-----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, Lp0/lbLCs0nFSHsg4MxlYadnAAPw4X+OwGbMpFj8PA+QwG2rkdb8myhVJos9fd/m rsdErzkKy0f3Z+l/oRMfVQ== 0000108312-00-000007.txt : 20000208 0000108312-00-000007.hdr.sgml : 20000208 ACCESSION NUMBER: 0000108312-00-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000204 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: SEC FILE NUMBER: 000-08408 FILM NUMBER: 524632 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 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) { X } QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 1999 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 0-8408 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) (815) 877-7441 (Registrant's telephone number, including area code) 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 APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes... No... As of January 31, 2000, 11,231,647 shares of common stock with a par value of $.00875 cents per share were outstanding. WOODWARD GOVERNOR COMPANY FORM 10-Q For the Quarter Ended December 31, 1999 INDEX Description Part I. Financial Information Item 1. Financial Statements Statements of Consolidated Earnings for the three months ended December 31, 1999 and 1998 Consolidated Balance Sheets as of December 31, 1999 and September 30, 1999 Statements of Consolidated Cash Flows for the three months ended December 31, 1999 and 1998 Notes to Consolidated Financial Statements Item 2. Management 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 December 31, 1999 and 1998 (in thousands except per share amounts) (Unaudited)
1999 1998 Net billings for products and services $133,592 $144,908 Costs and expenses: Cost of goods sold 99,653 110,015 Sales, general, and administrative expenses 18,521 19,850 Amortization of intangible assets 1,667 1,705 Interest expense 2,809 3,241 Interest income (174) (168) Other expense--net 1,002 939 Total costs and expenses 123,478 135,582 Earnings before income taxes and equity in loss of unconsolidated affiliate 10,114 9,326 Income taxes 4,045 3,730 Earnings before equity in loss of unconsolidated affiliate 6,069 5,596 Equity in loss of unconsolidated affiliate, net of tax 62 392 Net earnings $6,007 $5,204 Basic earnings per share $ .53 $ 0.46 Diluted earnings per share $ .53 $ 0.46 Weighted-average number of basic shares outstanding 11,274 11,299 Weighted-average number of diluted shares outstanding 11,321 11,310 Cash dividends per share $.2325 $.2325 See accompanying Notes to Consolidated Financial Statements.
WOODWARD GOVERNOR COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands of dollars)
DECEMBER SEPTEMBER 31, 1999 30, 1999 (Unaudited) Assets Current assets: Cash and cash equivalents $9,398 $10,449 Accounts receivable, less allowance for losses of $4,265 for December and $4,417 for September 96,362 115,517 Inventories 107,386 104,257 Deferred income taxes 17,221 17,221 Total current assets 230,367 247,444 Property, plant, and equipment, at cost: Land 6,161 6,100 Buildings and improvements 129,086 128,668 Machinery and equipment 233,591 227,611 Construction in progress 3,077 3,534 371,915 365,913 Less allowance for depreciation 246,672 241,791 Property, plant, and equipment - net 125,243 124,122 Intangibles - net 155,062 156,802 Other assets 4,179 4,287 Deferred income taxes 18,017 18,009 Total assets $532,868 $550,664 Liabilities and shareholders' equity Current liabilities: Short-term borrowings $20,196 $7,303 Current portion of long-term debt 24,900 34,650 Accounts payable and accrued expenses 57,847 76,772 Taxes on income 3,461 4,327 Total current liabilities 106,404 123,052 Long-term debt, less current portion 135,000 139,000 Other liabilities 46,635 46,620 Commitments and contingencies - - Shareholders' equity represented by: Preferred stock, par value $.003 per share, authorized 10,000 shares, no shares issued - - Common stock, par value $.00875 per share, authorized 50,000 shares, issued 12,160 shares 106 106 Additional paid-in capital 13,266 13,300 Unearned ESOP compensation (7,540) (7,450) Accumulated other comprehensive earnings 8,226 9,351 Retained earnings 250,883 247,420 264,941 262,727 Less treasury stock, at cost 20,112 20,735 Total shareholders' equity 244,829 241,992 Total liabilities and shareholders' equity $532,868 $550,664 See accompanying Notes to Consolidated Financial Statements.
