-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, rojIjyPTTCpO61wBDHJesXHEa0wqPsaWF2wqH1AdVznUgdri1+8E2Fp24XSf1RqU PXWKYncD9FNTfCH96M7CBw== 0000108312-94-000014.txt : 19940816 0000108312-94-000014.hdr.sgml : 19940816 ACCESSION NUMBER: 0000108312-94-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940815 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WOODWARD GOVERNOR CO CENTRAL INDEX KEY: 0000108312 STANDARD INDUSTRIAL CLASSIFICATION: 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: 94543883 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 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 June 30, 1994 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 July 31, 1994, 2,926,239 shares of common stock with a par value of 6.25 cents per share were outstanding. WOODWARD GOVERNOR COMPANY FORM 10-Q For the Quarter Ended June 30, 1994 INDEX Description Part I. Financial Information Item 1. Financial Statements Statements of Consolidated Earnings for the Three Months Ended June 30, 1994 and 1993 Statements of Consolidated Earnings for the Nine Months Ended June 30, 1994 and 1993 Consolidated Balance Sheets June 30, 1994 and September 30, 1993 Statements of Consolidated Cash Flows for the Nine Months Ended June 30, 1994 and 1993 Note 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 June 30, 1994 and 1993 (in thousands except per share amounts) (Unaudited) 1994 1993 ---------- ---------- (restated) Net billings for products and services $83,771 $81,959 ---------- ---------- Costs and expenses: Cost of goods sold 62,292 59,603 Sales, service and administrative expenses 13,843 13,644 Other (income) and expense, net: Interest (income) ($283) ($195) Interest expense 846 442 Restructuring expense 0 3,487 Miscellaneous expense, net 1,077 1,640 984 4,718 --------- ---------- -------- ---------- Total costs and expenses 77,775 77,965 ---------- ---------- Earnings before income taxes and cumulative effect of accounting changes 5,996 3,994 Income taxes 2,579 1,558 ---------- ---------- Earnings before cumulative effect of accounting changes 3,417 2,436 Cumulative effect of accounting changes - - ---------- ---------- Net earnings $3,417 $2,436 ---------- ---------- Net earnings per share: Before cumulative effect of accounting changes $1.16 $0.81 Cumulative effect of accounting changes - - ---------- ---------- Net earnings per share $1.16 $0.81 ---------- ---------- Average shares outstanding 2,946 2,973 ---------- ---------- Cash dividends per share $0.93 $0.93 ---------- ---------- See accompanying note to consolidated financial statements.
WOODWARD GOVERNOR COMPANY AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED EARNINGS for the nine months ended June 30, 1994 and 1993 (in thousands except per share amounts) (Unaudited) 1994 1993 ---------- ---------- (restated) Net billings for products and services $239,584 $242,441 ---------- ---------- Costs and expenses: Cost of goods sold 177,519 178,643 Sales, service and administrative expenses 40,033 39,511 Other (income) and expense, net: Interest (income) ($595) ($578) Interest expense 2,962 1,926 Restructuring expense 0 3,487 Miscellaneous expense, net 3,010 5,377 3,350 8,185 --------- ---------- -------- ---------- Total costs and expenses 222,929 226,339 ---------- ---------- Earnings before income taxes and cumulative effect of accounting changes 16,655 16,102 Income taxes 7,162 6,280 ---------- ---------- Earnings before cumulative effect of accounting changes 9,493 9,822 Cumulative effect of accounting changes, net of tax benefit of $11,360 - (17,417) ---------- ---------- Net earnings (loss) $9,493 ($7,595) ---------- ---------- Net earnings (loss) per share: Before cumulative effect of accounting changes $3.22 $3.30 Cumulative effect of accounting changes, net of tax - (5.86) ---------- ---------- Net earnings (loss) per share $3.22 ($2.56) ---------- ---------- Average shares outstanding 2,946 2,973 ---------- ---------- Cash dividends per share $2.79 $2.79 ---------- ---------- See accompanying note to consolidated financial statements.
