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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 30, 2024

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________  to _________

Commission file number 1-05129
MOOG Inc.
(Exact name of registrant as specified in its charter)
New York16-0757636
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
400 Jamison RoadEast Aurora,New York14052-0018
(Address of Principal Executive Offices)
(Zip Code)
(716) 652-2000
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A common stockMOG.ANew York Stock Exchange
Class B common stockMOG.BNew York Stock Exchange

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 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
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 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 April 19, 2024 was:
Class A common stock, 28,759,355 shares
Class B common stock, 3,209,711 shares



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QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS




PART I FINANCIAL INFORMATION
Item 1. Financial Statements
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Consolidated Condensed Statements of Earnings
(Unaudited)
Three Months EndedSix Months Ended
(dollars in thousands, except share and per share data)March 30,
2024
April 1,
2023
March 30,
2024
April 1,
2023
Net sales$930,303 $836,792 $1,787,153 $1,596,895 
Cost of sales663,350 615,477 1,287,001 1,171,894 
Inventory write-down175  175  
Gross profit266,778 221,315 499,977 425,001 
Research and development28,382 26,743 58,961 50,605 
Selling, general and administrative124,961 116,695 243,686 229,860 
Interest18,003 14,963 34,697 28,095 
Asset impairment6,750 1,219 6,750 1,219 
Restructuring6,750 2,017 8,639 3,095 
Gain on sale of buildings (527) (10,030)
Other3,183 3,901 5,884 5,552 
Earnings before income taxes78,749 56,304 141,360 116,605 
Income taxes18,746 13,291 33,545 27,576 
Net earnings$60,003 $43,013 $107,815 $89,029 
Net earnings per share
Basic$1.88 $1.35 $3.38 $2.80 
Diluted$1.86 $1.34 $3.34 $2.79 
Weighted average common shares outstanding
Basic31,967,828 31,848,140 31,934,965 31,797,071 
Diluted32,335,418 32,043,910 32,295,762 31,959,315 
See accompanying Notes to Consolidated Condensed Financial Statements.


4

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Consolidated Condensed Statements of Comprehensive Income
(Unaudited)
Three Months EndedSix Months Ended
(dollars in thousands)March 30,
2024
April 1,
2023
March 30,
2024
April 1,
2023
Net earnings$60,003 $43,013 $107,815 $89,029 
Other comprehensive income (loss) ("OCI"), net of tax:
Foreign currency translation adjustment(13,726)11,544 17,287 62,279 
Retirement liability adjustment2,173 2,032 3,851 3,231 
Change in accumulated loss on derivatives200 1,080 518 2,999 
Other comprehensive income (loss), net of tax(11,353)14,656 21,656 68,509 
Comprehensive income$48,650 $57,669 $129,471 $157,538 
See accompanying Notes to Consolidated Condensed Financial Statements.


5

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Consolidated Condensed Balance Sheets
(Unaudited)
(dollars in thousands)March 30,
2024
September 30,
2023
ASSETS
Current assets
Cash and cash equivalents$59,066 $68,959 
Restricted cash665 185 
Receivables, net419,399 434,723 
Unbilled receivables794,167 706,601 
Inventories, net810,483 724,002 
Prepaid expenses and other current assets73,165 50,862 
Total current assets2,156,945 1,985,332 
Property, plant and equipment, net869,303 814,696 
Operating lease right-of-use assets57,074 56,067 
Goodwill828,469 821,301 
Intangible assets, net68,876 71,637 
Deferred income taxes9,063 8,749 
Other assets49,390 50,254 
Total assets$4,039,120 $3,808,036 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable$267,731 $264,573 
Accrued compensation73,961 111,154 
Contract advances and progress billings404,876 377,977 
Accrued liabilities and other257,960 211,769 
Total current liabilities1,004,528 965,473 
Long-term debt, excluding current installments948,615 863,092 
Long-term pension and retirement obligations160,265 157,455 
Deferred income taxes22,765 37,626 
Other long-term liabilities149,688 148,303 
Total liabilities2,285,861 2,171,949 
Shareholders’ equity
Common stock - Class A43,826 43,822 
Common stock - Class B7,454 7,458 
Additional paid-in capital702,272 608,270 
Retained earnings2,587,222 2,496,979 
Treasury shares(1,071,558)(1,057,938)
Stock Employee Compensation Trust(153,295)(114,769)
Supplemental Retirement Plan Trust(129,709)(93,126)
Accumulated other comprehensive loss(232,953)(254,609)
Total shareholders’ equity1,753,259 1,636,087 
Total liabilities and shareholders’ equity$4,039,120 $3,808,036 
See accompanying Notes to Consolidated Condensed Financial Statements.

