0000108312-95-000010.txt : 19950815 0000108312-95-000010.hdr.sgml : 19950815 ACCESSION NUMBER: 0000108312-95-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950814 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: 95563375 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, 1995 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, 1995, 2,890,886 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, 1995 INDEX Description Part I. Financial Information Item 1. Financial Statements Statements of Consolidated Earnings for the Three Months Ended June 30, 1995 and 1994 Statements of Consolidated Earnings for the Nine Months Ended June 30, 1995 and 1994 Consolidated Balance Sheets as of June 30, 1995 and September 30, 1994 Statements of Consolidated Cash Flows for the Nine Months Ended June 30, 1995 and 1994 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, 1995 and 1994 (in thousands except per share amounts) (Unaudited)
1995 1994 Net billings for products and services $90,808 $83,771 Costs and expenses: Cost of goods sold 66,704 62,292 Sales, service and administrative expenses 18,100 13,843 Restructuring expense $1,172 - Interest expense 976 $846 Interest (income) (166) (283) Miscellaneous expense, net 1,297 3,279 1,077 1,640 Total costs and expenses 88,083 77,775 Earnings before income taxes 2,725 5,996 Income taxes 1,117 2,579 Net earnings $1,608 $3,417 Net earnings per share $.55 $1.16 Average shares outstanding 2,910 2,946 Cash dividends per share $.93 $.93 See accompanying note to consolidated financial statements.
WOODWARD GOVERNOR COMPANY AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED EARNINGS for the nine months ended June 30, 1995 and 1994 (in thousands except per share amounts) (Unaudited)
1995 1994 Net billings for products and services $271,036 $239,584 Costs and expenses: Cost of goods sold 198,429 177,519 Sales, service and administrative expenses 49,075 40,033 Restructuring expense $5,909 - Interest expense 2,802 $2,962 Interest (income) (372) (595) Miscellaneous expense, net 2,896 11,235 3,010 5,377 Total costs and expenses 258,739 222,929 Earnings before income taxes 12,297 16,655 Income taxes 5,041 7,162 Net earnings $7,256 $9,493 Net earnings per share $2.49 $3.22 Average shares outstanding 2,910 2,946 Cash dividends per share $2.79 $2.79 See accompanying note to consolidated financial statements.
WOODWARD GOVERNOR COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands of dollars)
JUNE SEPTEMBER 30, 1995 30, 1994 (Unaudited) Assets Current assets: Cash and cash equivalents $7,583 $10,272 Accounts receivable, less allowance for losses of $4,234 for June and $3,021 for September 69,464 69,778 Inventories 98,117 80,272 Deferred income taxes 20,957 20,957 Total current assets 196,121 181,279 Property, plant and equipment, at cost: Land 7,357 6,648 Buildings and improvements 123,331 120,503 Machinery and equipment 170,234 156,476 Construction in progress 2,007 2,475 302,929 286,102 Less allowance for depreciation 183,842 163,191 Property, plant and equipment - net 119,087 122,911 Intangibles and other assets 4,205 4,757 Deferred income taxes 14,425 14,371 Total assets $333,838 $323,318 Liabilities and Shareholders' Equity Current liabilities: Short-term borrowings $19,029 $24,674 Current portion of long-term debt 4,252 4,252 Accounts payable and accrued expenses 51,387 37,972 Taxes on income 1,069 630 Total current liabilities 75,737 67,528 Long-term debt, less current portion 32,431 32,665 Other liabilities 29,279 29,279 Commitments and contingencies - - Shareholders' equity represented by: Preferred stock - - Common stock 190 190 Additional paid-in capital 13,974 13,891 Unearned stock plan compensation (19,444) (19,777) Currency translation adjustment 20,113 15,210 Retained earnings 193,508 194,088 208,341 203,602 Less treasury stock, at cost 11,950 9,756 196,391 193,846 Total liabilities and shareholders' equity $333,838 $323,318 See accompanying note to consolidated financial statements.
