New York State
|
16-0757636
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
East Aurora, New York
|
14052-0018
|
(Address of principal executive offices)
|
(Zip Code)
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(716) 652-2000
|
|
(Telephone number including area code)
|
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|||||||
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PART I
|
|
FINANCIAL INFORMATION
|
|
PAGE
|
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Item 1
|
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Consolidated Condensed Balance Sheets as of
January 3, 2015 and September 27, 2014
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Condensed Statements of Earnings for the Three
Months Ended January 3, 2015 and December 28, 2013
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
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Consolidated Condensed Statements of Comprehensive Income for the Three
Months Ended January 3, 2015 and December 28, 2013
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Condensed Statements of Cash Flows for the
Three Months Ended January 3, 2015 and December 28, 2013
|
|
6
|
|
|
|
|
|
|
|
|
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7-19
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Item 2
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20 - 36
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Item 3
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36
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Item 4
|
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36
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PART II
|
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OTHER INFORMATION
|
|
|
|||
|
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|
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|
|
Item 2
|
|
|
37
|
|
|
|
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|
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|
|
|
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|
|
Item 6
|
|
|
38
|
|
|
|
|
|
|
|
|
|
|
|
39
|
|
(dollars in thousands)
|
|
January 3,
2015 |
|
September 27,
2014 |
||||
ASSETS
|
|
|
|
|
||||
CURRENT ASSETS
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
240,240
|
|
|
$
|
231,292
|
|
Receivables
|
|
706,373
|
|
|
780,874
|
|
||
Inventories
|
|
523,823
|
|
|
517,056
|
|
||
Other current assets
|
|
128,906
|
|
|
134,842
|
|
||
TOTAL CURRENT ASSETS
|
|
1,599,342
|
|
|
1,664,064
|
|
||
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of $647,142 and $639,076, respectively
|
|
546,329
|
|
|
555,348
|
|
||
GOODWILL
|
|
746,557
|
|
|
757,852
|
|
||
INTANGIBLE ASSETS, net
|
|
166,391
|
|
|
178,070
|
|
||
OTHER ASSETS
|
|
57,116
|
|
|
53,118
|
|
||
TOTAL ASSETS
|
|
$
|
3,115,735
|
|
|
$
|
3,208,452
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
||||
CURRENT LIABILITIES
|
|
|
|
|
||||
Short-term borrowings
|
|
$
|
100,415
|
|
|
$
|
103,660
|
|
Current installments of long-term debt
|
|
36
|
|
|
5,262
|
|
||
Accounts payable
|
|
153,148
|
|
|
162,667
|
|
||
Customer advances
|
|
143,094
|
|
|
145,500
|
|
||
Contract loss reserves
|
|
33,914
|
|
|
35,984
|
|
||
Other accrued liabilities
|
|
223,479
|
|
|
269,731
|
|
||
TOTAL CURRENT LIABILITIES
|
|
654,086
|
|
|
722,804
|
|
||
LONG-TERM DEBT, excluding current installments
|
|
|
|
|
||||
Senior debt
|
|
551,099
|
|
|
765,114
|
|
||
Senior notes
|
|
300,000
|
|
|
—
|
|
||
LONG-TERM PENSION AND RETIREMENT OBLIGATIONS
|
|
279,219
|
|
|
288,216
|
|
||
DEFERRED INCOME TAXES
|
|
89,545
|
|
|
83,931
|
|
||
OTHER LONG-TERM LIABILITIES
|
|
1,670
|
|
|
972
|
|
||
TOTAL LIABILITIES
|
|
1,875,619
|
|
|
1,861,037
|
|
||
COMMITMENTS AND CONTINGENCIES (Note 16)
|
|
—
|
|
|
—
|
|
||
SHAREHOLDERS' EQUITY
|
|
|
|
|
||||
Common stock
|
|
51,280
|
|
|
51,280
|
|
||
Other shareholders' equity
|
|
1,188,836
|
|
|
1,296,135
|
|
||
TOTAL SHAREHOLDERS' EQUITY
|
|
1,240,116
|
|
|
1,347,415
|
|
||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
$
|
3,115,735
|
|
|
$
|
3,208,452
|
|
See accompanying Notes to Consolidated Condensed Financial Statements.
|
|
|
|
|
|
|
Three Months Ended
|
||||||
(dollars in thousands)
|
|
January 3,
2015 |
|
December 28,
2013 |
||||
NET EARNINGS
|
|
$
|
35,265
|
|
|
$
|
32,097
|
|
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
|
|
|
|
|
||||
Foreign currency translation adjustment
|
|
(42,906
|
)
|
|
5,934
|
|
||
Retirement liability adjustment
|
|
5,574
|
|
|
2,420
|
|
||
Change in accumulated loss on derivatives
|
|
250
|
|
|
(530
|
)
|
||
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX
|
|
(37,082
|
)
|
|
7,824
|
|
||
COMPREHENSIVE INCOME (LOSS)
|
|
$
|
(1,817
|
)
|
|
$
|
39,921
|
|
See accompanying Notes to Consolidated Condensed Financial Statements.
