10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2011

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number 0-8408

WOODWARD, INC.

(Exact name of registrant as specified in its charter)

Delaware	36-1984010
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1000 East Drake Road, Fort Collins, Colorado	80525
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:
(970) 482-5811

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 þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definitions of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ Accelerated filer o Non-accelerated filer o Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þ

As of July 22, 2011, 68,810,043 shares of the registrant’s common stock with a par value of $0.001455 per share were outstanding.

TABLE OF CONTENTS

	Page
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements		3
Condensed Consolidated Statements of Earnings		3
Condensed Consolidated Statements of Comprehensive Earnings		4
Condensed Consolidated Balance Sheets		5
Condensed Consolidated Statements of Cash Flows		6
Condensed Consolidated Statements of Stockholders’ Equity		7
Notes to Condensed Consolidated Financial Statements		8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		28
Forward Looking Statements		28
Overview		30
Results of Operations		32
Liquidity and Capital Resources		38
Item 3. Quantitative and Qualitative Disclosures About Market Risk		41
Item 4. Controls and Procedures		41
PART II — OTHER INFORMATION
Item 1. Legal Proceedings		42
Item 1A. Risk Factors		42
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		43
Item 6. Exhibits		43
Signatures		44
Exhibit 10.1
Exhibit 10.2
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

2

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

WOODWARD, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share amounts)

(Unaudited)

	Three-Months Ending						Nine-Months Ending
	June 30,						June 30,
	2011			2010			2011			2010
Net sales	$	438,467		$	356,367		$	1,222,408		$	1,045,027
Costs and expenses:
Cost of goods sold		304,441			249,966			858,138			733,834
Selling, general and administrative expenses		38,470			31,394			109,581			98,359
Research and development costs		29,273			21,419			80,061			59,431
Amortization of intangible assets		8,935			8,635			26,020			26,471
Interest expense		6,361			6,949			19,161			22,524
Interest income		(117	)		(97	)		(325	)		(327	)
Other (income) expense, net		249			49			955			(625	)
Total costs and expenses		387,612			318,315			1,093,591			939,667
Earnings before income taxes		50,855			38,052			128,817			105,360
Income tax expense		14,799			6,187			38,272			26,873
Net earnings		36,056			31,865			90,545			78,487
Earnings attributable to noncontrolling interest, net of taxes		—			(120	)		—			(318	)
Net earnings attributable to Woodward	$	36,056		$	31,745		$	90,545		$	78,169
Earnings per share (Note 3):
Basic earnings per share attributable to Woodward	$	0.52		$	0.46		$	1.32		$	1.14
Diluted earnings per share attributable to Woodward	$	0.51		$	0.45		$	1.29		$	1.12
Weighted Average Common Shares Outstanding (Note 3):
Basic		68,793			68,489			68,785			68,428
Diluted		70,166			69,987			70,155			69,871
Cash dividends per share paid to Woodward common stockholders	$	0.07		$	0.06		$	0.20		$	0.18

See accompanying Notes to Condensed Consolidated Financial Statements.

3

WOODWARD, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

(In thousands)

(Unaudited)

	Three-Months Ending						Nine-Months Ending
	June 30,						June 30,
	2011			2010			2011			2010
Comprehensive earnings attributable to Woodward:
Net earnings attributable to Woodward	$	36,056		$	31,745		$	90,545		$	78,169
Other comprehensive earnings:
Foreign currency translation adjustments		8,414			(15,705	)		17,043			(29,525	)
Reclassification of realized losses on derivatives to earnings		57			70			172			211
Minimum retirement benefit liability adjustment		(139	)		(84	)		(413	)		396
Taxes on changes in other comprehensive earnings		(848	)		1,269			(1,711	)		1,832
Comprehensive earnings attributable to Woodward		43,540			17,295			105,636			51,083
Comprehensive earnings attributable to noncontrolling interest:
Net earnings attributable to noncontrolling interest		—			120			—			318
Foreign currency translation adjustments,net of tax		—			22			—			105
Comprehensive earnings attributable to noncontrolling interest		—			142			—			423
Total comprehensive earnings	$	43,540		$	17,437		$	105,636		$	51,506

See accompanying Notes to Condensed Consolidated Financial Statements.

4

WOODWARD, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

(Unaudited)

	June 30,			September 30,
	2011			2010
ASSETS
Current assets:
Cash and cash equivalents	$	72,598		$	105,579
Accounts receivable, less allowance for losses of $2,173 and $2,228, respectively		265,420			248,513
Inventories		387,768			295,034
Income taxes receivable		10,328			18,170
Deferred income tax assets		37,104			33,689
Other current assets		26,381			18,157
Total current assets		799,599			719,142
Property, plant and equipment, net		200,042			193,524
Goodwill		465,832			438,594
Intangible assets, net		279,228			292,149
Deferred income tax assets		1,979			8,623
Other assets		15,820			11,201
Total assets	$	1,762,500		$	1,663,233
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings	$	41,577		$	22,099
Current portion of long-term debt		18,459			18,493
Accounts payable		100,769			107,468
Income taxes payable		5,501			5,453
Accrued liabilities		109,726			109,052
Total current liabilities		276,032			262,565
Long-term debt, less current portion		408,750			425,250
Deferred income tax liabilities		88,367			88,249
Other liabilities		91,053			83,975
Total liabilities		864,202			860,039
Commitments and contingencies (Note 18)
Stockholders’ equity:
Preferred stock, par value $0.003 per share, 10,000 shares authorized, no shares issued		—			—
Common stock, par value $0.001455 per share, 150,000 shares authorized, 72,960 shares issued		106			106
Additional paid-in capital		80,145			73,915
Accumulated other comprehensive earnings		21,433			6,342
Deferred compensation		4,571			4,888
Retained earnings		912,700			835,919
		1,018,955			921,170
Treasury stock at cost, 4,153 shares and 4,223 shares, respectively		(116,086	)		(113,088	)
Treasury stock held for deferred compensation, at cost, 315 shares and 356 shares, respectively		(4,571	)		(4,888	)
Total stockholders’ equity		898,298			803,194
Total liabilities and stockholders’ equity	$	1,762,500		$	1,663,233

See accompanying Notes to Condensed Consolidated Financial Statements.

5

WOODWARD, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Nine-Months Ending
	June 30,
	2011			2010
Cash flows from operating activities:
Net earnings	$	90,545		$	78,487
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		57,299			56,455
Net loss (gain) on sales of assets		429			(99	)
Stock-based compensation		5,370			5,186
Excess tax benefits from stock-based compensation		(2,581	)		(1,588	)
Deferred income taxes		(1,011	)		5,135
Loss on derivatives reclassified from accumulated comprehensive earnings into earnings		172			185
Changes in operating assets and liabilities, net of business acquisitions:
Accounts receivable		(11,922	)		7,342
Inventories		(77,389	)		6,347
Accounts payable and accrued liabilities		(16,126	)		10,587
Current income taxes		10,434			6,871
Retirement benefit obligations		(3,230	)		(277	)
Other		(5,190	)		(13,022	)
Net cash provided by operating activities		46,800			161,609
Cash flows from investing activities:
Payments for property, plant and equipment		(32,640	)		(18,834	)
Proceeds from the sale of assets		30			268
Business acquisitions, net of cash and marketable securities acquired		(38,698	)		(25,000	)
Business acquisition, marketable securities acquired		(8,463	)		—
Proceeds from the sale of marketable securities		8,217			—
Proceeds from disposal of Fuel & Pneumatics product line		—			660
Net cash used in investing activities		(71,554	)		(42,906	)
Cash flows from financing activities:
Cash dividends paid		(13,764	)		(12,971	)
Proceeds from sales of treasury stock		2,078			2,709
Payments for repurchases of common stock		(6,837	)		(2,383	)
Excess tax benefits from stock compensation		2,581			1,588
Purchase of noncontrolling interest		—			(8,120	)
Borrowings on revolving lines of credit and short-term borrowings		126,098			71,653
Payments on revolving lines of credit and short-term borrowings		(103,158	)		(71,653	)
Payments of long-term debt		(16,500	)		(118,492	)
Net cash used in financing activities		(9,502	)		(137,669	)
Effect of exchange rate changes on cash and cash equivalents		1,275			(3,189	)
Net change in cash and cash equivalents		(32,981	)		(22,155	)
Cash and cash equivalents at beginning of period		105,579			100,863
Cash and cash equivalents at end of period	$	72,598		$	78,708

See accompanying Notes to Condensed Consolidated Financial Statements.

6

WOODWARD, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)

	Number of shares										Stockholders’ equity
																Accumulated other comprehensive earnings
																									Total
								Treasury								Foreign			Unrealized			Minimum			accumulated												Treasury			Noncontrolling
								stock held for					Additional			currency			derivative			retirement			other									Treasury			stock held for			interest in			Total
	Preferred		Common		Treasury			deferred			Common		paid-in			translation			gains			benefit liability			comprehensive			Deferred			Retained			stock at			deferred			consolidated			stockholders’
	stock		stock		stock			compensation			stock		capital			adjustments			(losses)			adjustments			earnings			compensaton			earnings			cost			compensation			subsidiary			equity
Balances as of September 30, 2009		—		72,960		(4,621	)		(389	)	$	106	$	73,197		$	29,464		$	(801	)	$	(18,534	)	$	10,129		$	4,904		$	741,505		$	(115,478	)	$	(4,904	)	$	2,056		$	711,515
Net earnings		—		—		—			—			—		—			—			—			—			—			—			78,169			—			—			318			78,487
Cash dividends paid		—		—		—			—			—		—			—			—			—			—			—			(12,316	)		—			—			(655	)		(12,971	)
Purchases of Treasury Stock		—		—		(85	)		—			—		—			—			—			—			—			—			—			(2,383	)		—			—			(2,383	)
Sale of Treasury Stock		—		—		266			—			—		(1,114	)		—			—			—			—			—			—			3,760			—			—			2,646
Purchase of noncontrolling interest		—		—		—			—			—		(6,180	)		(116	)		—			—			(116	)		—			—			—			—			(1,824	)		(8,120	)
Tax benefit attributable to exercise of stock options		—		—		—			—			—		1,588			—			—			—			—			—			—			—			—			—			1,588
Stock-based compensation		—		—		—			—			—		5,186			—			—			—			—			—			—			—			—			—			5,186
Purchase of stock by deferred compensation plan		—		—		3			(3	)		—		24			—			—			—			—			144			—			41			(144	)		—			65
Distribution of stock from deferred compensation plan		—		—		—			35			—		—			—			—			—			—			(175	)		—			—			175			—			—
Foreign currency translation adjustments		—		—		—			—			—		—			(29,525	)		—			—			(29,525	)		—			—			—			—			163			(29,362	)
Reclassification of unrecognized losses to earnings		—		—		—			—			—		—			—			211			—			211			—			—			—			—			—			211
Minimum retirement benefits liability adjustments		—		—		—			—			—		—			—			—			396			396			—			—			—			—			—			396
Taxes on changes in accumulated other comprehensive earnings		—		—		—			—			—		—			2,233			(80	)		(321	)		1,832			—			—			—			—			(58	)		1,774
Balances as of June 30, 2010		—		72,960		(4,437	)		(357	)	$	106	$	72,701		$	2,056		$	(670	)	$	(18,459	)	$	(17,073	)	$	4,873		$	807,358		$	(114,060	)	$	(4,873	)	$	—		$	749,032
Balances as of September 30, 2010		—		72,960		(4,223	)		(356	)	$	106	$	73,915		$	23,152		$	(627	)	$	(16,183	)	$	6,342		$	4,888		$	835,919		$	(113,088	)	$	(4,888	)	$	—		$	803,194
Net earnings		—		—		—			—			—		—			—			—			—			—			—			90,545			—			—			—			90,545
Cash dividends paid		—		—		—			—			—		—			—			—			—			—			—			(13,764	)		—			—			—			(13,764	)
Purchases of Treasury Stock		—		—		(242	)		—			—		—			—			—			—			—			—			—			(7,961	)		—			—			(7,961	)
Sale of Treasury Stock		—		—		310			—			—		(1,754	)		—			—			—			—			—			—			4,963			—			—			3,209
Tax benefit attributable to exercise of stock options		—		—		—			—			—		2,581			—			—			—			—			—			—			—			—			—			2,581
Stock-based compensation		—		—		—			—			—		5,370			—			—			—			—			—			—			—			—			—			5,370
Purchase of stock by deferred compensation plan		—		—		2			(2	)		—		33			—			—			—			—			128			—			—			(128	)		—			33
Distribution of stock from deferred compensation plan		—		—		—			43			—		—			—			—			—			—			(445	)		—			—			445			—			—
Foreign currency translation adjustments		—		—		—			—			—		—			17,043			—			—			17,043			—			—			—			—			—			17,043
Reclassification of unrecognized losses to earnings		—		—		—			—			—		—			—			172			—			172			—			—			—			—			—			172
Minimum retirement benefits liability adjustments		—		—		—			—			—		—			—			—			(413	)		(413	)		—			—			—			—			—			(413	)
Taxes on changes in accumulated other comprehensive earnings		—		—		—			—			—		—			(1,791	)		(65	)		145			(1,711	)		—			—			—			—			—			(1,711	)
Balances as of June 30, 2011		—		72,960		(4,153	)		(315	)	$	106	$	80,145		$	38,404		$	(520	)	$	(16,451	)	$	21,433		$	4,571		$	912,700		$	(116,086	)	$	(4,571	)	$	—		$	898,298

See accompanying Notes to Condensed Consolidated Financial Statements.

7

WOODWARD, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except per share amounts)

(Unaudited)

Note 1. Basis of presentation

The Condensed Consolidated Financial Statements of Woodward, Inc. (“Woodward” or the “Company”) as of June 30, 2011 and for the three and nine-months ending June 30, 2011 and June 30, 2010, included herein, have not been audited by an independent registered public accounting firm. These Condensed Consolidated Financial Statements reflect all normal recurring adjustments which, in the opinion of management, are necessary to present fairly Woodward’s financial position as of June 30, 2011, and the results of operations, cash flows, and changes in stockholders’ equity for the periods presented herein. The Condensed Consolidated Balance Sheet as of September 30, 2010 was derived from Woodward’s Annual Report on Form 10-K for the fiscal year then ended. The results of operations for the three and nine-months ending June 30, 2011 are not necessarily indicative of the operating results to be expected for other interim periods or for the full fiscal year. Dollar amounts contained in these Condensed Consolidated Financial Statements are in thousands, except per share amounts.

The Condensed Consolidated Financial Statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim reporting. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations.

These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and Notes thereto included in Woodward’s most recent Annual Report on Form 10-K filed with the SEC and other financial information filed with the SEC.

Management is required to use estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements, the reported revenues and expenses recognized during the reporting period, and certain financial statement disclosures, in the preparation of the Condensed Consolidated Financial Statements. Significant estimates in these Condensed Consolidated Financial Statements include allowances for doubtful accounts, net realizable value of inventories, warranty reserves, percentage complete on long-term contracts, cost of sales incentives, useful lives of property and identifiable intangible assets, the evaluation of impairments of property, identifiable intangible assets and goodwill, income tax and valuation reserves, the valuation of assets and liabilities acquired in business combinations, assumptions used in the determination of the funded status and annual expense of pension and postretirement employee benefit plans, the valuation of stock compensation instruments granted to employees, and contingencies. Actual results could vary materially from Woodward’s estimates.

The Condensed Consolidated Statement of Cash Flows for the nine-months ending June 30, 2010 has been adjusted to conform to the nine-months ending June 30, 2011 presentation. The change in “Retirement benefit obligations” presented in “Cash flows from operating activities” has been reclassified from “Other.”

Note 2. Recent accounting pronouncements

From time to time, the Financial Accounting Standards Board (“FASB”) or other standards setting bodies issue new accounting pronouncements. Updates to the FASB Accounting Standards Codification (“ASC”) are communicated through issuance of an Accounting Standards Update (“ASU”).

In October 2009, the FASB issued ASU 2009-13, “Multiple-Deliverable Revenue Arrangements” and ASU 2009-14, “Certain Revenue Arrangements That Include Software Elements.” ASU 2009-13 and ASU 2009-14 are required to be adopted concurrently in fiscal years beginning on or after June 15, 2010 (fiscal year 2011 for Woodward).

ASU 2009-13 changes the requirements for establishing separate units of accounting in a multiple element arrangement and requires the allocation of arrangement consideration to each deliverable based on the relative selling price. The selling price for each deliverable is based on vendor-specific objective evidence (“VSOE”) if available, third-party evidence (“TPE”) if VSOE is not available, or estimated selling price (“ESP”) if neither VSOE nor TPE is available.

ASU 2009-14 excludes software that is contained on a tangible product from the scope of software revenue guidance if the software is essential to the tangible product’s functionality.

ASU 2009-13 and ASU 2009-14 were adopted by Woodward on October 1, 2010. The adoption did not impact the identification of or the accounting for separate units of accounting, including the pattern and timing of revenue recognition, and is not expected to have a significant impact on Woodward’s financial position, results of operations or cash flows in future periods. Woodward does not generally sell its products and services through arrangements that include multiple-deliverable arrangements, and the Company had no significant multiple-deliverable arrangements as of June 30, 2011.

8

WOODWARD, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share amounts)
(Unaudited)

In April 2010, the FASB issued ASU 2010-17, “Milestone Method of Revenue Recognition.” ASU 2010-17 provides guidance on defining a milestone and determining when it may be appropriate to apply the milestone method of revenue recognition for research and development transactions, and requires certain disclosures regarding the use of the milestone method.

ASU 2010-17 was adopted by Woodward on October 1, 2010. The adoption did not impact the pattern or timing of revenue recognition and is not expected to have a significant impact on Woodward’s financial position, results of operations or cash flows in future periods. For certain development services provided to customers pursuant to funded long and short-term development contracts, Woodward recognizes revenue based on completion of substantive milestones determined based on the individual facts and circumstances of each arrangement. Total revenues recognized by Woodward based upon completion of substantive milestones as proscribed by ASU 2010-17 was $596 and $1,926 for the three and nine-months ending June 30, 2011, respectively.

In June 2011, the FASB issued ASU 2011-05, “Comprehensive Income.” ASU 2011-05 amends ASC Topic 220, Comprehensive Income, to require that all non-owner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements, and it eliminates the option to present components of other comprehensive income as a part of the statement of changes in stockholders’ equity. In addition, ASU 2011-05 requires an entity to present on the face of the financial statements reclassification adjustments for items that are reclassified from other comprehensive income to net income in the statement(s) where the components of net income and the components of other comprehensive income are presented. These amendments are to be applied retrospectively and are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 (fiscal 2013 for Woodward), early adoption is permitted. Woodward does not expect this guidance will have a significant impact on its Condensed Consolidated Financial Statements.

Note 3. Earnings per share

Basic earnings per share attributable to Woodward is computed by dividing net earnings available to common stockholders by the weighted average number of shares of common stock outstanding for the period.

Diluted earnings per share attributable to Woodward reflects the weighted average number of shares outstanding after the assumed conversion of all dilutive securities.

The following is a reconciliation of net earnings to net earnings per share — basic and net earnings per share — diluted:

	Three-Months Ending				Nine-Months Ending
	June 30,				June 30,
	2011		2010		2011		2010
Numerator:
Net earnings attributable to Woodward	$	36,056	$	31,745	$	90,545	$	78,169
Denominator:
Basic shares outstanding		68,793		68,489		68,785		68,428
Dilutive effect of employee stock options		1,373		1,498		1,370		1,443
Diluted shares outstanding		70,166		69,987		70,155		69,871
Income per common share:
Basic earnings per share attribuable to Woodward	$	0.52	$	0.46	$	1.32	$	1.14
Diluted earnings per share attributable to Woodward	$	0.51	$	0.45	$	1.29	$	1.12

The following stock option grants were outstanding during the three and nine-months ending June 30, 2011 and 2010, but were excluded from the computation of diluted earnings per share because their inclusion would have been anti-dilutive:

	Three-Months Ending				Nine-Months Ending
	June 30,				June 30,
	2011		2010		2011		2010
Options		678		430		679		447
Weighted-average option price	$	32.06	$	32.58	$	32.03	$	32.49

9

WOODWARD, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share amounts)
(Unaudited)

The weighted-average shares of common stock outstanding for basic and diluted earnings per share included weighted-average treasury stock shares held for deferred compensation obligations of the following:

	Three-Months Ending				Nine-Months Ending
	June 30,				June 30,
	2011		2010		2011		2010
Weighted average treasury stock shares held for deferred compensation obligation		324		361		340		375

Note 4. Business acquisitions

IDS Acquisition

During the third quarter of fiscal year 2011, Woodward acquired of all of the outstanding stock of Integral Drive Systems AG and its European companies, including their respective holding companies (“IDS”), and the assets of IDS’ business in China (together the “IDS Acquisition”) for an aggregate purchase price of approximately $48,412. The purchase price remains subject to certain customary post-closing adjustments. The estimated purchase price is included in “Cash flows from investing activities” in the Condensed Consolidated Statement of Cash Flows.

IDS is a developer and manufacturer of innovative power electronic systems predominantly in utility scale wind turbines and photovoltaic power plants. Additionally, IDS offers key products in power distribution and marine propulsion systems. In addition to wind turbines and photovoltaic plants, its products are used in offshore oil and gas platforms, energy storage and distribution systems, and a variety of industrial applications. IDS is being integrated into Woodward’s Electrical Power Systems business segment.

The Company believes the IDS Acquisition expands its presence in wind converter offerings and reduces its time to market with expansion of solar energy, energy storage, and marine drives. Goodwill recorded in connection with the IDS Acquisition, which is not deductible for income tax purposes, represents the estimated value of such future opportunities, the value of potential expansion with new customers and the opportunity to further develop sales opportunities with new and acquired IDS customers, and anticipated synergies expected to be achieved through the integration of IDS into Woodward’s Electrical Power Systems business segment.

Woodward is in the process of finalizing valuations of current assets, property, plant and equipment (including estimated useful lives), intangible assets (including estimated useful lives), other current liabilities, postretirement benefits obligations, deferred tax liabilities, and other noncurrent liabilities.

The preliminary purchase price of the IDS Acquisition is as follows:

Cash paid to owners	$	48,412
Less cash acquired		(1,251	)
Total estimated purchase price		47,161
Less marketable securities acquired		(8,463	)
Estimated price paid for business assets	$	38,698

As of June 30, 2011, $8,478 paid in connection with the IDS purchase was deposited into escrow accounts as surety against standard representations and warranties made by the seller. Funds held in escrow will be released upon the payment of certain tax and as otherwise specified in the related purchase agreements.

The preliminary allocation of the purchase price for the IDS Acquisition was accounted for under the purchase method of accounting in accordance with ASC Topic 805, Business Combinations. Assets acquired and liabilities assumed in the transaction were recorded at their acquisition date fair values, while transaction costs associated with the acquisition were expensed as incurred. The Company’s allocation was based on an evaluation of the appropriate fair values and represents management’s best estimate based on available data. As Woodward is still in the process of finalizing valuations, as mentioned above, the final purchase accounting has not yet been completed.

10

WOODWARD, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share amounts)
(Unaudited)

The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the date of the IDS Acquisition.

Current assets	$	14,627
Investments in marketable securities		8,463
Property, plant, and equipment		1,954
Goodwill		24,188
Intangible assets		11,882
Total assets acquired		61,114
Other current liabilities		5,505
Warranty accrual		2,250
Postretirement benefits		434
Deferred tax liabilities		2,472
Other tax — noncurrent		3,292
Total liabilities assumed		13,953
Net assets acquired	$	47,161

There were no changes to the values of assets acquired and liabilities assumed during the three-months ending June 30, 2011. The fair value of warranty liabilities assumed represents the estimated costs to provide service for contractual warranty obligations on products sold by IDS prior to April 15, 2011. The fair value of “Other tax — noncurrent” represents the estimated value of gross unrecognized tax benefits assumed.

In connection with the IDS Acquisition, Woodward acquired various marketable securities, which are not classified as cash equivalents under U.S. GAAP. These marketable securities were sold during the fiscal quarter ended June 30, 2011 and reinvested into cash and cash equivalents consistent with Woodward’s internal investment and risk management policies. Losses on the sale of marketable securities were included in “Other (income) expense, net” in the Condensed Consolidated Statements of Earnings.

Also, in connection with the IDS Acquisition, Woodward assumed the net postretirement benefit obligations of several Swiss statutory retirement plans which are considered to be defined benefit plans under U.S. GAAP.

A summary of the intangible assets acquired, weighted average useful lives and amortization methods follows:

			Weighted
			Average Useful	Amortization
	Amount		Life	Method
Customer relationships	$	3,452	9 years	Straight-line
Process technology		7,752	8.5 years	Straight-line
Other		678	2.5 years	Straight-line
Total	$	11,882	8 years

The operating results of the IDS Acquisition are included in Woodward’s Consolidated Statements of Earnings and Comprehensive Earnings as of April 15, 2011. Pro forma financial disclosures have not been presented as the IDS Acquisition was not material to Woodward’s results of operations or financial position. The Company incurred transaction costs of $219 and $1,964 for the three and nine-months ending June 30, 2011, which are included in “Selling, general and administrative expenses” in the Condensed Consolidated Statements of Earnings.

11

WOODWARD, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share amounts)
(Unaudited)

Note 5. Financial instruments and fair value measurements

The estimated fair values of Woodward’s financial instruments were as follows:

	At June 30, 2011						At September 30, 2010
	Estimated Fair						Estimated Fair
	Value			Carrying Cost			Value			Carrying Cost
Cash and cash equivalents	$	72,598		$	72,598		$	105,579		$	105,579
Investments in deferred compensation program		6,486			6,486			5,633			5,633
Short-term borrowings		(41,577	)		(41,577	)		(22,099	)		(22,099	)
Long-term debt, including current portion		(482,374	)		(427,190	)		(506,120	)		(443,673	)

The fair values of cash and cash equivalents, which include investments in money market funds, are assumed to be equal to their carrying amounts. Cash and cash equivalents have short-term maturities and market interest rates. Woodward’s cash and cash equivalents include funds deposited or invested in the U.S. and overseas that are not insured by the Federal Deposit Insurance Corporation (“FDIC”). Woodward believes that its deposited and invested funds are held by or invested with credit worthy financial institutions or counterparties.

Investments related to the deferred compensation program used to provide deferred compensation benefits to certain employees are carried at market value.

The fair values of short-term borrowings at variable interest rates are assumed to be equal to their carrying amounts because such borrowings are expected to be repaid or settled for their carrying amounts within a short period of time.

The fair value of long-term debt at fixed interest rates was estimated based on a model that discounted future principal and interest payments at interest rates available to the Company at the end of the period for similar debt of the same maturity. The weighted-average interest rates used to estimate the fair value of long-term debt at fixed interest rates were as follows:

	June 30,			September 30,
	2011			2010
Weighted-average interest rate used to estimate fair value		2.7	%		2.9	%

Financial assets and liabilities recorded at fair value in the Condensed Consolidated Balance Sheet are categorized based upon a fair value hierarchy established by U.S. GAAP, which prioritizes the inputs used to measure fair value into the following levels:

Level 1: Inputs based on quoted market prices in active markets for identical assets or liabilities at the measurement date.

Level 2: Quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable and can be corroborated by observable market data.

Level 3: Inputs reflect management’s best estimates and assumptions of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the valuation of the instruments.

12

WOODWARD, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share amounts)
(Unaudited)

The table below presents information about Woodward’s financial assets that are measured at fair value on a recurring basis and indicates the fair value hierarchy of the valuation techniques Woodward utilized to determine such fair value. Woodward had no financial liabilities required to be measured at fair value on a recurring basis as of June 30, 2011 or September 30, 2010.

	At June 30, 2011								At September 30, 2010
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Financial assets:
Investments in money market funds	$	8,444	$	—	$	—	$	8,444	$	50,360	$	—	$	—	$	50,360
Equity securities		6,486		—		—		6,486		5,633		—		—		5,633
Foreign exchange forward contract		—		—		—		—		—		579		—		579
Total financial assets	$	14,930	$	—	$	—	$	14,930	$	55,993	$	579	$	—	$	56,572

Investments in money market funds: Woodward sometimes invests excess cash in money market funds not insured by the FDIC. Woodward believes that the investments in money market funds are on deposit with creditworthy financial institutions and that the funds are highly liquid. The investments in money market funds are reported at fair value and are included in Woodward’s Condensed Consolidated Balance Sheet under the caption “Cash and cash equivalents.” Realized gains from interest income are recognized in earnings. The fair values of Woodward’s investments in money market funds are based on the quoted market prices for the net asset value of the various money market funds.

Equity securities: Woodward holds marketable equity securities, through investments in various mutual funds, related to its deferred compensation program. Based on Woodward’s intentions regarding these instruments, marketable equity securities are classified as trading securities. The trading securities are included in Woodward’s Condensed Consolidated Balance Sheet under the caption “Other current assets.” The trading securities are reported at fair value, with gains and losses recognized in earnings. The fair values of Woodward’s trading securities are based on the quoted market prices for the net asset value of the various mutual funds.

Forward contracts: As of September 30, 2010, Woodward was a party to a forward contract. The fair value of the derivative instrument was derived from published foreign currency exchange rates as of September 30, 2010. The forward contract was settled in December 2010, resulting in a realized loss of $1,033.

Note 6. Derivative instruments and hedging activities

Woodward is exposed to global market risks, including the effect of changes in interest rates, foreign currency exchange rates, changes in certain commodity prices and fluctuations in various producer indices. From time to time, Woodward enters into derivative instruments for risk management purposes only, including derivatives designated as accounting hedges and/or those utilized as economic hedges. Woodward uses interest rate related derivative instruments to manage its exposure to fluctuations of interest rates. Woodward does not enter into or issue derivatives for trading or speculative purposes.

By using derivative and/or hedging instruments to manage its risk exposure, Woodward is subject, from time to time, to credit risk and market risk on those derivative instruments. Credit risk arises from the potential failure of the counterparty to perform under the terms of the derivative and/or hedging instrument. When the fair value of a derivative contract is positive, the counterparty owes Woodward, which creates credit risk for Woodward. Woodward mitigates this credit risk by entering into transactions with only credit worthy counterparties. Market risk arises from the potential adverse effects on the value of derivative and/or hedging instruments that result from a change in interest rates, commodity prices, or foreign currency exchange rates. Woodward mitigates this market risk by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken.

Woodward did not enter into any hedging transactions during the three or nine-months ending June 30, 2011 and was not a party to any derivative instruments as of June 30, 2011.

In September 2010, Woodward entered into a foreign currency exchange rate contract to purchase €39,000 for approximately $52,549 in early December 2010. The objective of this derivative instrument, which was not designated as an accounting hedge, was to limit the risk of foreign currency exchange rate fluctuations on a short-term intercompany loan balance. At September 30, 2010, an unrealized gain of $579 was recorded in Woodward’s Condensed Consolidated Balance Sheet under the caption “Other current assets” reflecting an adjustment to fair market value for the related foreign currency exchange rate contract. In December 2010, a loss of $1,033 was realized on the settlement of this forward contract and was recorded in “Other (income) expense, net.” The resulting correlated foreign currency gain realized on the repayment of the short-term intercompany loan balance was recorded in Woodward’s Condensed Consolidated Statement of Earnings in “Selling, general and administrative expenses.”