WOODWARD GOVERNOR COMPANY AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED CASH FLOWS for the three months ended December 31, 1999 and 1998 (in thousands of dollars) (Unaudited)
1999 1998 Cash flows from operating activities: Net earnings $ 6,007 $ 5,204 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 7,639 8,470 Net loss on sale of property, plant, and equipment 30 - Deferred income taxes (8) (78) ESOP compensation expense (90) (57) Equity in loss of unconsolidated affiliate 102 643 Changes in operating assets and liabilities: Accounts receivable 18,573 5,968 Inventories (3,521) 959 Current liabilities, other than short- term borrowings and current portion of long-term debt (19,583) (22,412) Other--net 44 125 Total adjustments 3,186 (6,382) Net cash provided by (used in) operating 9,193 (1,178) activities Cash flows from investing activities: Payments for purchase of property, plant, and equipment (7,581) (5,316) Proceeds from sale of property, plant, and equipment 229 45 Investment in unconsolidated affiliate - (575) Other - 725 Net cash used in investing activities (7,352) (5,121) Cash flows from financing activities: Cash dividends paid (2,621) (2,627) Proceeds from sales of treasury stock 588 - Purchases of treasury stock - - Net proceeds from (payments on) borrowings under revolving lines (36,902) 14,279 Proceeds of long-term debt 40,000 - Payments of long-term debt (3,750) - Tax benefit applicable to ESOP dividend 77 95 Net cash provided by (used in) financing activities (2,608) 11,747 Effect of exchange rate changes on cash (284) 150 Net change in cash and cash equivalents (1,051) 5,598 Cash and cash equivalents, beginning of year 10,449 12,426 Cash and cash equivalents, end of year $ 9,398 $ 18,024 Supplemental cash flow information: Interest expense paid $ 3,471 $ 2,982 Income taxes paid $ 4,987 $ 6,057 See accompanying Notes to Consolidated Financial Statements.
WOODWARD GOVERNOR COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) The consolidated balance sheet as of December 31, 1999, and the statements of consolidated earnings and the statements of consolidated cash flows for the three month periods ended December 31, 1999 and 1998, were prepared by the company without audit. The September 30, 1999, consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. Information in this 10-Q report is based in part on estimates and is subject to year-end adjustments and audit. In our opinion, the figures reflect all adjustments necessary to present fairly the company's financial position as of December 31, 1999, and the results of its operations and its cash flows for the three-month periods ended December 31, 1999 and 1998. All such adjustments were of a normal and recurring nature. The statements were prepared following the accounting policies described in the company's 1999 annual report and Form 10-K and should be read with the Notes to Consolidated Financial Statements on pages 26-33 of the 1999 annual report. The statements of consolidated earnings for the three-month period ended December 31, 1999 are not necessarily indicative of the results to be expected for other interim periods or for the full year. (2) Earnings per share:
1999 1998 In thousands, except per share amounts, for the three months ended December 31, Net earnings (A) $ 6,007 $ 5,204 Determination of shares, in thousands: Weighted-average shares of common stock outstanding (B) 11,274 11,299 Assumed exercise of stock options 47 11 Weighted-average shares of common stock outstanding assuming dilution, in thousands (C) 11,321 11,310 Basic earnings per share (A/B) $ 0.53 $ 0.46 Diluted earnings per share (A/C) $ 0.53 $ 0.46
The following stock options were outstanding during the three months ended December 31, 1999 and 1998 but were not included in the computation of diluted earnings per share because the options' exercise prices were greater than the average market price of the common shares during the quarters. In thousands for the three months ended December 31,
1999 1998 Options 220,375 383,041 Weighted average exercise price $32.34 $28.76
(3) Inventories:
December September In thousands, 31, 1999 30, 1999 Raw materials $2,291 $2,452 Component parts 66,500 64,059 Work in process 28,168 26,955 Finished goods 12,636 12,021 109,594 105,487 Less progress payments (2,208) (1,230) $107,386 $104,257