6

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Consolidated Condensed Statements of Shareholders' Equity
(Unaudited)

  Three Months EndedSix Months Ended
(dollars in thousands)March 30,
2024
April 1,
2023
March 30,
2024
April 1,
2023
COMMON STOCK
Beginning and end of period$51,280$51,280$51,280 $51,280 
ADDITIONAL PAID-IN CAPITAL
Beginning of period673,261 550,511 608,270 516,123 
Issuance of treasury shares4,126 2,087 6,286 4,315 
Equity-based compensation expense2,182 2,128 5,636 4,571 
Adjustment to market - SECT and SERP22,703 21,780 82,080 51,497 
End of period702,272 576,506 702,272 576,506 
RETAINED EARNINGS
Beginning of period2,536,172 2,397,814 2,496,979 2,360,055 
Net earnings60,003 43,013 107,815 89,029 
Dividends (1)
(8,953)(8,602)(17,572)(16,859)
End of period2,587,222 2,432,225 2,587,222 2,432,225 
TREASURY SHARES AT COST
Beginning of period(1,065,654)(1,055,735)(1,057,938)(1,047,012)
Class A and B shares issued related to compensation5,623 7,283 6,618 9,007 
Class A and B shares purchased(11,527)(7,735)(20,238)(18,182)
End of period(1,071,558)(1,056,187)(1,071,558)(1,056,187)
STOCK EMPLOYEE COMPENSATION TRUST ("SECT")
Beginning of period(146,373)(89,689)(114,769)(73,602)
Issuance of shares10,787 7,234 15,788 9,795 
Purchase of shares(4,846)(5,468)(8,817)(7,221)
Adjustment to market(12,863)(11,957)(45,497)(28,852)
End of period(153,295)(99,880)(153,295)(99,880)
SUPPLEMENTAL RETIREMENT PLAN ("SERP") TRUST
Beginning of period(119,869)(71,811)(93,126)(58,989)
Adjustment to market(9,840)(9,823)(36,583)(22,645)
End of period(129,709)(81,634)(129,709)(81,634)
ACCUMULATED OTHER COMPREHENSIVE LOSS
Beginning of period(221,600)(257,189)(254,609)(311,042)
Other comprehensive income (loss)(11,353)14,656 21,656 68,509 
End of period(232,953)(242,533)(232,953)(242,533)
TOTAL SHAREHOLDERS’ EQUITY$1,753,259 $1,579,777 $1,753,259 $1,579,777 
See accompanying Notes to Consolidated Condensed Financial Statements.
(1) Cash dividends were $0.28 and $0.55 per share for the three and six months ended March 30, 2024 and $0.27 and $0.53 per share for three and six months ended April 1, 2023.
7

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Consolidated Condensed Statements of Shareholders’ Equity, Shares
(Unaudited)
  Three Months EndedSix Months Ended
(share data)March 30,
2024
April 1,
2023
March 30,
2024
April 1,
2023
COMMON STOCK - CLASS A
Beginning of period43,825,917 43,806,835 43,822,344 43,806,835 
Conversion of Class B to Class A 433  4,006  
End of period43,826,350 43,806,835 43,826,350 43,806,835 
COMMON STOCK - CLASS B
Beginning of period7,453,796 7,472,878 7,457,369 7,472,878 
Conversion of Class B to Class A (433) (4,006) 
End of period7,453,363 7,472,878 7,453,363 7,472,878 
TREASURY SHARES - CLASS A COMMON STOCK
Beginning of period(14,647,019)(14,666,508)(14,657,897)(14,614,444)
Class A shares issued related to compensation1,974 6,069 20,385 41,619 
Class A shares purchased(802)(2,677)(8,335)(90,291)
End of period(14,645,847)(14,663,116)(14,645,847)(14,663,116)
TREASURY SHARES - CLASS B COMMON STOCK
Beginning of period(2,891,694)(2,991,901)(2,896,845)(3,020,291)
Class B shares issued related to compensation104,202 129,791 168,465 202,531 
Class B shares purchased(78,309)(84,728)(137,421)(129,078)
End of period(2,865,801)(2,946,838)(2,865,801)(2,946,838)
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(584,600)(602,600)(592,128)(611,942)
Issuance of shares74,137 82,356 111,445 112,425 
Purchase of shares(33,612)(57,083)(63,392)(77,810)
End of period(544,075)(577,327)(544,075)(577,327)
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.