|
|
||||||||
|
|
Three Months Ended
|
||||||
(dollars in thousands)
|
|
January 3,
2015 |
|
December 28,
2013 |
||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
||||
Net earnings
|
|
$
|
35,265
|
|
|
$
|
32,097
|
|
Adjustments to reconcile net earnings to net cash provided (used) by operating activities:
|
|
|
|
|
||||
Depreciation
|
|
19,833
|
|
|
19,444
|
|
||
Amortization
|
|
6,741
|
|
|
7,950
|
|
||
Equity-based compensation expense
|
|
3,398
|
|
|
3,774
|
|
||
Redemption of senior subordinated notes
|
|
—
|
|
|
8,002
|
|
||
Other
|
|
7,824
|
|
|
5,631
|
|
||
Changes in assets and liabilities providing (using) cash:
|
|
|
|
|
||||
Receivables
|
|
62,772
|
|
|
36,329
|
|
||
Inventories
|
|
(15,381
|
)
|
|
(2,270
|
)
|
||
Accounts payable
|
|
(6,528
|
)
|
|
(16,042
|
)
|
||
Customer advances
|
|
(1,019
|
)
|
|
383
|
|
||
Accrued expenses
|
|
(35,922
|
)
|
|
(25,964
|
)
|
||
Accrued income taxes
|
|
(3,060
|
)
|
|
3,081
|
|
||
Pension assets and liabilities
|
|
970
|
|
|
(3,360
|
)
|
||
Other assets and liabilities
|
|
3,580
|
|
|
(820
|
)
|
||
NET CASH PROVIDED BY OPERATING ACTIVITIES
|
|
78,473
|
|
|
68,235
|
|
||
|
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
||||
Purchase of property, plant and equipment
|
|
(20,160
|
)
|
|
(20,019
|
)
|
||
Other investing transactions
|
|
71
|
|
|
(8,577
|
)
|
||
NET CASH USED BY INVESTING ACTIVITIES
|
|
(20,089
|
)
|
|
(28,596
|
)
|
||
|
|
|
|
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
||||
Net short term repayments
|
|
(3,236
|
)
|
|
(600
|
)
|
||
Net (repayments) proceeds from revolving lines of credit
|
|
(214,000
|
)
|
|
182,165
|
|
||
Net (repayments) proceeds on long-term debt
|
|
(5,234
|
)
|
|
36
|
|
||
Proceeds from senior notes, net of issuance costs
|
|
294,718
|
|
|
—
|
|
||
Payments on senior subordinated notes
|
|
—
|
|
|
(191,575
|
)
|
||
Payment of premium on redemption of senior subordinated notes
|
|
—
|
|
|
(6,945
|
)
|
||
Proceeds from sale of treasury stock
|
|
9,951
|
|
|
1,530
|
|
||
Purchase of outstanding shares for treasury
|
|
(122,443
|
)
|
|
(2,617
|
)
|
||
Purchase of stock held by SECT
|
|
(4,460
|
)
|
|
(1,792
|
)
|
||
Excess tax benefits from equity-based payment arrangements
|
|
4,855
|
|
|
1,112
|
|
||
NET CASH USED BY FINANCING ACTIVITIES
|
|
(39,849
|
)
|
|
(18,686
|
)
|
||
|
|
|
|
|
||||
Effect of exchange rate changes on cash
|
|
(9,587
|
)
|
|
1,526
|
|
||
INCREASE IN CASH AND CASH EQUIVALENTS
|
|
8,948
|
|
|
22,479
|
|
||
Cash and cash equivalents at beginning of period
|
|
231,292
|
|
|
157,090
|
|
||
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
|
$
|
240,240
|
|
|
$
|
179,569
|
|
|
|
|
|
|
||||
CASH PAID FOR:
|
|
|
|
|
||||
Interest
|
|
$
|
3,429
|
|
|
$
|
9,274
|
|
Income taxes, net of refunds
|
|
6,263
|
|
|
10,961
|
|
||
See accompanying Notes to Consolidated Condensed Financial Statements.
|
|
|
January 3,
2015 |
|
September 27,
2014 |
||||
Accounts receivable
|
|
$
|
293,345
|
|
|
$
|
332,450
|
|
Long-term contract receivables:
|
|
|
|
|
||||
Amounts billed
|
|
98,425
|
|
|
125,497
|
|
||
Unbilled recoverable costs and accrued profits
|
|
304,361
|
|
|
313,530
|
|
||
Total long-term contract receivables
|
|
402,786
|
|
|
439,027
|
|
||
Other
|
|
15,107
|
|
|
13,738
|
|
||
Total receivables
|
|
711,238
|
|
|
785,215
|
|
||
Less allowance for doubtful accounts
|
|
(4,865
|
)
|
|
(4,341
|
)
|
||
Receivables
|
|
$
|
706,373
|
|
|
$
|
780,874
|
|
|
|
January 3,
2015 |
|
September 27,
2014 |
||||
Raw materials and purchased parts
|
|
$
|
199,269
|
|
|
$
|
198,166
|
|
Work in progress
|
|
259,010
|
|
|
251,701
|
|
||
Finished goods