(4) Included in accounts payable and accrued expenses are accounts payable of $18,383,000 at December 31, 1999, and $20,923,000 at September 30, 1999. Also included in accounts payable and accrued expenses are accrued restructuring expenses of $323,000 at December 31, 1999, and $475,000 at September 30, 1999. Accrued restructuring expense and its decrease is due to member termination benefits. (5) Foreign currency translation adjustments are accumulated with other comprehensive earnings as a separate component of shareholders' equity. We have no other components of accumulated other comprehensive earnings. The company's total comprehensive earnings were as follows:
In thousands for the three months ended December 31, 1999 1998 Net earnings $6,007 $5,204 Other comprehensive earnings (loss) (1,125) 1,000 Total comprehensive earnings $4,882 $6,204
(6) Segment information:
In thousands for the three months ended December 31, 1999 1998 Aircraft Engine Systems: External net billings $64,731 $80,513 Intersegment billings 228 346 Segment earnings 4,456 13,315 Segment assets 319,563 316,904 Industrial Controls: External net billings $46,373 $46,550 Intersegment billings 5,284 6,207 Segment earnings 10,815 5,115 Segment assets 116,201 141,074 Other Segments: External net billings $22,488 17,845 Intersegment billings 734 122 Segment earnings (losses) 1,354 (1,746) Segment assets 43,569 32,473
Industrial Controls' intersegment billings for the year ended September 30, 1999, have been recast to reflect a more accurate level of intersegment activity. For the full year, intersegment billings previously reported as $13,297,000, have been restated to $26,857,000. Intersegment billings for the three months ended December 31, as reflected above, are shown on a comparable basis. This change did not affect other segment disclosures reported in the 1999 consolidated financial statements. The difference between the total of segment earnings (losses) and the statements of consolidated earnings follows:
In thousands for the three months ended December 31, 1999 1998 Total earnings for reportable segments $15,271 $18,430 Other segments' earnings (losses) 1,354 (1,746) Interest expense and interest income (2,635) (3,073) Unallocated corporate expenses (3,876) (4,285) Consolidated earnings before income taxes and equity in loss of unconsolidated affiliate $10,114 $9,326
PART I - ITEM 2 WOODWARD GOVERNOR COMPANY AND SUBSIDIARIES MANAGEMENT DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION We have prepared the following discussion and analysis to help you better understand our results of operations and financial condition. This discussion should be read with the consolidated financial statements, including the notes. RESULTS OF OPERATIONS Our results of operations are discussed and analyzed by reportable segment. We have two reportable segments - Aircraft Engine Systems and Industrial Controls. Aircraft Engine Systems provides fuel control systems and components primarily to original equipment manufacturers of aircraft engines. Industrial Controls provides fuel control systems and components primarily to original equipment manufacturers of industrial engines and turbines. Our other operations include Global Services and Automotive Products. Global Services focuses on providing control systems and related services to industrial engine users in retrofit situations. Automotive Products focuses on products for the non- automotive small engine markets that require low-cost, high- volume, high-reliability manufacturing processes characteristic of suppliers to the automotive industry. The segment earnings reported for these segments in the discussion and analysis that follows do not reflect interest expense, interest income and allocations of corporate expenses, and are before income taxes and equity in loss of unconsolidated affiliate. These other items are separately discussed and analyzed. Aircraft Engine Systems In thousands for the three months ended December 31, 1999 1998 External net billings $64,731 $80,513 Segment earnings 4,456 13,315