8

Image6.jpg
Consolidated Condensed Statements of Cash Flows
(Unaudited)

Six Months Ended
(dollars in thousands)March 30,
2024
April 1,
2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings$107,815 $89,029 
Adjustments to reconcile net earnings to net cash provided (used) by operating activities:
Depreciation42,276 36,810 
Amortization5,296 5,862 
Deferred income taxes(17,805)(9,970)
Equity-based compensation expense7,212 5,765 
Gain on sale of buildings (10,030)
Asset impairment and inventory write-down6,925 1,219 
Other2,207 3,292 
Changes in assets and liabilities providing (using) cash:
Receivables17,469 (10,836)
Unbilled receivables(86,197)(65,840)
Inventories(77,396)(72,346)
Accounts payable1,847 1,971 
Contract advances and progress billings24,512 17,067 
Accrued expenses903 (33,030)
Accrued income taxes10,833 11,965 
Net pension and post retirement liabilities 5,687 7,119 
Other assets and liabilities(35,195)(11,063)
Net cash provided (used) by operating activities16,389 (33,016)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of businesses, net of cash acquired(5,911) 
Purchase of property, plant and equipment(77,530)(89,743)
Net proceeds from businesses sold 959 
Net proceeds from buildings sold 18,825 
Other investing transactions(515)(4,241)
Net cash used by investing activities(83,956)(74,200)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from revolving lines of credit509,500 503,232 
Payments on revolving lines of credit(425,000)(381,300)
Payments on long-term debt (188)
Payments on finance lease obligations(2,741)(1,899)
Payment of dividends (17,572)(16,859)
Proceeds from sale of treasury stock7,579 9,148 
Purchase of outstanding shares for treasury(20,238)(20,457)
Proceeds from sale of stock held by SECT15,788 9,795 
Purchase of stock held by SECT(9,407)(7,221)
Other financing transactions (2,024)
Net cash provided by financing activities57,909 92,227 
Effect of exchange rate changes on cash245 5,410 
Decrease in cash, cash equivalents and restricted cash(9,413)(9,579)
Cash, cash equivalents and restricted cash at beginning of period69,144 119,233 
Cash, cash equivalents and restricted cash at end of period$59,731 $109,654 
SUPPLEMENTAL CASH FLOW INFORMATION
Treasury shares issued as compensation$5,325 $4,174 
Assets acquired through lease financing18,160 11,007 
See accompanying Notes to Consolidated Condensed Financial Statements.
9

Image7.jpg
Notes to Consolidated Condensed Financial Statements
Six Months Ended March 30, 2024
(Unaudited)
(dollars in thousands, except per share data)
Note 1 - Basis of Presentation
The accompanying unaudited consolidated condensed financial statements have been prepared by management in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments consisting of normal recurring adjustments considered necessary for the fair presentation of results for the interim period have been included. The results of operations for the three and six months ended March 30, 2024 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, 2023. All references to years in these financial statements are to fiscal years.
Effective October 1, 2023, we made changes to our segment reporting structure that resulted in four reporting segments. Our former Aircraft Controls segment has been separated into Military Aircraft and Commercial Aircraft. The Goodwill, Restructuring and Segment footnotes have been restated to reflect this change.
Recent Accounting Pronouncements Adopted
There have been no new accounting pronouncements adopted for the six months ended March 30, 2024.