13

WOODWARD, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share amounts)
(Unaudited)

The following table discloses the remaining unrecognized gains and losses and recognized gains associated with derivative instruments in Woodward’s Condensed Consolidated Balance Sheets:

	June 30,			September 30,
	2011			2010
Derivatives designated as hedging instruments	Unrecognized Gain (Loss)
Classified in accumulated other comprehensive earnings	$	(839	)	$	(1,011	)
Classified in current and long-term debt		19			70
	$	(820	)	$	(941	)

Derivatives not designated as hedging instruments	Recognized Gain
Classified in other current assets	$	—	$	579

The following tables disclose the impact of derivative instruments on Woodward’s Condensed Consolidated Statements of Earnings:

		Three-Months Ending June 30, 2011							Three-Months Ending June 30, 2010
							Amount of							Amount of
		Amount of			Amount of		(Gain) Loss		Amount of			Amount of		(Gain) Loss
		(Income)			(Gain) Loss		Reclassified		(Income)			(Gain) Loss		Reclassified
	Location of (Gain)	Expense			Recognized in		from		Expense			Recognized in		from
	Loss	Recognized in			Accumulated		Accumulated		Recognized in			Accumulated		Accumulated
	Recognized in	Earnings on			OCI on		OCI into		Earnings on			OCI on		OCI into
Derivatives in:	Earnings	Derivative			Derivative		Earnings		Derivative			Derivative		Earnings
Fair value hedging relationships	Interest expense	$	(17	)	$	—	$	—	$	(31	)	$	—	$	—
Cash flow hedging relationships	Interest expense		57			—		57		70			—		70
Foreign currency relationships	Other (income) expense		—			—		—		—			—		—
		$	40		$	—	$	57	$	39		$	—	$	70
		Nine-Months Ending June 30, 2011							Nine-Months Ending June 30, 2010
							Amount of							Amount of
		Amount of			Amount of		(Gain) Loss		Amount of			Amount of		(Gain) Loss
		(Income)			(Gain) Loss		Reclassified		(Income)			(Gain) Loss		Reclassified
	Location of (Gain)	Expense			Recognized in		from		Expense			Recognized in		from
	Loss	Recognized in			Accumulated		Accumulated		Recognized in			Accumulated		Accumulated
	Recognized in	Earnings on			OCI on		OCI into		Earnings on			OCI on		OCI into
Derivatives in:	Earnings	Derivative			Derivative		Earnings		Derivative			Derivative		Earnings
Fair value hedging relationships	Interest expense	$	(51	)	$	—	$	—	$	(95	)	$	—	$	—
Cash flow hedging relationships	Interest expense		172			—		172		211			—		211
Foreign currency relationships	Other (income) expense		1,612			—		—		(102	)		—		—
		$	1,733		$	—	$	172	$	14		$	—	$	211

Based on the carrying value of the unrecognized gains and losses on terminated derivative instruments designated as cash flow hedges as of June 30, 2011, Woodward expects to reclassify $188 of net unrecognized losses on terminated derivative instruments from accumulated other comprehensive earnings to earnings during the next twelve months.

14

WOODWARD, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share amounts)
(Unaudited)

Note 7. Supplemental statements of cash flows information

	Nine-Months Ending
	June 30,
	2011		2010
Interest paid	$	25,596	$	27,627
Income taxes paid		33,549		27,104
Income tax refunds received		9,269		9,008
Non-cash activities:
Purchases of property, plant and equipment on account		1,881		751
Cashless exercise of stock options		1,124		—
Reduction of accounts receivable and short-term borrowing due to the settlement of accounts receivable previously sold with recourse		3,228		—
Reduction of accounts payable due to the assignment of accounts receivable with recourse		570		—
Reduction to goodwill due to favorable resolution of lease termination recorded in restructuring reserve		103		—
Payment of director fees through issuance of treasury stock		38		—

During the first quarter of fiscal 2011, Woodward negotiated a lease settlement that was favorable in comparison to the previously recorded restructuring accrual established in purchase accounting in connection with the fiscal year 2009 acquisition of MPC Products Corporation (“MPC Products”) and Techni-Core, Inc. (“Techni-Core” and together with MPC Products “MPC”). The resulting benefit of $103 was recorded as a reduction to goodwill.

MPC Products, one of Woodward’s subsidiaries acquired in fiscal year 2009, was previously subject to an investigation by the Department of Justice (“DOJ”) regarding certain of its government contract pricing practices prior to June 2005. In the three-months ending December 31, 2009, MPC settled the criminal and civil claims related to the DOJ’s investigation and paid $25,000 in compensation and fines. The purchase price Woodward paid in connection with the acquisition of MPC was reduced by $25,000 at the time of the acquisition, which represents the amounts discussed above. Payment of this amount during the nine-months ending June 30, 2010 is reflected as an investing activity in the accompanying Condensed Consolidated Statements of Cash Flows.

Note 8. Inventories

	June 30,		September 30,
	2011		2010
Raw materials	$	46,963	$	19,457
Work in progress		91,971		86,438
Component parts and finished goods		248,834		189,139
	$	387,768	$	295,034

15

WOODWARD, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share amounts)
(Unaudited)

Note 9. Property, plant, and equipment — net

	June 30,			September 30,
	2011			2010
Land	$	14,596		$	11,372
Buildings and improvements		179,787			171,257
Leasehold improvements		18,891			17,884
Machinery and production equipment		262,611			270,126
Computer equipment and software		62,791			57,518
Other		24,097			22,854
Construction in progress		39,265			13,125
		602,038			564,136
Less accumulated depreciation		(401,996	)		(370,612	)
Property, plant and equipment, net	$	200,042		$	193,524

	Three-Months Ending				Nine-Months Ending
	June 30,				June 30,
	2011		2010		2011		2010
Depreciation expense	$	10,955	$	9,826	$	31,279	$	29,984

During fiscal 2010, Woodward began construction of a new 48,000 square foot system test facility in Rockford, Illinois. The facility, which will house numerous environmental system test cells and a vibration lab, will support, among other development projects, Turbine Systems’ development efforts of next generation fuel systems for aircraft turbines. The test facility is expected to be completed and placed into service in early fiscal year 2012. Included in construction in progress at June 30, 2011 and September 30, 2010 are $17,384 and $4,836, respectively, of costs associated with the construction of the test facility, including $805 and $165, respectively, of capitalized interest.

In addition at June 30, 2011 and September 30, 2010, Woodward recognized as construction in progress, $8,592 and $1,604, respectively, of costs associated with the development of a new Enterprise Resource Planning (“ERP”) system for its Airframe Systems segment, including capitalized interest of $239 and $24, respectively.

For the three and nine-months ending June 30, 2011 and June 30, 2010, Woodward had capitalized interest that would have otherwise been included in interest expense of the following:

	Three-Months Ending				Nine-Months Ending
	June 30,				June 30,
	2011		2010		2011		2010
Capitalized interest	$	383	$	36	$	896	$	61

16

WOODWARD, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share amounts)
(Unaudited)

Note 10. Goodwill

								Effects of
	September 30,							Currency
	2010		Additions		Adjustments			Translation		June 30, 2011
Turbine Systems	$	86,565	$	—	$	—		$	—	$	86,565
Airframe Systems		294,557		—		(103	)		165		294,619
Electrical Power Systems		16,534		24,188		—			2,715		43,437
Engine Systems		40,938		—		—			273		41,211
Consolidated	$	438,594	$	24,188	$	(103	)	$	3,153	$	465,832

During the first quarter of fiscal 2011, Woodward negotiated a lease settlement that was favorable in comparison to the previously recorded restructuring accrual established in purchase accounting in connection with the fiscal year 2009 acquisition of MPC. The resulting benefit of $103 was recorded as a reduction to goodwill.

During the third quarter of fiscal 2011, Woodward completed the IDS Acquisition (Note 4, Business acquisitions), which resulted in the recognition of $24,188 in goodwill. The operations of the IDS Acquisition will be integrated into Woodward's Electrical Power Systems segment.

Woodward tests goodwill for impairment at the reporting unit level on an annual basis and more often if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The impairment tests consist of comparing the fair value of each identified reporting unit with its carrying amount including goodwill. If the carrying amount of the reporting unit exceeds its fair value, Woodward compares the implied value of goodwill with its carrying amount. If the carrying amount of goodwill exceeds the implied fair value of goodwill, an impairment loss would be recognized to reduce the carrying amount to its implied fair value.

Woodward completed its annual goodwill impairment test during the quarter ended March 31, 2011. As a part of that test, Woodward determined its Turbine Systems, Airframe Systems and Engine Systems operating segments represented individual reporting units. Woodward determined its Electrical Power Systems operating segment was represented through three discrete identifiable reporting units. The fair value of each of Woodward’s reporting units was determined using a discounted cash flow method. This method represents a Level 3 input and incorporates various estimates and assumptions, the most significant being projected revenue growth rates, operating earnings margins, and forecasted cash flows based on the discount rate and terminal growth rate. Management projects revenue growth rates, operating earnings margins and cash flows based on each reporting unit’s current operational results, expected performance and operational strategies over a five-year period. These projections are adjusted to reflect current economic conditions and demand for certain products and require considerable management judgment.

Forecasted cash flows were discounted using an 11.3% weighted average cost of capital assumption. The terminal value of the forecasted cash flows assumed an annual compound growth rate after five years of 4.4% and was calculated using the Gordon Growth Model. These inputs, which are unobservable in the market, represent management’s estimate of what market participants would use in determining the present value of the Company’s forecasted cash flows. Changes in these estimates and assumptions can have a significant impact on the fair value of forecasted cash flows. Woodward evaluated the reasonableness of the resulting fair values of its reporting units by comparing the aggregate fair value to its market capitalization and assessing the reasonableness of any resulting premium.

The results of Woodward’s fiscal year 2011 annual goodwill impairment test performed as of March 31, 2011 indicated the estimated fair value of each reporting unit was in excess of its carrying value, and accordingly, no impairment existed. At March 31, 2011 the goodwill impairment test for Woodward’s Airframe Systems reporting unit, which has a significant concentration of business in the business jet and regional jet market segments that lagged in the economic recovery, indicated the closest premium, as compared to this reporting unit’s carrying value. Each of Woodward’s remaining reporting units had resulting fair values significantly in excess of their carrying values. Increasing the discount rate by 10%, decreasing the growth rate by 10%, or decreasing forecasted cash flow by 10%, as it relates to the Airframe Systems operating segment, would not have resulted in an impairment charge. However, an increase in the discount rate by approximately 11%, decreasing the growth rate by approximately 38%, or decreasing forecasted cash flow by approximately 15%, as it relates to the Airframe Systems operating segment would have resulted in an impairment charge.

As part of the Company’s ongoing monitoring efforts, Woodward will continue to consider the global economic environment and its potential impact on Woodward’s business in assessing goodwill recoverability. There can be no assurance that Woodward’s estimates and assumptions regarding forecasted cash flows of certain reporting units, the period or strength of the current economic recovery, or the other inputs used in forecasting the present value of forecasted cash flows will prove to be accurate projections of future performance.

17

WOODWARD, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share amounts)
(Unaudited)

Note 11. Other intangibles — net

	June 30, 2011							September 30, 2010
	Gross					Net		Gross					Net
	Carrying		Accumulated			Carrying		Carrying		Accumulated			Carrying
	Value		Amortization			Amount		Value		Amortization			Amount
Customer relationships:
Turbine Systems	$	44,327	$	(19,331	)	$	24,996	$	44,327	$	(18,223	)	$	26,104
Airframe Systems		176,667		(25,019	)		151,648		176,634		(13,162	)		163,472
Electrical Power Systems		5,993		(1,167	)		4,826		2,156		(844	)		1,312
Engine Systems		20,675		(14,990	)		5,685		20,675		(13,577	)		7,098
Total	$	247,662	$	(60,507	)	$	187,155	$	243,792	$	(45,806	)	$	197,986
Intellectual property:
Turbine Systems	$	—	$	—		$	—	$	—	$	—		$	—
Airframe Systems		—		—			—		—		—			—
Electrical Power Systems		7,908		(4,106	)		3,802		7,616		(3,567	)		4,049
Engine Systems		12,616		(7,611	)		5,005		12,599		(6,988	)		5,611
Total	$	20,524	$	(11,717	)	$	8,807	$	20,215	$	(10,555	)	$	9,660
Process technology:
Turbine Systems	$	11,941	$	(5,208	)	$	6,733	$	11,941	$	(4,909	)	$	7,032
Airframe Systems		62,984		(10,327	)		52,657		62,967		(6,797	)		56,170
Electrical Power Systems		8,289		(212	)		8,077		—		—			—
Engine Systems		12,593		(5,560	)		7,033		12,593		(4,787	)		7,806
Total	$	95,807	$	(21,307	)	$	74,500	$	87,501	$	(16,493	)	$	71,008
Other intangibles:
Turbine Systems	$	—	$	—		$	—	$	—	$	—		$	—
Airframe Systems		39,648		(32,900	)		6,748		39,638		(27,595	)		12,043
Electrical Power Systems		2,337		(583	)		1,754		1,510		(389	)		1,121
Engine Systems		460		(196	)		264		460		(129	)		331
Total	$	42,445	$	(33,679	)	$	8,766	$	41,608	$	(28,113	)	$	13,495
Total intangibles:
Turbine Systems	$	56,268	$	(24,539	)	$	31,729	$	56,268	$	(23,132	)	$	33,136
Airframe Systems		279,299		(68,246	)		211,053		279,239		(47,554	)		231,685
Electrical Power Systems		24,527		(6,068	)		18,459		11,282		(4,800	)		6,482
Engine Systems		46,344		(28,357	)		17,987		46,327		(25,481	)		20,846
Consolidated Total	$	406,438	$	(127,210	)	$	279,228	$	393,116	$	(100,967	)	$	292,149

	Three-Months Ending				Nine-Months Ending
	June 30,				June 30,
	2011		2010		2011		2010
Amortization expense	$	8,935	$	8,635	$	26,020	$	26,471

18

WOODWARD, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share amounts)
(Unaudited)

Future amortization expense associated with intangibles is expected to be:

Year Ending September 30:
2011 (remaining)	$	8,973
2012		33,062
2013		30,701
2014		27,545
2015		25,029
Thereafter		153,918
	$	279,228

Note 12. Accrued liabilities

	June 30,		September 30,
	2011		2010
Salaries and other member benefits	$	57,300	$	43,598
Current portion of restructuring and other charges		2,740		4,862
Warranties		14,522		10,851
Interest payable		5,689		11,925
Accrued retirement benefits		2,735		2,748
Deferred revenues		7,242		12,376
Taxes, other than income		1,956		4,618
Other		17,542		18,074
	$	109,726	$	109,052

Warranties

Provisions of Woodward’s sales agreements include product warranties customary to these types of agreements. Accruals are established for specifically identified warranty issues that are probable to result in future costs. Warranty costs are accrued on a non-specific basis whenever past experience indicates a normal and predictable pattern exists. Changes in accrued product warranties were as follows:

Warranties, September 30, 2010	$	10,851
Increases to accruals related to warranties during the period		4,070
Increases due to acquisition of IDS		2,250
Settlements of amounts accrued		(3,226	)
Foreign currency exchange rate changes		577
Warranties, June 30, 2011	$	14,522

Restructuring and other charges

The main components of accrued non-acquisition related restructuring charges include workforce management costs associated with the early retirement and the involuntary separation of employees in connection with a strategic realignment of global workforce capacity. Restructuring charges related to business acquisitions include a number of items such as those associated with integrating similar operations, workforce management, vacating certain facilities, and the cancellation of some contracts.

During the three-months ending December 31, 2010, Woodward negotiated a lease settlement that was favorable in comparison to the previously recorded restructuring accrual established in purchase accounting in connection with the fiscal year 2009 acquisition of MPC. The resulting benefit of $103 was recorded as a non-cash charge to restructuring and a reduction to goodwill previously established at the time of the acquisition of MPC. During the three-months ending December 31, 2010, Woodward also modified its exit plan related to its Pacoima, California location. As a result, the Company intends to occupy and continue operating from the Pacoima location for a longer period than originally anticipated. Accordingly, Woodward has reduced the anticipated exit costs by $1,513 for the Pacoima location.

19

WOODWARD, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share amounts)
(Unaudited)

The summary of the activity in accrued restructuring charges during the three and nine-months ending June 30, 2011 is as follows:

	Three-Months Ending
	June 30, 2011
	Restructuring			Business
	Charges			Acquisitions			Total
Accrued restructuring charges, March 31, 2011	$	497		$	3,253		$	3,750
Payments		(63	)		(5	)		(68	)
Non-cash adjustments		3			(453	)		(450	)
Foreign currency exchange rates		3			—			3
Accrued restructuring charges, June 30, 2011	$	440		$	2,795		$	3,235

	Nine-Months Ending
	June 30, 2011
	Restructuring			Business
	Charges			Acquisitions			Total
Accrued restructuring charges, September 30, 2010	$	667		$	5,446		$	6,113
Payments		(208	)		(705	)		(913	)
Non-cash adjustments		(28	)		(1,946	)		(1,974	)
Foreign currency exchange rates		9			—			9
Accrued restructuring charges, June 30, 2011	$	440		$	2,795		$	3,235

Other liabilities included the following amounts of accrued restructuring charges not expected to be settled within twelve months:

	June 30,		September 30,
	2011		2010
Non-current accrued restructuring charges	$	495	$	1,251

Note 13. Other liabilities

	June 30,		September 30,
	2011		2010
Net accrued retirement benefits, less amounts recognized within accrued liabilities	$	64,797	$	66,288
Uncertain tax positions, net of offsetting benefits, less amounts recognized within accrued liabilities (Note 15)		14,441		8,720
Other		11,815		8,967
	$	91,053	$	83,975

20

WOODWARD, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share amounts)
(Unaudited)

Note 14. Other (income) expense, net

	Three-Months Ending						Nine-Months Ending
	June 30,						June 30,
	2011			2010			2011			2010
Net (gain) loss on sale of assets	$	428		$	(156	)	$	429		$	(99	)
Rent income		(130	)		(123	)		(437	)		(388	)
Net (gain) loss on investments in deferred compensation program		(46	)		298			(614	)		(101	)
Net (income) expense recognized in earnings on foreign currency derivatives (Note 6)		—			—			1,612			(102	)
Other		(3	)		30			(35	)		65
	$	249		$	49		$	955		$	(625	)

For additional information regarding “Net (income) expense recognized in earnings on foreign currency derivatives” refer to Note 6, Derivative instruments and hedging activities.

Included in the “Net (gain) loss on sale of assets” for the three and nine-months ending June 30, 2011, is a net loss of $246 on the sale of the marketable securities acquired in the IDS Acquisition.

Note 15. Income taxes

U.S. GAAP requires that the interim period tax provision be determined as follows:

At the end of each quarter, Woodward estimates the tax that will be provided for the current fiscal year stated as a percentage of estimated “ordinary income”. The term ordinary income refers to earnings from continuing operations before income taxes, excluding significant unusual or infrequently occurring items.

The estimated annual effective rate is applied to the year to date ordinary income at the end of each quarter to compute the estimated year to date tax applicable to ordinary income. The tax expense or benefit related to ordinary income in each quarter is the difference between the most recent year to date and the prior quarter year to date computations.

The tax effects of significant unusual or infrequently occurring items are recognized as discrete items in the interim period in which the events occur. The impact of changes in tax laws or rates on deferred tax amounts, the effects of changes in judgment about beginning of the year valuation allowances, and changes in tax reserves resulting from the finalization of tax audits or reviews are examples of significant unusual or infrequently occurring items that are recognized as discrete items in the interim period in which the event occurs.

The determination of the annual effective tax rate is based upon a number of significant estimates and judgments, including the estimated annual pretax income of Woodward in each tax jurisdiction in which it operates, and the development of tax planning strategies during the year. In addition, as a global commercial enterprise, Woodward’s tax expense can be impacted by changes in tax rates or laws, the finalization of tax audits and reviews, as well as other factors that cannot be predicted with certainty. As such, there can be significant volatility in interim tax provisions.

The following table sets forth the tax expense and the effective tax rate for Woodward’s income from operations:

	Three-Months Ending						Nine-Months Ending
	June 30,						June 30,
	2011			2010			2011			2010
Earnings before income taxes	$	50,855		$	38,052		$	128,817		$	105,360
Income tax expense		14,799			6,187			38,272			26,873
Effective tax rate		29.1	%		16.3	%		29.7	%		25.5	%

Income taxes for the nine-months ending June 30, 2011 included an expense reduction of $3,088 related to the retroactive extension of the U.S. research and experimentation tax credit.

21

WOODWARD, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share amounts)
(Unaudited)

During the nine-months ended June 30, 2010, the Internal Revenue Service concluded an examination of Woodward’s U.S. Federal income tax returns for fiscal years 2007 and 2008. During the three-months ended June 30, 2010, Woodward completed certain internal revaluation assessments and certain statutes of limitations expired. As a result, Woodward reduced its liability for unrecognized tax benefits during the three-months ending June 30, 2010 by a net favorable amount of $6,416.

Worldwide unrecognized tax benefits were as follows, including $3,517 recorded in connection with the IDS Acquisition:

	June 30,		September 30,
	2011		2010
Gross liability	$	16,269	$	10,586
Amount that would impact Woodward’s effective tax rate, if recognized, net of expected offsetting adjustments		14,441		8,720

At this time, Woodward estimates that it is reasonably possible that the liability for unrecognized tax benefits will decrease by as much as $2,260 in the next twelve months due to the completion of reviews by tax authorities and the expiration of certain statutes of limitations.

Woodward recognizes interest and penalties related to unrecognized tax benefits in tax expense. Woodward had accrued interest and penalties of the following:

	June 30,		September 30,
	2011		2010
Accured interest and penalties	$	2,072	$	1,431

Woodward’s tax returns are audited by U.S., state, and foreign tax authorities, and these audits are at various stages of completion at any given time. Fiscal years remaining open to examination in significant foreign jurisdictions include 2003 and forward. Statutes of limitations on Woodward’s U.S. Federal income tax returns remain open for fiscal year 2008 and forward. Certain subsidiaries have open tax years back to 2007, which pre-dates the inclusion of these subsidiaries in the Woodward consolidated return filing group. Woodward is subject to U.S. state income tax examinations for fiscal years 2005 and forward.

Note 16. Retirement benefits

Woodward provides various benefits to eligible members of the Company, including contributions to various defined contribution plans, pension benefits associated with defined benefit plans, postretirement medical benefits and postretirement life insurance benefits. Eligibility requirements and benefit levels vary depending on employee location. A September 30 measurement date is utilized to value plan assets and obligations for all Woodward defined benefit pension and other postretirement benefit plans.

U.S. GAAP requires that, for obligations outstanding as of September 30, 2010, the funded status reported in interim periods shall be the same asset or liability recognized in the previous year end statement of financial position adjusted for (a) subsequent accruals of net periodic benefit cost that exclude the amortization of amounts previously recognized in other comprehensive income (for example, subsequent accruals of service cost, interest cost, and return on plan assets) and (b) contributions to a funded plan or benefit payments.

22

WOODWARD, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share amounts)
(Unaudited)

The components of the net periodic retirement pension costs recognized are as follows:

	Three-Months Ending June 30,
	United States						United Kingdom						Japan						Switzerland
	2011			2010			2011			2010			2011			2010			2011
Service cost	$	858		$	911		$	118		$	92		$	107		$	97		$	48
Interest cost		1,412			1,222			527			483			45			58			12
Expected return on plan assets		(1,673	)		(1,189	)		(572	)		(505	)		(65	)		(59	)		(12	)
Amortization of:
Transition obligation		—			—			—			—			—			21			—
Net actuarial loss		78			173			165			127			62			54			—
Prior service cost (benefit)		19			(65	)		—			—			(2	)		(2	)		—
Settlement loss		—			—			—			—			—			50			—
Curtailment loss		—			165			—			—			—			—			—
Net periodic retirement pension cost	$	694		$	1,217		$	238		$	197		$	147		$	219		$	48
Contributions	$	1,290		$	940		$	466		$	392		$	—		$	—		$	36

	Nine-Months Ending June 30,
	United States						United Kingdom						Japan						Switzerland
	2011			2010			2011			2010			2011			2010			2011
Service cost	$	2,575		$	2,735		$	350		$	292		$	321		$	292		$	48
Interest cost		4,235			3,667			1,556			1,518			133			178			12
Expected return on plan assets		(5,020	)		(3,569	)		(1,688	)		(1,591	)		(195	)		(179	)		(12	)
Amortization of:
Transition obligation		—			—			—			—			—			64			—
Net actuarial loss		234			437			487			398			185			165			—
Prior service cost (benefit)		56			(195	)		—			—			(6	)		(6	)		—
Settlement loss		—			—			—			—			—			50			—
Curtailment loss		—			165			—			—			—			—			—
Net periodic retirement pension cost	$	2,080		$	3,240		$	705		$	617		$	438		$	564		$	48
Contributions	$	1,290		$	940		$	1,406		$	1,318		$	2,250		$	913		$	36

The components of the net periodic other postretirement benefit costs recognized are as follows:

	Three-Months Ending						Nine-Months Ending
	June 30,						June 30,
	2011			2010			2011			2010
Service cost	$	23		$	30		$	69		$	90
Interest cost		494			519			1,481			1,560
Amortization of:
Net actuarial loss		32			48			96			142
Prior service benefit		(218	)		(313	)		(653	)		(937	)
Net periodic other postretirement cost	$	331		$	284		$	993		$	855
Contributions	$	879		$	609		$	2,473		$	2,075

23

WOODWARD, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share amounts)
(Unaudited)

The amount of cash contributions made to these plans in any year is dependent upon a number of factors, including minimum funding requirements in the jurisdictions in which Woodward operates and arrangements made with trustees of certain foreign plans. As a result, the actual funding in fiscal 2011 may differ from the current estimate. Woodward estimates its remaining cash contributions in fiscal 2011 will be as follows:

Retirement pension benefits:
United States	$	1,290
United Kingdom		430
Japan		—
Switzerland		47
Other postretirement benefits		178

Note 17. Stock-based compensation

Stock options

Woodward’s 2006 Omnibus Incentive Plan (the “2006 Plan”), which is stockholder-approved, provides for the grant of up to 7,410 stock options to its members and directors. Woodward believes that such awards better align the interest of its members with those of its stockholders. Stock option awards are granted with an exercise price equal to the market price of Woodward’s stock at the date of grant, and generally with a four-year vesting schedule at a vesting rate of 25% per year and a term of 10 years.

The fair value of each stock option award is estimated on the date of grant using a lattice-based option valuation model that uses the assumptions in the following table. Because the lattice-based option valuation models incorporate ranges of assumptions for inputs, those ranges are disclosed. Expected volatilities are based on implied volatilities from historical volatility of Woodward’s stock, and other factors. Woodward uses historical data to estimate stock option exercise and employee termination within the valuation model; separate groups of employees that have similar historical exercise behavior are considered separately for valuation purposes. The expected term of stock options granted is derived from the output of the option valuation model and represents the period of time that stock options granted are expected to be outstanding; the range given below results from certain participating groups exhibiting different behavior. The risk-free rate for periods within the contractual life of the stock option is based on the U.S. Treasury yield curve in effect at the time of grant.

	Three-Months Ending		Nine-Months Ending
	June 30,		June 30,
	2011	2010	2011	2010
Expected term	5.8 years	6.5 years	5.8 – 8.7 years	6.5 years
Estimated volatility	53.7%	51.0%	48.0% – 54.0%	51.0%
Estimated dividend yield	1.0%	1.4%	1.0% – 1.3%	1.4%
Risk-free interest rate	1.8%	2.4%	1.8% – 2.6%	3.4%
Forfeiture rate	10.6%	10.8%	0% – 10.6%	8.1%

24

WOODWARD, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share amounts)
(Unaudited)

The following is a summary of the activity for stock option awards during the three and nine-months ending June 30, 2011:

	Three-Months Ending					Nine-Months Ending
	June 30, 2011					June 30, 2011
				Weighted-					Weighted-
				Average					Average
	Number of			Exercise Price		Number of			Exercise Price
	options			per Share		options			per Share
Options, beginning balance		4,418		$	19.65		4,011		$	16.87
Options granted		28			33.04		710			32.10
Options exercised		(49	)		15.74		(310	)		10.14
Options expired unexercised		(2	)		32.73		(2	)		32.73
Options forfeited		(6	)		26.68		(20	)		26.61
Options, ending balance		4,389		$	19.76		4,389		$	19.76

As of June 30, 2011, there was $11,254 of total unrecognized compensation cost related to non-vested stock-based compensation arrangements granted under the 2002 Stock Option Plan (for which no further grants will be made) and the 2006 Plan. The remaining unrecognized compensation cost is expected to be recognized over a weighted-average period of approximately 2.7 years.

Restricted stock

In connection with Woodward’s acquisition of MPC Products, restricted stock awards were granted with a two-year graded vesting schedule. The restricted stock shares participated in dividends during the vesting period. On October 1, 2010, the remaining 70 outstanding restricted stock awards vested and there were no outstanding restricted stock awards as of June 30, 2011.

Note 18. Commitments and contingencies

Woodward is currently involved in claims, pending or threatened litigation or other legal proceedings, investigations or regulatory proceedings arising in the normal course of business, including, among others, those relating to product liability claims, employment matters, workman’s compensation claims, contractual disputes, product warranty claims and alleged violations of various laws and regulations. Woodward has accrued for individual matters that it believes are likely to result in a loss when ultimately resolved using estimates of the most likely amount of loss.

Woodward is partially self-insured in the U.S. for healthcare and workman’s compensation up to predetermined amounts, above which third party insurance applies. Management regularly reviews the probable outcome of these claims and proceedings, the expenses expected to be incurred, the availability and limits of the insurance coverage, and the established accruals for liabilities.

While the outcome of pending claims, proceedings and investigations cannot be predicted with certainty, management believes that any liabilities that may result from these claims, proceedings and investigations will not have a material adverse effect on Woodward’s liquidity, financial condition, or results of operations.

In connection with the sale of the Fuel & Pneumatic product line during fiscal year 2009, which was acquired as part of Woodward’s acquisition of HR Textron, Inc., Woodward assigned to a subsidiary of the purchaser its rights and responsibilities related to certain contracts with the U.S. Government. Woodward provided to the U.S. Government a customary guarantee of the purchaser’s subsidiary’s performance obligations under the contracts. The purchaser and its affiliates have agreed to indemnify Woodward for any liability incurred with respect to the guarantee.

In the event of a change in control of Woodward, as defined in change-in-control agreements with its current corporate officers, Woodward may be required to pay termination benefits to such officers.