WOODWARD GOVERNOR COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (in thousands) June September 30, 1994 30, 1993 ----------- ------------- (Unaudited) Assets Current assets: Cash and cash equivalents $11,451 $10,497 Accounts receivable, less allowance for losses of $2,389 for June and $1,989 for September 58,970 64,024 Inventories 84,687 83,128 Deferred income taxes 14,549 12,519 ------------- ------------- Total current assets 169,657 170,168 ------------- ------------- Property, plant and equipment, at cost: Land 6,377 6,156 Buildings and improvements 142,328 140,780 Machinery and equipment 173,275 158,043 Construction in progress 2,834 3,792 ------------- ------------- 324,814 308,771 Less allowance for depreciation 185,383 164,755 ------------- ------------- Property, plant and equipment - net 139,431 144,016 Intangibles and other assets 8,510 5,887 Deferred income taxes 12,391 12,390 ------------- ------------- Total assets $329,989 $332,461 ------------- ------------- Liabilities and Shareholders' Equity Current liabilities: Short-term borrowings $16,795 $18,123 Current portion of long-term debt 4,046 3,889 Accounts payable and accrued expenses 35,173 35,915 Taxes on income 5,009 4,432 ------------- ------------- Total current liabilities 61,023 62,359 ------------- ------------- Long-term debt, less current portion 36,711 36,246 Other liabilities 27,634 27,634 Commitments and contingencies - - Shareholders' equity represented by: Preferred stock - - Common stock 190 190 Additional paid-in capital 13,887 13,884 Unearned stock plan compensation (21,915) (22,327) Currency translation adjustment 12,540 12,786 Retained earnings 209,490 207,924 ------------- ------------- 214,192 212,457 Less treasury stock, at cost 9,571 6,235 ------------- ------------- 204,621 206,222 ------------- ------------- Total liabilities and shareholders' equity $329,989 $332,461 ------------- ------------- See accompanying note to consolidated financial statements.
WOODWARD GOVERNOR COMPANY AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED CASH FLOWS FOR THE NINE MONTHS ENDED JUNE 30, 1994 AND 1993 (in thousands of dollars) (Unaudited) 1994 1993 ----------- ----------- (restated) Cash flows from operating activities: Net earnings (loss) $9,493 ($7,595) ----------- ----------- Adjustments to reconcile net earnings to net cash provided (used) by operating activities: Cumulative effect of accounting changes, net of tax - 17,417 Depreciation 20,602 19,756 Deferred income taxes, noncurrent 0 (42) Stock plan compensation expense 412 605 Changes in assets and liabilities: Accounts receivable 9,019 18,443 Inventories 2,899 (5,403) Current liabilities, other than short-term borrowings and current portion of long-term debt (5,013) (9,563) Other, net (1,770) 317 ----------- ----------- Total adjustments 26,149 41,530 ----------- ----------- Net cash provided by operating activities 35,642 33,935 ----------- ----------- Cash flows from investing activities: Payments for purchase of property, plant and equipment (13,219) (14,806) Other 209 0 Acquisitions, net of cash (8,014) 0 ----------- ----------- Net cash (used) in investing activities (21,024) (14,806) ----------- ----------- Cash flows from financing activities: Cash dividends paid (8,234) (8,294) Purchase of treasury stock (3,349) (154) Payments of long-term debt (172) (58) Short-term borrowings, by original maturity: More than three months - proceeds - - More than three months - payments - - Three months or less, net (1,374) (12,501) Tax benefit applicable to ESOP dividend 309 272 ----------- ----------- Net cash (used) in financing activities (12,820) (20,735) ----------- ----------- Effect of exchange rate changes on cash (844) (178) ----------- ----------- Net change in cash and cash equivalents 954 (1,784) Cash and cash equivalents, beginning of year 10,497 7,633 ----------- ----------- Cash and cash equivalents, end of quarter $11,451 $5,849 ----------- ----------- SUPPLEMENTAL CASH FLOW INFORMATION: Interest paid (net of amount capitalized) $2,518 $1,754 Income taxes paid $8,897 $8,215 See accompanying note to consolidated financial statements.
WOODWARD GOVERNOR COMPANY AND SUBSIDIARIES NOTE TO CONSOLIDATED FINANCIAL STATEMENTS The consolidated balance sheet as of June 30, 1994, and the statements of consolidated earnings and cash flows for the three and nine month periods ended June 30, 1994 and 1993, have been prepared by the Company without audit. The September 30, 1993 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 June 30, 1994, and the results of its operations for the three and nine month periods ended June 30, 1994 and 1993, and cash flows for the nine 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 1993 annual report on Form 10-K and should be read in conjunction with the Notes to Consolidated Financial Statements therein. The results for the prior fiscal year have been restated to reflect the adoption of Statements of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions", No. 109 "Accounting for Income Taxes", and No. 112 "Employers Accounting for Post-employment Benefits", which the company adopted in the fourth quarter of fiscal 1993. The statements of consolidated earnings for the three and nine month periods ended June 30, 1994 are not necessarily indicative of the results to be expected for other interim periods or for the full year. PART I - ITEM 2 WOODWARD GOVERNOR COMPANY AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Net billings for products and services were $83,771,000 for the third quarter of the fiscal year, up 2% from the $81,959,000 for the same period in 1993. Costs and expenses in the third quarter were down slightly, and totaled $77,775,000 in 1994, compared to $77,965,000 in 1993. As a result, earnings before income taxes and cumulative effect of accounting changes increased from $3,994,000 to $5,996,000. Net earnings for the three months were $3,417,000 in 1994, and $2,436,000 last year. Third quarter earnings per