Recent Accounting Pronouncements Not Yet Adopted
StandardDescriptionFinancial Statement Effect or Other Significant Matters
ASU no. 2023-07
Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures
This standard requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss. The amendments also require disclosure of all other segment items by reportable segment and a description of its composition. Additionally, the amendments require disclosure of the title and position of the CODM and an explanation of how the CODM uses the reported measures of segment profit or loss in assessing segment performance and deciding how to allocate resources. The provisions of the standard are effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendment requires retrospective application to all prior periods presented in the financial statements. We are currently reviewing the guidance and evaluating the impact on our financial statements and related disclosures.
Planned date of adoption:
FY 2025
ASU no. 2023-09
Income Taxes (Topic 740): Improvements to Income Tax Disclosures

This standard expands annual income tax disclosures to require specific categories in the rate reconciliation table to be disclosed using both percentages and reporting currency amounts and requires additional information for reconciling items that meet a quantitative threshold. Additionally, the amendment requires disclosure of income taxes paid by jurisdiction. The provisions of the standard are effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied on a prospective basis. Retrospective application is permitted.We are currently reviewing the guidance and evaluating the impact on our financial statements and related disclosures.
Planned date of adoption:
FY 2026

We consider the applicability and impact of all Accounting Standard Updates ("ASU"). ASUs not listed above were assessed and determined to be either not applicable, or had or are expected to have an immaterial impact on our financial statements and related disclosures.
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Note 2 - 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 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.

Contracts are sometimes modified to account for changes in contract specifications and requirements. When this occurs, we assess the modification as prescribed in 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 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 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 using either the over time or point in time method. The over-time method of revenue recognition is predominantly used in Space and Defense, Military Aircraft and Commercial Aircraft. 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 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.

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Revenue recognized at the point in time control is transferred to the customer is used most frequently in Industrial. 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 - 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 over time on contracts using the 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 March 30, 2024 we recognized additional revenue of $2,479 and $2,384 respectively, for adjustments made to performance obligations satisfied (or partially satisfied) in previous periods. For the three and six months ended April 1, 2023 we recognized additional revenue of $2,233 and lower revenue $2,066, respectively, for adjustments made to performance obligations satisfied (or partially satisfied) in previous periods.

Contract costs include only allocable, allowable and 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 March 30, 2024.

As of March 30, 2024, we had contract reserves of $63,315. 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. 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.

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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. Unbilled receivables are classified as current assets and in accordance with industry practice, include amounts that may be billed and collected beyond one year due to the long term nature of our contracts.

Contract advances and progress billings (contract liabilities) relate to payments received from customers in advance of the satisfaction of performance obligations for a contract (contract advances) and when billings are in excess of revenue recognized (progress billings). These amounts are recorded as contract liabilities until such obligations are satisfied, either over-time as costs are incurred or at a point when deliveries are made. We do not consider contract advances and progress billings 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 industry.

For contracts recognized using the cost-to-cost method, the amount of unbilled receivables or contract advances and progress billings is determined for each contract to determine the contract asset or contract liability position at the end of each reporting period.

Total contract assets and contract liabilities are as follows:
March 30,
2024
September 30, 2023
Unbilled receivables$794,167 $706,601 
Contract advances and progress billings404,876 377,977 
Net contract assets$389,291 $328,624 

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 March 30, 2024, we recognized $45,503 and $143,209 of revenue, that was included in the contract liability balance at the beginning of the year.

Remaining Performance Obligations
As of March 30, 2024, the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied (or partially unsatisfied) was $5,200,000. We expect to recognize approximately 48% of that amount as sales over the next twelve months and the balance thereafter.

Disaggregation of Revenue
See Note 20 - Segments, for disclosures related to disaggregation of revenue.
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Note 3 - Acquisitions and Divestitures
Acquisitions
On October 20, 2023, we acquired Data Collection Limited ("DCL") based in Auckland, New Zealand for a purchase price, net of acquired cash, of $5,911. DCL specializes in manufacturing and operating pavement surveying equipment and providing innovative solutions for measuring and managing pavements. This operation is included in our Military Aircraft segment. The purchase price allocation is subject to adjustments as we obtain additional information for our estimates during the measurement period.

Divestitures
On September 30, 2022, we sold a sonar business based in the United Kingdom previously included in our Industrial segment. We have cumulatively received net proceeds of $13,075 and recorded a loss of $15,246, net of transaction costs. The transaction is subject to adjustments associated with amounts currently held in escrow.

