Operating Cycle: Consistent with industry practice, aerospace and defense related inventories, unbilled recoverable costs and profits on over-time contract receivables, customer advances, warranties and contract reserves include amounts relating to contracts having long production and procurement cycles, portions of which are not expected to be realized or settled within one year.

Foreign Currency Translation: Assets and liabilities of subsidiaries that prepare financial statements in currencies other than the U.S. dollar are translated using rates of exchange as of the balance sheet date and the statements of earnings are translated at the average rates of exchange for each reporting period.

Use of Estimates: The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates and assumptions.

Revenue Recognition: We recognize revenue from contracts with customers using an over-time, cost-to-cost method of accounting or at the point in time that control transfers to the customer. For additional discussion on revenue recognition, see Note 2, Revenue from Contracts with Customers.

Equity-Based Compensation: Our equity-based compensation plans allow for various types of equity-based incentive awards. The types and mix of these incentive awards are evaluated on an on-going basis and may vary based on our overall strategy regarding compensation. Equity-based compensation expense is based on awards that are ultimately expected to vest over the requisite service periods and are based on the fair value of the award measured on the grant date. Vesting requirements vary for directors, officers and key employees. In general, awards granted to officers and key employees principally vest over three years, in equal annual installments for time-based awards and in three years cliff vest for performance-based awards. We have elected to account for forfeitures when the forfeiture of the underlying awards occur. Equity-based compensation expense is included in selling, general and administrative expenses.

Allowance for Doubtful Accounts: The allowance for doubtful accounts is based on our assessment of the collectibility of customer accounts. The allowance is determined by considering factors such as historical experience, credit quality, age of the accounts receivable balances and current economic conditions that may affect a customer’s ability to pay.

Property, Plant and Equipment: Property, plant and equipment are stated at cost. Plant and equipment are depreciated principally using the straight-line method over the estimated useful lives of the assets, generally ranging from 15 to 40 years for buildings and improvements, 5 to 15 years for machinery and equipment and 3 to 10 years for computer equipment and software. Leasehold improvements are amortized on a straight-line basis over the term of the lease or the estimated useful life of the asset, whichever is shorter.

Goodwill: We test goodwill for impairment at the reporting unit level on an annual basis or more frequently if an event occurs or circumstances change that indicate that the fair value of a reporting unit is likely to be below its carrying amount. We also test goodwill for impairment when there is a change in reporting units.

We may elect to perform a qualitative assessment that considers economic, industry and company-specific factors for all or selected reporting units. If, after completing this assessment, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we proceed to a quantitative test. We may also elect to perform a quantitative test instead of a qualitative assessment for any or all of our reporting units.

Quantitative testing requires a comparison of the fair value of each reporting unit to its carrying value. We typically use the discounted cash flow method to estimate the fair value of our reporting units. The discounted cash flow method incorporates various assumptions, the most significant being projected revenue growth rates, operating margins and cash flows, the terminal growth rate and the weighted-average cost of capital. If the carrying value of the reporting unit exceeds its fair value, goodwill is considered impaired and any loss must be measured. To determine the amount of the impairment loss, the implied fair value of goodwill is determined by assigning a fair value to all of the reporting unit's assets and liabilities, including any unrecognized intangible assets, as if the reporting unit had been acquired in a business combination at fair value. If the carrying amount of the reporting unit goodwill exceeds the implied fair value of that goodwill, an impairment loss would be recognized in an amount equal to that excess.

Impairment of Long-Lived Assets: Long-lived assets, including acquired identifiable intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of those assets may not be recoverable. We use undiscounted cash flows to determine whether impairment exists and measure any impairment loss using discounted cash flows.

In 2020, we recorded impairment charges on long-lived assets primarily in our Aircraft Controls and Industrial Systems segments. These charges relate to property, plant and equipment, right-of-use-assets and intangibles assets that experienced significant decline in value due to economic impacts of the COVID-19 pandemic. These charges are included in long-lived asset impairment in the Consolidated Statements of Earnings.

In 2018, we recorded impairment charges in our Industrial Systems segment. These charges relate to intangible assets and equipment that will no longer be used as a result of restructuring actions taken for the wind pitch control business we exited. These charges are included in restructuring in the Consolidated Statements of Earnings.

Product Warranties: In the ordinary course of business, we warrant our products against defect 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.