25

WOODWARD, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share amounts)
(Unaudited)

Note 19. Segment information

Woodward has four operating business segments — Turbine Systems, Airframe Systems, Electrical Power Systems, and Engine Systems. Woodward uses segment information internally to manage its business, including the assessment of business segment performance and making decisions on the allocation of resources between segments.

The Company’s four operating business segments are strategic business units separately identified by the products and services they offer and by the markets in which they operate. Intersegment sales and transfers are made at established intersegment selling prices generally intended to approximate selling prices to unrelated parties. The Chief Executive Officer evaluates segment profit or loss based on internal performance measures for each business in a given period. In connection with that assessment, the Chief Executive Officer excludes matters such as charges for restructuring costs, interest income and expense, and certain gains and losses from asset dispositions.

A summary of consolidated net sales by segment follows:

	Three-Months Ending				Nine-Months Ending
	June 30,				June 30,
	2011		2010		2011		2010
Segment net sales:
Turbine Systems
External net sales	$	187,944	$	148,623	$	505,797	$	433,553
Intersegment sales		3,010		2,545		8,744		7,144
Total segment net sales		190,954		151,168		514,541		440,697
Airframe Systems
External net sales		102,354		93,518		282,065		274,827
Intersegment sales		603		609		1,988		1,900
Total segment net sales		102,957		94,127		284,053		276,727
Electrical Power Systems
External net sales		54,875		36,147		160,254		128,692
Intersegment sales		17,052		11,133		46,180		29,918
Total segment net sales		71,927		47,280		206,434		158,610
Engine Systems
External net sales		93,294		78,079		274,292		207,955
Intersegment sales		10,825		7,987		30,049		24,213
Total segment net sales		104,119		86,066		304,341		232,168
Consolidated
External net sales		438,467		356,367		1,222,408		1,045,027
Intersegment sales		31,490		22,274		86,961		63,175
Total segment net sales	$	469,957	$	378,641	$	1,309,369	$	1,108,202

26

WOODWARD, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share amounts)
(Unaudited)

A summary of consolidated earnings follows:

	Three-Months Ending						Nine-Months Ending
	June 30,						June 30,
	2011			2010			2011			2010
Segment earnings:
Turbine Systems	$	46,067		$	35,934		$	123,151		$	100,363
Airframe Systems		5,512			2,852			4,535			10,237
Electrical Power Systems		3,241			3,072			13,437			15,254
Engine Systems		9,833			9,131			28,129			18,513
Total segment earnings		64,653			50,989			169,252			144,367
Nonsegment expenses		(7,554	)		(6,085	)		(21,599	)		(16,810	)
Interest expense, net		(6,244	)		(6,852	)		(18,836	)		(22,197	)
Consolidated earnings before income taxes	$	50,855		$	38,052		$	128,817		$	105,360

Segment assets consist of accounts receivable, inventories, property, plant and equipment — net, goodwill, and other intangibles — net. A summary of consolidated total assets by segment follows:

	June 30,		September 30,
	2011		2010
Segment assets:
Turbine Systems	$	381,815	$	347,188
Airframe Systems		745,270		748,297
Electrical Power Systems		231,097		156,788
Engine Systems		229,998		204,495
Total segment assets		1,588,180		1,456,768
Unallocated corporate property, plant and equipment, net		6,853		6,111
Other unallocated assets		167,467		200,354
Consolidated total assets	$	1,762,500	$	1,663,233

27

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Amounts in thousands, except per share amounts)

FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements regarding future events and our future results within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are statements that are deemed forward-looking statements. These statements are based on current expectations, estimates, forecasts, and projections about the industries in which we operate and the beliefs and assumptions of management. Words such as “anticipate,” “believe,” “estimate,” “seek,” “goal,” “expect,” “forecast,” “intend,” “continue,” “outlook,” “plan,” “project,” “target,” “strive,” “can,” “could,” “may,” “should,” “will,” “would,” variations of such words, and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, and other characteristics of future events or circumstances are forward-looking statements. Forward-looking statements may include, among others, statements relating to:

• future sales, earnings, cash flow, uses of cash, and other measures of financial performance;

• description of our plans and expectations for future operations;

• the effect of economic downturns or growth in particular regions;

• the effect of changes in the level of activity in particular industries or markets;

• the availability and cost of materials, components, services, and supplies;

• the scope, nature, or impact of acquisition activity and integration into our businesses;

• the development, production, and support of advanced technologies and new products and services;

• new business opportunities;

• restructuring costs and savings;

• our plans, objectives, expectations and intentions with respect to recent acquisitions and expected business opportunities that may be available to us;

• the outcome of contingencies;

• future repurchases of common stock;

• future levels of indebtedness and capital spending; and

• pension plan assumptions and future contributions.

Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties, and assumptions that are difficult to predict, including:

• a decline in business with, or financial distress of, our significant customers;

• the instability in the financial markets and prolonged unfavorable economic and other industry conditions;

• our ability to obtain financing, on acceptable terms or at all, to implement our business plans, complete acquisitions, or otherwise take advantage of business opportunities or respond to business pressures;

• the long sales cycle, customer evaluation process, and implementation period of some of our products and services;

• our ability to implement, and realize the intended effects of, our restructuring efforts;

• our ability to successfully manage competitive factors, including prices, promotional incentives, industry consolidation, and commodity and other input cost increases;

• our ability to manage our expenses while responding to sales increases or decreases;

• the ability of our subcontractors to perform contractual obligations and our suppliers to provide us with materials of sufficient quality or quantity required to meet our production needs at favorable prices or at all;

28

• the success of, or expenses associated with, our product development activities;

• our ability to integrate acquisitions and manage costs related thereto;

• our debt obligations, our debt service requirements, and our ability to operate our business, pursue business strategies and incur additional debt in light of covenants contained in our outstanding debt agreements;

• risks related to our U.S. Government contracting activities, including risk of decline in the level of U.S. defense spending;

• future impairment charges resulting from changes in the estimates of fair value of reporting units or of long-lived assets;

• future subsidiary results or changes in domestic or international tax statutes;

• environmental liabilities related to manufacturing activities;

• our continued access to a stable workforce and favorable labor relations with our employees;

• the geographical location of a significant portion of our Airframe Systems business in California, which historically has been susceptible to natural disasters;

• our ability to successfully manage regulatory, tax, and legal matters (including product liability, patent, and intellectual property matters);

• liabilities resulting from legal and regulatory proceedings, inquiries, or investigations by private or U.S. Government persons or entities;

• risks from operating internationally, including the impact on reported earnings from fluctuations in foreign currency exchange rates, and changes in the legal and regulatory environments of countries in which we operate;

• fair value of defined benefit plan assets and assumptions used in determining our retirement pension and other postretirement benefit obligations and related expenses including, among others, discount rates and investment return on pension assets; and

• certain provisions of our charter documents and Delaware law that could discourage or prevent others from acquiring our company.

These factors are representative of the risks, uncertainties, and assumptions that could cause actual outcomes and results to differ materially from what is expressed or forecast in our forward-looking statements. Other factors are discussed under “Risk Factors” in our Securities and Exchange Commission (“SEC”) filings and are incorporated herein by reference.

Therefore, actual results could differ materially and adversely from those expressed in any forward-looking statements. For additional information regarding factors that may affect our actual financial condition and results of operations, see the information under the caption “Risk Factors” in Part I, Item 1A in our most recent Annual Report on Form 10-K filed with the SEC (our “Form 10-K”). We undertake no obligation to revise or update any forward-looking statements for any reason.

Unless we have indicated otherwise or the context otherwise requires, references in this Quarterly Report on Form 10-Q to “Woodward,” “the Company,” “we,” “us,” and “our” refer to Woodward, Inc. and its consolidated subsidiaries.

Amounts presented in this Quarterly Report on Form 10-Q are in thousands except per share amounts.

This discussion should be read together with Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our most recent Annual Report on Form 10-K filed with the SEC and the Condensed Consolidated Financial Statements and Notes included in this report.

Non-U.S. GAAP Financial Measures

Earnings before interest and taxes (“EBIT”), earnings before interest, taxes, depreciation and amortization (“EBITDA”) and free cash flow are financial measures not prepared and presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Management uses EBIT to evaluate Woodward’s operating performance without the impacts of financing and tax related considerations. Management uses EBITDA in evaluating Woodward’s operating performance; making business decisions, including developing budgets, managing expenditures, forecasting future periods; and evaluating capital structure impacts of various strategic scenarios. Management uses free cash flow, which is derived from cash flows provided by operating activities, in reviewing the financial performance of Woodward’s various business segments and evaluating cash generation levels. Securities analysts, investors, and others frequently use EBIT, EBITDA and free cash flow in their evaluation of companies, particularly those with significant property, plant, and equipment, and intangible assets that are subject to amortization. The use of these non-U.S. GAAP financial measures is not intended to be considered in isolation of, or as a substitute for, the financial information prepared and presented in accordance with U.S. GAAP. Because EBIT and EBITDA exclude certain financial information compared with net earnings, the most comparable U.S. GAAP financial measure, users of this financial information should consider the information that is excluded. Free cash flow does not necessarily represent funds available for discretionary use and is not necessarily a measure of our ability to fund our cash needs. Our calculations of EBIT, EBITDA and free cash flow may differ from similarly titled measures used by other companies, limiting their usefulness as comparative measures.

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EBIT and EBITDA for the three and nine-months ending June 30, 2011 and June 30, 2010 were as follows:

	Three-Months Ending						Nine-Months Ending
	June 30,						June 30,
	2011			2010			2011			2010
Net earnings	$	36,056		$	31,865		$	90,545		$	78,487
Income taxes		14,799			6,187			38,272			26,873
Interest expense		6,361			6,949			19,161			22,524
Interest income		(117	)		(97	)		(325	)		(327	)
EBIT		57,099			44,904			147,653			127,557
Amortization of intangible assets		8,935			8,635			26,020			26,471
Depreciation expense		10,955			9,826			31,279			29,984
EBITDA	$	76,989		$	63,365		$	204,952		$	184,012

Free cash flow for the nine-months ending June 30, 2011 and June 30, 2010 was as follows:

	Nine-Months Ending
	June 30,
	2011			2010
Net cash provided by operating activities	$	46,800		$	161,609
Capital expenditures		(32,640	)		(18,834	)
Free cash flow	$	14,160		$	142,775

OVERVIEW

Operational Highlights

Quarterly Highlights

Net sales for the third quarter of fiscal 2011 were $438,467, an increase of 23.0% from $356,367 for the third quarter of the prior fiscal year. We saw sales growth across all of our business segments, predominantly as a result of the overall global economic recovery, as compared to the third quarter of fiscal 2010.

Net earnings attributable to Woodward for the third quarter of fiscal 2011 were $36,056, or $0.51 per diluted share, compared to $31,745, or $0.45 per diluted share, for the third quarter of fiscal 2010. Net earnings were positively affected by the increased sales volume, partially offset by increased variable compensation and investment in research and development.

EBIT for the third quarter of fiscal 2011 was $57,099, up 27.2% from $44,904 in the same period of fiscal 2010, primarily due to increased sales volume.

During the third quarter of fiscal 2011, we acquired of all of the outstanding stock of Integral Drive Systems AG and its European companies, including their respective holding companies (“IDS”), and the assets of IDS’ business in China (together the “IDS Acquisition”) for an aggregate purchase price of approximately $48,412, which included approximately $8,463 in marketable securities.

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IDS is a developer and manufacturer of innovative power electronics systems predominantly in utility scale wind turbines and photovoltaic power plants. Additionally, IDS offers key products in both power distribution and marine propulsion systems. In addition to wind turbines and photovoltaic power plants, its products are used in offshore oil and gas platforms, energy storage and distribution systems, and a variety of industrial applications. IDS is being integrated into Woodward’s Electrical Power Systems business segment.

Year to Date Highlights

Net sales for the first nine months of fiscal 2011 were $1,222,408, an increase of 17.0% from $1,045,027 for the first nine months of the prior fiscal year. On a year to date basis, we saw growth across all of our business segments, with the majority of the growth occurring in our Turbine Systems and Engine Systems segments.

Net earnings attributable to Woodward for the first nine months of fiscal 2011 were $90,545, or $1.29 per diluted share, compared to $78,169, or $1.12 per diluted share, for the first nine months of fiscal 2010. Net earnings were positively affected by increased sales volumes, partially offset by increased investment in research and development, increased variable compensation and a reduction in customer funded development revenue. Net earnings attributable to Woodward for the first nine months of fiscal 2011 also included a charge of approximately $2,300, or $0.03 per share, net of approximately $1,300 tax benefit, related to a change in the estimate of future workman’s compensation costs. Net earnings attributable to Woodward for the third quarter and first nine months of fiscal 2010 also reflects the favorable resolution of prior year tax matters, which resulted in a reduction to tax expense of $6,416, or $0.09 per share.

EBIT for the first nine months of fiscal 2011 was $147,653, up 15.8% from $127,557 in the same period of fiscal 2010.

Liquidity Highlights

Net cash provided by operating activities for the first nine months of fiscal 2011 was $46,800 compared to $161,609 for the same period of fiscal 2010, reflecting the increase in working capital utilization primarily associated with increased inventory levels necessary to support future sales growth.

Free cash flow for the first nine months of fiscal 2011 was $14,160 compared to $142,775 for the same period of fiscal 2010.

EBITDA increased by $20,940 to $204,952 for the first nine months of fiscal 2011 from $184,012 for the same period of fiscal 2010.

At June 30, 2011, we held $72,598 in cash and cash equivalents, and had total outstanding debt of $468,786. At June 30, 2011, under our $225,000 revolving credit facility, we had additional borrowing availability of $179,330, net of outstanding letters of credit, and additional borrowing capacity of $29,086 under various foreign credit facilities.

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RESULTS OF OPERATIONS

The following table sets forth selected consolidated statements of earnings data as a percentage of net sales for each period indicated:

	Three-Months Ending												Nine-Months Ending
				% of						% of						% of						% of
	June 30,			Net			June 30,			Net			June 30,			Net			June 30,			Net
	2011			Sales			2010			Sales			2011			Sales			2010			Sales
Net sales	$	438,467			100.0	%	$	356,367			100.0	%	$	1,222,408			100.0	%	$	1,045,027			100.0	%
Cost of goods sold		304,441			69.4			249,966			70.1			858,138			70.2			733,834			70.2
Selling, general, and administrative expenses		38,470			8.8			31,394			8.8			109,581			9.0			98,359			9.4
Research and development costs		29,273			6.7			21,419			6.0			80,061			6.5			59,431			5.7
Amortization of intangible assets		8,935			2.0			8,635			2.4			26,020			2.1			26,471			2.5
Interest expense		6,361			1.5			6,949			1.9			19,161			1.6			22,524			2.2
Interest income		(117	)		(0.0	)		(97	)		(0.0	)		(325	)		(0.0	)		(327	)		(0.0	)
Other (income) expense, net		249			0.1			49			0.0			955			0.1			(625	)		(0.1	)
Consolidated costs and expenses		387,612			88.4			318,315			89.3			1,093,591			89.5			939,667			89.9
Earnings before income taxes		50,855			11.6			38,052			10.7			128,817			10.5			105,360			10.1
Income tax expense		14,799			3.4			6,187			1.7			38,272			3.1			26,873			2.6
Net earnings		36,056			8.2			31,865			8.9			90,545			7.4			78,487			7.5
Net earnings attributable to noncontrolling interest, net		—			—			(120	)		(0.0	)		—			—			(318	)		(0.0	)
Net earnings attributable to Woodward	$	36,056			8.2	%	$	31,745			8.9	%	$	90,545			7.4	%	$	78,169			7.5	%

Other select financial data:

	June 30,		September 30,
	2011		2010
Working capital	$	523,567	$	456,577
Short-term borrowings		41,577		22,099
Total debt		468,786		465,842
Total stockholders’ equity		898,298		803,194

Net sales

Consolidated net sales for the third quarter and first nine months of fiscal 2011 increased by $82,100, or 23.0%, and $177,381, or 17.0%, respectively, compared to the same periods of fiscal 2010. Details of the changes in consolidated net sales are as follows:

	Three-Month			Nine-Month
	Period			Period
Consolidated net sales for the period ending June 30, 2010	$	356,367		$	1,045,027
Turbine Systems volume changes		32,957			60,258
Airframe Systems volume changes		11,259			16,410
Airframe Systems customer funded development		(2,423	)		(9,172	)
Electrical Power Systems volume changes		14,882			33,251
Engine Systems volume changes		11,232			60,617
Price changes		2,748			6,742
Effects of changes in foreign currency rates		11,445			9,275
Consolidated net sales for the period ending June 30, 2011	$	438,467		$	1,222,408

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The increase in net external sales in the third quarter and first nine months of fiscal 2011 was attributable to sales volume increases across all our segments, offset partially by decreased customer funded development project revenue within Airframe Systems. Net external sales for the third quarter and first nine months of fiscal 2011 were also impacted by favorable price changes and foreign currency exchange rates.

As part of their component and system offerings, Turbine Systems and Engine Systems in some cases sell electronic controls manufactured by Electrical Power Systems. Engine Systems also manufactures certain components of larger systems ultimately sold by Turbine Systems.

Price changes: Increases in selling prices across several products in Turbine Systems and Engine Systems were partially offset by decreases in selling prices for some wind related Electrical Power Systems products. Selling price changes were in response to prevailing market conditions.

Foreign currency exchange rates: Our worldwide sales activities are primarily denominated in U.S. dollars (“USD”), European Monetary Units (the “Euro”), Great Britain pounds (“GBP”), Japanese yen (“JPY”) and Chinese yuan (“CNY”). As the USD, Euro, GBP, JPY, and CNY fluctuate against each other and other currencies, we are exposed to gains or losses on sales transactions. If the CNY, which the Chinese government has not historically allowed to fluctuate significantly against USD, is allowed to fluctuate against USD in the future, we would be exposed to gains or losses on sales transactions denominated in CNY. For additional information on foreign currency exchange rate risk refer to the risks summarized under the caption “Risk Factors” in Part I, Item 1A of our most recent Annual Report on Form 10-K filed with the SEC.

Costs and Expenses

Cost of goods sold increased by $54,475 to $304,441, or 69.4% of net sales, for the third quarter of fiscal 2011 from $249,966, or 70.1% of net sales, for the third quarter of fiscal 2010. Cost of goods sold increased to $858,138, or 70.2% of net sales, for the first nine months of fiscal 2011 from $733,834, or 70.2% of net sales, for the first nine months of fiscal 2010. Correspondingly, gross margins (as measured by net sales less cost of goods sold, divided by net sales) increased to 30.6% for the third quarter of fiscal 2011 compared to 29.9% for the same period of the prior year and remained flat at 29.8% for the first nine months of fiscal 2011 compared to fiscal 2010.

Selling, general, and administrative expenses increased by $7,076, or 22.5%, to $38,470 for the third quarter of fiscal 2011 as compared to $31,394 for the same period of fiscal 2010. Selling, general and administrative expenses were flat as a percentage of net sales at 8.8% for the third quarter of fiscal 2011 compared to fiscal 2010. Selling, general, and administrative expenses increased by $11,222, or 11.4%, to $109,581 for the first nine months of fiscal 2011 as compared to $98,359 for the same period of fiscal 2010. Selling, general and administrative expenses decreased as a percentage of net sales to 9.0% for the first nine months of fiscal 2011 as compared to 9.4% for the same period of fiscal 2010.

Research and development costs increased by $7,854, or 36.7%, to $29,273 for the third quarter of fiscal 2011 as compared to $21,419 for the same period of fiscal 2010. Research and development costs increased by $20,630, or 34.7%, to $80,061 for the first nine months of fiscal 2011 as compared to $59,431 for the same period of fiscal 2010. Research and development costs increased as a percentage of net sales to 6.7% and 6.5% for the third quarter and first nine months of fiscal 2011, respectively, as compared to 6.0% and 5.7% for the same respective periods of fiscal 2010. Our research and development activities extend across almost our entire customer base. The increase in research and development costs is primarily due to our investment in development of next generation technology and successful capture of new product platforms.

Amortization of intangible assets increased slightly to $8,935 and decreased slightly to $26,020 for the third quarter and first nine months of fiscal 2011, respectively, compared to $8,635 and $26,471 for the same periods in fiscal 2010. As a percentage of net sales, amortization of intangible assets decreased to 2.0% and 2.1% for the third quarter and first nine months of fiscal 2011, respectively, as compared to 2.4% and 2.5% for the same respective periods of the prior year.

Interest expense decreased to $6,361, or 1.5% of net sales, and $19,161, or 1.6% of net sales, for the third quarter and first nine months of fiscal 2011, respectively, compared to $6,949, or 1.9% of net sales, and $22,524, or 2.2% of net sales, for the same respective periods of the prior fiscal year. The decrease in interest expense is due to related debt reductions.

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Income taxes were provided at an effective rate on earnings before income taxes of 29.1% and 29.7% for the third quarter and first nine months of fiscal 2011, respectively, compared to 16.3% and 25.5% for the same respective periods of fiscal 2010. The change in the effective tax rate (as a percentage of earnings before income taxes) was attributable to the following:

	Three-Month			Nine-Month
	Period			Period
Effective tax rate for the period ending June 30, 2010		16.3	%		25.5	%
Research credit in fiscal 2011 as compared to fiscal 2010		(3.1	)		(3.0	)
Adjustment of tax issues recorded in the period ending June 30, 2010		18.2			8.2
Adjustment of tax issues recorded in the period ending June 30, 2011		(3.1	)		(1.3	)
Domestic production activities deduction		(0.9	)		(0.9	)
Foreign tax rate differences		1.2			1.2
Other changes, net		0.5			—
Effective tax rate for the period ending June 30, 2011		29.1	%		29.7	%

During the nine-months ending June 30, 2010, the Internal Revenue Service concluded an examination of our U.S. Federal income tax returns for fiscal years 2007 and 2008. During the three-months ending June 30, 2010, we completed certain internal revaluation assessments and certain statues of limitations expired. As a result, we reduced our liability for unrecognized tax benefits during the three-months ending June 30, 2010 by a net favorable amount of $6,416.

On December 17, 2010, legislation was enacted that retroactively extended the U.S. research tax credit, which had expired as of December 31, 2009. As a result of this extension, the first nine months of fiscal 2011 includes the effect of recognizing a tax benefit of $3,088 related to recognition of the retroactive impact to the prior year.

In January 2011, the State of Illinois increased its corporate income tax rate from 7.3% to 9.5% effective January 1, 2011. This tax rate increase is not expected to have a material impact on Woodward’s Consolidated Financial Statements.

Segment Results

The following table presents sales by segment:

	Three-Months Ending June 30,										Nine-Months Ending June 30,
	2011					2010					2011					2010
Segment net sales:
Turbine Systems	$	190,954		43.6	%	$	151,168		42.4	%	$	514,541		42.1	%	$	440,697		42.2	%
Airframe Systems		102,957		23.5			94,127		26.4			284,053		23.2			276,727		26.5
Electrical Power Systems		71,927		16.4			47,280		13.3			206,434		16.9			158,610		15.2
Engine Systems		104,119		23.7			86,066		24.2			304,341		24.9			232,168		22.2
Total segment net sales		469,957		107.2			378,641		106.3			1,309,369		107.1			1,108,202		106.0
Less intersegment net sales:
Turbine Systems		(3,010	)	(0.7	)		(2,545	)	(0.7	)		(8,744	)	(0.7	)		(7,144	)	(0.7	)
Airframe Systems		(603	)	(0.1	)		(609	)	(0.2	)		(1,988	)	(0.2	)		(1,900	)	(0.2	)
Electrical Power Systems		(17,052	)	(3.9	)		(11,133	)	(3.1	)		(46,180	)	(3.8	)		(29,918	)	(2.9	)
Engine Systems		(10,825	)	(2.5	)		(7,987	)	(2.2	)		(30,049	)	(2.5	)		(24,213	)	(2.3	)
Total intersegment net sales		(31,490	)	(7.2	)		(22,274	)	(6.3	)		(86,961	)	(7.1	)		(63,175	)	(6.0	)
Consolidated net sales	$	438,467		100.0	%	$	356,367		100.0	%	$	1,222,408		100.0	%	$	1,045,027		100.0	%

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The following table presents earnings by segment:

	Three-Months Ending June 30,						Nine-Months Ending June 30,
	2011			2010			2011			2010
Turbine Systems	$	46,067		$	35,934		$	123,151		$	100,363
Airframe Systems		5,512			2,852			4,535			10,237
Electrical Power Systems		3,241			3,072			13,437			15,254
Engine Systems		9,833			9,131			28,129			18,513
Total segment earnings		64,653			50,989			169,252			144,367
Nonsegment expenses		(7,554	)		(6,085	)		(21,599	)		(16,810	)
Interest expense, net		(6,244	)		(6,852	)		(18,836	)		(22,197	)
Consolidated earnings before income taxes		50,855			38,052			128,817			105,360
Income tax expense		(14,799	)		(6,187	)		(38,272	)		(26,873	)
Consolidated net earnings	$	36,056		$	31,865		$	90,545		$	78,487

The following table presents earnings by segment as a percentage of segment net sales, which includes intersegment sales:

	Three-Months Ending June 30,						Nine-Months Ending June 30,
	2011			2010			2011			2010
Turbine Systems		24.1	%		23.8	%		23.9	%		22.8	%
Airframe Systems		5.4			3.0			1.6			3.7
Electrical Power Systems		4.5			6.5			6.5			9.6
Engine Systems		9.4			10.6			9.2			8.0

Turbine Systems

Turbine Systems’ segment net sales (including intersegment sales) were $190,954 and $514,541 for the third quarter and first nine months of fiscal 2011, respectively, compared to $151,168 and $440,697 for the same periods of fiscal 2010. Sales were higher in both industrial turbine and aerospace markets during the third quarter and first nine months of fiscal 2011. Third quarter 2011 sales for the industrial turbine market were particularly strong in the steam, aeroderivative and heavy frame products, which also show favorable net sales results for the first nine months of fiscal 2011 as compared to the same period in the previous year. Sales for the aerospace aftermarket, in the third quarter and first nine months of fiscal 2011, continued to benefit from increased passenger and cargo air traffic, and the production of new aircraft platforms on which Turbine Systems’ products are used.

We believe the fleet dynamics of commercial aircraft platforms on which we have content, such as the Airbus A320, the Boeing 777, the Embraer and the Bombardier 70- to 90-seat regional jets, allowed our aftermarket business to be somewhat less negatively impacted by the effects of the recent economic down-cycle than some of our competitors and have supported sales growth as a result of the more recent rebound in air traffic. Commercial original equipment manufacturer (“OEM”) aircraft deliveries of narrow-body and wide-body aircraft have increased based on an increase in OEM production rates and orders. Sales in the power generation market have benefited from the continued recovery of the global economy and shift to natural gas. As a result, demand for industrial turbine equipment has strengthened, particularly in emerging markets and Japan.

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Turbine Systems’ segment earnings increased by $10,133, or 28.2%, and $22,788, or 22.7%, for the third quarter and first nine months of fiscal 2011, as compared to the same periods of fiscal 2010 due to the following:

	Three-Month			Nine-Month
	Period			Period
Earnings for the period ending June 30, 2010	$	35,934		$	100,363
Sales volume changes		12,117			21,985
Selling price changes		3,093			8,559
Sales mix		1,584			8,654
Investments in engineering and research and development		(1,700	)		(5,921	)
Changes in variable compensation		(2,709	)		(5,612	)
Increased costs to support sales growth		(1,450	)		(2,807	)
Effects of changes in foreign currency rates		249			(271	)
Other, net		(1,051	)		(1,799	)
Earnings for the period ending June 30, 2011	$	46,067		$	123,151

The increases in Turbine Systems’ segment earnings in the third quarter and first nine months of fiscal 2011 compared to the same periods of fiscal 2010 were primarily as a result of sales volume increases, selling price changes and a more favorable sales mix due to increased levels of aftermarket sales, partially offset by increased costs associated with new product development, variable compensation and costs associated with organizational infrastructure to support sales growth. The sales mix during the third quarter and first nine months of fiscal 2011 continued to include a higher proportion of aftermarket sales than the same period in fiscal 2010 as a result of increased air traffic. Earnings as a percentage of sales increased to 24.1% and 23.9% in the third quarter and first nine months of fiscal 2011, respectively, compared to 23.8% and 22.8% for the same periods of fiscal 2010.

Airframe Systems

Airframe Systems’ segment net sales (including intersegment sales) were $102,957 and $284,053 for the third quarter and first nine months of fiscal 2011, respectively, compared to $94,127 and $276,727 for the same periods of fiscal 2010. The increase in sales for the third quarter continues to reflect recovering demand for business and regional jets and a steady level of military sales, partially offset by reduced levels of customer funded development revenue. Additionally, military sales, primarily in our guided weapons products, contributed to increased fiscal 2011 third quarter sales. The increase in sales for the first nine months of fiscal 2011, as compared to the same period of the previous year, is attributable to increased OEM sales, primarily for rotorcraft and business and regional jets, offset by reduced demand for various military applications, which occurred in the first quarter of fiscal 2011, and decreased funding for customer development projects.

Airframe Systems’ segment earnings increased to $5,512 in the third quarter from $2,852 in the same period of fiscal 2010 and decreased to $4,535 in the first nine months of fiscal 2011 compared to $10,237 for the same period of fiscal 2010 due to the following:

	Three-Month			Nine-Month
	Period			Period
Earnings for the period ending June 30, 2010	$	2,852		$	10,237
Sales volume changes		4,490			4,678
Sales mix		741			(1,237	)
Customer funded development		(2,130	)		(8,879	)
Changes in variable compensation		(2,072	)		(3,402	)
Savings related to workforce management		—			2,369
Workman’s compensation costs		—			(2,232	)
Restructuring costs		—			1,411
Other, net		1,631			1,590
Earnings for the period ending June 30, 2011		5,512			4,535

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The increase in Airframe Systems segment earnings for the third quarter of fiscal 2011 was primarily due to increases in sales volume and favorable sales mix, partially offset by decreases in customer funded development revenue and increases in variable compensation. The decrease in Airframe Systems segment earnings for the first nine months of fiscal 2011 is due to decreased customer funded development revenue, increased variable compensation, and a charge related to a change in the estimate of future workman’s compensation costs, partially offset by increased sales volume, savings related to workforce management, and a reversal of previously accrued restructuring costs attributable to the early termination of a leased facility.

Electrical Power Systems

Electrical Power Systems’ segment net sales (including intersegment sales) were $71,927 and $206,434 for the third quarter and first nine months of fiscal 2011, respectively, compared to $47,280 and $158,610 for the same periods of fiscal 2010. During the third quarter fiscal 2011, wind turbine converter sales increased as a result of increased market share, primarily in China and India, and an increase in demand from existing customers. The third quarter of fiscal 2011 also experienced sales increases in non-wind power generation and distribution equipment, partially offset by strategic price decreases. Sales for the first nine months of fiscal 2011 increased principally due to increased demand for our wind turbine converters and non-wind power generation and distribution equipment, with sales related to power station projects down slightly as compared to the same period of fiscal 2010.