|
|
65,544
|
|
|
67,189
|
|
||
Inventories
|
|
$
|
523,823
|
|
|
$
|
517,056
|
|
|
|
Balance as of September 27, 2014
|
|
Foreign Currency Translation
|
|
Balance as of January 3, 2015
|
||||||
Aircraft Controls
|
|
$
|
192,852
|
|
|
$
|
(3,708
|
)
|
|
$
|
189,144
|
|
Space and Defense Controls
|
|
159,607
|
|
|
(647
|
)
|
|
158,960
|
|
|||
Industrial Systems
|
|
118,009
|
|
|
(4,179
|
)
|
|
113,830
|
|
|||
Components
|
|
202,910
|
|
|
(2,171
|
)
|
|
200,739
|
|
|||
Medical Devices
|
|
84,474
|
|
|
(590
|
)
|
|
83,884
|
|
|||
Goodwill
|
|
$
|
757,852
|
|
|
$
|
(11,295
|
)
|
|
$
|
746,557
|
|
|
|
|
|
January 3, 2015
|
|
September 27, 2014
|
||||||||||||
|
|
Weighted - Average Life (years)
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
||||||||
Customer-related
|
|
11
|
|
$
|
176,945
|
|
|
$
|
(103,818
|
)
|
|
$
|
180,670
|
|
|
$
|
(102,251
|
)
|
Program-related
|
|
18
|
|
76,340
|
|
|
(24,052
|
)
|
|
80,054
|
|
|
(24,065
|
)
|
||||
Technology-related
|
|
9
|
|
74,905
|
|
|
(46,814
|
)
|
|
76,057
|
|
|
(46,296
|
)
|
||||
Marketing-related
|
|
10
|
|
26,296
|
|
|
(15,201
|
)
|
|
26,707
|
|
|
(14,779
|
)
|
||||
Acquired intangible assets
|
|
12
|
|
$
|
354,486
|
|
|
$
|
(189,885
|
)
|
|
$
|
363,488
|
|
|
$
|
(187,391
|
)
|
|
|
January 3,
2015 |
|
September 27,
2014 |
||||
Securitization program
|
|
$
|
100,000
|
|
|
$
|
100,000
|
|
Lines of credit
|
|
415
|
|
|
3,660
|
|
||
Short-term borrowings
|
|
$
|
100,415
|
|
|
$
|
103,660
|
|
|
|
Three Months Ended
|
||||||
|
|
January 3,
2015 |
|
December 28,
2013 |
||||
Warranty accrual at beginning of period
|
|
$
|
19,953
|
|
|
$
|
17,429
|
|
Warranties issued during current period
|
|
1,465
|
|
|
1,787
|
|
||
Adjustments to pre-existing warranties
|
|
(1,132
|
)
|
|
(599
|
)
|
||
Reductions for settling warranties
|
|
(1,238
|
)
|
|
(1,380
|
)
|
||
Foreign currency translation
|
|
(722
|
)
|
|
132
|
|
||
Warranty accrual at end of period
|
|
$
|
18,326
|
|
|
$
|
17,369
|
|
|
|
Classification
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Foreign currency forwards
|
|
Other assets
|
$
|
—
|
|
|
$
|
1,283
|
|
|
$
|
—
|
|
|
$
|
1,283
|
|
Interest rate swaps
|
|
Other assets
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
|
|
Total assets
|
$
|
—
|
|
|
$
|
1,284
|
|
|
$
|
—
|
|
|
$
|
1,284
|
|
Foreign currency forwards
|
|
Other accrued liabilities
|
$
|
—
|
|
|
$
|
3,325
|
|
|
$
|
—
|
|
|
$
|
3,325
|
|
Foreign currency forwards
|
|
Other long-term liabilities
|
—
|
|
|
326
|
|
|
—
|
|
|
326
|
|
||||
Interest rate swaps
|
|
Other accrued liabilities
|
—
|
|
|
145
|
|
|
—
|
|
|
145
|
|
||||
Interest rate swaps
|
|
Other long-term liabilities
|
—
|
|
|
68
|
|
|
—
|
|
|
68
|
|
||||
|
|
Total liabilities
|
$
|
—
|
|
|
$
|
3,864
|
|
|
$
|
—
|
|
|
$
|
3,864
|
|
|
|
Three Months Ended
|
||
|
|
December 28,
2013 |
||
Balance at beginning of period
|
|
$
|
4,007
|
|
Increase in discounted future cash flows recorded as interest expense
|
|
97
|
|
|
Increase in earn out provisions recorded as other expense
|
|
576
|
|
|
Balance at end of period
|
|
$
|
4,680
|
|
|
|
Three Months Ended
|
||||||
|
|
January 3,
2015 |
|
December 28,
2013 |
||||
Service cost
|
|
$
|
5,909
|
|
|
$
|
5,393
|
|
Interest cost
|
|
8,507
|
|
|
8,339
|
|
||
Expected return on plan assets
|
|
(11,784
|
)
|
|
(10,844
|
)
|
||
Amortization of prior service cost
|
|
37
|
|
|
37
|
|
||
Amortization of actuarial loss
|
|
5,589
|
|
|
4,086
|
|
||
Pension expense for defined benefit plans
|
|
8,258
|
|
|
7,011
|
|
||
Pension expense for defined contribution plans
|
|
3,534
|
|
|
3,039
|
|
||
Total pension expense for U.S. plans
|