External net billings of Aircraft Engine Systems decreased 20% in the first quarter of fiscal year 2000 as compared to the first quarter of fiscal year 1999. This decrease was primarily related to reductions in sales volume as compared to last year. Our billings vary period to period and we do not believe this decrease reflects an ongoing trend. Last year our first quarter was relatively strong, in part due to shipments that were scheduled for delivery in the fourth quarter of fiscal year 1998, but were delayed until the first quarter of fiscal year 1999. With improvements in delivery performance, we did not have similar shipments this year. In addition, we believe the first quarter this year reflects some inventory reductions by our customers. We believe Aircraft Engine Systems' billings will strengthen over the final three quarters of fiscal year 2000. Segment earnings of Aircraft Engine Systems decreased 67% in the first quarter of fiscal year 2000 as compared to the first quarter of fiscal year 1999. About 29% of our decrease in earnings can be directly attributed to the decrease in net billings. The remaining decrease in segment earnings is primarily related to the relatively high level of fixed costs in this segment and an increase in engineering expenses of approximately $1 million, which we believe will benefit future periods. Industrial Controls In thousands for the three months ended December 31, 1999 1998 External net billings $ 46,373 $ 46,550 Segment earnings 10,815 5,115
Segment earnings for Industrial Controls increased 111% in the first quarter of fiscal year 2000 as compared to the first quarter of fiscal year 1999. This improvement in earnings primarily reflects cost reductions we implemented during 1999, at the time of the strategic refocusing of Industrial Controls and Global Services. We are encouraged that fuel control systems have become a focal point of efforts to improve engine and turbine efficiency and emissions profiles, while lowering capital and operating costs. Our goal is to provide the needed solutions by developing innovative products with improved functionality and cost, including integrated products that encompass more of the total fuel delivery system. Other Segments In thousands for the three months ended December 31, 1999 1998 External net billings $ 22,488 $ 17,845 Segment earnings (losses) 1,354 (1,746)
External net billings of other segments increased 26% in the first quarter of fiscal year 2000 as compared to the first quarter of fiscal year 1999. This increase primarily resulted from strong demand for our pre-engineered control systems for gas turbine retrofit applications. Billings for small industrial engines in the first quarter this year were about the same as the first quarter last year. Our segment results improved in the first quarter of fiscal year 2000 as compared to the first quarter of fiscal year 1999 primarily because of higher billings and cost reductions in Global Services. These improvements were offset somewhat by higher expenses in Automotive Products, primarily associated with a more fully-developed selling and administrative infrastructure for conducting business, and the development of new products. We are pleased with the market's acceptance of our new products, several of which we will begin shipping later during fiscal year 2000. Expenses Excluded From Segment Earnings In thousands for the three months ended December 31, 1999 1998 Interest expense $ 2,809 $ 3,241 Interest income (174) (168) Unallocated corporate expenses 3,876 4,285
Interest expense decreased in the first quarter of fiscal year 2000 as compared to the first quarter of fiscal year 1999 because we had lower levels of average outstanding debt in the first quarter this year than we did last year. Corporate expenses reflect normal variations in the level of corporate-sponsored activities that occur during a period. Net Earnings In thousands, except per share amounts, for the three months ended December 31, 1999 1998 Earnings before income taxes and equity in loss of unconsolidated affiliate $ 10,114 $ 9,326 Income taxes 4,045 3,730 Equity in loss of unconsolidated affiliate, net of tax 62 392 Net earnings $ 6,007 $ 5,204 Basic earnings per share $ .53 $ .46 Diluted earnings per share $ .53 $ .46