Although wind turbine converter sales increased in the first nine months of fiscal 2011 as compared to the same period in fiscal 2010, wind converter demand continues to be impacted by tight lender requirements for project financing and uncertainty regarding government stimulus programs due to a lack of clear policy direction in the U.S. and elsewhere.

Intersegment sales increased to $17,052 and $46,180 in the third quarter and first nine months of fiscal 2011, respectively, from $11,133 and $29,918 for the same periods of fiscal 2010 reflecting the strength in demand from Engine Systems’ and Turbine Systems’ customers.

Electrical Power Systems’ segment earnings increased by $169, or 5.5%, for the third quarter as compared to the same period in fiscal 2010 and decreased by $1,817, or 11.9%, for first nine months of fiscal 2011 as compared to the same period of fiscal 2010 due to the following:

	Three-Month			Nine-Month
	Period			Period
Earnings for the period ending June 30, 2010	$	3,072		$	15,254
Sales volume changes		3,499			14,446
Selling price changes		(478	)		(2,640	)
Sales mix		(1,271	)		(2,819	)
Investments in engineering and research and development		(718	)		(1,854	)
Changes in variable compensation		(1,163	)		(2,794	)
Increase in global expansion efforts		—			(3,625	)
Quality costs		—			(1,249	)
Effects of changes in foreign currency rates		410			(605	)
Other, net		(110	)		(677	)
Earnings for the period ending June 30, 2011	$	3,241		$	13,437

The increase in Electrical Power Systems’ segment earnings for the third quarter of fiscal 2011 as compared to the same period in the prior year was due to increased volume, partially offset by unfavorable sales mix, increased variable compensation costs, and price reductions to support market share gains. The decrease in Electrical Power Systems’ segment earnings for the first nine months of fiscal 2011 as compared to the same period in the prior year was driven mainly by increased global expansion effort costs, strategic price reductions to support market share gains and increased variable compensation. The benefit attributable to increased sales volume includes the affect of costs associated with recently expanded production facilities to serve the global customer base and product mix. These factors associated with the first nine months of fiscal 2011 were partially offset by increased sales volume of both wind turbine converters and non-wind power generation and distribution equipment.

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Engine Systems

Engine Systems’ segment net sales (including intersegment sales) were $104,119 and $304,341 for the third quarter and first nine months of fiscal 2011, respectively, compared to $86,066 and $232,168 for the same periods of fiscal 2010. The overall increase in sales for both the third quarter and the first nine months of fiscal 2011 compared to the same periods of fiscal 2010 was driven by increased sales volume in all markets served by Engine Systems. The strong growth continued to be recognized in the sales of energy control solutions used in small diesel and natural gas engine applications, which serve primarily construction, agricultural, and on-highway natural gas vehicles. Sales increases of energy control solutions used in large engine applications, which serve the power generation, marine, and process markets, were primarily attributable to increased demand for engines burning specialty fuels or for new power projects.

Engine Systems’ segment earnings increased by $702, or 7.7%, and $9,616, or 51.9%, for the third quarter and first nine months of fiscal 2011, respectively, as compared to the same periods of fiscal 2010 due to the following:

	Three-Month			Nine-Month
	Period			Period
Earnings for the period ending June 30, 2010	$	9,131		$	18,513
Sales volume changes		5,114			24,447
Selling price changes		133			823
Sales mix		(616	)		(5,097	)
Investments in engineering and research and development		(1,509	)		(5,124	)
Changes in variable compensation		(1,388	)		(3,111	)
Freight and duty costs		(200	)		(1,512	)
Effects of changes in foreign currency rates		363			924
Other, net		(1,195	)		(1,734	)
Earnings for the period ending June 30, 2011	$	9,833		$	28,129

For both the third quarter and the first nine months of fiscal 2011, increased segment earnings, compared to the same periods in fiscal 2010, were primarily driven by higher sales volumes, partially offset by increased investment in research and development, increases in variable compensation and an unfavorable sales mix.

Non-segment expenses

Non-segment expenses for the third quarter and first nine months of fiscal 2011 increased to $7,554, or 1.7% of net sales, and $21,599, or 1.8% of net sales, respectively, compared to $6,085, or 1.7% of net sales, and $16,810, or 1.6% of net sales, for the same periods of fiscal 2010. The increase in non-segment expenses for the third quarter and first nine months of fiscal 2011 resulted primarily from increased variable compensation.

LIQUIDITY AND CAPITAL RESOURCES

We believe liquidity and cash generation are important to our strategy of self-funding our ongoing operating needs. Historically, we have been able to satisfy our working capital needs, including capital expenditures, product development and other liquidity requirements associated with our operations, with cash flow provided by operating activities. We expect that cash generated from our operating activities will be sufficient to fund our continuing operating needs.

Our aggregate cash and cash equivalents were $72,598 and $105,579 and our working capital was $523,567 and $456,577 at June 30, 2011 and September 30, 2010, respectively. Of the $72,598 of cash and cash equivalents held at June 30, 2011, $64,902 is held in foreign subsidiaries. We are not presently aware of any restrictions on the repatriation of these funds, although a portion is considered permanently invested in these foreign subsidiaries. If these funds were needed to fund our operations or satisfy obligations in the U.S., they could be repatriated and their repatriation into the U.S. may cause us to incur additional U.S. income taxes on foreign withholding taxes. Any additional taxes could be offset, in part or in whole, by foreign tax credits. The amount of such taxes and application of tax credits would be dependent on the income tax laws and other circumstances at the time these amounts are repatriated.

In the event we are unable to generate sufficient cash flows from operating activities, we have a revolving credit facility comprised of unsecured financing arrangements with a syndicate of U.S. banks totaling $225,000. Under the revolving credit facility, we have an option to increase our available borrowings by $125,000 to $350,000, subject to the lenders’ participation. In addition, we have various foreign lines of credit, some of which are tied to net amounts on deposit at certain foreign financial institutions: these are generally reviewed annually for renewal. Historically, we have used borrowings under these foreign lines of credit to finance certain local operations on a periodic basis.

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At June 30, 2011, we had $41,000 of borrowings outstanding under our revolving credit facility and had foreign short-term borrowings outstanding of $577. The maximum daily balance during the period occurred in connection with the IDS Acquisition. Short-term borrowing activity during the nine-months ending June 30, 2011 follows:

Maximum daily balance during the period	$	67,573
Average daily balance during the period		27,167
Weighted average interest rate on average daily balance		1.08	%

At June 30, 2011, we had total outstanding debt of $468,786 with additional borrowing availability of $179,330 under our $225,000 revolving credit facility, net of outstanding letters of credit, and additional borrowing availability of $29,086 under various foreign credit facilities.

We were in compliance with all covenants under our revolving credit facility and long-term debt agreements during the nine-months ending June 30, 2011.

In addition to utilizing our cash resources to fund the working capital needs of our business, we evaluate additional strategic uses of our funds, including the repurchase of our stock, payment of dividends, and consideration of strategic acquisitions and other potential uses of cash.

We believe we have adequate access to several sources of contractually committed borrowings and other available credit facilities. However, we could be adversely affected if the banks supplying our short-term borrowing requirements refuse to honor their contractual commitments, cease lending, or declare bankruptcy. While we believe the lending institutions participating in our credit arrangements are financially capable, recent events in the global credit markets, including the failure, takeover or rescue by various government entities of major financial institutions, have created uncertainty with respect to credit availability.

Our ability to service our long-term debt, to remain in compliance with the various restrictions and covenants contained in our debt agreements and to fund working capital, capital expenditures and product development efforts will depend on our ability to generate cash from operating activities which in turn is subject to, among other things, future operating performance as well as general economic, financial, competitive, legislative, regulatory, and other conditions, some of which may be beyond our control.

Cash Flows Summary

	Nine-Months Ending
	June 30,
	2011			2010
Net cash provided by operating activities	$	46,800		$	161,609
Net cash used in investing activities		(71,554	)		(42,906	)
Net cash used in financing activities		(9,502	)		(137,669	)
Effect of exchange rate changes on cash and cash equivalents		1,275			(3,189	)
Net change in cash and cash equivalents		(32,981	)		(22,155	)
Cash and cash equivalents at beginning of period		105,579			100,863
Cash and cash equivalents at end of period	$	72,598		$	78,708

Net cash flows provided by operating activities for the first nine months of fiscal 2011 was $46,800 compared to $161,609 in the same period of fiscal 2010. The decrease during the first nine months of fiscal 2011 is attributable to the utilization of working capital primarily associated with increased investment in inventory levels and accounts receivable. The increase in inventory is due to anticipated deliveries scheduled for coming quarters as well as the effect of some sourcing inefficiencies.

Net cash flows used in investing activities for the first nine months of fiscal 2011 was $71,554 compared to $42,906 in the same period of fiscal 2010. The increase of $28,474 compared to the same period of the last fiscal year is due primarily to the IDS Acquisition completed in the third quarter of fiscal 2011 utilizing net cash of $47,161. Cash paid for capital expenditures was $32,640 during the first nine months of fiscal 2011, compared to $18,834 during the same period of fiscal 2010. Cash flows used in investing activities for the first nine months of fiscal 2010 included a $25,000 settlement with the Department of Justice (“DOJ”) associated with a liability assumed in the acquisition of MPC Products Corporation (“MPC Products”) and Techni-Core, Inc. (“Techni-Core” and together with MPC Products, “MPC”). The purchase price we paid in connection with the acquisition of MPC was reduced by a corresponding amount and the payment was recognized as cash used for business acquisition.

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Net cash flows used in financing activities for the first nine months of fiscal 2011 was $9,502 as compared to $137,669 in net cash flows used for the same period of fiscal 2010. During the first nine months of fiscal 2011, we had net short-term borrowings of $22,940, repaid $16,500 in scheduled long-term debt reductions, and paid stockholder dividends of $13,764. In addition, during this same period, we utilized $6,837 to repurchase 208 shares of our common stock.

During the first nine months of fiscal 2010, we repaid $118,582 of outstanding long-term debt, including unscheduled prepayments of $90,000, paid stockholder dividends of $12,971, and purchased the remaining non-controlling interest in Woodward Governor India Limited, a Woodward consolidated subsidiary, for $8,120. As a result of acquiring the remaining non-controlling interest, Woodward owns 100% of Woodward Governor India Limited. In addition, during the first nine months of fiscal 2010, we utilized $2,383 to purchase 85 shares of treasury stock, including $1,515 that was used to repurchase 55 shares of our common stock on the open market.

Contractual Obligations

We have various contractual obligations, including obligations related to long-term debt, operating leases, purchases, retirement pension benefit plans, and other postretirement benefit plans. These contractual obligations are summarized and discussed more fully in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our most recent Annual Report on Form 10-K filed with the SEC. There have been no material changes to our various contractual obligations during the first nine months of fiscal 2011.

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires us to make judgments, assumptions, and estimates that affect the amounts reported in the Condensed Consolidated Financial Statements and accompanying notes. Note 1, Operations and summary of significant accounting policies, to the Consolidated Financial Statements in our most recent Annual Report on Form 10-K filed with the SEC describes the significant accounting policies and methods used in the preparation of the Consolidated Financial Statements. Our critical accounting estimates, identified in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our most recent Annual Report on Form 10-K filed with the SEC include the discussion of estimates used for revenue recognition, purchase accounting, inventory valuation, postretirement benefit obligations, reviews for impairment of goodwill, and our provision for income taxes. Such accounting policies and estimates require significant judgments and assumptions to be used in the preparation of the Condensed Consolidated Financial Statements, and actual results could differ materially from the amounts reported.

Goodwill is tested for impairment at the reporting unit level on an annual basis and more often if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The impairment tests consist of comparing the fair value of each identified reporting unit with its carrying amount including goodwill. If the carrying amount of the reporting unit exceeds its fair value, we compare the implied value of goodwill with its carrying amount. If the carrying amount of goodwill exceeds the implied fair value of goodwill, an impairment loss would be recognized to reduce the carrying amount to its implied fair value.

We completed our annual goodwill impairment test during the quarter ended March 31, 2011. As a part of that test, we determined our Turbine Systems, Airframe Systems and Engine Systems operating segments represented individual reporting units. We determined our Electrical Power Systems operating segment was represented through three discrete identifiable reporting units. The fair value of each of our reporting units was determined using a discounted cash flow method. This method represents a Level 3 input and incorporates various estimates and assumptions, the most significant being projected revenue growth rates, operating earnings margins, and forecasted cash flows based on the discount rate and terminal growth rate. Management projects revenue growth rates, operating earnings margins and cash flows based on each reporting unit’s current operational results, expected performance and operational strategies over a five-year period. These projections are adjusted to reflect current economic conditions and demand for certain products and require considerable management judgment.

Forecasted cash flows were discounted using an 11.3% weighted average cost of capital assumption. The terminal value of the forecasted cash flows assumed an annual compound growth rate after five years of 4.4% and was calculated using the Gordon Growth Model. These inputs, which are unobservable in the market, represent management’s estimate of what market participants would use in determining the present value of our forecasted cash flows. Changes in these estimates and assumptions can have a significant impact on the fair value of forecasted cash flows. We evaluated the reasonableness of the resulting fair values of our reporting units by comparing the aggregate fair value to our market capitalization and assessing the reasonableness of any resulting premium.

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The results of our fiscal year 2011 annual goodwill impairment test performed as of March 31, 2011 indicated the estimated fair value of each reporting unit was in excess of its carrying value, and accordingly, no impairment existed. At March 31, 2011 the goodwill impairment test for our Airframe Systems reporting unit, which has a significant concentration of business in the business jet and regional jet market segments that lagged in the economic recovery, indicated the closest premium, as compared to this reporting unit’s carrying value. Each of our remaining reporting units had resulting fair values significantly in excess of their carrying values. Increasing the discount rate by 10%, decreasing the growth rate by 10%, or decreasing forecasted cash flow by 10%, as it relates to the Airframe Systems operating segment, would not have resulted in an impairment charge. However, an increase in the discount rate by approximately 11%, decreasing the growth rate by approximately 38%, or decreasing forecasted cash flow by approximately 15%, as it relates to our Airframe Systems operating segment, would have resulted in an impairment charge.

As part of our ongoing monitoring efforts, we will continue to consider the global economic environment and its potential impact on our business in assessing goodwill recoverability. There can be no assurance that our estimates and assumptions regarding forecasted cash flows of certain reporting units, the period or strength of the current economic recovery, or the other inputs used in forecasting the present value of forecasted cash flows will prove to be accurate projections of future performance.

New Accounting Standards

From time to time, the Financial Accounting Standards Board (“FASB”) or other standards setting bodies issue new accounting pronouncements. Updates to the FASB Accounting Standards Codification (“ASC”) are communicated through issuance of an Accounting Standards Update (“ASU”). Unless otherwise discussed, we believe that the impact of recently issued guidance, whether adopted or to be adopted in the future, is not expected to have a material impact on our Condensed Consolidated Financial Statements upon adoption.

To understand the impact of recently issued guidance, whether adopted or to be adopted, please review the information provided in Note 2, Recent accounting pronouncements, in the Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

In the normal course of business, we have exposures to interest rate risk from our long-term and short-term debt, and our postretirement benefit plans, and foreign currency exchange rate risk related to our foreign operations and foreign currency transactions. We are also exposed to various market risks that arise from transactions entered into in the normal course of business related to items such as the cost of raw materials and changes in inflation. Certain contractual relationships with customers and vendors mitigate risks from changes in raw material costs and foreign currency exchange rate changes that arise from normal purchasing and normal sales activities.

These market risks are discussed more fully in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our most recent Annual Report on Form 10-K filed with the SEC. These market risks have not materially changed since the date our most recent Annual Report on Form 10-K was filed with the SEC.

Item 4. Controls and Procedures

We have established disclosure controls and procedures, which are designed to ensure that information required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. These disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit under the Act is accumulated and communicated to management, including our Principal Executive Officer (Thomas A. Gendron, Chief Executive Officer and President) and Principal Financial Officer (Robert F. Weber, Jr., Chief Financial Officer and Treasurer), as appropriate, to allow timely decisions regarding required disclosures.

Thomas A. Gendron and Robert F. Weber, Jr., evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Form 10-Q. Based on their evaluations, they concluded that our disclosure controls and procedures were effective as of June 30, 2011.

Furthermore, there have been no changes in our internal control over financial reporting during the fiscal quarter covered by this Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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During the third quarter of fiscal 2011, we completed the IDS Acquisition as discussed in Note 4, Business acquisitions, in the Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q. We considered the results of our pre-acquisition due diligence activities, the continuation by IDS of its established internal control over financial reporting, and our implementation of additional internal control over financial reporting activities as part of our overall evaluation of disclosure controls and procedures as of June 30, 2011. The objectives of IDS’ established internal control over financial reporting was predominately associated with local statutory financial reporting. We are in the process of completing a more complete review of IDS’ internal control over financial reporting and will be implementing changes to better align its reporting and controls with the rest of Woodward. As a result of the timing of the acquisition and the changes that are anticipated to be made, and in accordance with the general guidance issued by the SEC regarding exclusion of certain acquired businesses, we currently intend to exclude IDS from the September 30, 2011 assessment of Woodward’s internal controls over financial reporting. IDS will be included in the September 30, 2012 assessment of Woodward’s internal controls over financial reporting. IDS accounted for approximately 3% of Woodward’s total assets at June 30, 2011. IDS accounted for less than 2%of Woodward’s total net sales for the quarter ending June 30, 2011.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

Woodward is currently involved in claims, pending or threatened litigation or other legal proceedings, investigations or regulatory proceedings arising in the normal course of business, including, among others, those relating to product liability claims, employment matters, workman’s compensation claims, regulatory, legal or contractual disputes, product warranty claims and alleged violations of various environmental laws. We have accrued for individual matters that we believe are likely to result in a loss when ultimately resolved using estimates of the most likely amount of loss.

While the outcome of pending claims, legal proceedings, investigations and regulatory proceedings cannot be predicted with certainty, management believes that any liabilities that may result from these claims, proceedings and investigations will not have a material adverse effect on our liquidity, financial condition, or results of operations.

Item 1A. Risk Factors

Investment in our securities involves risk. An investor or potential investor should consider the risks summarized under the caption “Risk Factors” in Part I, Item 1A of our most recent Annual Report on Form 10-K filed with the SEC, when making investment decisions regarding our securities. The risk factors that were disclosed in our most recent Annual Report on Form 10-K filed with the SEC have not materially changed since the date our most recent Annual Report on Form 10-K was filed with the SEC.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Recent Sales of Unregistered Securities

Sales of common stock issued from treasury during the second quarter of fiscal 2011 consisted of the following:

	Total Shares		Consideration
	Sold (2)		Received
April 1, 2011 through April 30, 2011 (1)		372	$	14
May 1, 2011 through May 31, 2011		—		—
June 1, 2011 through June 30, 2011		—		—

(1)	On April 28, 2011, one of our directors received 372 shares of common stock from treasury in lieu of cash payment of Board of Director retainer fees. The securities were issued by Woodward in reliance upon the exemption contained in Section 4(2) of the Securities Act of 1933.
(2)	Actual number of shares (not in thousands).

(b) Use of Proceeds

Not applicable.

(c) Issuer Purchases of Equity Securities

					Total
					Number of		Maximum Number
					Shares		(or Approximate
					Purchased		Dollar Value) of
	Total				as Part of		Shares that may
	Number of				Publicly		yet be Purchased
	Shares		Average		Announced		under the Plans or
	Purchased		Price Paid		Plans or		Programs at Period
	(3)		Per Share		Programs (1)		End (1)
April 1, 2011 through April 30, 2011		—	$	—		—	$	190,162
May 1, 2011 through May 31, 2011		—		—		—		190,162
June 1, 2011 through June 30, 2011 (2)		625		34.86		—		190,162

(1)	In July 2010, our Board of Directors authorized a stock repurchase program of up to $200,000 of our outstanding shares of common stock on the open market or in privately negotiated transactions over a three-year period that will end in July 2013.
(2)	The Woodward Governor Company Executive Benefit Plan, which is a separate legal entity, aquired 625 shares of common stock on the open market related to the reinvestment of dividends for shares of treasury stock held for deferred compensation in June 2011.
(3)	Actual number of shares (not in thousands).

Item 6. Exhibits

(a) Exhibits filed as Part of this Report are listed in the Exhibit Index.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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, INC.
Date: July 25, 2011	/s/ Thomas A. Gendron
	Thomas A. Gendron
	Chief Executive Officer and President (Principal Executive Officer)
Date: July 25, 2011	/s/ Robert F. Weber, Jr.
	Robert F. Weber, Jr.
	Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

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WOODWARD, INC.

EXHIBIT INDEX

Exhibit
Number		Description:
	10.1	Mr. Martin V. Glass employment letter dated April 27, 2011, filed as an exhibit.
	10.2	Sagar Patel employment letter dated June 17, 2011, filed as an exhibit.
	31.1	Rule 13a-14(a)/15d-14(a) certification of Thomas A. Gendron, filed as an exhibit.
	31.2	Rule 13a-14(a)/15d-14(a) certification of Robert F. Weber, Jr., filed as an exhibit.
	32.1	Section 1350 certifications, filed as an exhibit.
	101.1	The following materials from Woodward, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Statements of Earnings, (ii) the Condensed Consolidated Statements of Comprehensive Earnings, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash Flows, (v) the Condensed Consolidated Statements of Stockholders’ Equity, (vi) the Notes to Condensed Consolidated Financial Statements, and (vii) document and entity information. In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, and shall not be part of any registration statement or other document filed under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as shall be expressly set forth by specific reference in such filing.

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EX-10.1

Woodward Governor Company
1000 East Drake Road
P.O. Box 1519
Fort Collins, CO 80522-1519 USA
Tel: 970-482-5811
Fax: 970-498-3058

Exhibit 10.1

Date:	April 27, 2011
To:	Marty Glass
From:	Tom Gendron Chairman of the Board and Chief Executive Officer
Subject:	Job Offer: President, Airframe Systems

Dear Marty,

We are pleased to present to you the following details of your job offer for President, Airframe Systems, subject to your acceptance:

POSITION:

• Your new position would be President, Airframe Systems, and would be effective as of June 1, 2011.

• Your new position would be classified as a grade 8 (no change) on the Executive Compensation Structure, and would be used as the basis for determining your variable pay.

• The Compensation Committee of the Board of Directors reviewed the Hewitt total compensation data and approved our recommendations to make this offer.

• You would be based in the Skokie, Illinois facility and report directly to me.

COMPENSATION:

• Effective as of the pay period beginning May 28, 2011, your base salary would be $14,038.46 bi-weekly or $365,000 annually. This represents a base pay increase of 7.4%.

• You will continue to participate in the Management Incentive Plan (MIP). Your annual incentive pay target will continue to be 60% of base pay. For FY11, the base pay amount used to calculate any MIP bonus will be based on the number of pay periods worked prior to and after your promotion.

• You will continue to qualify for stock options. The granting of stock options is not a guarantee, and is subject to approval by the Compensation Committee of the Board of Directors.

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• You will continue to participate in the Woodward Long Term Incentive Plan (LTIP). Your annual LTIP target will continue to be 35% of base pay.

• You will be eligible for a salary review in October 2011.

RELOCATION BENEFITS:

Upon your acceptance, we would authorize a comprehensive relocation program to assist you and your spouse in moving from Rockford to the greater Chicago area, in accordance with the Woodward Relocation Policy Guidelines. The following highlights some of the benefits that will be provided to you:

• Pre-move house hunting trip for you and your spouse.

• Moving of household goods.

• Final move expenses.

• Temporary living expenses.

• Assistance in the sale of your home (including full-buyout program).

• Closing costs on your new home.

• Relocation Miscellaneous Expense Payment of $5,000

Special Relocation Benefits:

• You will receive a lump sum in the amount of $250,000 grossed up for taxes. The intent of this lump sum is to help offset the higher cost of housing in the greater Chicago area compared to the Rockford area. Please note that you would be required to repay Woodward the lump sum paid should you voluntarily leave the company within 2 years from your position effective date.

• If needed, the Company will authorize a “directed offer” to ensure your home sale is not less than your original home purchase price of $590,000. If the guaranteed offer (based on appraised value) or the actual sale price is higher than $590,000, this provision will not apply.

Please contact me should you have any questions. Marty, we are looking forward to your leadership abilities in running the Airframe Systems Business Group. In your new position, you will continue to play a key role on the Executive Staff and will have significant impact on our ability to meet our Vision 2015, goals and strategies.

If you accept this job offer and promotion on the terms and conditions set forth in this letter, please sign below and return the original of this letter to my attention.

Sincerely,
 

Tom Gendron

Accepted:
Martin V. Glass	Date

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EX-10.2

Woodward, Inc.
1000 East Drake Road
P.O. Box 1519
Fort Collins, CO 80522-1519 USA
Tel: 970-482-5811
Fax: 970-498-3050

Exhibit 10.2

Date:	May 27, 2011
To:	Mr. Sagar Patel 4711 Medallion Way Mason, Ohio 45040
From:	Tom Gendron Chairman of the Board and Chief Executive Officer
Subject:	Job Offer

Dear Sagar,

We are pleased to present to you the following details of your job offer:

POSITION:

This offer is for the position of President, Aircraft Turbines Systems reporting to Tom Gendron. This is an executive officer, exempt position and you will be based in the Rockford, Illinois facility.

COMPENSATION:

Base Pay:

• Your base salary will be $13,461.54 bi-weekly or $350,000 annually. Pay periods are bi-weekly and in the form of direct deposit. You will be eligible for a wage review on October 1, 2012.

Annual Incentive Compensation:

• You will participate in the Management Incentive Plan (MIP). Your annual MIP target will be 60% of base pay (or $210,000). The MIP payouts can reach a maximum of 200% of target. Any MIP bonuses are paid out each November after the close of the fiscal year, which is September 30^th. Target MIP bonuses are set by company objectives and financial performance. Subject to a start date prior to July 1, 2011, you would be eligible to participate in the MIP for Fiscal Year 2011, under which any MIP payout would be based on a prorated basis based on the number of pay periods you worked in the Fiscal Year. Please review the attached MIP Administrative Guidelines and related materials for further details.

Long Term Incentives:

• This position qualifies for Stock Options. The granting of Stock Options is not a guarantee, and is subject to approval by the Compensation Committee of the Board of Directors. Any grants are typically issued on or about October 1st. Please review the enclosed Stock Option Plan materials for further details.

• You will participate in the Woodward Long Term Incentive Plan (LTIP). This is a cash incentive compensation plan for selected top executives of the Company. The plan consists of a three-year performance period, with a new performance period starting at the beginning of each fiscal year. To the extent that the designated goals are achieved, a percentage (up to 200%) of the target award will be paid at the end of the performance period. Your target participation level will be 35% of your base pay (or $122,500).

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Special Provisions:

• As an added incentive, you will also receive a $375,000 (less applicable withholdings) cash sign on bonus if you accept the position. This bonus will be paid in the first pay run following your start date. Please note that you will be required to repay Woodward the bonus paid should you voluntarily leave the company within 2 years from your start date.

• Please note that all special provision payments are taxed at a flat federal withholding tax of twenty-five percent (25%), whether they are grossed up or not. Depending on your personal tax situation, this rate may not be enough to cover your actual tax liability. If you determine that additional taxes should be withheld, please contact Human Resources so they can coordinate with Payroll to increase the flat rate. This increase would apply to special payments only.

• If you accept this position, you will receive 25,000 nonqualified stock options upon your start date. The grant will be established at the Woodward stock price on your first date of employment using the closing price of the Company’s common stock on NASDAQ as of the award date. The vesting schedule will be consistent with the Stock Option Agreement. You will be eligible for another stock option grant in October 2011.

• Guaranteed target pro-rated LTIP payment (i.e., no less than $40,833) paid in November 2012, and guaranteed target pro-rated LTIP payment (i.e., no less than $81,667) in November 2013.

• A Change in Control Agreement that is triggered by a change in control will be prepared for you consistent with the provisions set for our Officers. If, within two years following a change in control of Woodward, (a) you resign for good reason (as defined in the agreement), or (b) your employment is terminated by Woodward (other than for cause or due to death or disability), you would receive, subject to the terms and conditions of the change in control agreement: (1) your unpaid base salary, accrued vacation pay, unreimbursed business expenses, and any other accrued obligations owed by Woodward; (2) a payment equal to the Woodward’s cost to provide you with two years continued health and welfare benefit coverage under Company-provided plans; (3) a payment equal to two years of contributions Woodward would have made on your behalf to your tax-qualified defined contribution retirement plan(s); (4) a payment, pro-rated based on relevant service, of the greater of the then-current year’s annual incentive award target or actual amount earned based on annualized year-to-date performance; (5) a payment, pro-rated based on relevant service, of the greater of target or the actual amount earned based on annualized year-to-date performance of all outstanding cash-based long-term incentive awards; (6) 200% of the sum of your annual base salary and target annual incentive. In addition, all unvested stock options awards not previously accelerated would become immediately exercisable. Outplacement services would be provided at Woodward’s expense as well as tax preparation services for the taxable year in which the termination occurred.

BENEFITS:

Woodward has an outstanding benefits package that distinguishes us in the labor market. Please review the enclosed Benefits Program Summary. Some benefits to highlight:

• You and any eligible dependents will be able to fully participate in the OneWoodward Health Care (medical, dental and vision) programs after thirty days of continued employment.

• You will become eligible for company-funded life insurance in the amount of two times your base annual salary after thirty days of continued employment. Additional life insurance for yourself or your dependents may be purchased during the annual enrollment period, which is each October/November.

2

• You may also elect to participate in our 401K plan upon employment. You can contribute between 0-50% of your bi-weekly pay, and Woodward will match 100% on contributions from 1 to 3%, and 50% on contributions above 3% to 6% (maximum company match of 4.5%). You will be 100% vested at the time of enrollment.

• Upon two years of service, you will automatically become a participant in the Woodward Stock Plan (the Company annually contributes 5% of eligible wages on your behalf). You will be 100% vested at the time of eligibility.

• The standard Seniority Based Vacation Plan accrues per pay period and equates to a base of ten days per calendar year. As a seasoned professional, you will be eligible for 4 weeks of vacation through your 13th^th year of service. Upon your 14^th year of service, vacation will begin to accrue beyond 4 weeks, at the rate indicated on the Seniority Based Vacation Plan schedule. Vacation may be taken after 30 days of employment. Base vacation in your first year will be calculated based upon the number of pay periods you work.

• You will also be eligible to participate in the Executive Benefit Plan. This is a nonqualified deferred compensation plan that allows you, as part of a select group of Woodward executives, to save extra pre-tax compensation for your retirement. These savings are in addition to the amount you can save through the qualified Woodward Retirement Program, which includes the 401(k) deferrals and matching contributions and the Woodward Stock Plan. Please review the attached program description.