|
$
|
11,792
|
|
|
$
|
10,050
|
|
|
|
Three Months Ended
|
||||||
|
|
January 3,
2015 |
|
December 28,
2013 |
||||
Service cost
|
|
$
|
1,591
|
|
|
$
|
1,362
|
|
Interest cost
|
|
1,265
|
|
|
1,509
|
|
||
Expected return on plan assets
|
|
(1,339
|
)
|
|
(1,143
|
)
|
||
Amortization of prior service credit
|
|
(13
|
)
|
|
(15
|
)
|
||
Amortization of actuarial loss
|
|
587
|
|
|
350
|
|
||
Pension expense for defined benefit plans
|
|
2,091
|
|
|
2,063
|
|
||
Pension expense for defined contribution plans
|
|
1,686
|
|
|
1,424
|
|
||
Total pension expense for non-U.S. plans
|
|
$
|
3,777
|
|
|
$
|
3,487
|
|
|
|
Three Months Ended
|
||||||
|
|
January 3,
2015 |
|
December 28,
2013 |
||||
Service cost
|
|
$
|
56
|
|
|
$
|
56
|
|
Interest cost
|
|
144
|
|
|
156
|
|
||
Amortization of actuarial gain
|
|
(26
|
)
|
|
(65
|
)
|
||
Total periodic post-retirement benefit cost
|
|
$
|
174
|
|
|
$
|
147
|
|
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
|
Total
|
||||||
Actual
|
|
$
|
5,574
|
|
|
$
|
3,791
|
|
|
$
|
9,365
|
|
Anticipated
|
|
47,002
|
|
|
4,768
|
|
|
51,770
|
|
|||
|
|
$
|
52,576
|
|
|
$
|
8,559
|
|
|
$
|
61,135
|
|
|
Aircraft Controls
|
Space and Defense Controls
|
Industrial Systems
|
Total
|
||||||||
Balance at September 27, 2014
|
5,439
|
|
5,764
|
|
186
|
|
11,389
|
|
||||
Adjustments to provision
|
(355
|
)
|
(329
|
)
|
—
|
|
(684
|
)
|
||||
Payments - 2013 plan
|
—
|
|
(381
|
)
|
—
|
|
(381
|
)
|
||||
Payments - 2014 plan
|
(2,310
|
)
|
(2,034
|
)
|
(182
|
)
|
(4,526
|
)
|
||||
Foreign currency translation
|
(19
|
)
|
(32
|
)
|
(4
|
)
|
(55
|
)
|
||||
Balance at January 3, 2015
|
$
|
2,755
|
|
$
|
2,988
|
|
$
|
—
|
|
$
|
5,743
|
|
|
|
|
|
Number of Shares
|
||||||
|
|
Amount
|
|
Class A Common Stock
|
|
Class B Common Stock
|
||||
COMMON STOCK
|
|
|
|
|
|
|
||||
Beginning of period
|
|
$
|
51,280
|
|
|
43,627,531
|
|
|
7,652,182
|
|
Conversion of Class B to Class A
|
|
—
|
|
|
1,269
|
|
|
(1,269
|
)
|
|
End of Period
|
|
51,280
|
|
|
43,628,800
|
|
|
7,650,913
|
|
|
|
|
|
|
|
|
|
||||
ADDITIONAL PAID-IN CAPITAL
|
|
|
|
|
|
|
||||
Beginning of period
|
|
463,965
|
|
|
|
|
|
|||
Equity-based compensation expense
|
|
3,398
|
|
|
|
|
|
|||
Issuance of treasury shares
|
|
(3,142
|
)
|
|
|
|
|
|||
Adjustment to market - SECT, and other
|
|
8,511
|
|
|
|
|
|
|||
End of period
|
|
472,732
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
||||
RETAINED EARNINGS
|
|
|
|
|
|
|
||||
Beginning of period
|
|
1,447,911
|
|
|
|
|
|
|||
Net earnings
|
|
35,265
|
|
|
|
|
|
|||
End of period
|
|
1,483,176
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
||||
TREASURY STOCK
|
|
|
|
|
|
|
||||
Beginning of period
|
|
(360,445
|
)
|
|
(5,806,702
|
)
|
|
(3,319,038
|
)
|
|
Issuance of treasury shares
|
|
13,093
|
|
|
447,713
|
|
|
—
|
|
|
Purchase of treasury shares
|
|
(119,226
|
)
|
|
(1,682,286
|
)
|
|
(2,238
|
)
|
|
End of period
|
|
(466,578
|
)
|
|
(7,041,275
|
)
|
|
(3,321,276
|
)
|
|
|
|
|
|
|
|
|
||||
STOCK EMPLOYEE COMPENSATION TRUST (SECT)
|
|
|
|
|
|
|
||||
Beginning of period
|
|
(48,458
|
)
|
|
|
|
(710,841
|
)
|
||
Purchase of shares
|
|
(4,460
|
)
|
|
|
|
(62,245
|
)
|
||
Adjustment to market - SECT
|
|
(3,656
|
)
|
|
|
|
—
|
|
||
End of period
|
|
(56,574
|
)
|
|
—
|
|
|
(773,086
|
)
|
|
|
|
|
|
|
|
|
||||
ACCUMULATED OTHER COMPREHENSIVE LOSS
|
|
|
|
|
|
|
||||
Beginning of period
|
|
(206,838
|
)
|
|
|
|
|
|||
Other comprehensive income (loss)
|
|
(37,082
|
)
|
|
|
|
|
|||
End of period
|
|
(243,920
|
)
|
|
|
|
|
|||
TOTAL SHAREHOLDERS' EQUITY
|
|
$
|
1,240,116
|
|
|
36,587,525
|
|
|
3,556,551
|
|
|
|
Accumulated foreign currency translation
