-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OQTrg3mG6LZuPzilOqAZ0qdAqE2AYs+lb+qmfkUJH9iXZAgsVQV8yTetLSfG/LaH SxdaXNxoyRTE47r/bz1mBw== 0000108312-97-000004.txt : 19970520 0000108312-97-000004.hdr.sgml : 19970520 ACCESSION NUMBER: 0000108312-97-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: WOODWARD GOVERNOR CO CENTRAL INDEX KEY: 0000108312 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRICAL INDUSTRIAL APPARATUS [3620] IRS NUMBER: 361984010 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-08408 FILM NUMBER: 97607105 BUSINESS ADDRESS: STREET 1: 5001 N SECOND ST STREET 2: P O BOX 7001 CITY: ROCKFORD STATE: IL ZIP: 61125-7001 BUSINESS PHONE: 8158777441 10-Q 1 10Q FILING SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q { X } QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended March 31, 1997 Commission File #0-8408 OR { } TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 WOODWARD GOVERNOR COMPANY (Exact name of registrant as specified in its charter) Delaware 36-1984010 (State or other jurisdiction of (I.R.S. Employer identification No.) incorporation or organization) 5001 North Second Street, Rockford, Illinois 61125-7001 (Address of principal executive offices) Registrant's telephone number - (815) 877-7441 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 X No As of April 30, 1997, 11,446,900 shares of common stock with a par value of 1.5625 cents per share were outstanding. WOODWARD GOVERNOR COMPANY FORM 10-Q For the Quarter Ended March 31, 1997 INDEX Description Part I. Financial Information Item 1. Financial Statements Statements of Consolidated Earnings for the Three Months Ended March 31, 1997 and 1996 Statements of Consolidated Earnings for the Six Months Ended March 31, 1997 and 1996 Consolidated Balance Sheets as of March 31, 1997 and September 30, 1996 Statements of Consolidated Cash Flows for the Six Months Ended March 31, 1997 and 1996 Notes to Consolidated Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Part II. Other Information Signatures WOODWARD GOVERNOR COMPANY AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED EARNINGS for the three months ended March 31,1997 and 1996 (in thousands except per share amounts) (Unaudited)
1997 1996 Net billings for products and services $106,546 $106,785 Costs and expenses: Cost of goods sold 79,708 80,343 Sales, service and administrative expenses 18,624 16,419 Interest expense $642 $879 Interest income (294) (206) Miscellaneous expense, net 980 1,328 1,767 2,440 Total costs and expenses 99,660 99,202 Earnings before income taxes and equity in loss of unconsolidated affiliate 6,886 7,583 Income taxes 2,686 3,033 Earnings before equity in loss of unconsolidated affiliate 4,200 4,550 Equity in loss of unconsolidated affiliate, net of tax (770) - Net earnings $3,430 $4,550 Net earnings per share $0.30 $0.39 Average shares outstanding 11,485 11,572 Cash dividends per share $0.2325 $0.2325 See accompanying notes to consolidated financial statements.
WOODWARD GOVERNOR COMPANY AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED EARNINGS for the six months ended March 31,1997 and 1996 (in thousands except per share amounts) (Unaudited)
1997 1996 Net billings for products and services $205,575 $194,927 Costs and expenses: Cost of goods sold 150,965 145,100 Sales, service and administrative expenses 35,267 31,444 Interest expense $1,212 $1,808 Interest income (390) (341) Miscellaneous expense, net 2,140 2,962 2,374 3,841 Total costs and expenses 189,194 180,385 Earnings before income taxes and equity in loss of unconsolidated affiliate 16,381 14,542 Income taxes 6,388 5,817 Earnings before equity in loss of unconsolidated affiliate 9,993 8,725 Equity in loss of unconsolidated affiliate, net of tax (1,425) - Net earnings $8,568 $8,725 Net earnings per share $0.74 $0.75 Average shares outstanding 11,516 11,591 Cash dividends per share $0.4650 $0.4650 See accompanying notes to consolidated financial statements.