RELOCATION BENEFITS:

We will authorize a comprehensive relocation program to assist you and your family in moving from Ohio to the Rockford area. Please review the attached Woodward Relocation Policy Guidelines for a full description of the relocation benefits and program rules. The following highlights some of the benefits that will be provided to you:

• Pre-move house hunting trip for you and your spouse.

• Moving of household goods.

• Final move expenses.

• Temporary living expenses.

• Assistance in the sale of your home

• Closing costs on your new home.

As an added benefit, we will authorize the following relocation policy exceptions:

• An extension to complete the relocation process up to August 31, 2012.

• Guaranteed offer on home option

• Interim living arrangements (use of the Woodward Condominium) in Rockford up to August 31, 2012 (valued at $1,550 per month), plus gross-up.

This letter contains the entire agreement with respect to your employment. It supersedes any and all other agreements, either oral or in writing with respect to the employment relationship. You and Woodward acknowledge and agree that no other agreement, statement or promise not included in this letter shall be valid or binding. The terms of employment, as set out in this letter, may not be modified or amended by oral agreement or course of conduct, but only by an agreement signed by both you and the Corporate Vice President, Human Resources.

Although we look forward to this being a long and mutually rewarding association, Illinois is an at-will state. Your employment will be at will. You may leave your employment at any time. Woodward may transfer, reassign, suspend or demote, or may terminate your employment, at any time, for any reason, with or without cause, and with or without notice.

3

Our offer is contingent upon: 1) the successful completion of a pre-employment drug screen, 2) the position being in existence at the time of your established start date, 3) no evidence of false or misleading information on your application or subsequent information you provide, 4) the completion of a post-offer physical, 5) the successful completion of a background check and Restricted Party Screening, 6) fulfilling I-9 and e-Verify requirements, and 7) receipt of any required export license or other authorization from the US government under US Export Control Regulation. These are requirements for all new employees.

We look forward to discussing the offer in more detail. Should any questions arise regarding this offer, feel free to contact Steve Meyer, Corporate Vice President, Human Resources or me.

If you accept this job offer on the terms and conditions set forth in this letter, please sign below and return the original of this letter to Steve Meyer either via fax ((970) 962-7146) or mail (1000 E. Drake Road, Fort Collins, CO 80525).

Sagar, we are really looking forward to having you join Woodward. This is an exciting time to be with the company as we are positioned extremely well for profitable growth. We hope that the career transition process for you and your family goes well.

Sincerely,

Tom Gendron

Enclosures

Accepted:

/s/ Sagar Patel
Sagar Patel	Date

Start Date: 6/27/2011

4

EX-31.1

Exhibit 31.1
Woodward, Inc.
Rule 13a-14(a)/15d-14(a) certifications

CERTIFICATION

I, Thomas A. Gendron, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the period ended June 30, 2011, of Woodward, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 25, 2011	/s/ Thomas A. Gendron
	Thomas A. Gendron Chairman of the Board, Chief Executive Officer, President (Principal Executive Officer)

A signed original of this written statement required by Rule 13a-14(a)/15d-14(a), or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Rule 13a-14(a)/15d-14(a), has been provided to Woodward and will be retained by Woodward and furnished to the Securities and Exchange Commission or its staff upon request.

EX-31.2

Exhibit 31.2
Woodward, Inc.
Rule 13a-14(a)/15d-14(a) certifications

CERTIFICATION

I, Robert F. Weber, Jr., certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the period ended June 30, 2011, of Woodward, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 25, 2011	/s/ Robert F. Weber, Jr.
	Robert F. Weber, Jr. Chief Financial Officer, Treasurer (Principal Financial and Accounting Officer)

A signed original of this written statement required by Rule 13a-14(a)/15d-14(a), or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Rule 13a-14(a)/15d-14(a), has been provided to Woodward and will be retained by Woodward and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.1

Exhibit 32.1
Woodward, Inc.
Section 1350 certifications

We hereby certify, pursuant to 18 U.S.C. Section 1350, that the accompanying Quarterly Report on Form 10-Q for the period ended June 30, 2011, of Woodward, Inc., fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in the Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Woodward, Inc.

Date: July 25, 2011	/s/ Thomas A. Gendron
	Thomas A. Gendron
	Chairman of the Board, Chief Executive Officer, and President

Date: July 25, 2011	/s/ Robert F. Weber, Jr.
	Robert F. Weber, Jr.
	Chief Financial Officer and Treasurer

A signed original of this written statement required by Rule 13a-14(a)/15d-14(a), or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Rule 13a-14(a)/15d-14(a), has been provided to Woodward and will be retained by Woodward and furnished to the Securities and Exchange Commission or its staff upon request.

XML



Document and Entity Information	9 Months Ended
	Jun. 30, 2011	Apr. 22, 2011
Document and Entity Information
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2011
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q3
Entity Registrant Name	Woodward, Inc.
Entity Central Index Key	0000108312
Current Fiscal Year End Date	--09-30
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		68,810,043

XML



Earnings Per Share

9 Months Ended

Jun. 30, 2011

Earnings Per Share

Earnings Per Share

Note 3. Earnings per share

Basic earnings per share attributable to Woodward is computed by dividing net earnings available to common stockholders by the weighted average number of shares of common stock outstanding for the period.

Diluted earnings per share attributable to Woodward reflects the weighted average number of shares outstanding after the assumed conversion of all dilutive securities.

The following is a reconciliation of net earnings to net earnings per share — basic and net earnings per share — diluted:

	Three-Months Ending				Nine-Months Ending
	June 30,				June 30,
	2011		2010		2011		2010
Numerator:
Net earnings attributable to Woodward	$	36,056	$	31,745	$	90,545	$	78,169
Denominator:
Basic shares outstanding		68,793		68,489		68,785		68,428
Dilutive effect of employee stock options		1,373		1,498		1,370		1,443
Diluted shares outstanding		70,166		69,987		70,155		69,871
Income per common share:
Basic earnings per share attribuable to Woodward	$	0.52	$	0.46	$	1.32	$	1.14
Diluted earnings per share attributable to Woodward	$	0.51	$	0.45	$	1.29	$	1.12

The following stock option grants were outstanding during the three and nine-months ending June 30, 2011 and 2010, but were excluded from the computation of diluted earnings per share because their inclusion would have been anti-dilutive:

	Three-Months Ending				Nine-Months Ending
	June 30,				June 30,
	2011		2010		2011		2010
Options		678		430		679		447
Weighted-average option price	$	32.06	$	32.58	$	32.03	$	32.49

The weighted-average shares of common stock outstanding for basic and diluted earnings per share included weighted-average treasury stock shares held for deferred compensation obligations of the following:

	Three-Months Ending				Nine-Months Ending
	June 30,				June 30,
	2011		2010		2011		2010
Weighted average treasury stock shares held for deferred compensation obligation		324		361		340		375

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Business Acquisitions

9 Months Ended

Jun. 30, 2011

Business Combinations

Business Acquisitions

Note 4. Business acquisitions

IDS Acquisition

During the third quarter of fiscal year 2011, Woodward acquired of all of the outstanding stock of Integral Drive Systems AG and its European companies, including their respective holding companies ("IDS"), and the assets of IDS' business in China (together the "IDS Acquisition") for an aggregate purchase price of approximately $48,412. The purchase price remains subject to certain customary post-closing adjustments. The estimated purchase price is included in "Cash flows from investing activities" in the Condensed Consolidated Statement of Cash Flows.

IDS is a developer and manufacturer of innovative power electronic systems predominantly in utility scale wind turbines and photovoltaic power plants. Additionally, IDS offers key products in power distribution and marine propulsion systems. In addition to wind turbines and photovoltaic plants, its products are used in offshore oil and gas platforms, energy storage and distribution systems, and a variety of industrial applications. IDS is being integrated into Woodward's Electrical Power Systems business segment.

The Company believes the IDS Acquisition expands its presence in wind converter offerings and reduces its time to market with expansion of solar energy, energy storage, and marine drives. Goodwill recorded in connection with the IDS Acquisition, which is not deductible for income tax purposes, represents the estimated value of such future opportunities, the value of potential expansion with new customers and the opportunity to further develop sales opportunities with new and acquired IDS customers, and anticipated synergies expected to be achieved through the integration of IDS into Woodward's Electrical Power Systems business segment.

Woodward is in the process of finalizing valuations of current assets, property, plant and equipment (including estimated useful lives), intangible assets (including estimated useful lives), other current liabilities, postretirement benefits obligations, deferred tax liabilities, and other noncurrent liabilities.

The preliminary purchase price of the IDS Acquisition is as follows:

Cash paid to owners	$	48,412
Less cash acquired		(1,251	)
Total estimated purchase price		47,161
Less marketable securities acquired		(8,463	)
Estimated price paid for business assets	$	38,698

As of June 30, 2011, $8,478 paid in connection with the IDS purchase was deposited into escrow accounts as surety against standard representations and warranties made by the seller. Funds held in escrow will be released upon the payment of certain tax and as otherwise specified in the related purchase agreements.

The preliminary allocation of the purchase price for the IDS Acquisition was accounted for under the purchase method of accounting in accordance with ASC Topic 805, Business Combinations. Assets acquired and liabilities assumed in the transaction were recorded at their acquisition date fair values, while transaction costs associated with the acquisition were expensed as incurred. The Company's allocation was based on an evaluation of the appropriate fair values and represents management's best estimate based on available data. As Woodward is still in the process of finalizing valuations, as mentioned above, the final purchase accounting has not yet been completed.

The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the date of the IDS Acquisition.

Current assets	$	14,627
Investments in marketable securities		8,463
Property, plant, and equipment		1,954
Goodwill		24,188
Intangible assets		11,882
Total assets acquired		61,114
Other current liabilities		5,505
Warranty accrual		2,250
Postretirement benefits		434
Deferred tax liabilities		2,472
Other tax — noncurrent		3,292
Total liabilities assumed		13,953
Net assets acquired	$	47,161

There were no changes to the values of assets acquired and liabilities assumed during the three-months ending June 30, 2011. The fair value of warranty liabilities assumed represents the estimated costs to provide service for contractual warranty obligations on products sold by IDS prior to April 15, 2011. The fair value of "Other tax — noncurrent" represents the estimated value of gross unrecognized tax benefits assumed.

In connection with the IDS Acquisition, Woodward acquired various marketable securities, which are not classified as cash equivalents under U.S. GAAP. These marketable securities were sold during the fiscal quarter ended June 30, 2011 and reinvested into cash and cash equivalents consistent with Woodward's internal investment and risk management policies. Losses on the sale of marketable securities were included in "Other (income) expense, net" in the Condensed Consolidated Statements of Earnings.

Also, in connection with the IDS Acquisition, Woodward assumed the net postretirement benefit obligations of several Swiss statutory retirement plans which are considered to be defined benefit plans under U.S. GAAP.

A summary of the intangible assets acquired, weighted average useful lives and amortization methods follows:

			Weighted
			Average Useful	Amortization
	Amount		Life	Method
Customer relationships	$	3,452	9years	Straight-line
Process technology		7,752	8.5years	Straight-line
Other		678	2.5years	Straight-line
Total	$	11,882	8years

The operating results of the IDS Acquisition are included in Woodward's Consolidated Statements of Earnings and Comprehensive Earnings as of April 15, 2011. Pro forma financial disclosures have not been presented as the IDS Acquisition was not material to Woodward's results of operations or financial position. The Company incurred transaction costs of $219 and $1,964 for the three and nine-months ending June 30, 2011, which are included in "Selling, general and administrative expenses" in the Condensed Consolidated Statements of Earnings.

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Financial Instruments and Fair Value Measurements

9 Months Ended

Jun. 30, 2011

Financial Instruments and Fair Value Measurements

Financial Instruments and Fair Value Measurements

Note 5. Financial instruments and fair value measurements

The estimated fair values of Woodward's financial instruments were as follows:

	At June 30, 2011						At September 30, 2010
	Estimated Fair						Estimated Fair
	Value			Carrying Cost			Value			Carrying Cost
Cash and cash equivalents	$	72,598		$	72,598		$	105,579		$	105,579
Investments in deferred compensation program		6,486			6,486			5,633			5,633
Short-term borrowings		(41,577	)		(41,577	)		(22,099	)		(22,099	)
Long-term debt, including current portion		(482,374	)		(427,190	)		(506,120	)		(443,673	)

The fair values of cash and cash equivalents, which include investments in money market funds, are assumed to be equal to their carrying amounts. Cash and cash equivalents have short-term maturities and market interest rates. Woodward's cash and cash equivalents include funds deposited or invested in the U.S. and overseas that are not insured by the Federal Deposit Insurance Corporation ("FDIC"). Woodward believes that its deposited and invested funds are held by or invested with credit worthy financial institutions or counterparties.

Investments related to the deferred compensation program used to provide deferred compensation benefits to certain employees are carried at market value.

The fair values of short-term borrowings at variable interest rates are assumed to be equal to their carrying amounts because such borrowings are expected to be repaid or settled for their carrying amounts within a short period of time.

The fair value of long-term debt at fixed interest rates was estimated based on a model that discounted future principal and interest payments at interest rates available to the Company at the end of the period for similar debt of the same maturity. The weighted-average interest rates used to estimate the fair value of long-term debt at fixed interest rates were as follows:

	June 30,			September 30,
	2011			2010
Weighted-average interest rate used to estimate fair value		2.7	%		2.9	%

Financial assets and liabilities recorded at fair value in the Condensed Consolidated Balance Sheet are categorized based upon a fair value hierarchy established by U.S. GAAP, which prioritizes the inputs used to measure fair value into the following levels:

Level 1: Inputs based on quoted market prices in active markets for identical assets or liabilities at the measurement date.

Level 2: Quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable and can be corroborated by observable market data.

Level 3: Inputs reflect management's best estimates and assumptions of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the valuation of the instruments.

The table below presents information about Woodward's financial assets that are measured at fair value on a recurring basis and indicates the fair value hierarchy of the valuation techniques Woodward utilized to determine such fair value. Woodward had no financial liabilities required to be measured at fair value on a recurring basis as of June 30, 2011 or September 30, 2010.

	At June 30, 2011								At September 30, 2010
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Financial assets:
Investments in money market funds	$	8,444	$	—	$	—	$	8,444	$	50,360	$	—	$	—	$	50,360
Equity securities		6,486		—		—		6,486		5,633		—		—		5,633
Foreign exchange forward contract		—		—		—		—		—		579		—		579
Total financial assets	$	14,930	$	—	$	—	$	14,930	$	55,993	$	579	$	—	$	56,572

Investments in money market funds: Woodward sometimes invests excess cash in money market funds not insured by the FDIC. Woodward believes that the investments in money market funds are on deposit with creditworthy financial institutions and that the funds are highly liquid. The investments in money market funds are reported at fair value and are included in Woodward's Condensed Consolidated Balance Sheet under the caption "Cash and cash equivalents." Realized gains from interest income are recognized in earnings. The fair values of Woodward's investments in money market funds are based on the quoted market prices for the net asset value of the various money market funds.

Equity securities: Woodward holds marketable equity securities, through investments in various mutual funds, related to its deferred compensation program. Based on Woodward's intentions regarding these instruments, marketable equity securities are classified as trading securities. The trading securities are included in Woodward's Condensed Consolidated Balance Sheet under the caption "Other current assets." The trading securities are reported at fair value, with gains and losses recognized in earnings. The fair values of Woodward's trading securities are based on the quoted market prices for the net asset value of the various mutual funds.

Forward contracts: As of September 30, 2010, Woodward was a party to a forward contract. The fair value of the derivative instrument was derived from published foreign currency exchange rates as of September 30, 2010. The forward contract was settled in December 2010, resulting in a realized loss of $1,033.

XML



Derivative Instruments and Hedging Activities

9 Months Ended

Jun. 30, 2011

Derivative Instruments and Hedging Activities

Derivative Instruments and Hedging Activities

Note 6. Derivative instruments and hedging activities

Woodward is exposed to global market risks, including the effect of changes in interest rates, foreign currency exchange rates, changes in certain commodity prices and fluctuations in various producer indices. From time to time, Woodward enters into derivative instruments for risk management purposes only, including derivatives designated as accounting hedges and/or those utilized as economic hedges. Woodward uses interest rate related derivative instruments to manage its exposure to fluctuations of interest rates. Woodward does not enter into or issue derivatives for trading or speculative purposes.

By using derivative and/or hedging instruments to manage its risk exposure, Woodward is subject, from time to time, to credit risk and market risk on those derivative instruments. Credit risk arises from the potential failure of the counterparty to perform under the terms of the derivative and/or hedging instrument. When the fair value of a derivative contract is positive, the counterparty owes Woodward, which creates credit risk for Woodward. Woodward mitigates this credit risk by entering into transactions with only credit worthy counterparties. Market risk arises from the potential adverse effects on the value of derivative and/or hedging instruments that result from a change in interest rates, commodity prices, or foreign currency exchange rates. Woodward mitigates this market risk by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken.

Woodward did not enter into any hedging transactions during the three or nine-months ending June 30, 2011 and was not a party to any derivative instruments as of June 30, 2011.

In September 2010, Woodward entered into a foreign currency exchange rate contract to purchase €39,000 for approximately $52,549 in early December 2010. The objective of this derivative instrument, which was not designated as an accounting hedge, was to limit the risk of foreign currency exchange rate fluctuations on a short-term intercompany loan balance. At September 30, 2010, an unrealized gain of $579 was recorded in Woodward's Condensed Consolidated Balance Sheet under the caption "Other current assets" reflecting an adjustment to fair market value for the related foreign currency exchange rate contract. In December 2010, a loss of $1,033 was realized on the settlement of this forward contract and was recorded in "Other (income) expense, net." The resulting correlated foreign currency gain realized on the repayment of the short-term intercompany loan balance was recorded in Woodward's Condensed Consolidated Statement of Earnings in "Selling, general and administrative expenses."

The following table discloses the remaining unrecognized gains and losses and recognized gains associated with derivative instruments in Woodward's Condensed Consolidated Balance Sheets:

	June 30,			September 30,
	2011			2010
Derivatives designated as hedging instruments	Unrecognized Gain (Loss)
Classified in accumulated other comprehensive earnings	$	(839	)	$	(1,011	)
Classified in current and long-term debt		19			70
	$	(820	)	$	(941	)
Derivatives not designated as hedging instruments	Recognized Gain
Classified in other current assets	$	—		$	579

The following tables disclose the impact of derivative instruments on Woodward's Condensed Consolidated Statements of Earnings:

		Three-Months Ending June 30, 2011							Three-Months Ending June 30, 2010
							Amount of							Amount of
		Amount of			Amount of		(Gain) Loss		Amount of			Amount of		(Gain) Loss
		(Income)			(Gain) Loss		Reclassified		(Income)			(Gain) Loss		Reclassified
	Location of (Gain)	Expense			Recognized in		from		Expense			Recognized in		from
	Loss	Recognized in			Accumulated		Accumulated		Recognized in			Accumulated		Accumulated
	Recognized in	Earnings on			OCI on		OCI into		Earnings on			OCI on		OCI into
Derivatives in:	Earnings	Derivative			Derivative		Earnings		Derivative			Derivative		Earnings
Fair value hedging relationships	Interest expense	$	(17	)	$	—	$	—	$	(31	)	$	—	$	—
Cash flow hedging relationships	Interest expense		57			—		57		70			—		70
Foreign currency relationships	Other (income) expense		—			—		—		—			—		—
		$	40		$	—	$	57	$	39		$	—	$	70
		Nine-Months Ending June 30, 2011							Nine-Months Ending June 30, 2010
							Amount of							Amount of
		Amount of			Amount of		(Gain) Loss		Amount of			Amount of		(Gain) Loss
		(Income)			(Gain) Loss		Reclassified		(Income)			(Gain) Loss		Reclassified
	Location of (Gain)	Expense			Recognized in		from		Expense			Recognized in		from
	Loss	Recognized in			Accumulated		Accumulated		Recognized in			Accumulated		Accumulated
	Recognized in	Earnings on			OCI on		OCI into		Earnings on			OCI on		OCI into
Derivatives in:	Earnings	Derivative			Derivative		Earnings		Derivative			Derivative		Earnings
Fair value hedging relationships	Interest expense	$	(51	)	$	—	$	—	$	(95	)	$	—	$	—
Cash flow hedging relationships	Interest expense		172			—		172		211			—		211
Foreign currency relationships	Other (income) expense		1,612			—		—		(102	)		—		—
		$	1,733		$	—	$	172	$	14		$	—	$	211

Based on the carrying value of the unrecognized gains and losses on terminated derivative instruments designated as cash flow hedges as of June 30, 2011, Woodward expects to reclassify $188 of net unrecognized losses on terminated derivative instruments from accumulated other comprehensive earnings to earnings during the next twelve months.

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Supplemental Statements of Cash Flows Information

9 Months Ended

Jun. 30, 2011

Supplemental Statements of Cash Flows Information

Supplemental Statements of Cash Flows Information

Note 7. Supplemental statements of cash flows information

	Nine-Months Ending
	June 30,
	2011		2010
Interest paid	$	25,596	$	27,627
Income taxes paid		33,549		27,104
Income tax refunds received		9,269		9,008
Non-cash activities:
Purchases of property, plant and equipment on account		1,881		751
Cashless exercise of stock options		1,124		—
Reduction of accounts receivable and short-term borrowing due to the settlement of accounts receivable previously sold with recourse		3,228		—
Reduction of accounts payable due to the assignment of accounts receivable with recourse		570		—
Reduction to goodwill due to favorable resolution of lease termination recorded in restructuring reserve		103		—
Payment of director fees through issuance of treasury stock		38		—

During the first quarter of fiscal 2011, Woodward negotiated a lease settlement that was favorable in comparison to the previously recorded restructuring accrual established in purchase accounting in connection with the fiscal year 2009 acquisition of MPC Products Corporation ("MPC Products") and Techni-Core, Inc. ("Techni-Core" and together with MPC Products "MPC"). The resulting benefit of $103 was recorded as a reduction to goodwill.

MPC Products, one of Woodward's subsidiaries acquired in fiscal year 2009, was previously subject to an investigation by the Department of Justice ("DOJ") regarding certain of its government contract pricing practices prior to June 2005. In the three-months ending December 31, 2009, MPC settled the criminal and civil claims related to the DOJ's investigation and paid $25,000 in compensation and fines. The purchase price Woodward paid in connection with the acquisition of MPC was reduced by $25,000 at the time of the acquisition, which represents the amounts discussed above. Payment of this amount during the nine-months ending June 30, 2010 is reflected as an investing activity in the accompanying Condensed Consolidated Statements of Cash Flows.

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Inventories

9 Months Ended

Jun. 30, 2011

Inventories

Inventories

Note 8. Inventories

	June 30,		September 30,
	2011		2010
Raw materials	$	46,963	$	19,457
Work in progress		91,971		86,438
Component parts and finished goods		248,834		189,139
	$	387,768	$	295,034

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Property, Plant, and Equipment - Net

9 Months Ended

Jun. 30, 2011

Property, Plant, and Equipment - Net

Property, Plant and Equipment - Net

Note 9. Property, plant, and equipment — net

	June 30,			September 30,
	2011			2010
Land	$	14,596		$	11,372
Buildings and improvements		179,787			171,257
Leasehold improvements		18,891			17,884
Machinery and production equipment		262,611			270,126
Computer equipment and software		62,791			57,518
Other		24,097			22,854
Construction in progress		39,265			13,125
		602,038			564,136
Less accumulated depreciation		(401,996	)		(370,612	)
Property, plant and equipment, net	$	200,042		$	193,524

	Three-Months Ending				Nine-Months Ending
	June 30,				June 30,
	2011		2010		2011		2010
Depreciation expense	$	10,955	$	9,826	$	31,279	$	29,984

During fiscal 2010, Woodward began construction of a new 48,000 square foot system test facility in Rockford, Illinois. The facility, which will house numerous environmental system test cells and a vibration lab, will support, among other development projects, Turbine Systems' development efforts of next generation fuel systems for aircraft turbines. The test facility is expected to be completed and placed into service in early fiscal year 2012. Included in construction in progress at June 30, 2011 and September 30, 2010 are $17,384 and $4,836, respectively, of costs associated with the construction of the test facility, including $805 and $165, respectively, of capitalized interest.

In addition at June 30, 2011 and September 30, 2010, Woodward recognized as construction in progress, $8,592 and $1,604, respectively, of costs associated with the development of a new Enterprise Resource Planning ("ERP") system for its Airframe Systems segment, including capitalized interest of $239 and $24, respectively.

For the three and nine-months ending June 30, 2011 and June 30, 2010, Woodward had capitalized interest that would have otherwise been included in interest expense of the following:

	Three-Months Ending				Nine-Months Ending
	June 30,				June 30,
	2011		2010		2011		2010
Capitalized interest	$	383	$	36	$	896	$	61

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Goodwill

9 Months Ended

Jun. 30, 2011

Goodwill

Goodwill

Note 10. Goodwill

								Effects of
	September 30,							Currency		June 30,
	2010		Additions		Adjustments			Translation		2011
Turbine Systems	$	86,565	$	—	$	—		$	—	$	86,565
Airframe Systems		294,557		—		(103	)		165		294,619
Electrical Power Systems		16,534		24,188		—			2,715		43,437
Engine Systems		40,938		—		—			273		41,211
Consolidated	$	438,594	$	24,188	$	(103	)	$	3,153	$	465,832

During the first quarter of fiscal 2011, Woodward negotiated a lease settlement that was favorable in comparison to the previously recorded restructuring accrual established in purchase accounting in connection with the fiscal year 2009 acquisition of MPC. The resulting benefit of $103 was recorded as a reduction to goodwill.

During the third quarter of fiscal 2011, Woodward completed the IDS Acquisition (Note 4, Business acquisitions), which resulted in the recognition of $24,188 in goodwill. The operations of the IDS Acquisition will be integrated into Woodward's Electrical Power Systems segment.

Woodward tests goodwill for impairment at the reporting unit level on an annual basis and more often if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The impairment tests consist of comparing the fair value of each identified reporting unit with its carrying amount including goodwill. If the carrying amount of the reporting unit exceeds its fair value, Woodward compares the implied value of goodwill with its carrying amount. If the carrying amount of goodwill exceeds the implied fair value of goodwill, an impairment loss would be recognized to reduce the carrying amount to its implied fair value.

Woodward completed its annual goodwill impairment test during the quarter ended March 31, 2011. As a part of that test, Woodward determined its Turbine Systems, Airframe Systems and Engine Systems operating segments represented individual reporting units. Woodward determined its Electrical Power Systems operating segment was represented through three discrete identifiable reporting units. The fair value of each of Woodward's reporting units was determined using a discounted cash flow method. This method represents a Level 3 input and incorporates various estimates and assumptions, the most significant being projected revenue growth rates, operating earnings margins, and forecasted cash flows based on the discount rate and terminal growth rate. Management projects revenue growth rates, operating earnings margins and cash flows based on each reporting unit's current operational results, expected performance and operational strategies over a five-year period. These projections are adjusted to reflect current economic conditions and demand for certain products and require considerable management judgment.

Forecasted cash flows were discounted using an 11.3% weighted average cost of capital assumption. The terminal value of the forecasted cash flows assumed an annual compound growth rate after five years of 4.4% and was calculated using the Gordon Growth Model. These inputs, which are unobservable in the market, represent management's estimate of what market participants would use in determining the present value of the Company's forecasted cash flows. Changes in these estimates and assumptions can have a significant impact on the fair value of forecasted cash flows. Woodward evaluated the reasonableness of the resulting fair values of its reporting units by comparing the aggregate fair value to its market capitalization and assessing the reasonableness of any resulting premium.

The results of Woodward's fiscal year 2011 annual goodwill impairment test performed as of March 31, 2011 indicated the estimated fair value of each reporting unit was in excess of its carrying value, and accordingly, no impairment existed. At March 31, 2011 the goodwill impairment test for Woodward's Airframe Systems reporting unit, which has a significant concentration of business in the business jet and regional jet market segments that lagged in the economic recovery, indicated the closest premium, as compared to this reporting unit's carrying value. Each of Woodward's remaining reporting units had resulting fair values significantly in excess of their carrying values. Increasing the discount rate by 10%, decreasing the growth rate by 10%, or decreasing forecasted cash flow by 10%, as it relates to the Airframe Systems operating segment, would not have resulted in an impairment charge. However, an increase in the discount rate by approximately 11%, decreasing the growth rate by approximately 38%, or decreasing forecasted cash flow by approximately 15%, as it relates to the Airframe Systems operating segment would have resulted in an impairment charge.

As part of the Company's ongoing monitoring efforts, Woodward will continue to consider the global economic environment and its potential impact on Woodward's business in assessing goodwill recoverability. There can be no assurance that Woodward's estimates and assumptions regarding forecasted cash flows of certain reporting units, the period or strength of the current economic recovery, or the other inputs used in forecasting the present value of forecasted cash flows will prove to be accurate projections of future performance.