The increase in earnings before income taxes and equity in loss of unconsolidated affiliate, which consists of the segment earnings and expenses excluded from segment earnings included in the preceding tables and discussion, resulted in an increase in income taxes in the first quarter of fiscal year 2000 as compared to the first quarter of fiscal year 1999. Income taxes were provided at the same effective rate. The equity in loss of unconsolidated affiliate reflects our share of the losses generated by GENXON(tm) Power Systems, LLC, a 50/50 joint venture. Since its inception, most of the activities and costs incurred were directly related to product development. GENXON(tm) reduced the amount of development activities in the first quarter of fiscal year 2000 as compared to the first quarter of fiscal year 1999. GENXON(tm) is focused on the retrofit market for installed, out-of-warranty industrial gas turbines, which we believed would develop before the original equipment manufacturers markets developed. However, the original equipment manufacturers have shown strong interest in the technology and we are assessing the direction of that market. In the meantime, GENXON(tm)'s costs will be contained approximately at or below the levels of those incurred in 1999. Basic and diluted earnings per share both increased about 15% on a net earnings increase of 15% in the first quarter of fiscal year 2000 as compared to the first quarter of fiscal year 1999. Changes in the weighted-average shares of common stock outstanding both before and after the assumed exercise of outstanding stock options were relatively small. FINANCIAL CONDITION Our discussion and analysis of our financial condition is presented by segment for total segment assets, which consists of accounts receivable, inventories, property, plant, and equipment- net and intangibles-net. We also discuss and analyze our working capital, noncurrent liabilities and shareholders' equity and cash flows. Together, this discussion and analysis will help you assess our liquidity and capital resources, as well as understand changes in our financial condition.
Assets December September In thousands, 31, 1999 30, 1999 Aircraft Engine Systems $ 319,563 $ 330,299 Industrial Controls 116,201 126,344 Other segments 43,569 40,129 Unallocated corporate property, plant, and equipment-net and intangibles-net 4,720 3,926 Other unallocated assets 48,815 49,966 Total assets $ 532,868 $ 550,664
Aircraft Engine Systems total segment assets at December 31, 1999 were 3% lower than at September 30, 1999. This decrease was primarily related to reductions in accounts receivable, which was somewhat offset by increases in inventory. Accounts receivable decreased because of lower billing levels in the first quarter of fiscal year 2000 as compared to the fourth quarter of fiscal year 1999. Inventory increased in anticipation of higher shipment levels in future periods. Industrial Controls total segment assets at December 31, 1999 were 8% lower than at September 30, 1999. This decrease was primarily related to reductions in accounts receivable attributable to lower billing levels in the first quarter of fiscal year 2000 as compared to the latter part of the fourth quarter of fiscal year 1999. Total segment assets for other segments increased 9% from September 30, 1999 to December 31, 1999. This increase was primarily related to higher accounts receivable balances following two strong shipment quarters relative to prior quarters.
Selected Other Balance Sheet Items December September In thousands, 31, 1999 30, 1999 Total assets $532,868 $550,664 Working capital (current assets less current liabilities) 123,963 124,392 Long-term debt, less current portion 135,000 139,000 Other liabilities 46,635 46,620 Commitments and contingencies - - Shareholders' equity 244,829 241,992
Our balance sheet remained strong at December 31, 1999. Changes in our balance sheet from September 30, 1999 included a reduction in long-term debt while maintaining working capital at a relatively stable level, made possible by cash flows generated from operations. We are currently involved in matters of litigation arising from the normal course of business, including certain environmental and product liability matters. Further discussion of these matters is in our Annual Report for the year ended September 30, 1999 in Note P to the Consolidated Financial Statements on page 32.