|
|
Accumulated retirement liability
|
|
Accumulated (loss) on derivatives
|
|
Total
|
||||||||
AOCI at beginning of period
|
|
$
|
9,254
|
|
|
$
|
(214,984
|
)
|
|
$
|
(1,108
|
)
|
|
$
|
(206,838
|
)
|
Other comprehensive income (loss) before reclassifications
|
|
(42,906
|
)
|
|
—
|
|
|
(316
|
)
|
|
(43,222
|
)
|
||||
Amounts reclassified from AOCI
|
|
—
|
|
|
5,574
|
|
|
566
|
|
|
6,140
|
|
||||
Other comprehensive income (loss)
|
|
(42,906
|
)
|
|
5,574
|
|
|
250
|
|
|
(37,082
|
)
|
||||
AOCI at end of period
|
|
$
|
(33,652
|
)
|
|
$
|
(209,410
|
)
|
|
$
|
(858
|
)
|
|
$
|
(243,920
|
)
|
|
|
|
|
Three Months Ended
|
||||||
|
|
Statement of earnings classification
|
|
January 3,
2015 |
|
December 28,
2013 |
||||
Retirement liability:
|
|
|
|
|
|
|
||||
Prior service cost (credit)
|
|
|
|
$
|
293
|
|
|
$
|
(327
|
)
|
Actuarial losses
|
|
|
|
7,552
|
|
|
4,298
|
|
||
Reclassification from AOCI into earnings
|
|
7,845
|
|
|
3,971
|
|
||||
Tax effect
|
|
|
|
(2,271
|
)
|
|
(1,551
|
)
|
||
Net reclassification from AOCI into earnings - expense (income)
|
|
$
|
5,574
|
|
|
$
|
2,420
|
|
||
Derivatives:
|
|
|
|
|
|
|
||||
Foreign currency forwards
|
|
Sales
|
|
$
|
—
|
|
|
$
|
(192
|
)
|
Foreign currency forwards
|
|
Cost of sales
|
|
505
|
|
|
371
|
|
||
Interest rate swaps
|
|
Interest
|
|
405
|
|
|
69
|
|
||
Reclassification from AOCI into earnings
|
|
910
|
|
|
248
|
|
||||
Tax effect
|
|
|
|
(344
|
)
|
|
(166
|
)
|
||
Net reclassification from AOCI into earnings - expense (income)
|
|
$
|
566
|
|
|
$
|
82
|
|
|
|
Three Months Ended
|
||||
|
|
January 3,
2015 |
|
December 28,
2013 |
||
Weighted-average shares outstanding - Basic
|
|
40,594,886
|
|
|
45,384,652
|
|
Dilutive effect of equity-based awards
|
|
485,293
|
|
|
625,383
|
|
Weighted-average shares outstanding - Diluted
|
|
41,080,179
|
|
|
46,010,035
|
|
|
|
Three Months Ended
|
||||||
|
|
January 3,
2015 |
|
December 28,
2013 |
||||
Net sales:
|
|
|
|
|
||||
Aircraft Controls
|
|
$
|
266,368
|
|
|
$
|
265,416
|
|
Space and Defense Controls
|
|
99,955
|
|
|
99,450
|
|
||
Industrial Systems
|
|
133,366
|
|
|
144,079
|
|
||
Components
|
|
99,905
|
|
|
102,685
|
|
||
Medical Devices
|
|
30,929
|
|
|
31,755
|
|
||
Net sales
|
|
$
|
630,523
|
|
|
$
|
643,385
|
|
Operating profit and margins:
|
|
|
|
|
||||
Aircraft Controls
|
|
$
|
24,458
|
|
|
$
|
31,771
|
|
|
|
9.2
|
%
|
|
12.0
|
%
|
||
Space and Defense Controls
|
|
8,726
|
|
|
7,853
|
|
||
|
|
8.7
|
%
|
|
7.9
|
%
|
||
Industrial Systems
|
|
13,219
|
|
|
12,286
|
|
||
|
|
9.9
|
%
|
|
8.5
|
%
|
||
Components
|
|
14,700
|
|
|
16,189
|
|
||
|
|
14.7
|
%
|
|
15.8
|
%
|
||
Medical Devices
|
|
4,598
|
|
|
3,628
|
|
||
|
|
14.9
|
%
|
|
11.4
|
%
|
||
Total operating profit
|
|
65,701
|
|
|
71,727
|
|
||
|
|
10.4
|
%
|
|
11.1
|
%
|
||
Deductions from operating profit:
|
|
|
|
|
||||
Interest expense
|
|
5,368
|
|
|
5,129
|
|
||
Equity-based compensation expense
|
|
3,398
|
|
|
3,774
|
|
||
Redemption of senior subordinated notes
|
|
—
|
|
|
8,002
|
|
||
Corporate expenses and other
|
|
7,497
|
|
|
7,965
|
|
||
Earnings before income taxes
|
|
$
|
49,438
|
|
|
$
|
46,857
|
|
•
|
Defense market - primary and secondary flight controls for military aircraft, tactical and strategic missile steering controls and gun aiming controls, stabilization and automatic ammunition loading controls for armored combat vehicles.
|
•
|
Commercial aircraft market - primary and secondary flight controls for commercial aircraft.
|
•
|
Commercial space market - space satellite positioning controls and thrust vector controls for space launch vehicles.