Financial Instruments: Our financial instruments consist primarily of cash and cash equivalents, receivables, notes payable, accounts payable, long-term debt, interest rate swaps and foreign currency contracts. The carrying values for our financial instruments approximate fair value with the exception at times of long-term debt. We do not hold or issue financial instruments for trading purposes.

We carry derivative instruments on the Consolidated Balance Sheets at fair value, determined by reference to quoted market prices. The accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and, if so, the reason for holding it. Our use of derivative instruments is generally limited to cash flow hedges of certain interest rate risks and minimizing foreign currency exposure on foreign currency transactions, which are typically designated in hedging relationships, and intercompany balances, which are not designated as hedging instruments. Cash flows resulting from forward contracts are accounted for as hedges of identifiable transactions or events and classified in the same category as the cash flows from the items being hedged.

Recent Accounting Pronouncements Adopted



Standard	Description	Financial Statement Effect or Other Significant Matters
ASU no. 2016-02 Leases (and all related ASUs)	The standard requires most lease arrangements to be recognized in the balance sheet as lease assets and lease liabilities. The standard also requires additional disclosures about the leasing arrangements. The provisions of the standard are effective for fiscal years beginning after December 15, 2018 and interim periods within those years. Early adoption is permitted.	We adopted this standard using the modified retrospective method, without adjusting prior comparative periods. We recorded initial right-of-use (ROU) assets of $75,521 and lease liabilities of $79,187, which included reclassifying deferred rent as a component of the ROU asset on the Consolidated Balance Sheets. There were no material changes to our Consolidated Statements of Earnings or Consolidated Statements of Cash Flows. See Note 7 - Leases, for additional disclosure.
ASU no. 2016-02 Leases (and all related ASUs)		Date adopted: Q1 2020



Standard	Description	Financial Statement Effect or Other Significant Matters
ASU no. 2016-13 Measurement of Credit Losses on Financial Instruments	The standard replaces the incurred loss model with the current expected credit loss (CECL) model to estimate credit losses for financial assets measured at amortized cost and certain off-balance sheet credit exposures. The CECL model requires a Company to estimate credit losses expected over the life of the financial assets based on historical experience, current conditions and reasonable and supportable forecasts. The provisions of the standard are effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. Early adoption is permitted. The amendment requires a modified retrospective approach by recording a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption.	We evaluated the effect of this standard and determined that it will not have a material impact on our financial statements, disclosures, internal controls or processes.
		Planned date of adoption: Q1 2021

Beginning in the first quarter of 2020, we changed our method of accounting for the determination of the market-related value of assets for a class of assets within the qualified U.S. defined benefit plan (the plan). This class of assets is currently comprised solely of the fixed income funds asset class held in the portfolio for the plan and provides a natural hedge (liability-hedging assets) against the changes in the recorded amount of net periodic pension cost. Refer to Note 14 - Employee Benefit Plans for our fair value disclosure by asset classification. Our previous method of accounting was to calculate the market-related value of assets for all the plan’s assets recognizing investment gains and losses ratably over a five-year period. We have elected to use the fair value of our liability-hedging assets, which represent approximately 80% of the plan’s assets, to determine the market-related value of the assets beginning in the first quarter of 2020. This change in accounting principle is preferable as the recognition of the gains and losses on this class of assets will affect net periodic pension cost in the period in which they occur. No change is being made to the accounting principle for the other classes of pension assets, which represent the remaining 20% of the pension asset portfolio for the plan. The gains and losses for these other plan assets will continue to be amortized into earnings over a five-year period.

The change in accounting principle requires retrospective application and prospective disclosure. The tables below represent the impact of this change on the Consolidated Statements of Earnings and the Consolidated Statements of Comprehensive Income (Loss) for the fiscal years ended October 3, 2020, September 28, 2019 and September 29, 2018, respectively, and on the Consolidated Balance Sheets for the fiscal years ended October 3, 2020, September 28, 2019, September 29, 2018 and September 30, 2017, respectively. The change in accounting principle had no impact on the Consolidated Statements of Cash Flows for these periods.



