) announced today that it has closed on its acquisition of the assets of Northrop Grumman Corporation’s Poly-Scientific Division.

Poly-Sci is a manufacturer of motion control and data-transmission devices. Its principal products are electrical and fiber-optic slip rings, brushless D. C. motors, and electromechanical actuators and it employs about 1,000 people in three locations: Blacksburg, Virginia, Springfield, Pennsylvania, and Murphy, North Carolina. Poly-Sci was founded 50 years ago and was acquired in the early 1960’s by Litton Industries, Inc. Litton subsequently acquired Clifton Precision and merged it with the Poly-Sci Division. Northrop Grumman acquired Litton Industries in 2001.

Audited financial statements for Poly-Sci’s calendar year 2002 are expected to be completed by the end of October 2003. A Form 8-K incorporating these audited financial statements, as well as the unaudited interim and required pro-forma financial information, will be filed as soon as practicable upon completion of the audit. The following unaudited historical financial information of Poly-Sci is based on information obtained by Moog in connection with our evaluation of the acquisition.

Sales for Poly-Sci, which will now be called Moog Components Group, were approximately $133 million for the 2002 calendar year and $67 million for the first six months of 2003 ended June 30, 2003. For Moog’s fiscal ’04, which began on September 28th, 2003, Poly-Sci’s sales are forecast to be $140 million. About two-thirds of Poly-Sci sales come from aerospace and defense markets and the balance are industrial. Nearly half of the company’s industrial products are used in medical equipment. Operating margins for Poly-Sci were 12.2% for the 2002 calendar year and 13.4% for the first six months of 2003. For Moog’s fiscal ’04, Poly-Sci’s operating margins are forecast to be 10.5% after the non-cash accounting charges under FAS141, Accounting for Business Combinations, including the amortization of intangibles and the costs associated with the step-up in inventory values. Depreciation and amortization were $2 million for Poly-Sci’s 2002 and $1 million for the first six months of Poly-Sci’s operations in calendar 2003.

Net proceeds of $72 million from Moog’s equity offering, which closed on September 16, 2003, resulted from the sale of 2,012,500 newly issued Class A shares and were used to pay for part of the $158 million acquisition. The balance of the purchase price was funded through the company’s credit agreements. Total consolidated interest expense for fiscal ’04 is expected to be approximately $13 million. In fiscal ’04, diluted earnings per share, based on an average of 17.6 million shares outstanding, are estimated to be in the range of $3.10 to $3.30, and net income is forecast to be in a range between $54 million and $58 million.

This forecast of net income and earnings per share is based on the above-mentioned estimates of expense including the amortization of intangible assets acquired in the acquisition of Poly-Sci and the expense related to purchase accounting adjustments related to their inventory and fixed assets. Actual amounts for these expenses may differ from these estimates and the Company’s earnings per share may be updated in the future.

Moog Inc. is a worldwide manufacturer of precision control components and systems. Moog’s high-performance actuation products control military and commercial aircraft, satellites and space vehicles, launch vehicles, missiles and automated industrial machinery.

Company Type: Private Companies, Public Corporations

Transasction Type: Sellside M&A

Industry: Industrial Manufacturing