On December 3, 2021, we sold the assets of our Navigation Aids ("NAVAIDS") business based in Salt Lake City, Utah previously included in our Military Aircraft segment to Thales USA Inc. We have cumulatively received net proceeds of $36,550 and recorded a gain of $15,242, net of transaction costs. The transaction is subject to adjustments associated with amounts currently held in escrow.

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Note 4 - Receivables
Receivables consist of:
March 30,
2024
September 30,
2023
Accounts receivable$393,103 $426,804 
Other29,513 11,929 
Less allowance for credit losses(3,217)(4,010)
Receivables, net$419,399 $434,723 
During the three months ended March 30, 2024, we recorded an impairment charge of $1,152 associated with the U.S. Army announcement cancelling the next generation Future Attack Reconnaissance Aircraft ("FARA") program.

On December 13, 2023, 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 the Third Amendment to the Amended and Restated Receivables Purchase Agreement (the "RPA"). The RPA amendment increased the capacity from $100,000 to $125,000 and extended the maturity date from November 4, 2024 to December 11, 2026. The RPA 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 $125,000 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 variable 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 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 Statements of Cash Flows. 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 $174,779 and $323,606 for the three and six months ended March 30, 2024, respectively. Total cash collections under the RPA were $174,779 and $298,606 for the three and six months ended March 30, 2024, 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 March 30, 2024, the amount sold to the Purchasers was $125,000, 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 $649,274 at March 30, 2024.

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.
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Note 5 - Inventories
Inventories, net of reserves, consist of:
March 30,
2024
September 30,
2023
Raw materials and purchased parts$290,748 $270,305 
Work in progress424,215 368,277 
Finished goods95,520 85,420 
Inventories, net$810,483 $724,002 
There are no material inventoried costs relating to over-time contracts where revenue is accounted for using the cost-to-cost method of accounting as of March 30, 2024 and September 30, 2023.
During the three months ended March 30, 2024, we recorded $175 of write-downs due to the U.S. Army announcement cancelling the FARA program.
Note 6 - Property, Plant and Equipment
Property, plant and equipment consists of:
March 30,
2024
September 30,
2023
Land$31,826 $31,417 
Buildings and improvements675,578 646,079 
Machinery and equipment864,832 827,257 
Computer equipment and software229,027 228,284 
Property, plant and equipment, at cost1,801,263 1,733,037 
Less accumulated depreciation and amortization(931,960)(918,341)
Property, plant and equipment, net$869,303 $814,696 
During the three months ended March 30, 2024, we recorded $304 of impairment charges on equipment no longer in use.
Note 7 - Leases
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 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.





16



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 EndedSix Months Ended
March 30,
2024
April 1,
2023
March 30,
2024
April 1,
2023
Operating lease cost$8,245 $7,560 $15,215 $14,955 
Finance lease cost:
Amortization of right-of-use assets$2,072 $1,146 $3,898 $2,118 
Interest on lease liabilities1,335 427 2,567 791 
Total finance lease cost$3,407 $1,573 $6,465 $2,909 
Supplemental cash flow information related to leases was as follows:
Six Months Ended
March 30,
2024
April 1,
2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flow for operating leases$15,600 $15,094 
Operating cash flow for finance leases2,567 791 
Financing cash flow for finance leases2,741 1,899 
Assets obtained in exchange for lease obligations:
Operating leases$6,543 $1,393 
Finance leases11,617 9,614 



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Supplemental balance sheet information related to leases was as follows:
March 30,
2024
September 30,
2023
Operating Leases:
Operating lease right-of-use assets$57,074 $56,067 
Accrued liabilities and other$11,395 $11,283 
Other long-term liabilities56,807 56,398 
Total operating lease liabilities$68,202 $67,681 
Finance Leases:
Property, plant, and equipment, at cost$98,707 $85,324 
Accumulated depreciation(15,224)(10,913)
Property, plant, and equipment, net$83,483 $74,411 
Accrued liabilities and other$7,139 $5,621 
Other long-term liabilities79,963 71,225 
Total finance lease liabilities$87,102 $76,846 
Weighted average remaining lease term in years:
Operating leases6.56.9
Finance leases21.323.1
Weighted average discount rates:
Operating leases5.2 %5.0 %
Finance leases6.5 %6.5 %
Maturities of lease liabilities were as follows:
 March 30, 2024
Operating LeasesFinance Leases
2024$7,545 $5,984 
202513,858 11,790 
202613,185 11,512 
202711,904 10,761 
20289,827 9,762 
Thereafter24,152 140,790 
Total lease payments80,471 190,599 
Less: imputed interest(12,269)(103,497)
Total$68,202 $87,102 