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Other Intangibles - Net

9 Months Ended

Jun. 30, 2011

Other Intangibles - Net

Other Intangibles - Net

Note 11. Other intangibles — net

	June 30, 2011							September 30, 2010
	Gross							Gross
	Carrying		Accumulated			Net Carrying		Carrying		Accumulated			Net Carrying
	Value		Amortization			Amount		Value		Amortization			Amount
Customer relationships:
Turbine Systems	$	44,327	$	(19,331	)	$	24,996	$	44,327	$	(18,223	)	$	26,104
Airframe Systems		176,667		(25,019	)		151,648		176,634		(13,162	)		163,472
Electrical Power Systems		5,993		(1,167	)		4,826		2,156		(844	)		1,312
Engine Systems		20,675		(14,990	)		5,685		20,675		(13,577	)		7,098
Total	$	247,662	$	(60,507	)	$	187,155	$	243,792	$	(45,806	)	$	197,986
Intellectual property:
Turbine Systems	$	—	$	—		$	—	$	—	$	—		$	—
Airframe Systems		—		—			—		—		—			—
Electrical Power Systems		7,908		(4,106	)		3,802		7,616		(3,567	)		4,049
Engine Systems		12,616		(7,611	)		5,005		12,599		(6,988	)		5,611
Total	$	20,524	$	(11,717	)	$	8,807	$	20,215	$	(10,555	)	$	9,660
Process technology:
Turbine Systems	$	11,941	$	(5,208	)	$	6,733	$	11,941	$	(4,909	)	$	7,032
Airframe Systems		62,984		(10,327	)		52,657		62,967		(6,797	)		56,170
Electrical Power Systems		8,289		(212	)		8,077		—		—			—
Engine Systems		12,593		(5,560	)		7,033		12,593		(4,787	)		7,806
Total	$	95,807	$	(21,307	)	$	74,500	$	87,501	$	(16,493	)	$	71,008
Other intangibles:
Turbine Systems	$	—	$	—		$	—	$	—	$	—		$	—
Airframe Systems		39,648		(32,900	)		6,748		39,638		(27,595	)		12,043
Electrical Power Systems		2,337		(583	)		1,754		1,510		(389	)		1,121
Engine Systems		460		(196	)		264		460		(129	)		331
Total	$	42,445	$	(33,679	)	$	8,766	$	41,608	$	(28,113	)	$	13,495
Total intangibles:
Turbine Systems	$	56,268	$	(24,539	)	$	31,729	$	56,268	$	(23,132	)	$	33,136
Airframe Systems		279,299		(68,246	)		211,053		279,239		(47,554	)		231,685
Electrical Power Systems		24,527		(6,068	)		18,459		11,282		(4,800	)		6,482
Engine Systems		46,344		(28,357	)		17,987		46,327		(25,481	)		20,846
Consolidated Total	$	406,438	$	(127,210	)	$	279,228	$	393,116	$	(100,967	)	$	292,149

	Three-Months Ending				Nine-Months Ending
	June 30,				June 30,
	2011		2010		2011		2010
Amortization expense	$	8,935	$	8,635	$	26,020	$	26,471

Future amortization expense associated with intangibles is expected to be:

Year Ending September 30:
2011 (remaining)	$	8,973
2012		33,062
2013		30,701
2014		27,545
2015		25,029
Thereafter		153,918
	$	279,228

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Accrued Liabilities

9 Months Ended

Jun. 30, 2011

Accrued Liabilities

Accrued Liabilities

Note 12. Accrued liabilities

	June 30,		September 30,
	2011		2010
Salaries and other member benefits	$	57,300	$	43,598
Current portion of restructuring and other charges		2,740		4,862
Warranties		14,522		10,851
Interest payable		5,689		11,925
Accrued retirement benefits		2,735		2,748
Deferred revenues		7,242		12,376
Taxes, other than income		1,956		4,618
Other		17,542		18,074
	$	109,726	$	109,052

Warranties

Provisions of Woodward's sales agreements include product warranties customary to these types of agreements. Accruals are established for specifically identified warranty issues that are probable to result in future costs. Warranty costs are accrued on a non-specific basis whenever past experience indicates a normal and predictable pattern exists. Changes in accrued product warranties were as follows:

Warranties, September 30, 2010	$	10,851
Increases to accruals related to warranties during the period		4,070
Increases due to acquisition of IDS		2,250
Settlements of amounts accrued		(3,226	)
Foreign currency exchange rate changes		577
Warranties, June 30, 2011	$	14,522

Restructuring and other charges

The main components of accrued non-acquisition related restructuring charges include workforce management costs associated with the early retirement and the involuntary separation of employees in connection with a strategic realignment of global workforce capacity. Restructuring charges related to business acquisitions include a number of items such as those associated with integrating similar operations, workforce management, vacating certain facilities, and the cancellation of some contracts.

During the three-months ending December 31, 2010, Woodward negotiated a lease settlement that was favorable in comparison to the previously recorded restructuring accrual established in purchase accounting in connection with the fiscal year 2009 acquisition of MPC. The resulting benefit of $103 was recorded as a non-cash charge to restructuring and a reduction to goodwill previously established at the time of the acquisition of MPC. During the three-months ending December 31, 2010, Woodward also modified its exit plan related to its Pacoima, California location. As a result, the Company intends to occupy and continue operating from the Pacoima location for a longer period than originally anticipated. Accordingly, Woodward has reduced the anticipated exit costs by $1,513 for the Pacoima location.

The summary of the activity in accrued restructuring charges during the three and nine-months ending June 30, 2011 is as follows:

	Three-Months Ending
	June 30, 2011
	Restructuring			Business
	Charges			Acquisitions			Total
Accrued restructuring charges, March 31, 2011	$	497		$	3,253		$	3,750
Payments		(63	)		(5	)		(68	)
Non-cash adjustments		3			(453	)		(450	)
Foreign currency exchange rates		3			—			3
Accrued restructuring charges, June 30, 2011	$	440		$	2,795		$	3,235

	Nine-Months Ending
	June 30, 2011
	Restructuring			Business
	Charges			Acquisitions			Total
Accrued restructuring charges, September 30, 2010	$	667		$	5,446		$	6,113
Payments		(208	)		(705	)		(913	)
Non-cash adjustments		(28	)		(1,946	)		(1,974	)
Foreign currency exchange rates		9			—			9
Accrued restructuring charges, June 30, 2011	$	440		$	2,795		$	3,235

Other liabilities included the following amounts of accrued restructuring charges not expected to be settled within twelve months:

	June 30,		September 30,
	2011		2010
Non-current accrued restructuring charges	$	495	$	1,251

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Condensed Consolidated Statements of Earnings (USD $) In Thousands, except Per Share data	3 Months Ended		9 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Condensed Consolidated Statements of Earnings
Net sales	$ 438,467	$ 356,367	$ 1,222,408	$ 1,045,027
Costs and expenses:
Cost of goods sold	304,441	249,966	858,138	733,834
Selling, general and administrative expenses	38,470	31,394	109,581	98,359
Research and development costs	29,273	21,419	80,061	59,431
Amortization of intangible assets	8,935	8,635	26,020	26,471
Interest expense	6,361	6,949	19,161	22,524
Interest income	(117)	(97)	(325)	(327)
Other (income) expense, net	249	49	955	(625)
Total costs and expenses	387,612	318,315	1,093,591	939,667
Earnings before income taxes	50,855	38,052	128,817	105,360
Income tax expense	14,799	6,187	38,272	26,873
Net earnings	36,056	31,865	90,545	78,487
Earnings attributable to noncontrolling interest, net of taxes		(120)		(318)
Net earnings attributable to Woodward	$ 36,056	$ 31,745	$ 90,545	$ 78,169
Earnings per share (Note 3):
Basic earnings per share attributable to Woodward	$ 0.52	$ 0.46	$ 1.32	$ 1.14
Diluted earnings per share attributable to Woodward	$ 0.51	$ 0.45	$ 1.29	$ 1.12
Weighted Average Common Shares Outstanding (Note 3):
Basic	68,793	68,489	68,785	68,428
Diluted	70,166	69,987	70,155	69,871
Cash dividends per share paid to Woodward common stockholders	$ 0.07	$ 0.06	$ 0.20	$ 0.18

XML



Other Liabilities

9 Months Ended

Jun. 30, 2011

Other Liabilities

Other Liabilities

Note 13. Other liabilities

	June 30,		September 30,
	2011		2010
Net accrued retirement benefits, less amounts recognized within accrued liabilities	$	64,797	$	66,288
Uncertain tax positions, net of offsetting benefits, less amounts recognized within accrued liabilities (Note 15)		14,441		8,720
Other		11,815		8,967
	$	91,053	$	83,975

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Other (Income) Expense, Net

9 Months Ended

Jun. 30, 2011

Other (Income) Expense, Net

Other (Income) Expense, Net

Note 14. Other (income) expense, net

	Three-Months Ending						Nine-Months Ending
	June 30,						June 30,
	2011			2010			2011			2010
Net (gain) loss on sale of assets	$	428		$	(156	)	$	429		$	(99	)
Rent income		(130	)		(123	)		(437	)		(388	)
Net (gain) loss on investments in deferred compensation program		(46	)		298			(614	)		(101	)
Net (income) expense recognized in earnings on foreign currency derivatives (Note 6)		—			—			1,612			(102	)
Other		(3	)		30			(35	)		65
	$	249		$	49		$	955		$	(625	)

For additional information regarding "Net (income) expense recognized in earnings on foreign currency derivatives" refer to Note 6, Derivative instruments and hedging activities.

Included in the "Net (gain) loss on sale of assets" for the three and nine-months ending June 30, 2011, is a net loss of $246 on the sale of the marketable securities acquired in the IDS Acquisition.

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Income Taxes

9 Months Ended

Jun. 30, 2011

Income Taxes

Income Taxes

Note 15. Income taxes

U.S. GAAP requires that the interim period tax provision be determined as follows:

At the end of each quarter, Woodward estimates the tax that will be provided for the current fiscal year stated as a percentage of estimated "ordinary income". The term ordinary income refers to earnings from continuing operations before income taxes, excluding significant unusual or infrequently occurring items.

The estimated annual effective rate is applied to the year to date ordinary income at the end of each quarter to compute the estimated year to date tax applicable to ordinary income. The tax expense or benefit related to ordinary income in each quarter is the difference between the most recent year to date and the prior quarter year to date computations.

The tax effects of significant unusual or infrequently occurring items are recognized as discrete items in the interim period in which the events occur. The impact of changes in tax laws or rates on deferred tax amounts, the effects of changes in judgment about beginning of the year valuation allowances, and changes in tax reserves resulting from the finalization of tax audits or reviews are examples of significant unusual or infrequently occurring items that are recognized as discrete items in the interim period in which the event occurs.

The determination of the annual effective tax rate is based upon a number of significant estimates and judgments, including the estimated annual pretax income of Woodward in each tax jurisdiction in which it operates, and the development of tax planning strategies during the year. In addition, as a global commercial enterprise, Woodward's tax expense can be impacted by changes in tax rates or laws, the finalization of tax audits and reviews, as well as other factors that cannot be predicted with certainty. As such, there can be significant volatility in interim tax provisions.

The following table sets forth the tax expense and the effective tax rate for Woodward's income from operations:

	Three-Months Ending						Nine-Months Ending
	June 30,						June 30,
	2011			2010			2011			2010
Earnings before income taxes	$	50,855		$	38,052		$	128,817		$	105,360
Income tax expense		14,799			6,187			38,272			26,873
Effective tax rate		29.1	%		16.3	%		29.7	%		25.5	%

Income taxes for the nine-months ending June 30, 2011 included an expense reduction of $3,088 related to the retroactive extension of the U.S. research and experimentation tax credit.

During the nine-months ended June 30, 2010, the Internal Revenue Service concluded an examination of Woodward's U.S. Federal income tax returns for fiscal years 2007 and 2008. During the three-months ended June 30, 2010, Woodward completed certain internal revaluation assessments and certain statutes of limitations expired. As a result, Woodward reduced its liability for unrecognized tax benefits during the three-months ending June 30, 2010 by a net favorable amount of $6,416.

Worldwide unrecognized tax benefits were as follows, including $3,517 recorded in connection with the IDS Acquisition:

	June 30,		September 30,
	2011		2010
Gross liability	$	16,269	$	10,586
Amount that would impact Woodward's effective tax rate, if recognized, net of expected offsetting adjustments		14,441		8,720

At this time, Woodward estimates that it is reasonably possible that the liability for unrecognized tax benefits will decrease by as much as $2,260 in the next twelve months due to the completion of reviews by tax authorities and the expiration of certain statutes of limitations.

Woodward recognizes interest and penalties related to unrecognized tax benefits in tax expense. Woodward had accrued interest and penalties of the following:

	June 30,		September 30,
	2011		2010
Accured interest and penalties	$	2,072	$	1,431

Woodward's tax returns are audited by U.S., state, and foreign tax authorities, and these audits are at various stages of completion at any given time. Fiscal years remaining open to examination in significant foreign jurisdictions include 2003 and forward. Statutes of limitations on Woodward's U.S. Federal income tax returns remain open for fiscal year 2008 and forward. Certain subsidiaries have open tax years back to 2007, which pre-dates the inclusion of these subsidiaries in the Woodward consolidated return filing group. Woodward is subject to U.S. state income tax examinations for fiscal years 2005 and forward.

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Retirement Benefits

9 Months Ended

Jun. 30, 2011

Retirement Benefits

Retirement Benefits

Note 16. Retirement benefits

Woodward provides various benefits to eligible members of the Company, including contributions to various defined contribution plans, pension benefits associated with defined benefit plans, postretirement medical benefits and postretirement life insurance benefits. Eligibility requirements and benefit levels vary depending on employee location. A September 30 measurement date is utilized to value plan assets and obligations for all Woodward defined benefit pension and other postretirement benefit plans.

U.S. GAAP requires that, for obligations outstanding as of September 30, 2010, the funded status reported in interim periods shall be the same asset or liability recognized in the previous year end statement of financial position adjusted for (a) subsequent accruals of net periodic benefit cost that exclude the amortization of amounts previously recognized in other comprehensive income (for example, subsequent accruals of service cost, interest cost, and return on plan assets) and (b) contributions to a funded plan or benefit payments.

The components of the net periodic retirement pension costs recognized are as follows:

	Three-Months Ending June 30,
	United States						United Kingdom						Japan						Switzerland
	2011			2010			2011			2010			2011			2010			2011
Service cost	$	858		$	911		$	118		$	92		$	107		$	97		$	48
Interest cost		1,412			1,222			527			483			45			58			12
Expected return on plan assets		(1,673	)		(1,189	)		(572	)		(505	)		(65	)		(59	)		(12	)
Amortization of:
Transition obligation		—			—			—			—			—			21			—
Net actuarial loss		78			173			165			127			62			54			—
Prior service cost (benefit)		19			(65	)		—			—			(2	)		(2	)		—
Settlement loss		—			—			—			—			—			50			—
Curtailment loss		—			165			—			—			—			—			—
Net periodic retirement pension cost	$	694		$	1,217		$	238		$	197		$	147		$	219		$	48
Contributions	$	1,290		$	940		$	466		$	392		$	—		$	—		$	36

	Nine-Months Ending June 30,
	United States						United Kingdom						Japan						Switzerland
	2011			2010			2011			2010			2011			2010			2011
Service cost	$	2,575		$	2,735		$	350		$	292		$	321		$	292		$	48
Interest cost		4,235			3,667			1,556			1,518			133			178			12
Expected return on plan assets		(5,020	)		(3,569	)		(1,688	)		(1,591	)		(195	)		(179	)		(12	)
Amortization of:
Transition obligation		—			—			—			—			—			64			—
Net actuarial loss		234			437			487			398			185			165			—
Prior service cost (benefit)		56			(195	)		—			—			(6	)		(6	)		—
Settlement loss		—			—			—			—			—			50			—
Curtailment loss		—			165			—			—			—			—			—
Net periodic retirement pension cost	$	2,080		$	3,240		$	705		$	617		$	438		$	564		$	48
Contributions	$	1,290		$	940		$	1,406		$	1,318		$	2,250		$	913		$	36

The components of the net periodic other postretirement benefit costs recognized are as follows:

	Three-Months Ending						Nine-Months Ending
	June 30,						June 30,
	2011			2010			2011			2010
Service cost	$	23		$	30		$	69		$	90
Interest cost		494			519			1,481			1,560
Amortization of:
Net actuarial loss		32			48			96			142
Prior service benefit		(218	)		(313	)		(653	)		(937	)
Net periodic other postretirement cost	$	331		$	284		$	993		$	855
Contributions	$	879		$	609		$	2,473		$	2,075

The amount of cash contributions made to these plans in any year is dependent upon a number of factors, including minimum funding requirements in the jurisdictions in which Woodward operates and arrangements made with trustees of certain foreign plans. As a result, the actual funding in fiscal 2011 may differ from the current estimate. Woodward estimates its remaining cash contributions in fiscal 2011 will be as follows:

Retirement pension benefits:
United States	$	1,290
United Kingdom		430
Japan		—
Switzerland		47
Other postretirement benefits		178

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Stock-Based Compensation

9 Months Ended

Jun. 30, 2011

Stock-Based Compensation

Stock-Based Compensation

Note 17. Stock-based compensation

Stock options

Woodward's 2006 Omnibus Incentive Plan (the "2006 Plan"), which is stockholder-approved, provides for the grant of up to 7,410 stock options to its members and directors. Woodward believes that such awards better align the interest of its members with those of its stockholders. Stock option awards are granted with an exercise price equal to the market price of Woodward's stock at the date of grant, and generally with a four-year vesting schedule at a vesting rate of 25% per year and a term of 10 years.

The fair value of each stock option award is estimated on the date of grant using a lattice-based option valuation model that uses the assumptions in the following table. Because the lattice-based option valuation models incorporate ranges of assumptions for inputs, those ranges are disclosed. Expected volatilities are based on implied volatilities from historical volatility of Woodward's stock, and other factors. Woodward uses historical data to estimate stock option exercise and employee termination within the valuation model; separate groups of employees that have similar historical exercise behavior are considered separately for valuation purposes. The expected term of stock options granted is derived from the output of the option valuation model and represents the period of time that stock options granted are expected to be outstanding; the range given below results from certain participating groups exhibiting different behavior. The risk-free rate for periods within the contractual life of the stock option is based on the U.S. Treasury yield curve in effect at the time of grant.

	Three-Months Ending		Nine-Months Ending
	June 30,		June 30,
	2011	2010	2011	2010
Expected term	5.8 years	6.5 years	5.8– 8.7 years	6.5 years
Estimated volatility	53.7%	51.0%	48.0% – 54.0%	51.0%
Estimated dividend yield	1.0%	1.4%	1.0% – 1.3%	1.4%
Risk-free interest rate	1.8%	2.4%	1.8% – 2.6%	3.4%
Forfeiture rate	10.6%	10.8%	0% – 10.6%	8.1%

The following is a summary of the activity for stock option awards during the three and nine-months ending June 30, 2011:

	Three-Months Ending					Nine-Months Ending
	June 30, 2011					June 30, 2011
				Weighted-					Weighted-
				Average					Average
	Number of			Exercise Price		Number of			Exercise Price
	options			per Share		options			per Share
Options, beginning balance		4,418		$	19.65		4,011		$	16.87
Options granted		28			33.04		710			32.10
Options exercised		(49	)		15.74		(310	)		10.14
Options expired unexercised		(2	)		32.73		(2	)		32.73
Options forfeited		(6	)		26.68		(20	)		26.61
Options, ending balance		4,389		$	19.76		4,389		$	19.76

As of June 30, 2011, there was $11,254 of total unrecognized compensation cost related to non-vested stock-based compensation arrangements granted under the 2002 Stock Option Plan (for which no further grants will be made) and the 2006 Plan. The remaining unrecognized compensation cost is expected to be recognized over a weighted-average period of approximately 2.7 years.

Restricted stock

In connection with Woodward's acquisition of MPC Products, restricted stock awards were granted with a two-year graded vesting schedule. The restricted stock shares participated in dividends during the vesting period. On October 1, 2010, the remaining 70 outstanding restricted stock awards vested and there were no outstanding restricted stock awards as of June 30, 2011.

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Commitments and Contingencies

9 Months Ended

Jun. 30, 2011

Commitments and Contingencies

Commitments and Contingencies

Note 18. Commitments and contingencies

Woodward is currently involved in claims, pending or threatened litigation or other legal proceedings, investigations or regulatory proceedings arising in the normal course of business, including, among others, those relating to product liability claims, employment matters, workman's compensation claims, contractual disputes, product warranty claims and alleged violations of various laws and regulations. Woodward has accrued for individual matters that it believes are likely to result in a loss when ultimately resolved using estimates of the most likely amount of loss.

Woodward is partially self-insured in the U.S. for healthcare and workman's compensation up to predetermined amounts, above which third party insurance applies. Management regularly reviews the probable outcome of these claims and proceedings, the expenses expected to be incurred, the availability and limits of the insurance coverage, and the established accruals for liabilities.

While the outcome of pending claims, proceedings and investigations cannot be predicted with certainty, management believes that any liabilities that may result from these claims, proceedings and investigations will not have a material adverse effect on Woodward's liquidity, financial condition, or results of operations.

In connection with the sale of the Fuel & Pneumatic product line during fiscal year 2009, which was acquired as part of Woodward's acquisition of HR Textron, Inc., Woodward assigned to a subsidiary of the purchaser its rights and responsibilities related to certain contracts with the U.S. Government. Woodward provided to the U.S. Government a customary guarantee of the purchaser's subsidiary's performance obligations under the contracts. The purchaser and its affiliates have agreed to indemnify Woodward for any liability incurred with respect to the guarantee.

In the event of a change in control of Woodward, as defined in change-in-control agreements with its current corporate officers, Woodward may be required to pay termination benefits to such officers.

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Segment Information

9 Months Ended

Jun. 30, 2011

Segment Information

Segment Information

Note 19. Segment information

Woodward has four operating business segments — Turbine Systems, Airframe Systems, Electrical Power Systems, and Engine Systems. Woodward uses segment information internally to manage its business, including the assessment of business segment performance and making decisions on the allocation of resources between segments.

The Company's four operating business segments are strategic business units separately identified by the products and services they offer and by the markets in which they operate. Intersegment sales and transfers are made at established intersegment selling prices generally intended to approximate selling prices to unrelated parties. The Chief Executive Officer evaluates segment profit or loss based on internal performance measures for each business in a given period. In connection with that assessment, the Chief Executive Officer excludes matters such as charges for restructuring costs, interest income and expense, and certain gains and losses from asset dispositions.

A summary of consolidated net sales by segment follows:

	Three-Months Ending				Nine-Months Ending
	June 30,				June 30,
	2011		2010		2011		2010
Segment net sales:
Turbine Systems
External net sales	$	187,944	$	148,623	$	505,797	$	433,553
Intersegment sales		3,010		2,545		8,744		7,144
Total segment net sales		190,954		151,168		514,541		440,697
Airframe Systems
External net sales		102,354		93,518		282,065		274,827
Intersegment sales		603		609		1,988		1,900
Total segment net sales		102,957		94,127		284,053		276,727
Electrical Power Systems
External net sales		54,875		36,147		160,254		128,692
Intersegment sales		17,052		11,133		46,180		29,918
Total segment net sales		71,927		47,280		206,434		158,610
Engine Systems
External net sales		93,294		78,079		274,292		207,955
Intersegment sales		10,825		7,987		30,049		24,213
Total segment net sales		104,119		86,066		304,341		232,168
Consolidated
External net sales		438,467		356,367		1,222,408		1,045,027
Intersegment sales		31,490		22,274		86,961		63,175
Total segment net sales	$	469,957	$	378,641	$	1,309,369	$	1,108,202

A summary of consolidated earnings follows:

	Three-Months Ending						Nine-Months Ending
	June 30,						June 30,
	2011			2010			2011			2010
Segment earnings:
Turbine Systems	$	46,067		$	35,934		$	123,151		$	100,363
Airframe Systems		5,512			2,852			4,535			10,237
Electrical Power Systems		3,241			3,072			13,437			15,254
Engine Systems		9,833			9,131			28,129			18,513
Total segment earnings		64,653			50,989			169,252			144,367
Nonsegment expenses		(7,554	)		(6,085	)		(21,599	)		(16,810	)
Interest expense, net		(6,244	)		(6,852	)		(18,836	)		(22,197	)
Consolidated earnings before income taxes	$	50,855		$	38,052		$	128,817		$	105,360

Segment assets consist of accounts receivable, inventories, property, plant and equipment - net, goodwill, and other intangibles — net. A summary of consolidated total assets by segment follows:

	June 30,		September 30,
	2011		2010
Segment assets:
Turbine Systems	$	381,815	$	347,188
Airframe Systems		745,270		748,297
Electrical Power Systems		231,097		156,788
Engine Systems		229,998		204,495
Total segment assets		1,588,180		1,456,768
Unallocated corporate property, plant and equipment, net		6,853		6,111
Other unallocated assets		167,467		200,354
Consolidated total assets	$	1,762,500	$	1,663,233

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Earnings Per Share (Tables)

9 Months Ended

Jun. 30, 2011

Earnings Per Share

Reconciliation of Net Earnings to Net Earnings Per Share Basic and Diluted

	Three-Months Ending				Nine-Months Ending
	June 30,				June 30,
	2011		2010		2011		2010
Numerator:
Net earnings attributable to Woodward	$	36,056	$	31,745	$	90,545	$	78,169
Denominator:
Basic shares outstanding		68,793		68,489		68,785		68,428
Dilutive effect of employee stock options		1,373		1,498		1,370		1,443
Diluted shares outstanding		70,166		69,987		70,155		69,871
Income per common share:
Basic earnings per share attribuable to Woodward	$	0.52	$	0.46	$	1.32	$	1.14
Diluted earnings per share attributable to Woodward	$	0.51	$	0.45	$	1.29	$	1.12

Anti-dilutive Stock Options Excluded from Computation of Earnings Per Share

	Three-Months Ending				Nine-Months Ending
	June 30,				June 30,
	2011		2010		2011		2010
Options		678		430		679		447
Weighted-average option price	$	32.06	$	32.58	$	32.03	$	32.49

Schedule of Treasury Stock Shares Held for Deferred Compensation Included in Basic and Diluted Shares Outstanding

	Three-Months Ending				Nine-Months Ending
	June 30,				June 30,
	2011		2010		2011		2010
Weighted average treasury stock shares held for deferred compensation obligation		324		361		340		375

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Business Acquisitions (Tables)

9 Months Ended

Jun. 30, 2011

Business Combinations

Schedule of the Estimated Purchase Price

Cash paid to owners	$	48,412
Less cash acquired		(1,251	)
Total estimated purchase price		47,161
Less marketable securities acquired		(8,463	)
Estimated price paid for business assets	$	38,698

Schedule of Estimated Purchase Price Allocation

Current assets	$	14,627
Investments in marketable securities		8,463
Property, plant, and equipment		1,954
Goodwill		24,188
Intangible assets		11,882
Total assets acquired		61,114
Other current liabilities		5,505
Warranty accrual		2,250
Postretirement benefits		434
Deferred tax liabilities		2,472
Other tax — noncurrent		3,292
Total liabilities assumed		13,953
Net assets acquired	$	47,161

Schedule of Finite-Lived Intangible Assets Acquired

			Weighted
			Average Useful	Amortization
	Amount		Life	Method
Customer relationships	$	3,452	9years	Straight-line
Process technology		7,752	8.5years	Straight-line
Other		678	2.5years	Straight-line
Total	$	11,882	8years

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Financial Instruments and Fair Value Measurements (Tables)

9 Months Ended

Jun. 30, 2011

Financial Instruments and Fair Value Measurements

Estimated Fair Values of Financial Instruments

	At June 30, 2011						At September 30, 2010
	Estimated Fair						Estimated Fair
	Value			Carrying Cost			Value			Carrying Cost
Cash and cash equivalents	$	72,598		$	72,598		$	105,579		$	105,579
Investments in deferred compensation program		6,486			6,486			5,633			5,633
Short-term borrowings		(41,577	)		(41,577	)		(22,099	)		(22,099	)
Long-term debt, including current portion		(482,374	)		(427,190	)		(506,120	)		(443,673	)

Schedule of Weighted Average Interest Rates Used to Calculate Long-Term Debt Fair Value

	June 30,			September 30,
	2011			2010
Weighted-average interest rate used to estimate fair value		2.7	%		2.9	%

Financial Assets that are Measured at Fair Value on a Recurring Basis

	At June 30, 2011								At September 30, 2010
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Financial assets:
Investments in money market funds	$	8,444	$	—	$	—	$	8,444	$	50,360	$	—	$	—	$	50,360
Equity securities		6,486		—		—		6,486		5,633		—		—		5,633
Foreign exchange forward contract		—		—		—		—		—		579		—		579
Total financial assets	$	14,930	$	—	$	—	$	14,930	$	55,993	$	579	$	—	$	56,572

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Condensed Consolidated Statements of Comprehensive Earnings (USD $) In Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Comprehensive earnings attributable to Woodward:
Net earnings attributable to Woodward	$ 36,056	$ 31,745	$ 90,545	$ 78,169
Other comprehensive earnings:
Foreign currency translation adjustments	8,414	(15,705)	17,043	(29,525)
Reclassification of realized losses on derivatives to earnings	57	70	172	211
Minimum retirement benefits liability adjustment	(139)	(84)	(413)	396
Taxes on changes in other comprehensive earnings	(848)	1,269	(1,711)	1,832
Comprehensive earnings attributable to Woodward	43,540	17,295	105,636	51,083
Comprehensive earnings attributable to noncontrolling interest:
Net earnings attributable to noncontrolling interest		120		318
Foreign currency translation adjustments, net of tax		22		105
Comprehensive earnings attributable to noncontrolling interest		142		423
Total comprehensive earnings	$ 43,540	$ 17,437	$ 105,636	$ 51,506

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Derivative Instruments and Hedging Activities (Tables)

9 Months Ended

Jun. 30, 2011

Derivative Instruments and Hedging Activities

Unrecognized Gains and Losses and Recognized Gains Associated with Derivative Intruments in Balance Sheet

	June 30,			September 30,
	2011			2010
Derivatives designated as hedging instruments	Unrecognized Gain (Loss)
Classified in accumulated other comprehensive earnings	$	(839	)	$	(1,011	)
Classified in current and long-term debt		19			70
	$	(820	)	$	(941	)
Derivatives not designated as hedging instruments	Recognized Gain
Classified in other current assets	$	—		$	579

Impact of Derivative Instruments on Earnings

		Three-Months Ending June 30, 2011							Three-Months Ending June 30, 2010
							Amount of							Amount of
		Amount of			Amount of		(Gain) Loss		Amount of			Amount of		(Gain) Loss
		(Income)			(Gain) Loss		Reclassified		(Income)			(Gain) Loss		Reclassified
	Location of (Gain)	Expense			Recognized in		from		Expense			Recognized in		from
	Loss	Recognized in			Accumulated		Accumulated		Recognized in			Accumulated		Accumulated
	Recognized in	Earnings on			OCI on		OCI into		Earnings on			OCI on		OCI into
Derivatives in:	Earnings	Derivative			Derivative		Earnings		Derivative			Derivative		Earnings
Fair value hedging relationships	Interest expense	$	(17	)	$	—	$	—	$	(31	)	$	—	$	—
Cash flow hedging relationships	Interest expense		57			—		57		70			—		70
Foreign currency relationships	Other (income) expense		—			—		—		—			—		—
		$	40		$	—	$	57	$	39		$	—	$	70
		Nine-Months Ending June 30, 2011							Nine-Months Ending June 30, 2010
							Amount of							Amount of
		Amount of			Amount of		(Gain) Loss		Amount of			Amount of		(Gain) Loss
		(Income)			(Gain) Loss		Reclassified		(Income)			(Gain) Loss		Reclassified
	Location of (Gain)	Expense			Recognized in		from		Expense			Recognized in		from
	Loss	Recognized in			Accumulated		Accumulated		Recognized in			Accumulated		Accumulated
	Recognized in	Earnings on			OCI on		OCI into		Earnings on			OCI on		OCI into
Derivatives in:	Earnings	Derivative			Derivative		Earnings		Derivative			Derivative		Earnings
Fair value hedging relationships	Interest expense	$	(51	)	$	—	$	—	$	(95	)	$	—	$	—
Cash flow hedging relationships	Interest expense		172			—		172		211			—		211
Foreign currency relationships	Other (income) expense		1,612			—		—		(102	)		—		—
		$	1,733		$	—	$	172	$	14		$	—	$	211

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Supplemental Statements of Cash Flows Information (Tables)