WOODWARD GOVERNOR COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands of dollars)
MARCH SEPTEMBER 31,1997 30, 1996 (Unaudited) Assets Current assets: Cash and cash equivalents $14,005 $13,070 Accounts receivable, less allowance for losses of $2,841 for March and $2,755 for September 75,901 80,902 Inventories 95,051 92,135 Deferred income taxes 19,991 19,991 Total current assets 204,948 206,098 Property, plant and equipment, at cost: Land 5,884 6,218 Buildings and improvements 120,764 120,283 Machinery and equipment 192,495 182,680 Construction in progress 339 6,971 319,482 316,152 Less allowance for depreciation 209,627 201,939 Property, plant and equipment - net 109,855 114,213 Intangibles and other assets 10,821 9,919 Deferred income taxes 18,527 18,568 Total assets $344,151 $348,798 Liabilities and shareholders' equity Current liabilities: Short-term borrowings $21,651 $15,310 Current portion of long-term debt 4,862 4,862 Accounts payable and accrued expenses 51,409 61,597 Taxes on income 5,638 3,226 Total current liabilities 83,560 84,995 Long-term debt, less current portion 22,672 22,696 Other liabilities 33,112 33,112 Commitments and contingencies - - Shareholders' equity represented by: Preferred stock - - Common stock 190 190 Additional paid-in capital 13,192 13,165 Unearned stock plan compensation (14,647) (14,665) Currency translation adjustment 10,560 13,620 Retained earnings 210,782 207,392 220,077 219,702 Less treasury stock, at cost 15,270 11,707 204,807 207,995 Total liabilities and shareholders' equity $344,151 $348,798 See accompanying notes to consolidated financial statements.
WOODWARD GOVERNOR COMPANY AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED CASH FLOWS for the six months ended March 31, 1997 and 1996 (in thousands of dollars) (Unaudited)
1997 1996 Cash flows from operating activities: Net earnings $8,568 $8,725 Adjustments to reconcile net earnings to net cash provided (used) by operating activities: Depreciation and amortization 11,877 11,496 Deferred income taxes, noncurrent 40 42 Stock plan compensation expense 18 83 Changes in assets and liabilities: Accounts receivable 3,658 9,321 Inventories (4,071) (2,718) Current liabilities, other than short-term borrowings and current portion of long-term debt (6,591) (3,854) Equity in loss of unconsolidated affiliate 2,336 - Other, net (571) (601) Total adjustments 6,696 13,770 Net cash provided by operating activities 15,264 22,494 Cash flows from investing activities: Payments for purchase of property, plant and equipment (8,015) (9,614) Other (243) 573 Investment in unconsolidated affiliate (3,500) - Net cash (used) in investing activities (11,758) (9,041) Cash flows from financing activities: Cash dividends paid (5,359) (5,401) Proceeds from sale of treasury stock 184 436 Purchase of treasury stock (3,761) (1,479) Payments of long-term debt (24) (138) Short-term borrowings (payments) 6,553 (4,568) Tax benefit applicable to ESOP dividend 182 184 Net cash (used) in financing activities (2,225) (10,966) Effect of exchange rate changes on cash (346) (1,184) Net change in cash and cash equivalents 935 1,303 Cash and cash equivalents, beginning of year 13,070 12,451 Cash and cash equivalents, end of period $14,005 $13,754 SUPPLEMENTAL CASH FLOW INFORMATION: Interest paid $1,262 $1,833 Income taxes paid $2,369 $6,652 See accompanying notes to consolidated financial statements.
WOODWARD GOVERNOR COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The consolidated balance sheet as of March 31, 1997, and the statements of consolidated earnings and cash flows for the three and six month periods ended March 31, 1997 and 1996, have been prepared by the company without audit. The September 30, 1996 consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. Information furnished in this 10-Q report is based in part on approximations and is subject to year-end adjustment and audit. The figures do reflect all adjustments necessary, in the opinion of management, to present fairly the company's financial position as of March 31, 1997, and the results of its operations for the three and six month periods ended March 31, 1997 and 1996, and cash flows for the six months then ended. All such adjustments are of a normal and recurring nature. The statements have been prepared in accordance with accounting policies set forth in the company's 1996 annual report on Form 10-K and should be read in conjunction with the Notes to Consolidated Financial Statements therein. The statements of consolidated earnings for the three and six month periods ended March 31, 1997 are not necessarily indicative of the results to be expected for other interim periods or for the full year. Stock Split Fiscal year 1996 net earnings per share, average shares outstanding and cash dividends per share have been restated to reflect the four-for-one stock split effective February 1997. PART I - ITEM 2 WOODWARD GOVERNOR COMPANY AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Following an exceptionally strong first fiscal quarter, Woodward's financial performance moderated in the second quarter, with total net billings little changed from those of the same period a year ago. Just as we observed in our first quarter report that the 23% increase in net earnings for that period might not be matched in subsequent periods, we would not assume that the decline in net earnings for the second fiscal quarter represents the beginning of a new