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Note 8 - Goodwill and Intangible Assets
Effective October 1, 2023, we made a change to our reporting structure to separate our former Aircraft Controls operating segment into two operating segments, Military Aircraft and Commercial Aircraft, which also represent reporting units for purposes of assessing goodwill. We performed an impairment test consistent with the rules set forth under ASC 350, “Intangibles—Goodwill and Other,” by performing a quantitative analysis on the former reporting unit. Following this test, the Company reassigned the goodwill from the former Aircraft Controls reporting unit to its new reporting units using a relative fair value allocation approach. We then performed quantitative goodwill impairment tests on each of the new reporting units. Quantitative testing requires a comparison of the fair value of a reporting unit to its carrying value. We principally use the discounted cash flow method to estimate the fair value of a reporting unit. The discounted cash flow method incorporates various assumptions, the most significant being projected cash flows (inclusive of projected revenue growth rates and operating margins), the terminal growth rate and the discount rate. Management projects revenue growth rates, operating margins and cash flows based on each reporting unit's current business, expected developments and operational strategies typically over a five-year period. If the carrying value of the reporting unit exceeds its fair value, goodwill is considered impaired and an impairment loss must be measured. The results of our quantitative assessments showed the fair value of the two new reporting units, Military Aircraft and Commercial Aircraft, exceeded their carrying value; and therefore, goodwill was not impaired.

The changes in the carrying amount of goodwill are as follows:
Space and
Defense
Military AircraftCommercial AircraftIndustrialTotal
Balance at September 30, 2023$259,475 $111,276 $92,612 $357,938 $821,301 
Acquisition 2,739   2,739 
Foreign currency translation28 1,725  2,676 4,429 
Balance at March 30, 2024$259,503 $115,740 $92,612 $360,614 $828,469 
Goodwill in our Space and Defense segment is net of a $4,800 accumulated impairment loss at March 30, 2024. Goodwill in our Medical Devices reporting unit, included in our Industrial segment, is net of a $38,200 accumulated impairment loss at March 30, 2024.

The components of intangible assets are as follows:
March 30, 2024September 30, 2023
  Weighted-
Average
Life (years)
Gross Carrying
Amount
Accumulated
Amortization
Gross Carrying
Amount
Accumulated
Amortization
Customer-related11$132,602 $(95,198)$133,269 $(93,648)
Technology-related971,559 (58,499)69,242 (56,106)
Program-related2338,333 (23,039)37,465 (21,672)
Marketing-related822,516 (19,587)21,890 (18,995)
Other101,801 (1,612)1,773 (1,581)
Intangible assets12$266,811 $(197,935)$263,639 $(192,002)
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.

During the three months ended March 30, 2024, we initiated restructuring actions in conjunction with exiting a product line within our Military Aircraft segment, which included the write off of intangible assets. We have recorded this charge based on the expected cash flows over the remaining life of the assets and is included in Restructuring in the Consolidated Condensed Statement of Earnings. See Note 14 – Restructuring, for additional disclosures.


19


Amortization of acquired intangible assets is as follows:
Three Months EndedSix Months Ended
March 30, 2024April 1, 2023March 30, 2024April 1, 2023
Acquired intangible asset amortization$2,563 $2,865 $5,288 $5,852 
Based on acquired intangible assets recorded at March 30, 2024, amortization is estimated to be approximately:
20242025202620272028
Estimated future amortization of acquired intangible assets$10,300 $9,600 $9,500 $8,300 $7,500 