9 Months Ended

Jun. 30, 2011

Supplemental Statements of Cash Flows Information

Schedule of Cash Flow Supplemental Disclosures

	Nine-Months Ending
	June 30,
	2011		2010
Interest paid	$	25,596	$	27,627
Income taxes paid		33,549		27,104
Income tax refunds received		9,269		9,008
Non-cash activities:
Purchases of property, plant and equipment on account		1,881		751
Cashless exercise of stock options		1,124		—
Reduction of accounts receivable and short-term borrowing due to the settlement of accounts receivable previously sold with recourse		3,228		—
Reduction of accounts payable due to the assignment of accounts receivable with recourse		570		—
Reduction to goodwill due to favorable resolution of lease termination recorded in restructuring reserve		103		—
Payment of director fees through issuance of treasury stock		38		—

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Inventories (Tables)

9 Months Ended

Jun. 30, 2011

Inventories

Schedule of Inventories

	June 30,		September 30,
	2011		2010
Raw materials	$	46,963	$	19,457
Work in progress		91,971		86,438
Component parts and finished goods		248,834		189,139
	$	387,768	$	295,034

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Property, Plant, and Equipment - Net (Tables)

9 Months Ended

Jun. 30, 2011

Property, Plant, and Equipment - Net

Schedule of Property Plant and Equipment-Net

	June 30,			September 30,
	2011			2010
Land	$	14,596		$	11,372
Buildings and improvements		179,787			171,257
Leasehold improvements		18,891			17,884
Machinery and production equipment		262,611			270,126
Computer equipment and software		62,791			57,518
Other		24,097			22,854
Construction in progress		39,265			13,125
		602,038			564,136
Less accumulated depreciation		(401,996	)		(370,612	)
Property, plant and equipment, net	$	200,042		$	193,524

Schedule of Depreciation Expense

	Three-Months Ending				Nine-Months Ending
	June 30,				June 30,
	2011		2010		2011		2010
Depreciation expense	$	10,955	$	9,826	$	31,279	$	29,984

Schedule of Capitalized Interest

	Three-Months Ending				Nine-Months Ending
	June 30,				June 30,
	2011		2010		2011		2010
Capitalized interest	$	383	$	36	$	896	$	61

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Goodwill (Tables)

9 Months Ended

Jun. 30, 2011

Goodwill

Schedule of Goodwill

								Effects of
	September 30,							Currency		June 30,
	2010		Additions		Adjustments			Translation		2011
Turbine Systems	$	86,565	$	—	$	—		$	—	$	86,565
Airframe Systems		294,557		—		(103	)		165		294,619
Electrical Power Systems		16,534		24,188		—			2,715		43,437
Engine Systems		40,938		—		—			273		41,211
Consolidated	$	438,594	$	24,188	$	(103	)	$	3,153	$	465,832

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Other Intangibles - Net (Tables)

9 Months Ended

Jun. 30, 2011

Other Intangibles - Net

Schedule of Finite-Lived Intangible Assets by Major Class

	June 30, 2011							September 30, 2010
	Gross							Gross
	Carrying		Accumulated			Net Carrying		Carrying		Accumulated			Net Carrying
	Value		Amortization			Amount		Value		Amortization			Amount
Customer relationships:
Turbine Systems	$	44,327	$	(19,331	)	$	24,996	$	44,327	$	(18,223	)	$	26,104
Airframe Systems		176,667		(25,019	)		151,648		176,634		(13,162	)		163,472
Electrical Power Systems		5,993		(1,167	)		4,826		2,156		(844	)		1,312
Engine Systems		20,675		(14,990	)		5,685		20,675		(13,577	)		7,098
Total	$	247,662	$	(60,507	)	$	187,155	$	243,792	$	(45,806	)	$	197,986
Intellectual property:
Turbine Systems	$	—	$	—		$	—	$	—	$	—		$	—
Airframe Systems		—		—			—		—		—			—
Electrical Power Systems		7,908		(4,106	)		3,802		7,616		(3,567	)		4,049
Engine Systems		12,616		(7,611	)		5,005		12,599		(6,988	)		5,611
Total	$	20,524	$	(11,717	)	$	8,807	$	20,215	$	(10,555	)	$	9,660
Process technology:
Turbine Systems	$	11,941	$	(5,208	)	$	6,733	$	11,941	$	(4,909	)	$	7,032
Airframe Systems		62,984		(10,327	)		52,657		62,967		(6,797	)		56,170
Electrical Power Systems		8,289		(212	)		8,077		—		—			—
Engine Systems		12,593		(5,560	)		7,033		12,593		(4,787	)		7,806
Total	$	95,807	$	(21,307	)	$	74,500	$	87,501	$	(16,493	)	$	71,008
Other intangibles:
Turbine Systems	$	—	$	—		$	—	$	—	$	—		$	—
Airframe Systems		39,648		(32,900	)		6,748		39,638		(27,595	)		12,043
Electrical Power Systems		2,337		(583	)		1,754		1,510		(389	)		1,121
Engine Systems		460		(196	)		264		460		(129	)		331
Total	$	42,445	$	(33,679	)	$	8,766	$	41,608	$	(28,113	)	$	13,495
Total intangibles:
Turbine Systems	$	56,268	$	(24,539	)	$	31,729	$	56,268	$	(23,132	)	$	33,136
Airframe Systems		279,299		(68,246	)		211,053		279,239		(47,554	)		231,685
Electrical Power Systems		24,527		(6,068	)		18,459		11,282		(4,800	)		6,482
Engine Systems		46,344		(28,357	)		17,987		46,327		(25,481	)		20,846
Consolidated Total	$	406,438	$	(127,210	)	$	279,228	$	393,116	$	(100,967	)	$	292,149

Schedule of Finite-Lived Intangible Assets Amortization Expense

	Three-Months Ending				Nine-Months Ending
	June 30,				June 30,
	2011		2010		2011		2010
Amortization expense	$	8,935	$	8,635	$	26,020	$	26,471

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense

Year Ending September 30:
2011 (remaining)	$	8,973
2012		33,062
2013		30,701
2014		27,545
2015		25,029
Thereafter		153,918
	$	279,228

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Accrued Liabilities (Tables)

3 Months Ended

9 Months Ended

Jun. 30, 2011

Jun. 30, 2011

Accrued Liabilities

Accrued Liabilities

	June 30,		September 30,
	2011		2010
Salaries and other member benefits	$	57,300	$	43,598
Current portion of restructuring and other charges		2,740		4,862
Warranties		14,522		10,851
Interest payable		5,689		11,925
Accrued retirement benefits		2,735		2,748
Deferred revenues		7,242		12,376
Taxes, other than income		1,956		4,618
Other		17,542		18,074
	$	109,726	$	109,052

Warranties

Warranties, September 30, 2010	$	10,851
Increases to accruals related to warranties during the period		4,070
Increases due to acquisition of IDS		2,250
Settlements of amounts accrued		(3,226	)
Foreign currency exchange rate changes		577
Warranties, June 30, 2011	$	14,522

Restructuring and Other Charges

	Three-Months Ending
	June 30, 2011
	Restructuring			Business
	Charges			Acquisitions			Total
Accrued restructuring charges, March 31, 2011	$	497		$	3,253		$	3,750
Payments		(63	)		(5	)		(68	)
Non-cash adjustments		3			(453	)		(450	)
Foreign currency exchange rates		3			—			3
Accrued restructuring charges, June 30, 2011	$	440		$	2,795		$	3,235

	Nine-Months Ending
	June 30, 2011
	Restructuring			Business
	Charges			Acquisitions			Total
Accrued restructuring charges, September 30, 2010	$	667		$	5,446		$	6,113
Payments		(208	)		(705	)		(913	)
Non-cash adjustments		(28	)		(1,946	)		(1,974	)
Foreign currency exchange rates		9			—			9
Accrued restructuring charges, June 30, 2011	$	440		$	2,795		$	3,235

Accrued Restructuring Charges Included in Other Liabilities

	June 30,		September 30,
	2011		2010
Non-current accrued restructuring charges	$	495	$	1,251

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Other Liabilities (Tables)

9 Months Ended

Jun. 30, 2011

Other Liabilities

Schedule of Other Liabilities

	June 30,		September 30,
	2011		2010
Net accrued retirement benefits, less amounts recognized within accrued liabilities	$	64,797	$	66,288
Uncertain tax positions, net of offsetting benefits, less amounts recognized within accrued liabilities (Note 15)		14,441		8,720
Other		11,815		8,967
	$	91,053	$	83,975

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Other (Income) Expense, Net (Tables)

9 Months Ended

Jun. 30, 2011

Other (Income) Expense, Net

Schedule of Other (Income) Expense, Net

	Three-Months Ending						Nine-Months Ending
	June 30,						June 30,
	2011			2010			2011			2010
Net (gain) loss on sale of assets	$	428		$	(156	)	$	429		$	(99	)
Rent income		(130	)		(123	)		(437	)		(388	)
Net (gain) loss on investments in deferred compensation program		(46	)		298			(614	)		(101	)
Net (income) expense recognized in earnings on foreign currency derivatives (Note 6)		—			—			1,612			(102	)
Other		(3	)		30			(35	)		65
	$	249		$	49		$	955		$	(625	)

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Income Taxes (Tables)

9 Months Ended

Jun. 30, 2011

Income Taxes

Tax Expense and Effective Tax Rate

	Three-Months Ending						Nine-Months Ending
	June 30,						June 30,
	2011			2010			2011			2010
Earnings before income taxes	$	50,855		$	38,052		$	128,817		$	105,360
Income tax expense		14,799			6,187			38,272			26,873
Effective tax rate		29.1	%		16.3	%		29.7	%		25.5	%

Unrecognized Tax Benefits

	June 30,		September 30,
	2011		2010
Gross liability	$	16,269	$	10,586
Amount that would impact Woodward's effective tax rate, if recognized, net of expected offsetting adjustments		14,441		8,720

Accrued Interest and Penalties

	June 30,		September 30,
	2011		2010
Accured interest and penalties	$	2,072	$	1,431

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Condensed Consolidated Balance Sheets (USD $) In Thousands	Jun. 30, 2011	Sep. 30, 2010
Current assets:
Cash and cash equivalents	$ 72,598	$ 105,579
Accounts receivable, less allowance for losses of $2,173 and $2,228, respectively	265,420	248,513
Inventories	387,768	295,034
Income taxes receivable	10,328	18,170
Deferred income tax assets	37,104	33,689
Other current assets	26,381	18,157
Total current assets	799,599	719,142
Property, plant and equipment, net	200,042	193,524
Goodwill	465,832	438,594
Intangible assets, net	279,228	292,149
Deferred income tax assets	1,979	8,623
Other assets	15,820	11,201
Total assets	1,762,500	1,663,233
Current liabilities:
Short-term borrowings	41,577	22,099
Current portion of long-term debt	18,459	18,493
Accounts payable	100,769	107,468
Income taxes payable	5,501	5,453
Accrued liabilities	109,726	109,052
Total current liabilities	276,032	262,565
Long-term debt, less current portion	408,750	425,250
Deferred income tax liabilities	88,367	88,249
Other liabilities	91,053	83,975
Total liabilities	864,202	860,039
Commitments and contingencies (Note 18)
Stockholders' equity:
Preferred stock, par value $0.003 per share, 10,000 shares authorized, no shares issued
Common stock, par value $0.001455 per share, 150,000 shares authorized, 72,960 shares issued	106	106
Additional paid-in capital	80,145	73,915
Accumulated other comprehensive earnings	21,433	6,342
Deferred compensation	4,571	4,888
Retained earnings	912,700	835,919
Stockholders' equity excluding treasury stock	1,018,955	921,170
Treasury stock at cost, 4,153 shares and 4,223 shares, respectively	(116,086)	(113,088)
Treasury stock held for deferred compensation, at cost, 315 shares and 356 shares, respectively	(4,571)	(4,888)
Total stockholders' equity	898,298	803,194
Total liabilities and stockholders' equity	$ 1,762,500	$ 1,663,233

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Retirement Benefits (Tables)

3 Months Ended

9 Months Ended

Jun. 30, 2011

Jun. 30, 2011

Schedule of Estimated Remaining Cash Contributions

Retirement pension benefits:
United States	$	1,290
United Kingdom		430
Japan		—
Switzerland		47
Other postretirement benefits		178

Pension Plans, Defined Benefit [Member]

Schedule of Costs of Retirement Plans

	Three-Months Ending June 30,
	United States						United Kingdom						Japan						Switzerland
	2011			2010			2011			2010			2011			2010			2011
Service cost	$	858		$	911		$	118		$	92		$	107		$	97		$	48
Interest cost		1,412			1,222			527			483			45			58			12
Expected return on plan assets		(1,673	)		(1,189	)		(572	)		(505	)		(65	)		(59	)		(12	)
Amortization of:
Transition obligation		—			—			—			—			—			21			—
Net actuarial loss		78			173			165			127			62			54			—
Prior service cost (benefit)		19			(65	)		—			—			(2	)		(2	)		—
Settlement loss		—			—			—			—			—			50			—
Curtailment loss		—			165			—			—			—			—			—
Net periodic retirement pension cost	$	694		$	1,217		$	238		$	197		$	147		$	219		$	48
Contributions	$	1,290		$	940		$	466		$	392		$	—		$	—		$	36

	Nine-Months Ending June 30,
	United States						United Kingdom						Japan						Switzerland
	2011			2010			2011			2010			2011			2010			2011
Service cost	$	2,575		$	2,735		$	350		$	292		$	321		$	292		$	48
Interest cost		4,235			3,667			1,556			1,518			133			178			12
Expected return on plan assets		(5,020	)		(3,569	)		(1,688	)		(1,591	)		(195	)		(179	)		(12	)
Amortization of:
Transition obligation		—			—			—			—			—			64			—
Net actuarial loss		234			437			487			398			185			165			—
Prior service cost (benefit)		56			(195	)		—			—			(6	)		(6	)		—
Settlement loss		—			—			—			—			—			50			—
Curtailment loss		—			165			—			—			—			—			—
Net periodic retirement pension cost	$	2,080		$	3,240		$	705		$	617		$	438		$	564		$	48
Contributions	$	1,290		$	940		$	1,406		$	1,318		$	2,250		$	913		$	36

Other Postretirement Benefit Plans, Defined Benefit [Member]

Schedule of Costs of Retirement Plans

	Three-Months Ending						Nine-Months Ending
	June 30,						June 30,
	2011			2010			2011			2010
Service cost	$	23		$	30		$	69		$	90
Interest cost		494			519			1,481			1,560
Amortization of:
Net actuarial loss		32			48			96			142
Prior service benefit		(218	)		(313	)		(653	)		(937	)
Net periodic other postretirement cost	$	331		$	284		$	993		$	855
Contributions	$	879		$	609		$	2,473		$	2,075

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Stock-Based Compensation (Tables)

9 Months Ended

Jun. 30, 2011

Stock-Based Compensation

Schedule of Assumptions Used in Estimate of Fair Value of Stock Option Awards

	Three-Months Ending		Nine-Months Ending
	June 30,		June 30,
	2011	2010	2011	2010
Expected term	5.8 years	6.5 years	5.8– 8.7 years	6.5 years
Estimated volatility	53.7%	51.0%	48.0% – 54.0%	51.0%
Estimated dividend yield	1.0%	1.4%	1.0% – 1.3%	1.4%
Risk-free interest rate	1.8%	2.4%	1.8% – 2.6%	3.4%
Forfeiture rate	10.6%	10.8%	0% – 10.6%	8.1%

Activity for Stock Option Awards

	Three-Months Ending					Nine-Months Ending
	June 30, 2011					June 30, 2011
				Weighted-					Weighted-
				Average					Average
	Number of			Exercise Price		Number of			Exercise Price
	options			per Share		options			per Share
Options, beginning balance		4,418		$	19.65		4,011		$	16.87
Options granted		28			33.04		710			32.10
Options exercised		(49	)		15.74		(310	)		10.14
Options expired unexercised		(2	)		32.73		(2	)		32.73
Options forfeited		(6	)		26.68		(20	)		26.61
Options, ending balance		4,389		$	19.76		4,389		$	19.76

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Segment Information (Tables)

9 Months Ended

Jun. 30, 2011

Segment Information

Consolidated Net Sales by Segment

	Three-Months Ending				Nine-Months Ending
	June 30,				June 30,
	2011		2010		2011		2010
Segment net sales:
Turbine Systems
External net sales	$	187,944	$	148,623	$	505,797	$	433,553
Intersegment sales		3,010		2,545		8,744		7,144
Total segment net sales		190,954		151,168		514,541		440,697
Airframe Systems
External net sales		102,354		93,518		282,065		274,827
Intersegment sales		603		609		1,988		1,900
Total segment net sales		102,957		94,127		284,053		276,727
Electrical Power Systems
External net sales		54,875		36,147		160,254		128,692
Intersegment sales		17,052		11,133		46,180		29,918
Total segment net sales		71,927		47,280		206,434		158,610
Engine Systems
External net sales		93,294		78,079		274,292		207,955
Intersegment sales		10,825		7,987		30,049		24,213
Total segment net sales		104,119		86,066		304,341		232,168
Consolidated
External net sales		438,467		356,367		1,222,408		1,045,027
Intersegment sales		31,490		22,274		86,961		63,175
Total segment net sales	$	469,957	$	378,641	$	1,309,369	$	1,108,202

Consolidated Earnings by Segment

	Three-Months Ending						Nine-Months Ending
	June 30,						June 30,
	2011			2010			2011			2010
Segment earnings:
Turbine Systems	$	46,067		$	35,934		$	123,151		$	100,363
Airframe Systems		5,512			2,852			4,535			10,237
Electrical Power Systems		3,241			3,072			13,437			15,254
Engine Systems		9,833			9,131			28,129			18,513
Total segment earnings		64,653			50,989			169,252			144,367
Nonsegment expenses		(7,554	)		(6,085	)		(21,599	)		(16,810	)
Interest expense, net		(6,244	)		(6,852	)		(18,836	)		(22,197	)
Consolidated earnings before income taxes	$	50,855		$	38,052		$	128,817		$	105,360

Consolidated Total Assets by Segment

	June 30,		September 30,
	2011		2010
Segment assets:
Turbine Systems	$	381,815	$	347,188
Airframe Systems		745,270		748,297
Electrical Power Systems		231,097		156,788
Engine Systems		229,998		204,495
Total segment assets		1,588,180		1,456,768
Unallocated corporate property, plant and equipment, net		6,853		6,111
Other unallocated assets		167,467		200,354
Consolidated total assets	$	1,762,500	$	1,663,233

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Recent Accounting Pronouncements (Details) (USD $) In Thousands	3 Months Ended	9 Months Ended
	Jun. 30, 2011	Jun. 30, 2011
Recent Accounting Pronouncements
Total revenues recognized based upon completion of substantive milestones	$ 596	$ 1,926

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Earnings Per Share (Reconciliation of Net Earnings to Net Earnings Per Share Basic and Diluted) (Details) (USD $) In Thousands, except Per Share data	3 Months Ended		9 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Earnings Per Share
Net earnings attributable to Woodward	$ 36,056	$ 31,745	$ 90,545	$ 78,169
Basic shares outstanding	68,793	68,489	68,785	68,428
Dilutive effect of employee stock options	1,373	1,498	1,370	1,443
Diluted shares outstanding	70,166	69,987	70,155	69,871
Basic earnings per share attributable to Woodward	$ 0.52	$ 0.46	$ 1.32	$ 1.14
Diluted earnings per share attributable to Woodward	$ 0.51	$ 0.45	$ 1.29	$ 1.12

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Earnings Per Share (Anti-dilutive Stock Options Excluded from Computation of Earnings Per Share) (Details) (USD $) In Thousands, except Per Share data	3 Months Ended		9 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Earnings Per Share
Options	678	430	679	447
Weighted-average option price	$ 32.06	$ 32.58	$ 32.03	$ 32.49

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Earnings Per Share (Schedule of Treasury Stock Shares Held for Deferred Compensation Included in Basic and Diluted Shares Outstanding) (Details) In Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Earnings Per Share
Weighted-average treasury stock shares held for deferred compensation obligation	324	361	340	375

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Business Acquisitions (Narrative) (Details) (USD $) In Thousands	3 Months Ended	9 Months Ended
	Jun. 30, 2011	Jun. 30, 2011
Business Combinations
Cash paid to owners	$ 48,412	$ 48,412
Amount of the estimated purchase price deposited in escrow	8,478	8,478
Transaction costs	$ 219	$ 1,964

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Business Acquisitions (Schedule of Estimated Purchase Price) (Details) (USD $) In Thousands	Jun. 30, 2011
Business Combinations
Cash paid to owners	$ 48,412
Less cash acquired	(1,251)
Total estimated purchase price	47,161
Less marketable securities acquired	(8,463)
Estimated price paid for business assets	$ 38,698

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Business Acquisitions (Schedule of Estimated Purchase Price Allocation) (Details) (USD $) In Thousands	Jun. 30, 2011
Business Combinations
Current assets	$ 14,627
Investments in marketable securities	8,463
Property, plant, and equipment	1,954
Goodwill	24,188
Intangible assets	11,882
Total assets acquired	61,114
Other current liabilities	5,505
Warranty accrual	2,250
Postretirement benefits	434
Deferred tax liabilities	2,472
Other tax - noncurrent	3,292
Total liabilities assumed	13,953
Net assets acquired	$ 47,161

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Per Share data	Jun. 30, 2011	Sep. 30, 2010
Current assets:
Allowance, accounts receivable	$ 2,173	$ 2,228
Stockholders' equity:
Preferred stock, par value	$ 0.003	$ 0.003
Preferred stock, shares authorized	10,000	10,000
Preferred stock, shares issued	0	0
Common stock, par value	$ 0.001455	$ 0.001455
Common stock, shares authorized	150,000	150,000
Common stock, shares issued	72,960	72,960
Treasury stock, shares	4,153	4,223
Treasury stock held for deferred compensation, shares	315	356

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Business Acquisitions (Schedule of Finite-Lived Intangible Assets Acquired) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Jun. 30, 2011 sqft years
Weighted Average Useful Life	8.0
Total	$ 11,882
Customer Relationships [Member]
Amount	3,452
Weighted Average Useful Life	9.0
Process Technology [Member]
Amount	7,752
Weighted Average Useful Life	8.5
Other Intangibles [Member]
Amount	$ 678
Weighted Average Useful Life	2.5

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Financial Instruments and Fair Value Measurements (Narrative) (Details) (USD $) In Thousands			3 Months Ended
	Jun. 30, 2011	Sep. 30, 2010	Dec. 31, 2010 Derivatives in Foreign Currency Relationships [Member]
Financial liability on recurring basis	$ 0	$ 0
Realized loss on settlement of forward contract			$ 1,033

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Financial Instruments and Fair Value Measurements (Estimated Fair Values of Financial Instruments) (Details) (USD $) In Thousands	Jun. 30, 2011	Sep. 30, 2010	Jun. 30, 2010	Sep. 30, 2009
Financial Instruments and Fair Value Measurements
Cash and cash equivalents, Estimated Fair Value	$ 72,598	$ 105,579
Investments in deferred compensation program, Estimated Fair Value	6,486	5,633
Short-term borrowings, Estimated Fair Value	(41,577)	(22,099)
Long-term debt, including current portion, Estimated Fair Value	(482,374)	(506,120)
Cash and cash equivalents, Carrying Cost	72,598	105,579	78,708	100,863
Investments in deferred compensation program, Carrying Cost	6,486	5,633
Short-term borrowings, Carrying Cost	(41,577)	(22,099)
Long-term debt, including current portion, Carrying Cost	$ (427,190)	$ (443,673)

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Financial Instruments and Fair Value Measurements (Schedule of Weighted Average Interest Rates Used to Calculate Long-Term Debt Fair Value) (Details)	Jun. 30, 2011	Sep. 30, 2010
Financial Instruments and Fair Value Measurements
Long-term debt, weighted-average interest rate	2.70%	2.90%

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Financial Instruments and Fair Value Measurements (Financial Assets that are Measured at Fair Value on a Recurring Basis) (Details) (USD $) In Thousands	Jun. 30, 2011	Sep. 30, 2010
Investments in money market funds	$ 72,598	$ 105,579
Total financial assets	14,930	56,572
Investments in Money Market Funds [Member]
Investments in money market funds	8,444	50,360
Investments in Money Market Funds [Member] | Fair Value, Inputs, Level 1 [Member]
Investments in money market funds	8,444	50,360
Equity Securities [Member]
Equity securities	6,486	5,633
Equity Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Equity securities	6,486	5,633
Foreign Exchange Forward Contract [Member]
Foreign exchange forward contract		579
Foreign Exchange Forward Contract [Member] | Fair Value, Inputs, Level 2 [Member]
Foreign exchange forward contract		579
Fair Value, Inputs, Level 1 [Member]
Total financial assets	14,930	55,993
Fair Value, Inputs, Level 2 [Member]
Total financial assets		$ 579

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Derivative Instruments and Hedging Activities (Narrative) (Details) In Thousands	9 Months Ended	3 Months Ended
	Jun. 30, 2011 USD ($)	Dec. 31, 2010 Derivatives in Foreign Currency Relationships [Member] USD ($)	Sep. 30, 2010 Derivatives in Foreign Currency Relationships [Member] USD ($)	Sep. 30, 2010 Derivatives in Foreign Currency Relationships [Member] EUR (€)
Foreign currency exchange rate contract			$ 52,549	€ 39,000
Gain on the fair market value of foreign currency exchange rate contract			579
Realized loss on settlement of forward contract		1,033
Net unrecognized losses on terminated derivative instruments expected to be reclassified to earnings	$ 188
Expected period to reclassify unrecognized losses on terminated derivatives from accumulated other comprehensive earnings to earnings, in months	twelve

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Derivative Instruments and Hedging Activities (Unrecognized Gains and Losses and Recognized Gains Associated with Derivative Instruments in Balance Sheet) (Details) (USD $) In Thousands	Jun. 30, 2011	Sep. 30, 2010
Designated as Hedging Instrument [Member]
Unrecognized gain (loss)	$ (820)	$ (941)
Designated as Hedging Instrument [Member] | Accumulated Other Comprehensive Earnings [Member]
Unrecognized gain (loss)	(839)	(1,011)
Designated as Hedging Instrument [Member] | Current and Long-Term Debt [Member]
Unrecognized gain (loss)	19	70
Other Current Assets [Member]
Recognized gain		$ 579

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Derivative Instruments and Hedging Activities (Impact of Derivative Instruments on Earnings) (Details) (USD $) In Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Amount of (Income) Expense Recognized in Earnings on Derivative	$ 40	$ 39	$ 1,733	$ 14
Amount of (Gain) Loss Reclassified from Accumulated OCI into Earnings	57	70	172	211
Interest Expense [Member] | Derivatives in Fair Value Hedging Relationships [Member]
Amount of (Income) Expense Recognized in Earnings on Derivative	(17)	(31)	(51)	(95)
Interest Expense [Member] | Derivatives in Cash Flow Hedging Relationships [Member]
Amount of (Income) Expense Recognized in Earnings on Derivative	57	70	172	211
Amount of (Gain) Loss Reclassified from Accumulated OCI into Earnings	57	70	172	211
Derivatives in Foreign Currency Relationships [Member] | Other (Income) Expense [Member]
Amount of (Income) Expense Recognized in Earnings on Derivative			$ 1,612	$ (102)

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Supplemental Statements of Cash Flows Information (Narrative) (Details) (USD $) In Thousands	3 Months Ended	9 Months Ended	3 Months Ended
	Dec. 31, 2010	Jun. 30, 2011	Dec. 31, 2009 Legal Settlement [Member]
Reduction to goodwill due to favorable resolution of lease termination recorded in restructuring reserve	$ 103	$ 103
Business acquisitions, net of cash acquired			$ (25,000)

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Supplemental Statements of Cash Flows Information (Schedule of Cash Flow Supplemental Disclosures) (Details) (USD $) In Thousands	9 Months Ended
	Jun. 30, 2011	Jun. 30, 2010
Supplemental Statements of Cash Flows Information
Interest paid	$ 25,596	$ 27,627
Income taxes paid	33,549	27,104
Income tax refunds received	9,269	9,008
Purchases of property, plant and equipment on account	1,881	751
Cashless exercise of stock options	1,124
Reduction of accounts receivable and short-term borrowing due to the settlement of accounts receivable previously sold with recourse	3,228
Reduction of accounts payable due to the assignment of accounts receivable with recourse	570
Reduction to goodwill due to favorable resolution of lease termination recorded in restructuring reserve	103
Payment of director fees through issuance of treasury stock	$ 38

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Condensed Consolidated Statements of Cash Flows (USD $) In Thousands	9 Months Ended
	Jun. 30, 2011	Jun. 30, 2010
Cash flows from operating activities:
Net earnings	$ 90,545	$ 78,487
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	57,299	56,455
Net (gain) loss on sales of assets	429	(99)
Stock-based compensation	5,370	5,186
Excess tax benefits from stock-based compensation	(2,581)	(1,588)
Deferred income taxes	(1,011)	5,135
Loss on derivatives reclassified from accumulated comprehensive earnings into earnings	172	185
Changes in operating assets and liabilities, net of business acquisitions:
Accounts receivable	(11,922)	7,342
Inventories	(77,389)	6,347
Accounts payable and accrued liabilities	(16,126)	10,587
Current income taxes	10,434	6,871
Retirement benefit obligations	(3,230)	(277)
Other	(5,190)	(13,022)
Net cash provided by operating activities	46,800	161,609
Cash flows from investing activities:
Payments for property, plant and equipment	(32,640)	(18,834)
Proceeds from the sale of assets	30	268
Business acquisitions, net of cash and marketable securities acquired	(38,698)	(25,000)
Business acquisitions, marketable securities acquired	(8,463)
Proceeds from sale of marketable securities	8,217
Proceeds from disposal of Fuel & Pneumatics product line		660
Net cash used in investing activities	(71,554)	(42,906)
Cash flows from financing activities:
Cash dividends paid	(13,764)	(12,971)
Proceeds from sales of treasury stock	2,078	2,709
Payments for repurchases of common stock	(6,837)	(2,383)
Excess tax benefits from stock compensation	2,581	1,588
Purchase of noncontrolling interest		(8,120)
Borrowings on revolving lines of credit and short-term borrowings	126,098	71,653
Payments on revolving lines of credit and short-term borrowings	(103,158)	(71,653)
Payments of long-term debt	(16,500)	(118,492)
Net cash used in financing activities	(9,502)	(137,669)
Effect of exchange rate changes on cash and cash equivalents	1,275	(3,189)
Net change in cash and cash equivalents	(32,981)	(22,155)
Cash and cash equivalents at beginning of period	105,579	100,863
Cash and cash equivalents at end of period	$ 72,598	$ 78,708

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Inventories (Schedule of Inventories) (Details) (USD $) In Thousands	Jun. 30, 2011	Sep. 30, 2010
Inventories
Raw materials	$ 46,963	$ 19,457
Work in progress	91,971	86,438
Component parts and finished goods	248,834	189,139
Inventory, net	$ 387,768	$ 295,034

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Property, Plant, and Equipment - Net (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Jun. 30, 2011 sqft years	Sep. 30, 2010
Size of system test facility, in square feet	48,000
Construction in progress	$ 39,265	$ 13,125
System Test Facility [Member]
Construction in progress	17,384	4,836
Capitalized interest	805	165
Enterprise Resource Planning system [Member]
Construction in progress	8,592	1,604
Capitalized interest	$ 239	$ 24