Selected Cash Flow Items In thousands for the three months ended December 31, 1999 1998 Net cash provided by (used in) operating activities $ 9,193 $ (1,178) Net cash used in investing activities (7,352) (5,121) Net cash provided by (used in) financing activities (2,608) 11,747
Net cash flow from operations in the first quarter of fiscal year 2000 improved over the first quarter of fiscal year 1999 by more than $10 million. This improvement primarily related to changes in operating assets and liabilities in the first quarter this year as compared to last year. The most significant change as compared to last year was related to accounts receivable reductions. Accounts receivable collections outpaced billings to a higher degree in the first quarter of fiscal year 2000 as compared to the first quarter of fiscal year 1999. Net cash flow used in investing activities were higher in the first quarter of fiscal year 2000 as compared to the first quarter of fiscal year 1999 primarily because of purchases of property, plant, and equipment. In the first quarter of fiscal year 2000, we capitalized about $450 thousand of software development costs. The remaining difference is related to both normal quarterly variations in capital expenditure rates and an expectation of higher capital expenditures for the full fiscal year 2000 as compared to fiscal year 1999. Net cash flow for financing activities reflect our ability to reduce debt in the first quarter of fiscal year 2000 as a result of the positive cash flow from operations in excess of investment activities. Last year, we were in a net borrowing situation in the first quarter due to use of cash for operations and for investment activities. Future cash flow from operations and available revolving lines of credit are expected to be adequate to meet the investing and financing cash requirements of our existing business during the next twelve months. However, it is possible business acquisitions could be made that would require amendments to existing debt agreements and the need to obtain additional financing. OTHER MATTERS Market Risks Interest on long-term debt is sensitive to changes in interest rates. Also, assets, liabilities and commitments that are to be settled in cash and are denominated in foreign currencies for transaction purposes are sensitive to changes in currency exchange rates. These market risks are discussed more fully in our Annual Report and Form 10-K for the year ended September 30, 1999 in the Management Discussion and Analysis of Results of Operations and Financial Condition on page 20. Year 2000 We recognized the potential problems associated with the year 2000 and formed a task force to address this risk in May 1997. We believe corrective efforts undertaken adequately addressed year 2000 issues. There have been no significant issues affecting our products or internal systems since the change in year to 2000. Furthermore, we are not aware of, and do not expect, any year 2000 issues with our partners or suppliers that will cause significant disruption to our operations. Although we do not expect any significant issues, the task force will remain in force until March 2000. We have applied available and beneficial provisions of the federal "Year 2000 Information and Readiness Disclosure Act." Comments above should be regarded as being "Year 2000 Statements" and "Year 2000 Readiness Disclosures," as applicable, within the meaning of, and subject to, the exclusions prescribed by the Act. Recent Accounting Pronouncements In March 1998, the American Institute of Certified Public Accountants issued Statement of Position 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use." This statement provides guidance on accounting for the costs of software developed or obtained for internal use and is effective beginning October 1, 1999. As a result, we are now capitalizing certain software development costs that we expensed in the past. We have estimated that the effect of complying with this statement for planned projects will be to increase net earnings in 2000 by approximately $650 thousand. Through December 31, 1999, we have capitalized approximately $450 thousand of software development costs. In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities." Following a subsequent deferral of the original implementation date, it is effective in fiscal year 2001. This statement establishes accounting and reporting standards for derivative instruments and for hedging activities. Among other requirements, it requires that an entity recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative. The company currently does not have any derivative instruments and does not expect this new statement to have any significant impact on our consolidated financial statements. PART II - OTHER INFORMATION Item 6 a) Exhibits 27. Financial data schedule b) No form 8-K was filed for the quarter ended December 31, 1999. 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 February 4, 2000 /s/ John A. Halbrook John A. Halbrook, President and Chief Executive Officer February 4, 2000 /s/ Stephen P. Carter Stephen P. Carter, Vice President, Chief Financial Officer and Treasurer EX-27 2
5 This schedule contains summary financial information extracted from the Consolidated Financial Statements for the three months ended December 31, 1999, and are included in their entirety by reference in the financial statements. 1000 3-MOS SEP-30-2000 DEC-31-1999 9398 0 100627 4265 107386 230367 371915 246672 532868 106404 135000 0 0 106 244723 532868 133592 133592 99653 118174 2495 0 2809 10114 4045 0 0 0 0 6007 .53 .53
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