share were $1.16 in 1994, compared to $.81 in 1993. Net billings for the first nine months of the fiscal year were $239,584,000, 1% less than last year's $242,441,000. Total costs and expenses for the nine months were $222,929,000, over 1% less than the $226,339,000 in 1993. Earnings before income taxes and cumulative effect of accounting changes increased 3% from $16,102,000 last year to $16,655,000 this year. Due to the increase in the effective tax rate from 39% last year to 43% this year, earnings before cumulative effect of accounting changes decreased from $9,822,000 to $9,493,000. Earnings per share before cumulative effect of accounting changes were $3.22 this year compared to $3.30 last year. On May 16, 1994, the company acquired HSC Controls, Inc. of Buffalo, New York. HSC designs and manufactures torque motors and servovalves primarily for aerospace and industrial applications. Sales for 1993 were $9,000,000. This acquisition supports and enhances our commitment to provide increased electromechanical content and complete systems for controls and related accessories. The effect on third quarter results was insignificant. The results for the last fiscal year have been restated to reflect the adoption of Statements of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," No. 109 "Accounting for Income Taxes," and No. 112 "Employers' Accounting for Post-employment Benefits." The company adopted these accounting changes in the fourth quarter of fiscal 1993, but for reporting purposes they must be presented as if adopted at the beginning of the year. The cumulative effect of these changes in fiscal 1993 was a charge of $17,417,000, net of the tax benefit of $11,360,000. The effect on earnings through the third quarter last year before income taxes and cumulative effect of accounting changes was a decrease of $906,000. For the first time in a long time, the quarterly shipments of Aircraft Controls were up from the same period last year. Third quarter shipments of the Aircraft Controls group were $37,170,000, compared to $34,904,000 in 1993. This is a result of an increase in repair and overhaul work at our Aircraft Product Service Centers, as well as $1,112,000 in shipments by HSC. Year-to-date shipments of aircraft products are $104,992,000, or 10% less than last year's total of $116,761,000. The repair and overhaul business is up over 8% while control sales are down over 18% from 1993. Shipments of Industrial Controls dropped off slightly in the third quarter, from $47,055,000 last year to $46,601,000 this year. In the third quarter, we successfully implemented our new management information system in the Colorado facilities of the Industrial Controls group. While the information system changeover was better than expected, disruptions did occur which delayed some shipments from the third quarter to the fourth quarter. For the nine months, worldwide Industrial Control shipments were up 7% to $134,592,000 from $125,680,000 with shipments from the overseas business units up 16% from $52,400,000 last year to $60,586,000 this year. Shipments in 1994 included $4,828,000 of shipments from the German company acquired in the current year. Costs and expenses for the three and nine months have decreased from last year. Third quarter expenses for this year include $4,070,000 of additional operating costs for businesses acquired this year. Last year's third quarter results included $3,487,000 of restructuring expenses. Taking these two items into account would result in $73,705,000 of expenses this year compared to $74,478,000 last year. Costs and expenses for the nine months have decreased from $226,339,000 to $222,929,000. As we noted in the second quarter report, there have been several unusual expenditures which we do not anticipate will be repeated in the future. In addition, almost $5,000,000 of additional expenses are included in 1994 due to current year acquisitions. We continue to work on cost containment measures and improving profitability. While the results of the third quarter are much improved from the same period of the prior year, they may not be indicative of the remainder of the year. Last year's fourth quarter was a very good one, and it will be a challenge to achieve comparable results. Cash and cash equivalents have increased to $11,451,000 at June 30, 1994 from $10,497,000 at September 30, 1993. Accounts receivable have decreased from $64,024,000 at September 30, 1993 to $58,970,000 at June 30, 1994 due to the higher level of shipments in the last two months of last fiscal year. Inventories have increased from $83,128,000 at September 30, 1993 to $84,687,000 at June 30, 1994. Property, plant and equipment - net has decreased to $139,431,000 at June 30, 1994 from $144,016,000 at September 30, 1993, due to holding capital expenditures to a reduced level. Short-term borrowings and long-term debt totalled $57,522,000 at June 30, 1994, down from $58,258,000 at September 30, 1993. Accounts payable and accrued expenses have decreased slightly from $35,915,000 at September 30, 1993 to $35,173,000 at June 30, 1994. The June 30, 1994 balances reflect acquisitions made in the current year. Cumulative currency translation adjustment has decreased from September 30, 1993 as a result of fluctuations in exchange rates. Treasury stock has increased from $6,235,000 at September 30, 1993 to $9,571,000 due to the purchase of 44,830 shares. The company's effective tax rate for the nine months ended June 30, 1994 and 1993 was 43.0% and 39.0%, respectively. The effective tax rate for the fiscal year ended September 30, 1993 was 42.0%. PART II - OTHER INFORMATION Item 6(b) No Form 8-K was filed for the quarter ended June 30, 1994. 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 August 11, 1994 /s/ John A. Halbrook John A. Halbrook, President and Chief Executive Officer August 11, 1994 /s/ Vern H. Cassens Vern H. Cassens,Senior Vice President, Treasurer, and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----