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Note 9 - Equity Method Investments and Joint Ventures
Investments and operating results in which we do not have a controlling interest, however we do have the ability to exercise significant influence over operations, are accounted for using the equity method of accounting. Net investment balances for equity method investments and joint ventures are included as Other assets in the Consolidated Condensed Balance Sheets and consist of:
March 30, 2024September 30, 2023
Moog Aircraft Service Asia$1,615 $1,302 
NOVI LLC 325
Suffolk Technologies Fund 1, L.P.1,603 1,180 
Net investment balance$3,218 $2,807 
We recorded the following gains and losses from equity method investments and joint ventures which are included in Other in the Consolidated Condensed Statements of Earnings:
Three Months EndedSix Months Ended
Statements of Earnings locationMarch 30,
2024
April 1,
2023
March 30,
2024
April 1,
2023
Net gain (loss)
Equity method investments and joint venturesOther$338 $176 $271 $(28)
Moog Aircraft Services Asia ("MASA") is a joint venture included in our Commercial Aircraft segment in which we currently hold a 51% ownership share. MASA is intended to provide maintenance, repair and overhaul services for our manufactured flight control systems.

During the three months ended March 30, 2024 we continued to divest our interest in NOVI LLC, which is included in our Space and Defense segment. Our ownership is now below the threshold for equity accounting and as such is now recorded at fair value.

Suffolk Technologies Fund 1, L.P., is a limited partnership included in our Industrial segment that invests in startups to transform the construction, real estate and property maintenance industries in the U.S. We have a remaining on-call capital commitment of up to $6,078.

Hybrid Motion Solutions (“HMS”) is a joint venture in our Industrial segment in which we hold a 50% ownership interest. HMS specializes in hydrostatic servo drives and leverages synergies to enter new markets. The joint venture focuses on research and development, design and assembly as well as service. Our share of cumulative losses to date has exceeded our initial investment, and as such, we had no net investment balance recorded as of March 30, 2024.

Investments in, and the operating results of, entities in which we do not have a controlling financial interest or the ability to exercise significant influence over the operations are accounted for at historical cost or fair value using readily determinable financial information. As of March 30, 2024, we had investments of $4,580, which are included as Other assets in the Consolidated Condensed Balance Sheets. During the three months ended March 30, 2024, we recorded an impairment for the devaluation of an investment of $5,294, which is included as Asset impairment in the Consolidated Condensed Statement of Earnings.


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Note 10 - 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:
March 30,
2024
September 30,
2023
U.S. revolving credit facility$450,000 $334,500 
SECT revolving credit facility2,000 33,000 
Senior notes 4.25%500,000 500,000 
Senior debt952,000 867,500 
Less deferred debt issuance cost(3,385)(4,408)
Long-term debt$948,615 $863,092 
Our U.S. revolving credit facility, which matures on October 27, 2027, has a capacity of $1,100,000 and provides an expansion option, which permits us to request an increase of up to $400,000 to the credit facility upon satisfaction of certain conditions. Interest on the majority of our outstanding borrowings is principally based on SOFR plus the applicable margin. 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. We are in compliance with all covenants.

The SECT has a revolving credit facility with a borrowing capacity of $35,000, maturing on October 26, 2025. Interest is based on SOFR plus an applicable margin. A commitment fee is also charged based on a percentage of the unused amounts available and is not material.

We have $500,000 aggregate principal amount of 4.25% senior notes due December 15, 2027 with interest paid semiannually on June 15 and December 15 of each year. The senior notes are unsecured obligations, guaranteed on a senior unsecured basis by certain subsidiaries and contain normal incurrence-based covenants and limitations such as the ability to incur additional indebtedness, pay dividends, make other restricted payments and investments, create liens and certain corporate acts such as mergers and consolidations. We are in compliance with all covenants.



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Note 11 - Other Accrued Liabilities
Other accrued liabilities consists of:
March 30,
2024
September 30, 2023
Employee benefits$50,388 $47,653 
Contract reserves63,315 45,257 
Warranty accrual 23,616 22,939 
Accrued income taxes36,796 29,631 
Other83,845 66,289 
Other accrued liabilities$257,960 $211,769 
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 EndedSix Months Ended
March 30,
2024
April 1,
2023
March 30,
2024
April 1,
2023
Warranty accrual at beginning of period$24,096 $22,429 $22,939 $23,072 
Warranties issued during current period1,971 2,994 5,290 4,952 
Adjustments to pre-existing warranties(155)(229)(681)(443)
Reductions for settling warranties(2,148)(3,179)(4,024)(5,984)
Foreign currency translation(148)47 92 465 
Warranty accrual at end of period$23,616 $22,062 $23,616 $22,062 
Note 12 - Derivative Financial Instruments
We principally use derivative financial instruments to manage foreign exchange risk related to foreign operations and foreign currency 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. As of March 30, 2024, we had no outstanding foreign currency contracts.