trend. Net billings for products and services in the quarter ended March 31, 1997 were $106,546,000, slightly below the $106,785,000 a year earlier. Although demand generally remained firm in most product lines, a few production delays and weakness in the European turbine market resulted in lower than expected billings. Reflecting our ongoing commitment to customer service and new product development, operating expenses increased. Total costs and expenses as a percentage of billings remained comparable to last year, although somewhat higher than expectations. Cost management remains a high corporate priority. For the second quarter of the fiscal year, earnings before the effect of the GENXONtm Power System joint venture (discussed further below) fell 8% to $4,200,000, or $.37 per share, compared with earnings of $4,550,000, or $.39 per share a year ago. Including our share of the GENXON loss, net of tax, of $770,000, or $.07 per share, net earnings were $3,430,000, or $0.30 per share. First Half Results A more representative picture of Woodward's financial performance is provided by results for the first half of fiscal 1997, as the company's management philosophy is that operating trends are more accurately measured over the long term. For the six-month period, net billings of products and services were $205,575,000, up 5% from $194,927,000 in fiscal 1996. Aircraft Controls' shipments rose 3%, to $86,801,000 from $84,313,000 last year. Industrial Controls' shipments of $118,774,000 increased 7% from last year's $110,614,000, even though a weak second quarter in the European turbine market and a strengthening U.S. dollar moderated the gains. Before our share of the GENXON loss, earnings for the first half of fiscal 1997 were $9,993,000, or $0.86 per share, up 15% from $8,725,000, or $0.75 per share a year ago. Including the GENXON loss ($1,425,000, or $0.12 per share), net earnings were $8,568,000, or $.74 per share, compared to $8,725,000, or $.75 per share last year. Operating Highlights Following a favorable reception from potential customers, GENXON accelerated efforts to develop its first advanced technology ultra-low emission combustion system, which it will offer with Woodward controls to the operators of fleets of installed, out-of-warranty industrial gas turbines. We view our share of the current loss as a strategic investment in a significant new market opportunity. Expectations are that revenues will start being generated in the next fiscal year to offset some of the expenses. Shortly after the end of the second quarter, Industrial Controls combined its Engine Controls and Turbomachinery business units into a single organization. The objectives of the combination are to pool technology, closely coordinate marketing and sales, and reduce costs in future years by eliminating duplication. As a result, we believe customer service will be improved, our competitiveness enhanced and, ultimately, financial performance improved. Balance Sheet Cash and cash equivalents increased to $14,005,000 at March 31, 1997 from $13,070,000 at September 30, 1996. Accounts receivable decreased from $80,902,000 at September 30, 1996 to $75,901,000 at March 31, 1997. Inventories increased from $92,135,000 at September 30, 1996 to $95,051,000 at March 31, 1997 due to the increased sales volume and a higher level of past due shipments. Property, plant and equipment - net decreased to $109,855,000 at March 31, 1997 from $114,213,000 at September 30, 1996, due to capital expenditures being less than depreciation. Intangibles and other assets increased from $9,919,000 at September 30, 1996 to $10,821,000 at March 31, 1997 due to the investment in the GENXONtm Power Systems joint venture recorded during fiscal 1997. Short term borrowings increased from $15,310,000 at September 30, 1996 to $21,651,000 at March 31, 1997. Accounts payable and accrued expenses decreased to $51,409,000 at March 31, 1997 from $61,597,000 at September 30, 1996 due in part to reductions in accounts payable and member benefit accruals. Currency translation adjustment decreased from $13,620,000 at September 30, 1996 to $10,560,000 at March 31, 1997 as a result of fluctuations in exchange rates. The company's estimated effective tax rate for the six months ended March 31, 1997 and 1996 was 39.0% and 40.0%, respectively. The effective tax rate for the fiscal year ended September 30, 1996 was 37.0%. This quarterly report may contain forward looking statements reflecting Woodward's current expectations. These statements involve risk and uncertainty. Actual future results may differ materially from expectations. PART II - OTHER INFORMATION Item 6(b) No form 8-K was filed for the quarter ended March 31, 1997. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. WOODWARD GOVERNOR COMPANY May 14, 1997 /s/ John A. Halbrook John A. Halbrook, President and Chief Executive Officer May 14, 1997 /s/ Stephen P. Carter Stephen P. Carter,Vice President, Chief Financial Officer and Treasurer EX-27 2 1997 FDS SCHEDULES
5 1000 3-MOS 6-MOS SEP-30-1997 SEP-30-1997 MAR-31-1997 MAR-31-1997 9007 9007 4998 4998 78742 78742 2841 2841 95051 95051 204948 204948 319482 319482 209627 209627 344151 344151 83560 83560 22672 22672 0 0 0 0 190 190 204617 204617 344151 344151 106546 205575 106546 205575 79708 150965 99660 189194 686 1750 0 0 642 1212 6886 16381 2686 6388 4200 9993 0 0 0 0 0 0 3430 8568 .30 .74 .30 .74
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