|
•
|
Industrial automation market - injection molding, metal forming, heavy industry, material and automotive testing, pilot training simulators and surveillance systems.
|
•
|
Energy market - oil and gas exploration, wind energy and power generation.
|
•
|
Medical market - motors used in sleep apnea devices, enteral clinical nutrition and infusion therapy pumps and CT scanners.
|
•
|
superior technical competence in delivering mission-critical solutions,
|
•
|
an innovative customer-intimacy approach,
|
•
|
a diverse base of customers and end markets served by a broad product portfolio,
|
•
|
well-established international presence serving customers worldwide, and
|
•
|
a proven ability to successfully undertake investments designed to enhance our control systems product franchise and drive continued growth.
|
•
|
maintaining our technological excellence by building upon our systems integration capabilities while solving our customers’ most demanding technical problems in applications "When Performance Really Matters
®
,"
|
•
|
utilizing our global capabilities and strong engineering heritage,
|
•
|
continuing to grow our profitable aftermarket business,
|
•
|
capitalizing on strategic acquisitions and opportunities,
|
•
|
maximizing customer value through continuous cost improvements, and
|
•
|
investing in talent development to accelerate our leadership capability and employee performance.
|
CONSOLIDATED RESULTS OF OPERATIONS AND OUTLOOK
|
|||||||||||
|
|
|
|
|
|||||||
|
Three Months Ended
|
||||||||||
(dollars and shares in millions, except per share data)
|
January 3, 2015
|
December 28, 2013
|
$
Variance |
%
Variance |
|||||||
Net sales
|
$
|
630.5
|
|
$
|
643.4
|
|
$
|
(12.9
|
)
|
(2
|
%)
|
Gross margin
|
29.2
|
%
|
31.0
|
%
|
|
|
|||||
Research and development expenses
|
$
|
31.3
|
|
$
|
35.8
|
|
$
|
(4.4
|
)
|
(12
|
%)
|
Selling, general and administrative expenses as a percentage of sales
|
15.5
|
%
|
15.5
|
%
|
|
|
|||||
Interest expense
|
$
|
5.4
|
|
$
|
5.1
|
|
$
|
0.2
|
|
5
|
%
|
Redemption of senior subordinated notes
|
—
|
|
8.0
|
|
(8.0
|
)
|
n/a
|
|
|||
Other
|
—
|
|
3.7
|
|
(3.7
|
)
|
n/a
|
|
|||
Effective tax rate
|
28.7
|
%
|
31.5
|
%
|
|
|
|||||
Net earnings
|
$
|
35.3
|
|
$
|
32.1
|
|
$
|
3.2
|
|
10
|
%
|
Average common shares outstanding
|
41.1
|
|
46.0
|
|
(4.9
|
)
|
(11
|
)%
|
|||
Diluted earnings per share
|
$
|
0.86
|
|
$
|
0.70
|
|
$
|
0.16
|
|
23
|
%
|
|
Three Months Ended
|
||||||||||
(dollars in millions)
|
January 3,
2015 |
December 28,
2013 |
$
Variance
|
%
Variance
|
|||||||
Net sales - military aircraft
|
$
|
126.0
|
|
$
|
137.5
|
|
$
|
(11.6
|
)
|
(8
|
%)
|
Net sales - commercial aircraft
|
140.4
|
|
127.9
|
|
12.5
|
|
10
|
%
|
|||
|
$
|
266.4
|
|
$
|
265.4
|
|
$
|
1.0
|
|
—
|
%
|
Operating profit
|
$
|
24.5
|
|
$
|
31.8
|
|
$
|
(7.3
|
)
|
(23
|
%)
|
Operating margin
|
9.2
|
%
|
12.0
|
%
|
|
|
|||||
Backlog
|
$
|
710.8
|
|
$
|
723.1
|
|
$
|
(12.3
|
)
|
(2
|
%)
|
|
Three Months Ended
|
||||||||||
(dollars in millions)
|
January 3,
2015 |
December 28,
2013 |
$
Variance
|
%
Variance |
|||||||
Net sales
|
$
|
100.0
|
|
$
|
99.5
|
|
$
|
0.5
|
|
1
|
%
|
Operating profit
|
$
|
8.7
|
|
$
|
7.9
|
|
$
|
0.9
|
|
11
|
%
|
Operating margin
|
8.7
|
%
|
7.9
|
%
|
|
|
|||||
Backlog
|
$
|
275.8
|
|
$
|
284.9
|
|
$
|
(9.2
|
)
|
(3
|
%)
|
|
Three Months Ended
|
||||||||||
(dollars in millions)
|
January 3,
2015 |
December 28,
2013 |
$
Variance |
%
Variance |
|||||||
Net sales
|
$
|
133.4
|
|
$
|
144.1
|
|
$
|
(10.7
|
)
|
(7
|
%)
|
Operating profit
|
$
|
13.2
|
|
$
|
12.3
|
|
$
|
0.9
|
|
8
|
%
|
Operating margin
|
9.9
|
%
|
8.5
|
%
|
|
|
|||||
Backlog
|
$
|
176.4
|
|
$
|
195.1
|
|
$
|
(18.7
|
)
|
(10
|
%)
|
|
Three Months Ended
|
||||||||||
(dollars in millions)
|
January 3,
2015 |
December 28,
2013 |
$
Variance
|
%
Variance
|
|||||||
Net sales
|
$
|
99.9
|
|
$
|
102.7
|
|
$
|
(2.8
|
)
|
(3
|
%)
|
Operating profit
|
$
|
14.7
|
|
$
|
16.2
|
|
$
|
(1.5
|
)
|
(9
|
%)
|
Operating margin
|
14.7
|
%
|
15.8
|
%
|
|
|
|||||
Backlog
|
$
|
175.0
|
|
$
|
170.9
|
|
$
|
4.1
|
|
2
|
%
|
|
Three Months Ended
|
||||||||||
(dollars in millions)
|
January 3,
2015 |
December 28,
2013 |
$
Variance
|
%
Variance
|
|||||||
Net sales
|
$
|
30.9
|
|
$
|
31.8
|
|
$
|
(0.8
|
)
|
(3
|
%)
|
Operating profit
|
$
|
4.6
|
|
$
|
3.6
|
|
$
|
1.0
|
|
27
|
%
|
Operating margin
|
14.9
|
%
|
11.4
|
%
|
|
|
|||||
Backlog
|
$
|
15.3
|
|
$
|
14.8
|
|
$
|
0.5
|
|
3
|
%
|
|
Three Months Ended
|
|||||||||||||
(dollars in millions)
|
January 3,
2015 |
|
December 28,
2013 |
|
$
Variance |
|
%
Variance |