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Property, Plant, and Equipment - Net (Property, Plant, and Equipment - Net) (Details) (USD $) In Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010	Sep. 30, 2010
Property, Plant, and Equipment - Net
Land	$ 14,596		$ 14,596		$ 11,372
Buildings and improvements	179,787		179,787		171,257
Leasehold improvements	18,891		18,891		17,884
Machinery and production equipment	262,611		262,611		270,126
Computer equipment and software	62,791		62,791		57,518
Other	24,097		24,097		22,854
Construction in progress	39,265		39,265		13,125
Property, plant and equipment, gross total	602,038		602,038		564,136
Less accumulated depreciation	(401,996)		(401,996)		(370,612)
Property, plant and equipment, net, total	200,042		200,042		193,524
Depreciation expense	10,955	9,826	31,279	29,984
Capitalized interest	$ 383	$ 36	$ 896	$ 61

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Goodwill (Narrative) (Details) (USD $)	3 Months Ended	9 Months Ended
	Dec. 31, 2010	Jun. 30, 2011
Reduction to goodwill due to favorable resolution of lease termination recorded in restructuring reserve	$ 103,000	$ 103,000
Goodwill addition		24,188,000
Impairment		0
Weighted average cost of capital assumption		11.30%
Assumed annual compound growth rate after five years		4.40%
Percent increase in discount rate that would not result in impairment		10.00%
Percent decrease in growth rate that would not result in impairment		10.00%
Percent decrease in forecasted cash flow that would not result in impairment		10.00%
Percent increase in discount rate that would result in impairment		11.00%
Percent decrease in growth rate that would result in impairment		38.00%
Percent decrease in forecasted cash flow that would result in impairment		15.00%
Turbine Systems [Member]
Goodwill addition
Electrical Power Systems [Member]
Goodwill addition		$ 24,188,000

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Goodwill (Goodwill) (Details) (USD $) In Thousands	9 Months Ended
	Jun. 30, 2011
Goodwill, Beginning Balance	$ 438,594
Additions	24,188
Adjustments	(103)
Effects of Currency Translation	3,153
Goodwill, Ending Balance	465,832
Turbine Systems [Member]
Goodwill, Beginning Balance	86,565
Additions
Adjustments
Effects of Currency Translation
Goodwill, Ending Balance	86,565
Airframe Systems [Member]
Goodwill, Beginning Balance	294,557
Adjustments	(103)
Effects of Currency Translation	165
Goodwill, Ending Balance	294,619
Electrical Power Systems [Member]
Goodwill, Beginning Balance	16,534
Additions	24,188
Effects of Currency Translation	2,715
Goodwill, Ending Balance	43,437
Engine Systems [Member]
Goodwill, Beginning Balance	40,938
Effects of Currency Translation	273
Goodwill, Ending Balance	$ 41,211

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Other Intangibles - Net (Schedule of Finite-Lived Intangible Assets by Major Class) (Details) (USD $) In Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010	Sep. 30, 2010
Gross Carrying Value	$ 406,438		$ 406,438		$ 393,116
Accumulated Amortization	(127,210)		(127,210)		(100,967)
Net Carrying Amount	279,228		279,228		292,149
Amortization expense	8,935	8,635	26,020	26,471
Customer Relationships [Member] | Turbine Systems [Member]
Gross Carrying Value	44,327		44,327		44,327
Accumulated Amortization	(19,331)		(19,331)		(18,223)
Net Carrying Amount	24,996		24,996		26,104
Process Technology [Member] | Turbine Systems [Member]
Gross Carrying Value	11,941		11,941		11,941
Accumulated Amortization	(5,208)		(5,208)		(4,909)
Net Carrying Amount	6,733		6,733		7,032
Other Intangibles [Member] | Turbine Systems [Member]
Gross Carrying Value
Accumulated Amortization
Net Carrying Amount
Turbine Systems [Member]
Gross Carrying Value	56,268		56,268		56,268
Accumulated Amortization	(24,539)		(24,539)		(23,132)
Net Carrying Amount	31,729		31,729		33,136
Turbine Systems [Member] | Intellectual Property [Member]
Gross Carrying Value
Accumulated Amortization
Net Carrying Amount
Customer Relationships [Member] | Airframe Systems [Member]
Gross Carrying Value	176,667		176,667		176,634
Accumulated Amortization	(25,019)		(25,019)		(13,162)
Net Carrying Amount	151,648		151,648		163,472
Process Technology [Member] | Airframe Systems [Member]
Gross Carrying Value	62,984		62,984		62,967
Accumulated Amortization	(10,327)		(10,327)		(6,797)
Net Carrying Amount	52,657		52,657		56,170
Other Intangibles [Member] | Airframe Systems [Member]
Gross Carrying Value	39,648		39,648		39,638
Accumulated Amortization	(32,900)		(32,900)		(27,595)
Net Carrying Amount	6,748		6,748		12,043
Airframe Systems [Member]
Gross Carrying Value	279,299		279,299		279,239
Accumulated Amortization	(68,246)		(68,246)		(47,554)
Net Carrying Amount	211,053		211,053		231,685
Airframe Systems [Member] | Intellectual Property [Member]
Gross Carrying Value
Accumulated Amortization
Net Carrying Amount
Customer Relationships [Member] | Electrical Power Systems [Member]
Gross Carrying Value	5,993		5,993		2,156
Accumulated Amortization	(1,167)		(1,167)		(844)
Net Carrying Amount	4,826		4,826		1,312
Process Technology [Member] | Electrical Power Systems [Member]
Gross Carrying Value	8,289		8,289
Accumulated Amortization	(212)		(212)
Net Carrying Amount	8,077		8,077
Other Intangibles [Member] | Electrical Power Systems [Member]
Gross Carrying Value	2,337		2,337		1,510
Accumulated Amortization	(583)		(583)		(389)
Net Carrying Amount	1,754		1,754		1,121
Electrical Power Systems [Member]
Gross Carrying Value	24,527		24,527		11,282
Accumulated Amortization	(6,068)		(6,068)		(4,800)
Net Carrying Amount	18,459		18,459		6,482
Electrical Power Systems [Member] | Intellectual Property [Member]
Gross Carrying Value	7,908		7,908		7,616
Accumulated Amortization	(4,106)		(4,106)		(3,567)
Net Carrying Amount	3,802		3,802		4,049
Customer Relationships [Member] | Engine Systems [Member]
Gross Carrying Value	20,675		20,675		20,675
Accumulated Amortization	(14,990)		(14,990)		(13,577)
Net Carrying Amount	5,685		5,685		7,098
Process Technology [Member] | Engine Systems [Member]
Gross Carrying Value	12,593		12,593		12,593
Accumulated Amortization	(5,560)		(5,560)		(4,787)
Net Carrying Amount	7,033		7,033		7,806
Other Intangibles [Member] | Engine Systems [Member]
Gross Carrying Value	460		460		460
Accumulated Amortization	(196)		(196)		(129)
Net Carrying Amount	264		264		331
Engine Systems [Member]
Gross Carrying Value	46,344		46,344		46,327
Accumulated Amortization	(28,357)		(28,357)		(25,481)
Net Carrying Amount	17,987		17,987		20,846
Engine Systems [Member] | Intellectual Property [Member]
Gross Carrying Value	12,616		12,616		12,599
Accumulated Amortization	(7,611)		(7,611)		(6,988)
Net Carrying Amount	5,005		5,005		5,611
Customer Relationships [Member]
Gross Carrying Value	247,662		247,662		243,792
Accumulated Amortization	(60,507)		(60,507)		(45,806)
Net Carrying Amount	187,155		187,155		197,986
Intellectual Property [Member]
Gross Carrying Value	20,524		20,524		20,215
Accumulated Amortization	(11,717)		(11,717)		(10,555)
Net Carrying Amount	8,807		8,807		9,660
Process Technology [Member]
Gross Carrying Value	95,807		95,807		87,501
Accumulated Amortization	(21,307)		(21,307)		(16,493)
Net Carrying Amount	74,500		74,500		71,008
Other Intangibles [Member]
Gross Carrying Value	42,445		42,445		41,608
Accumulated Amortization	(33,679)		(33,679)		(28,113)
Net Carrying Amount	$ 8,766		$ 8,766		$ 13,495

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Other Intangibles - Net (Schedule of Finite-Lived Intangible Assets, Future Amortization Expense) (Details) (USD $) In Thousands	9 Months Ended
	Jun. 30, 2011
Other Intangibles - Net
2011 (remaining)	$ 8,973
2012	33,062
2013	30,701
2014	27,545
2015	25,029
Thereafter	153,918
Total future amortization expense	$ 279,228

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Accrued Liabilities (Accrued Liabilities) (Details) (USD $) In Thousands	Jun. 30, 2011	Sep. 30, 2010
Accrued Liabilities
Salaries and other member benefits	$ 57,300	$ 43,598
Current portion of restructuring and other charges	2,740	4,862
Warranties	14,522	10,851
Interest payable	5,689	11,925
Accrued retirement benefits	2,735	2,748
Deferred revenues	7,242	12,376
Taxes, other than income	1,956	4,618
Other	17,542	18,074
Accrued liabilities	$ 109,726	$ 109,052

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Accrued Liabilities (Warranties) (Details) (USD $) In Thousands	9 Months Ended
	Jun. 30, 2011
Accrued Liabilities
Warranties, beginning balance	$ 10,851
Increases to accruals related to warranties during the period	4,070
Increases due to acquisition of IDS	2,250
Settlements of amounts accrued	(3,226)
Foreign currency exchange rate changes	577
Warranties, ending balance	$ 14,522

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Accrued Liabilities (Restructuring and Other Charges) (Details) (USD $) In Thousands	3 Months Ended	9 Months Ended		3 Months Ended			9 Months Ended	3 Months Ended	9 Months Ended
	Jun. 30, 2011	Jun. 30, 2011	Sep. 30, 2010	Dec. 31, 2010 Lease Settlement [Member] Business Acquisitions [Member]	Dec. 31, 2010 Facility Closing [Member] Business Acquisitions [Member]	Jun. 30, 2011 Restructuring Charges [Member]	Jun. 30, 2011 Restructuring Charges [Member]	Jun. 30, 2011 Business Acquisitions [Member]	Jun. 30, 2011 Business Acquisitions [Member]
Accrued restructuring charges, beginning balance	$ 3,750	$ 6,113				$ 497	$ 667	$ 3,253	$ 5,446
Payments	(68)	(913)				(63)	(208)	(5)	(705)
Non-cash adjustments	(450)	(1,974)		(103)	(1,513)	3	(28)	(453)	(1,946)
Foreign currency exchange rates	3	9				3	9
Accrued restructuring charges, ending balance	3,235	3,235				440	440	2,795	2,795
Non-current accrued restructuring charges	$ 495	$ 495	$ 1,251

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Condensed Consolidated Statements of Stockholders' Equity (USD $) In Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Other Comprehensive Earnings [Member]	Foreign Currency Translation Adjustments [Member]	Unrealized Derivative Gains (Losses) [Member]	Minimum Retirement Benefit Liability Adjustments [Member]	Deferred Compensation in Equity [Member]	Retained Earnings [Member]	Treasury Stock at Cost [Member]	Treasury Stock Held for Deferred Compensaton [Member]	Noncontrolling Interest in Consolidated Subsidiary [Member]	Total
Beginning Balance at Sep. 30, 2009	$ 106	$ 73,197	$ 10,129	$ 29,464	$ (801)	$ (18,534)	$ 4,904	$ 741,505	$ (115,478)	$ (4,904)	$ 2,056	$ 711,515
Beginning Balance, Treasury Stock, shares at Sep. 30, 2009									(4,621)
Beginning Balance, Common Stock, shares at Sep. 30, 2009	72,960
Beginning Balance, Treasury stock held for deferred compensation, Shares at Sep. 30, 2009										(389)
Net earnings								78,169			318	78,487
Cash dividends paid								(12,316)			(655)	(12,971)
Purchase of Treasury Stock									(2,383)			(2,383)
Purchase of Treasury Stock, shares									(85)
Sale of Treasury Stock		(1,114)							3,760			2,646
Sale of Treasury Stock, shares									266
Purchase of noncontrolling interest		(6,180)	(116)	(116)							(1,824)	(8,120)
Tax benefit attributable to exercise of stock options		1,588										1,588
Stock-based compensation		5,186										5,186
Purchase of stock by deferred compensation plan		24					144		41	(144)		65
Purchase of stock by deferred compensation plan, shares									3	(3)
Distribution of stock from deferred compensation plan							(175)			175
Distribution of stock from deferred compensation plan, shares										35
Foreign currency translation adjustments			(29,525)	(29,525)							163	(29,362)
Reclassification of realized losses on derivatives to earnings			211		211							211
Minimum retirement benefits liability adjustment			396			396						396
Taxes on changes in accumulated other comprehensive earnings			1,832	2,233	(80)	(321)					(58)	1,774
Ending Balance at Jun. 30, 2010	106	72,701	(17,073)	2,056	(670)	(18,459)	4,873	807,358	(114,060)	(4,873)		749,032
Ending Balance, Treasury Stock, shares at Jun. 30, 2010									(4,437)
Ending Balance, Common Stock, shares at Jun. 30, 2010	72,960
Ending Balance, Treasury stock held for deferred compensation, Shares at Jun. 30, 2010										(357)
Beginning Balance at Sep. 30, 2010	106	73,915	6,342	23,152	(627)	(16,183)	4,888	835,919	(113,088)	(4,888)		803,194
Beginning Balance, Treasury Stock, shares at Sep. 30, 2010									(4,223)			(4,223)
Beginning Balance, Common Stock, shares at Sep. 30, 2010	72,960											72,960
Beginning Balance, Preferred Stock, shares at Sep. 30, 2010												0
Beginning Balance, Treasury stock held for deferred compensation, Shares at Sep. 30, 2010										(356)		(356)
Net earnings								90,545				90,545
Cash dividends paid								(13,764)				(13,764)
Purchase of Treasury Stock									(7,961)			(7,961)
Purchase of Treasury Stock, shares									(242)
Sale of Treasury Stock		(1,754)							4,963			3,209
Sale of Treasury Stock, shares									310
Tax benefit attributable to exercise of stock options		2,581										2,581
Stock-based compensation		5,370										5,370
Purchase of stock by deferred compensation plan		33					128			(128)		33
Purchase of stock by deferred compensation plan, shares									2	(2)
Distribution of stock from deferred compensation plan							(445)			445
Distribution of stock from deferred compensation plan, shares										43
Foreign currency translation adjustments			17,043	17,043								17,043
Reclassification of realized losses on derivatives to earnings			172		172							172
Minimum retirement benefits liability adjustment			(413)			(413)						(413)
Taxes on changes in accumulated other comprehensive earnings			(1,711)	(1,791)	(65)	145						(1,711)
Ending Balance at Jun. 30, 2011	$ 106	$ 80,145	$ 21,433	$ 38,404	$ (520)	$ (16,451)	$ 4,571	$ 912,700	$ (116,086)	$ (4,571)		$ 898,298
Ending Balance, Treasury Stock, shares at Jun. 30, 2011									(4,153)			(4,153)
Ending Balance, Common Stock, shares at Jun. 30, 2011	72,960											72,960
Ending Balance, Preferred Stock, shares at Jun. 30, 2011												0
Ending Balance, Treasury stock held for deferred compensation, Shares at Jun. 30, 2011										(315)		(315)

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Other Liabilities (Details) (USD $) In Thousands	Jun. 30, 2011	Sep. 30, 2010
Other Liabilities
Net accrued retirement benefits, less amounts recognized with accrued liabilities	$ 64,797	$ 66,288
Uncertain tax positions, net of offsetting benefits, less amounts recognized within accrued liabilities (Note 15)	14,441	8,720
Other	11,815	8,967
Other liabilities, net	$ 91,053	$ 83,975

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Other (Income) Expense, Net (Details) (USD $) In Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Net (gain) loss on sales of assets	$ 428	$ (156)	$ 429	$ (99)
Rent income	(130)	(123)	(437)	(388)
Amount of (Income) Expense Recognized in Earnings on Derivative	40	39	1,733	14
Other	(3)	30	(35)	65
Other (income) expense, net	249	49	955	(625)
Net loss on sale of marketable securities acquired in IDS Acquisition	246		246
Derivatives in Foreign Currency Relationships [Member]
Amount of (Income) Expense Recognized in Earnings on Derivative			1,612	(102)
Investments in Deferred Compensation Plan [Member]
Net gain on investments in deferred compensation program	$ (46)	$ 298	$ (614)	$ (101)

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Income Taxes (Narrative) (Details) (USD $) In Thousands	3 Months Ended	9 Months Ended
	Jun. 30, 2010	Jun. 30, 2011	Sep. 30, 2010
Income tax expense reduction due to research and experimentation tax credit		$ 3,088
Unrecognized Tax Benefits that Would Impact Effective Tax Rate		14,441	8,720
Reduction in liability for unrecognized tax benefits	6,416
Business Acquisition, Acquiree - IDS [Member]
Unrecognized Tax Benefits that Would Impact Effective Tax Rate		3,517
Unrecognized Tax Benefits, Change Resulting from Settlements with Taxing Authorities and Lapse of Applicable Statute of Limitations [Member]
Estimated decrease in liability for unrecognized tax benefits		$ 2,260

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Income Taxes (Tax Expense and Effective Tax Rate) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Income Taxes
Earnings before income taxes	$ 50,855	$ 38,052	$ 128,817	$ 105,360
Income tax expense	$ 14,799	$ 6,187	$ 38,272	$ 26,873
Effective tax rate	29.10%	16.30%	29.70%	25.50%

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Income Taxes (Unrecognized Tax Benefits) (Details) (USD $) In Thousands	Jun. 30, 2011	Sep. 30, 2010
Income Taxes
Gross liability	$ 16,269	$ 10,586
Amount that would impact Woodward's effective tax rate, if recognized, net of expected offsetting adjustments	14,441	8,720
Accrued interest and penalties	$ 2,072	$ 1,431

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Retirement Benefits ( Schedule Of Costs Of Retirement Plans) (Details) (USD $) In Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Pension Costs [Member] | United States [Member]
Service cost	$ 858	$ 911	$ 2,575	$ 2,735
Interest cost	1,412	1,222	4,235	3,667
Expected return on plan assets	(1,673)	(1,189)	(5,020)	(3,569)
Amortization of Transition obligation
Amortization of Net actuarial loss	78	173	234	437
Amortization of Prior service cost (benefit)	19	(65)	56	(195)
Curtailment loss		165		165
Net periodic retirement pension cost	694	1,217	2,080	3,240
Contributions	1,290	940	1,290	940
Pension Costs [Member] | United Kingdom [Member]
Service cost	118	92	350	292
Interest cost	527	483	1,556	1,518
Expected return on plan assets	(572)	(505)	(1,688)	(1,591)
Amortization of Transition obligation
Amortization of Net actuarial loss	165	127	487	398
Net periodic retirement pension cost	238	197	705	617
Contributions	466	392	1,406	1,318
Pension Costs [Member] | Japan [Member]
Service cost	107	97	321	292
Interest cost	45	58	133	178
Expected return on plan assets	(65)	(59)	(195)	(179)
Amortization of Transition obligation		21		64
Amortization of Net actuarial loss	62	54	185	165
Amortization of Prior service cost (benefit)	(2)	(2)	(6)	(6)
Settlement loss		50		50
Net periodic retirement pension cost	147	219	438	564
Contributions			2,250	913
Pension Costs [Member] | Switzerland [Member]
Service cost	48		48
Interest cost	12		12
Expected return on plan assets	(12)		(12)
Amortization of Transition obligation
Net periodic retirement pension cost	48		48
Contributions	36		36
Other Postretirement Benefit Costs [Member]
Service cost	23	30	69	90
Interest cost	494	519	1,481	1,560
Amortization of Net actuarial loss	32	48	96	142
Amortization of Prior service cost (benefit)	(218)	(313)	(653)	(937)
Net periodic retirement pension cost	331	284	993	855
Contributions	$ 879	$ 609	$ 2,473	$ 2,075

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Retirement Benefits (Schedule of estimated remaining cash contributions) (Details) (USD $) In Thousands	Jun. 30, 2011
Pension Costs [Member] | United States [Member]
Contributions	$ 1,290
Pension Costs [Member] | United Kingdom [Member]
Contributions	430
Pension Costs [Member] | Switzerland [Member]
Contributions	47
Other Postretirement Benefit Costs [Member]
Contributions	$ 178

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Stock-Based Compensation (Narrative) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended	9 Months Ended
	Dec. 31, 2010	Jun. 30, 2011
Total unrecognized compensation cost related to non-vested stock-based compensation arrangements		11,254
Unrecognized compensation cost is expected to be recognized over a weighted-average period, in years		2.7
Stock Options [Member]
Number of shares of stock options authorized		7,410,000
Vesting period, in years		4
Vesting rate		25.00%
Vested contractual term, in years		10
Restricted Stock Award [Member]
Shares vested, Number of Shares	70,000
Number of shares outstanding		0
Vesting period, in years		2

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Stock-Based Compensation (Schedule of Assumptions Used in Estimate of Fair Value of Stock Option Awards) (Details) (Stock Options [Member])	3 Months Ended		9 Months Ended
	Jun. 30, 2011 years	Jun. 30, 2010 years	Jun. 30, 2010 years	Jun. 30, 2011 Minimum [Member] years	Jun. 30, 2011 Maximum [Member] years
Expected term	5.8	6.5	6.5	5.8	8.7
Estimated volatility	53.70%	51.00%	51.00%	48.00%	54.00%
Estimated dividend yield	1.00%	1.40%	1.40%	1.00%	1.30%
Risk-free interest rate	1.80%	2.40%	3.40%	1.80%	2.60%
Forfeiture rate	10.60%	10.80%	8.10%	0.00%	10.60%

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Stock-Based Compensation (Activity for Stock Option Awards) (Details) (USD $) In Thousands, except Per Share data	3 Months Ended	9 Months Ended
	Jun. 30, 2011	Jun. 30, 2011
Stock-Based Compensation
Number of options, beginning balance	4,418	4,011
Weighted Average Exercise Price Per Share, beginning balance	$ 19.65	$ 16.87
Options granted, Number of options	28	710
Options granted, Weighted Average Exercise Price Per Share	$ 33.04	$ 32.10
Options exercised, Number of options	(49)	(310)
Options exercised, Weighted Average Exercise Price Per Share	$ 15.74	$ 10.14
Options expired unexercised, Number of options	(2)	(2)
Options expired unexercised, Weighted Average Exercise Price Per Share	$ 32.73	$ 32.73
Options forfeited, Number of options	(6)	(20)
Options forfeited, Weighted Average Exercise Price Per Share	$ 26.68	$ 26.61
Number of options, ending balance	4,389	4,389
Weighted Average Exercise Price Per Share, ending balance	$ 19.76	$ 19.76

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Basis of Presentation

9 Months Ended

Jun. 30, 2011

Basis of Presentation

Basis of Presentation

Note 1. Basis of presentation

The Condensed Consolidated Financial Statements of Woodward, Inc. ("Woodward" or the "Company") as of June 30, 2011 and for the three and nine-months ending June 30, 2011 and June 30, 2010, included herein, have not been audited by an independent registered public accounting firm. These Condensed Consolidated Financial Statements reflect all normal recurring adjustments which, in the opinion of management, are necessary to present fairly Woodward's financial position as of June 30, 2011, and the results of operations, cash flows, and changes in stockholders' equity for the periods presented herein. The Condensed Consolidated Balance Sheet as of September 30, 2010 was derived from Woodward's Annual Report on Form 10-K for the fiscal year then ended. The results of operations for the three and nine-months ending June 30, 2011 are not necessarily indicative of the operating results to be expected for other interim periods or for the full fiscal year. Dollar amounts contained in these Condensed Consolidated Financial Statements are in thousands, except per share amounts.

The Condensed Consolidated Financial Statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for interim reporting. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") have been condensed or omitted pursuant to such rules and regulations.

These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and Notes thereto included in Woodward's most recent Annual Report on Form 10-K filed with the SEC and other financial information filed with the SEC.

Management is required to use estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements, the reported revenues and expenses recognized during the reporting period, and certain financial statement disclosures, in the preparation of the Condensed Consolidated Financial Statements. Significant estimates in these Condensed Consolidated Financial Statements include allowances for doubtful accounts, net realizable value of inventories, warranty reserves, percentage complete on long-term contracts, cost of sales incentives, useful lives of property and identifiable intangible assets, the evaluation of impairments of property, identifiable intangible assets and goodwill, income tax and valuation reserves, the valuation of assets and liabilities acquired in business combinations, assumptions used in the determination of the funded status and annual expense of pension and postretirement employee benefit plans, the valuation of stock compensation instruments granted to employees, and contingencies. Actual results could vary materially from Woodward's estimates.

The Condensed Consolidated Statement of Cash Flows for the nine-months ending June 30, 2010 has been adjusted to conform to the nine-months ending June 30, 2011 presentation. The change in "Retirement benefit obligations" presented in "Cash flows from operating activities" has been reclassified from "Other."

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Segment Information (Consolidated Net Sales by Segment) (Details) (USD $) In Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
External sales	$ 438,467	$ 356,367	$ 1,222,408	$ 1,045,027
Intersegment sales	31,490	22,274	86,961	63,175
Total segment net sales	469,957	378,641	1,309,369	1,108,202
Turbine Systems [Member]
External sales	187,944	148,623	505,797	433,553
Intersegment sales	3,010	2,545	8,744	7,144
Total segment net sales	190,954	151,168	514,541	440,697
Airframe Systems [Member]
External sales	102,354	93,518	282,065	274,827
Intersegment sales	603	609	1,988	1,900
Total segment net sales	102,957	94,127	284,053	276,727
Electrical Power Systems [Member]
External sales	54,875	36,147	160,254	128,692
Intersegment sales	17,052	11,133	46,180	29,918
Total segment net sales	71,927	47,280	206,434	158,610
Engine Systems [Member]
External sales	93,294	78,079	274,292	207,955
Intersegment sales	10,825	7,987	30,049	24,213
Total segment net sales	$ 104,119	$ 86,066	$ 304,341	$ 232,168

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Segment Information (Consolidated Earnings by Segment) (Details) (USD $) In Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Interest expense, net	$ (6,244)	$ (6,852)	$ (18,836)	$ (22,197)
Consolidated earnings before income taxes	50,855	38,052	128,817	105,360
Unallocated Corporate [Member]
Segment earnings (loss)	(7,554)	(6,085)	(21,599)	(16,810)
Turbine Systems [Member]
Segment earnings (loss)	46,067	35,934	123,151	100,363
Airframe Systems [Member]
Segment earnings (loss)	5,512	2,852	4,535	10,237
Electrical Power Systems [Member]
Segment earnings (loss)	3,241	3,072	13,437	15,254
Engine Systems [Member]
Segment earnings (loss)	9,833	9,131	28,129	18,513
Total Segment Earnings [Member]
Segment earnings (loss)	$ 64,653	$ 50,989	$ 169,252	$ 144,367

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Segment Information (Consolidated Total Assets by Segment) (Details) (USD $) In Thousands	Jun. 30, 2011	Sep. 30, 2010
Assets	$ 1,762,500	$ 1,663,233
Property, plant and equipment, net	200,042	193,524
Total Segment Assets [Member]
Assets	1,588,180	1,456,768
Turbine Systems [Member]
Assets	381,815	347,188
Airframe Systems [Member]
Assets	745,270	748,297
Electrical Power Systems [Member]
Assets	231,097	156,788
Engine Systems [Member]
Assets	229,998	204,495
Unallocated Corporate [Member]
Property, plant and equipment, net	6,853	6,111
Other unallocated assets	$ 167,467	$ 200,354

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Recent Accounting Pronouncements

9 Months Ended

Jun. 30, 2011

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Note 2. Recent accounting pronouncements

From time to time, the Financial Accounting Standards Board ("FASB") or other standards setting bodies issue new accounting pronouncements. Updates to the FASB Accounting Standards Codification ("ASC") are communicated through issuance of an Accounting Standards Update ("ASU").

In October 2009, the FASB issued ASU 2009-13, "Multiple-Deliverable Revenue Arrangements" and ASU 2009-14, "Certain Revenue Arrangements That Include Software Elements." ASU 2009-13 and ASU 2009-14 are required to be adopted concurrently in fiscal years beginning on or after June 15, 2010 (fiscal year 2011 for Woodward).

ASU 2009-13 changes the requirements for establishing separate units of accounting in a multiple element arrangement and requires the allocation of arrangement consideration to each deliverable based on the relative selling price. The selling price for each deliverable is based on vendor-specific objective evidence ("VSOE") if available, third-party evidence ("TPE") if VSOE is not available, or estimated selling price ("ESP") if neither VSOE nor TPE is available.

ASU 2009-14 excludes software that is contained on a tangible product from the scope of software revenue guidance if the software is essential to the tangible product's functionality.

ASU 2009-13 and ASU 2009-14 were adopted by Woodward on October 1, 2010. The adoption did not impact the identification of or the accounting for units of accounting, including the pattern and timing of revenue recognition, and is not expected to have a significant impact on Woodward's financial position, results of operations or cash flows in future periods. Woodward does not generally sell its products and services through arrangements that include multiple-deliverable arrangements, and the Company had no significant multiple-deliverable arrangements as of June 30, 2011.

In April 2010, the FASB issued ASU 2010-17, "Milestone Method of Revenue Recognition." ASU 2010-17 provides guidance on defining a milestone and determining when it may be appropriate to apply the milestone method of revenue recognition for research and development transactions, and requires certain disclosures regarding the use of the milestone method.

ASU 2010-17 was adopted by Woodward on October 1, 2010. The adoption did not impact the pattern or timing of revenue recognition and is not expected to have a significant impact on Woodward's financial position, results of operations or cash flows in future periods. For certain development services provided to customers pursuant to funded long and short-term development contracts, Woodward recognizes revenue based on completion of substantive milestones determined based on the individual facts and circumstances of each arrangement. Total revenues recognized by Woodward based upon completion of substantive milestones as proscribed by ASU 2010-17 was $596 and $1,926 for the three and nine-months ending June 30, 2011, respectively.

In June 2011, the FASB issued ASU 2011-05, "Comprehensive Income." ASU 2011-05 amends ASC Topic 220, Comprehensive Income, to require that all non-owner changes in stockholders' equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements, and it eliminates the option to present components of other comprehensive income as a part of the statement of changes in stockholders' equity. In addition, ASU 2011-05 requires an entity to present on the face of the financial statements reclassification adjustments for items that are reclassified from other comprehensive income to net income in the statement(s) where the components of net income and the components of other comprehensive income are presented. These amendments are to be applied retrospectively and are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 (fiscal 2013 for Woodward), early adoption is permitted. Woodward does not expect this guidance will have a significant impact on its Condensed Consolidated Financial Statements.