	As Reported (With Change), October 3, 2020			Impact of Change			Without Change, October 3, 2020
Other	$	20,707		$	11,502		$	32,209
Earnings (loss) before income taxes	5,417			(11,502		)	(6,085		)
Income taxes (benefit)	(3,788		)	(2,714		)	(6,502		)
Net earnings attributable to Moog and noncontrolling interest	$	9,205		$	(8,788	)	$	417
Net earnings attributable to Moog	$	9,205		$	(8,788	)	$	417

Net earnings per share attributable to Moog
Basic	$	0.28		$	(0.27	)	$	0.01
Diluted	$	0.28		$	(0.27	)	$	0.01

Retirement liability adjustment	$	102,081		$	8,788		$	110,869
Other comprehensive income, net of tax	$	130,024		$	8,788		$	138,812
Comprehensive income (loss)	$	139,229		$	—		$	139,229
Comprehensive income (loss) attributable to Moog	$	139,229		$	—		$	139,229

The table below represents the impact of the change in accounting principle on the Consolidated Balance Sheet and Consolidated Statements of Shareholders’ Equity as of October 3, 2020.



	As Reported (With Change), October 3, 2020			Impact of Change			Without Change, October 3, 2020
Shareholders’ equity
Retained earnings (loss)	$	2,112,734		$	(4,199	)	$	2,108,535
Accumulated other comprehensive income (loss)	(285,453		)	4,199			(281,254		)
Total shareholders’ equity	$	1,243,083		$	—		$	1,243,083



	As Previously Reported, September 28, 2019			Impact of Change			As Reported (With Change), September 28, 2019
Other	$	11,699		$	6,806		$	18,505
Earnings (loss) before income taxes	233,758			(6,806		)	226,952
Income taxes (benefit)	54,010			(1,606		)	52,404
Net earnings attributable to Moog and noncontrolling interest	$	179,748		$	(5,200	)	$	174,548
Net earnings attributable to Moog	$	179,748		$	(5,200	)	$	174,548

Net earnings per share attributable to Moog
Basic	$	5.16		$	(0.15	)	$	5.01
Diluted	$	5.11		$	(0.15	)	$	4.96

Retirement liability adjustment	$	(18,006	)	$	5,200		$	(12,806	)
Other comprehensive income (loss), net of tax	$	(47,885	)	$	5,200		$	(42,685	)
Comprehensive income (loss)	$	131,863		$	—		$	131,863
Comprehensive income (loss) attributable to Moog	$	131,863		$	—		$	131,863



	As Previously Reported, September 28, 2019			Impact of Change			As Reported (With Change), September 28, 2019
Shareholders’ equity
Retained earnings (loss)	$	2,133,328		$	(4,589	)	$	2,128,739
Accumulated other comprehensive income (loss)	(420,066		)	4,589			(415,477		)
Total shareholders’ equity	$	1,322,481		$	—		$	1,322,481



	As Previously Reported, September 29, 2018		Impact of Change			As Reported (With Change), September 29, 2018
Other	$	6,950	$	1,658		$	8,608
Earnings (loss) before income taxes	183,837		(1,658		)	182,179
Income taxes (benefit)	87,209		(391		)	86,818
Net earnings attributable to Moog and noncontrolling interest	$	96,628	$	(1,267	)	$	95,361
Net earnings attributable to Moog	$	96,507	$	(1,267	)	$	95,240

Net earnings per share attributable to Moog
Basic	$	2.71	$	(0.04	)	$	2.67
Diluted	$	2.68	$	(0.04	)	$	2.64

Retirement liability adjustment	$	26,757	$	1,267		$	28,024
Other comprehensive income, net of tax	$	10,357	$	1,267		$	11,624
Comprehensive income (loss)	$	59,908	$	—		$	59,908
Comprehensive income (loss) attributable to Moog	$	59,817	$	—		$	59,817



	As Previously Reported, September 29, 2018			Impact of Change			As Reported (With Change), September 29, 2018
Shareholders’ equity
Retained earnings	$	1,973,514		$	611		$	1,974,125
Accumulated other comprehensive income (loss)	(372,181		)	(611		)	(372,792		)
Total shareholders’ equity	$	1,224,986		$	—		$	1,224,986



	As Previously Reported, September 30, 2017			Impact of Change			As Reported (With Change), September 30, 2017
Shareholders’ equity
Retained earnings	$	1,847,819		$	1,878		$	1,849,697
Accumulated other comprehensive income (loss)	(335,491		)	(1,878		)	(337,369		)
Total shareholders’ equity	$	1,214,304		$	—		$	1,214,304