|||||||
Net cash provided (used) by:
|
|
|
|
|
|
|
|
|||||||
Operating activities
|
$
|
78.5
|
|
|
$
|
68.2
|
|
|
$
|
10.2
|
|
|
15
|
%
|
Investing activities
|
(20.1
|
)
|
|
(28.6
|
)
|
|
8.5
|
|
|
(30
|
%)
|
|||
Financing activities
|
(39.8
|
)
|
|
(18.7
|
)
|
|
(21.2
|
)
|
|
N/A
|
|
•
|
the markets we serve are cyclical and sensitive to domestic and foreign economic conditions and events, which may cause our operating results to fluctuate;
|
•
|
we operate in highly competitive markets with competitors who may have greater resources than we possess;
|
•
|
we depend heavily on government contracts that may not be fully funded or may be terminated, and the failure to receive funding or the termination of one or more of these contracts could reduce our sales and increase our costs;
|
•
|
we make estimates in accounting for long-term contracts, and changes in these estimates may have significant impacts on our earnings;
|
•
|
we enter into fixed-price contracts, which could subject us to losses if we have cost overruns;
|
•
|
we may not realize the full amounts reflected in our backlog as revenue, which could adversely affect our future revenue and growth prospects;
|
•
|
if our subcontractors or suppliers fail to perform their contractual obligations, our prime contract performance and our ability to obtain future business could be materially and adversely impacted;
|
•
|
contracting on government programs is subject to significant regulation, including rules related to bidding, billing and accounting kickbacks and false claims, and any non-compliance could subject us to fines and penalties or possible debarment;
|
•
|
the loss of The Boeing Company as a customer or a significant reduction in sales to The Boeing Company could adversely impact our operating results;
|
•
|
our new product research and development efforts may not be successful which could reduce our sales and earnings;
|
•
|
our inability to adequately enforce and protect our intellectual property or defend against assertions of infringement could prevent or restrict our ability to compete;
|
•
|
our business operations may be adversely affected by information systems interruptions, intrusions or new software implementations;
|
•
|
our indebtedness and restrictive covenants under our credit facilities could limit our operational and financial flexibility;
|
•
|
significant changes in discount rates, rates of return on pension assets, mortality tables and other factors could adversely affect our earnings and equity and increase our pension funding requirements;
|
•
|
a write-off of all or part of our goodwill or other intangible assets could adversely affect our operating results and net worth;
|
•
|
our sales and earnings may be affected if we cannot identify, acquire or integrate strategic acquisitions, or if we engage in divesting activities;
|
•
|
our operations in foreign countries expose us to political and currency risks and adverse changes in local legal and regulatory environments;
|
•
|
unforeseen exposure to additional income tax liabilities may affect our operating results;
|
•
|
government regulations could limit our ability to sell our products outside the United States and otherwise adversely affect our business;
|
•
|
new governmental regulations and customer demands related to conflict minerals may adversely impact our operating results;
|
•
|
the failure or misuse of our products may damage our reputation, necessitate a product recall or result in claims against us that exceed our insurance coverage, thereby requiring us to pay significant damages;
|
•
|
future terror attacks, war, natural disasters or other catastrophic events beyond our control could negatively impact our business;
|
•
|
our operations are subject to environmental laws, and complying with those laws may cause us to incur significant costs; and
|
•
|
we are involved in various legal proceedings, the outcome of which may be unfavorable to us.
|
(a)
|
Disclosure Controls and Procedures. We carried out an evaluation, under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e) and 15d-15(e). Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures are effective as of the end of the period covered by this report, to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.
|
(b)
|
Changes in Internal Control over Financial Reporting. There have been no changes in our internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
|
(c)
|
The following table summarizes our purchases of our common stock for the quarter ended
January 3, 2015
.
