Moog is a worldwide designer, manufacturer, and integrator of precision motion control products and systems. The U.S.

government is Moogs biggest customer account for 35% of fiscal year 2010 revenue. Although there is a positive outlook in the commercial aerospace industry, 61% of Moogs revenue in its aircraft controls segment comes from the military, and with the defense budget expected to remain somewhat stagnant over the five years, this puts a lot of uncertainty to whether or not the company will see organic growth from this segment. Moogs revenue is concentrated in only a few areas. This lack of diversification is cause for concern. 40% of Moogs FY2010 revenue came from the Government and military defense budget. This reliance makes Moog vulnerable to changes in the US defense budget. For example, a week ago today, on January 7, 2011, the Wall Street Journal reported that US defense secretary Robert Gates plans to make $78 billion in military cuts. -the F-35 Lightning 2, the V-22 Osprey, and the amphibious landing craft programs are among the most recent string of budget cuts from the pentagon. Secretary Gates announced several cuts, totaling about $100 billion in hopes to fend off additional cuts from Congress as total spending levels were under scrutiny. The total defense budget is expected to increase just above inflation until 2015 when it levels off due to the expected pull out of troops in Afghanistan by 2014. The F-35 production has been delayed as well as about 25% of planned plane orders being cancelled all together. Another program being cancelled is the Marines amphibious landing craft which Moog would have supplied primary control components to. Gates also mentioned that he believe the US relies too heavily on private contractors and wants to see more development and production done within the military which could cause funding to certain programs to switch from private companies to military branches. Further pressure from Congress about deficit and budget concerns may cause more unexpected cuts in the future.