WOODWARD GOVERNOR COMPANY AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED CASH FLOWS for the nine months ended June 30, 1995 and 1994 (in thousands of dollars) (Unaudited)
1995 1994 Cash flows from operating activities: Net earnings $7,256 $9,493 Adjustments to reconcile net earnings to net cash provided (used) by operating activities: Depreciation 18,884 20,602 Deferred income taxes, noncurrent (54) - Stock plan compensation expense 333 412 Changes in assets and liabilities: Accounts receivable 2,384 9,019 Inventories (16,023) 2,899 Current liabilities, other than short-term borrowings and current portion of long-term debt 13,713 (5,013) Other, net 691 (1,770) Total adjustments 19,928 26,149 Net cash provided by operating activities 27,184 35,642 Cash flows from investing activities: Payments for purchase of property, plant and equipment (13,321) (13,219) Other 217 209 Acquisitions, net of cash - (8,014) Net cash (used) in investing activities (13,104) (21,024) Cash flows from financing activities: Cash dividends paid (8,128) (8,234) Purchase of treasury stock (2,194) (3,349) Payments of long-term debt (200) (172) Short-term borrowings, by original maturity: More than three months - proceeds - - More than three months - payments - - Three months or less, net (6,098) (1,374) Tax benefit applicable to ESOP dividend 292 309 Net cash (used) in financing activities (16,328) (12,820) Effect of exchange rate changes on cash (441) (844) Net change in cash and cash equivalents (2,689) 954 Cash and cash equivalents, beginning of year 10,272 10,497 Cash and cash equivalents, end of quarter $7,583 $11,451 SUPPLEMENTAL CASH FLOW INFORMATION: Interest paid (net of amount capitalized) $2,235 $2,518 Income taxes paid $6,797 $8,897 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, 1995, and the statements of consolidated earnings and cash flows for the three and nine month periods ended June 30, 1995 and 1994, have been prepared by the Company without audit. The September 30, 1994 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, 1995, and the results of its operations for the three and nine month periods ended June 30, 1995 and 1994, 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 1994 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 nine month periods ended June 30, 1995 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 delivered to customers continued to increase in the third quarter of fiscal year 1995. These billings totaled $90,808,000 compared to $83,771,000 in 1994, an 8% increase. Costs and expenses for the same period were $88,083,000 in 1995 and $77,775,000 in 1994, a 13% increase. As a result, earnings before income taxes decreased from $5,996,000 in 1994 to $2,725,000 this year. Third quarter net earnings were $1,608,000 for 1995 and $3,417,000 in 1994. Year-to-date net billings of $271,036,000 were up $31,452,000 or 13% from 1994. Nine month total costs and expenses were $258,739,000, a 16% increase from last year's total of $222,929,000. Net earnings totaled $7,256,000 compared to $9,493,000 for last year, down 24%. Earnings per share decreased from $3.22 last year to $2.49 this year. ONGOING OPERATIONS Shipments from ongoing operations for the first nine months of the fiscal year increased almost 6% from $230,784,000 last year to $243,408,000 this year. For the first nine months, costs and expenses increased 6% from $211,363,000 to $224,452,000. Ongoing operations are all operations except those included in the Acquisitions and Divestiture and Unusual Items sections below. Aircraft Controls shipments from ongoing operations were down 3% from last year and Industrial Controls shipments were up 12%. The weakened U.S. dollar had an impact on both shipments and costs as the overseas financial results translated into more U.S. dollars. Ongoing price pressures, especially in the Aircraft Controls group, have had an adverse effect on sales volume, and the benefits from restructuring have not yet been reflected in costs and expenses. Worker membership at June 30, 1995 for ongoing operations was 2854 compared to 3142 at June 30, 1994. ACQUISITIONS AND DIVESTITURE The three companies acquired