|
Period
|
|
(a) Total Number of Shares Purchased (1)(2)
|
|
(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 Approximate Dollar Value) of Shares that May yet be Purchased Under the Plans or Programs (3)
|
|||||
September 28, 2014 - October 31, 2014
|
|
1,005,598
|
|
|
$
|
69.02
|
|
|
866,396
|
|
|
4,131,726
|
|
November 1, 2014 - November 30, 2014
|
|
320,431
|
|
|
74.84
|
|
|
195,300
|
|
|
3,936,426
|
|
|
December 1, 2014 - January 3, 2015
|
|
420,740
|
|
|
72.01
|
|
|
398,238
|
|
|
3,538,189
|
|
|
Total
|
|
1,746,769
|
|
|
$
|
70.81
|
|
|
1,459,934
|
|
|
3,538,189
|
|
(1)
|
Reflects purchases by the SECT of shares of Class B common stock from the Moog Inc. Retirement Savings Plan (RSP) as follows: 44,161 shares at $70.71 per share during October, 12,337 shares at $74.75 per share during November and 5,747 shares at $72.14 per share during December.
|
(2)
|
In connection with the exercise of equity based compensation awards, we accept delivery of shares to pay for the exercise price and withhold shares for tax withholding obligations. During October, there were 95,040 shares at $72.69 per share, in November, there were 112,794 shares at $75.22 per share and in December, there were 16,756 shares at $72.68 per share, in connection with the exercise of equity based awards.
|
(3)
|
In December 2011, the Board of Directors authorized a share repurchase program, which was amended in January 2014. The program permits the purchase of up to 4,000,000 shares of Class A or Class B common stock in open market or privately negotiated transactions at the discretion of management. In August 2014, the Board of Directors authorized an additional repurchase of up to 5,000,000 shares of Class A or Class B common stock under identical terms and conditions. During October, we purchased 866,396 Class A shares at an average price of $68.53 per share. In November, we purchased 193,300 Class A shares at an average price of $74.62 per share and 2,000 Class B shares at an average price of $75.58 per share. In December, we purchased 398,000 Class A shares at an average price of $71.98 per share and 238 Class B shares at an average price of $71.82 per share.
|
(a)
|
Exhibits
|
||
|
10.1
|
Supplemental Retirement Plan, as amended and restated, effective January 1, 2013, as amended May 8, 2013.
|
|
|
10.2
|
Moog Inc. Stock Employee Compensation Trust Agreement amended and restated as of August 13, 2014.
|
|
|
31.1
|
Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
31.2
|
Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
32.1
|
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
101
|
Interactive Date files (submitted electronically herewith)
|
(101.INS)
|
XBRL Instance Document
|
|
|
(101.SCH)
|
XBRL Taxonomy Extension Schema Document
|
|
|
(101.CAL)
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
(101.DEF)
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
(101.LAB)
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
(101.PRE)
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
Moog Inc.
|
|
|
|
|
|
|
|
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
|
Date:
|
February 3, 2015
|
|
By
|
/s/ John R. Scannell
|
|
|
|
|
|
John R. Scannell
|
|
|
|
|
|
Chairman Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
|
|
|
|
Date:
|
February 3, 2015
|
|
By
|
/s/ Donald R. Fishback
|
|
|
|
|
|
Donald R. Fishback
|
|
|
|
|
|
Vice President
Chief Financial Officer
(Principal Financial Officer)
|
|
|
|
|
|
|
|
Date:
|
February 3, 2015
|
|
By
|
/s/ Jennifer Walter
|
|
|
|
|
|
Jennifer Walter
|
|
|
|
|
|
Controller (Principal Accounting Officer)
|
|
|
|
|
|
|
|
Years of Service
|
|
(a) Total Combined Benefit Target
|
24
|
|
64%
|
23
|
|
63%
|
22
|
|
62%
|
21
|
|
61%
|
20
|
|
60%
|
19
|
|
59%
|
18
|
|
58%
|
17
|
|
57%
|
16
|
|
56%
|
15
|
|
55%
|
14
|
|
54%
|
13
|
|
53%
|
12
|
|
52%
|
11
|
|
51%
|
10
|
|
50%
|
To the Company:
|
Moog Inc.
Jamison Road
East Aurora, New York 14052
Attention: Gary Szakmary, Vice President and Chief Human Resources Officer
|
With a copy to:
|
Robert J. Olivieri, Esq.
Hodgson Russ LLP 140 Pearl Street, Suite 100 Buffalo, NY 14202 |
To the Trustee:
|
G. Wayne Hawk
1634 Hubbard Road East Aurora, NY 14052 |
1.
|
Employee welfare benefit plans (as defined in Section 3(1) of ERISA) sponsored or maintained by the Company or its Affiliates.
|
2.
|
Moog Inc. Retirement Savings Plan
|
3.
|
Moog Inc. Employees’ Retirement Plan
|
4.
|
Moog Inc. Amended and Restated 1998 Stock Option Plan
|
5.
|
Moog Inc. Amended and Restated 2003 Stock Option Plan
|
6.
|
Moog Inc. 2008 Stock Appreciation Rights Plan
|
7.
|
Moog Inc. Supplemental Retirement Plan
|
8.
|
Moog Inc. Plan to Equalize Retirement Income
|
9.
|
Moog Inc. Deferred Compensation Plan for Directors and Officers
|
10.
|
Moog Inc. Management Profit Sharing Plan
|
11.
|
Moog Inc. Employee Profit Sharing Plan
|
12.
|
Moog Inc. Extended Vacation Plan
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Moog Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in t
his report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that o
ccurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Moog Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in t
his report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that o
ccurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|