We use forward currency contracts to hedge our net investment in certain foreign subsidiaries. As of March 30, 2024, 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 March 30, 2024, we had no outstanding interest rate swaps.

Foreign currency contracts, net investment hedges and interest rate swaps are recorded in the Consolidated Condensed Balance Sheets at fair value and the related gains or losses are deferred in Shareholders’ Equity as a component of Accumulated Other Comprehensive Income (Loss) ("AOCIL"). These deferred gains and losses are reclassified into the Consolidated Condensed Statements of 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 are not perfectly effective in offsetting the change in the value of the payments and revenue being hedged, the ineffective portion of these contracts is recognized in earnings immediately. Ineffectiveness was not material in the first six months of 2024 or 2023.


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Derivatives not designated as hedging instruments
We also have foreign currency exposure on balances, primarily intercompany, that are denominated in a foreign currency and are adjusted to current values using period-end exchange rates. The resulting gains or losses are recorded in the Consolidated Condensed Statements of Earnings. To minimize foreign currency exposure, we have foreign currency contracts with notional amounts of $130,012 at March 30, 2024. The foreign currency contracts are recorded in the Consolidated Condensed Balance Sheets at fair value and resulting gains or losses are recorded in the Consolidated Condensed Statements of Earnings. We recorded the following gains and losses on foreign currency contracts which are included in other income or expense and generally offset the gains or losses from the foreign currency adjustments on the intercompany balances that are also included in other income or expense:
Three Months EndedSix Months Ended
Statements of Earnings locationMarch 30,
2024
April 1,
2023
March 30,
2024
April 1,
2023
Net gain (loss)
Foreign currency contractsOther$(2,919)$(890)$1,533 $3,105 
Summary of derivatives
The fair value and classification of derivatives is summarized as follows:
Balance Sheets locationMarch 30,
2024
September 30,
2023
Derivatives designated as hedging instruments:
Foreign currency contractsOther current assets$ $295 
Foreign currency contractsAccrued liabilities and other$ $581 
Derivatives not designated as hedging instruments:
Foreign currency contractsOther current assets$41 $93 
Foreign currency contractsAccrued liabilities and other$445 $324 



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Note 13 - 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, except for the acquisition contingent consideration, which is classified as Level 3:
Balance Sheets locationMarch 30,
2024
September 30,
2023
Foreign currency contractsOther current assets$41 $388 
Total assets$41 $388 
Foreign currency contractsAccrued liabilities and other$445 $905 
Acquisition contingent considerationAccrued liabilities and other3,256  
Acquisition contingent considerationOther long-term liabilities 3,089 
Total liabilities$3,701 $3,994 
The changes in financial liabilities classified as Level 3 within the fair value hierarchy are as follows:
Three Months EndedSix Months Ended
March 30,
2024
April 1,
2023
March 30,
2024
April 1,
2023
Balance at beginning of period$3,172 $3,365 $3,089 $3,272 
Acquisition adjustment (491) (491)
Increase in discounted future cash flows recorded as interest expense84 80 167 173 
Balance at end of period$3,256 $2,954 $3,256 $2,954 
Our only financial instrument for which the carrying value differs from its fair value is long-term debt. At March 30, 2024, the fair value of long-term debt was $915,743 compared to its carrying value of $952,000. 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.
Certain property, plant and equipment and other assets 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.


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Note 14 - Restructuring
In 2024, we initiated restructuring actions in relation to portfolio shaping activities in our Military Aircraft and Industrial segments. These actions have and will result in workforce reductions, principally in the U.S. The 2024 restructuring charges include $2,293 for severance, $733 of non-cash charges related to intangibles written off and $2,390 of other costs. These actions contain certain elements that will continue through 2025 and are expected to result in additional costs of up to $2,000.
In 2023, we initiated restructuring actions in relation to portfolio shaping activities which contains certain elements, primarily retention agreements, that will continue through 2027 and are expected to result in additional costs of up to approximately $9,000.

Restructuring activity for severance and other costs by segment and reconciliation to consolidated amounts is as follows:
Space and DefenseMilitary Aircraft