in 1994 had shipments in the third quarter of $6,148,000 in 1995 compared to $4,951,000 in 1994. Year-to-date shipments were $16,762,000 this year and $5,940,000 last year. The shipment results have been good and we are encouraged by the future opportunities. Costs and expenses have been higher than anticipated and totaled $18,399,000 for the first nine months of fiscal year 1995, compared to $4,854,000 last year. The costs of some necessary reorganization and increased staffing requirements, as well as additional development costs, have resulted in the acquisitions not yet attaining profitability. We expect improvement in this situation. Our attempt to divest ourselves of Bauer Aerospace continues. Shipments at Bauer were $3,266,000 for the first nine months of 1995 compared to $2,860,000 in 1994. Due to restructuring charges taken last year as well as cost savings measures, costs and expenses this year are $4,227,000 compared to $6,047,000 last year. As of June 30, 1995 there were 43 members at Bauer; last year there were 62. UNUSUAL ITEMS As was discussed in previous quarterly reports, several unusual items have occurred in 1995 and have had an effect on operating results. Over $7,000,000 of revenue was recognized in the first quarter for reimbursement of non- recurring engineering charges. Additional expenses were incurred relating to several items announced in the first quarter report: these included severance and relocation costs related to our decision to move the Hydro business unit to Colorado and integrate it into our Turbomachinery Controls business, plus an early retirement program made available to domestic members. There were also some additional costs related to the ongoing restructuring and consolidation of the Aircraft Controls group. In the third quarter, an additional provision of $1,100,000 was made for an accounts receivable write-off. This provision was unusual in that it related to a customer we had dealt with for 25 years. The total of all these unusual costs is over $11,600,000 for the first nine months of fiscal 1995. Last year $665,000 for unusual items was included in costs and expenses through the nine months. BALANCE SHEET Cash and cash equivalents have decreased to $7,583,000 at June 30, 1995 from $10,272,000 at September 30, 1994. Accounts receivable have decreased from $69,778,000 at September 30, 1994 to $69,464,000 at June 30, 1995. Inventories have increased from $80,272,000 at September 30, 1994 to $98,117,000 at June 30, 1995. This is due to an increase in sales volume and a higher level of past due shipments. Property, plant and equipment net has decreased to $119,087,000 at June 30, 1995 from $122,911,000 at September 30, 1994, due to capital expenditures being less than depreciation. Short-term borrowings and long-term debt totalled $55,712,000 at June 30, 1995, down from $61,591,000 at September 30, 1994. Accounts payable and accrued expenses have increased to $51,387,000 at June 30, 1995 from $37,972,000 at September 30, 1994 due in part to accruals for trade payables,early retirement program and costs related to the Hydro relocation. Treasury stock has increased from $9,756,000 at September 30, 1994 to $11,950,000 due to the net purchase of 31,894 shares. The company's effective tax rate for the nine months ended June 30, 1995 and 1994 was 41.0% and 43.0%, respectively. The effective tax rate for the fiscal year ended September 30, 1994 was 37.0%. PART II - OTHER INFORMATION Item 6(b) No Form 8-K was filed for the quarter ended June 30, 1995. 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 14, 1995 /s/ John A. Halbrook John A. Halbrook, President and Chief Executive Officer August 14, 1995 /s/ Vern H. Cassens Vern H. Cassens,Senior Vice President, Treasurer, and Chief Financial Officer EX-27 2
5 1000 3-MOS 9-MOS SEP-30-1995 SEP-30-1995 JUN-30-1995 JUN-30-1995 3836 3836 3747 3747 73698 73698 4234 4234 98117 98117 196121 196121 302929 302929 183842 183842 333838 333838 75737 75737 0 0 190 190 0 0 0 0 196201 196201 333838 333838 90808 271036 90808 271036 66704 198429 85976 253413 1131 2524 0 0 976 2802 0 0 1117 5041 1608 7256 0 0 0 0 0 0 1608 7256 .55 2.49 .55 2.49