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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Item 8.01. Other Events
Item 9.01. Financial Statements and Exhibits 99.2 Press Release of Woodward Governor Company dated July 25, 2006
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
By: /s/ Robert F. Weber, Jr. ROCKFORD, IL -- 07/25/2006 -- Woodward Governor Company (NASDAQ: WGOV) today
reported financial results for its third fiscal quarter and nine months
ended June 30, 2006.
Net sales for the quarter were $217,053,000, up 3 percent from $210,252,000
for the third quarter last year. Earnings before income taxes for the
quarter were $21,579,000, compared with $25,488,000 for the same quarter a
year ago. This year's third quarter pretax results included the effects of
expense accruals totaling $3,500,000 for certain pending legal matters.
Last year's third quarter pretax results included a curtailment gain of
$7,825,000 that resulted from changes to a retirement healthcare benefit
plan.
Woodward adopted the new accounting standard for stock compensation this
year. Had the same standard been applied last year, employee compensation
expense would have increased by $608,000 in last year's third quarter.
Net earnings for the quarter were $28,918,000, or $0.82 per share, compared
with $19,746,000, or $0.56 per share, in last year's third quarter (all per
share amounts are diluted). This year's third quarter results benefited by
$13,710,000 from changes in valuation allowances for deferred tax assets.
"Profitability improvement in our third quarter was significant, with
combined segment earnings up over 30 percent from the same quarter last
year," said President and Chief Executive Officer Thomas A. Gendron.
Industrial Controls' net sales for the third quarter were $137,930,000, a
slight increase from the $136,592,000 for the third quarter a year ago.
Segment earnings increased 73 percent to $16,406,000 from $9,469,000 for
the same quarter a year ago.
"The Industrial Controls segment showed strong profitability for the
quarter helped by the European restructuring efforts that were completed in
March and a favorable mix in product sales. Sales growth, while flat
overall, showed some improvement in large gas turbines from the sharply
lower levels of the second quarter. Increases in turbine auxiliary and
power distribution sales were also largely offset by continued lower demand
in both gas-powered and diesel buses in China," commented Mr. Gendron.
Aircraft Engine Systems' net sales for the third quarter were $79,123,000,
an increase of 7 percent from $73,660,000 for last year's third quarter.
Segment earnings for the quarter increased 3 percent to $14,753,000 from
$14,321,000 for the same quarter a year ago.
"Aircraft Engine Systems continued to make excellent progress in meeting
development milestones for major engine control programs awarded over the
past several years," said Mr. Gendron. "While increased development
expenses continued in the quarter, we expect to be back within our targeted
operating profit range in the fourth quarter and for the full year."
For the nine months ended June 30, 2006, consolidated net sales were
$621,604,000, an increase of 2 percent from $610,196,000 for the
corresponding period a year ago. Earnings before income taxes were
$57,875,000 for the nine-month period, which included the expense accruals
totaling $8,500,000 for pending legal matters. In the same period a year
ago, earnings before income taxes were $64,818,000, which included a pretax
gain of $3,834,000 from the first quarter sale of product rights and the
third quarter curtailment gain of $7,825,000 described above. Net earnings
for the nine-month period were $52,811,000, or $1.50 per share, compared
with $44,720,000, or $1.28 per share last year. Income taxes benefited by
$13,710,000 from changes in valuation allowances for deferred tax assets in
this year's nine-month period.
Had we adopted the new accounting standard for stock compensation last
year, employee compensation expense would have increased by $1,742,000 in
last year's first nine months.
Mr. Gendron concluded, "We believe both of our operating segments will post
higher sequential sales in the fourth quarter and our profitability will be
in our previously communicated range. For the full year, we continue to
anticipate company-wide sales growth of 3 to 6 percent and earnings of
$1.67 to $1.75 per share before the effects of the pending legal matters
and reduction of deferred tax valuation allowances mentioned earlier."
Woodward will hold an investor conference call at 7:30 a.m. CT on
Wednesday, July 26, 2006, to provide an overview of the fiscal year 2006's
third quarter and nine month financial performance, business highlights,
and outlook for the year. You are invited to listen to the live webcast of
our conference call or a recording at our website, www.woodward.com. You
may also listen to the call by dialing 1-866-835-8903 (domestic) or
1-703-639-1410 (international). Participants should call prior to the start
time to allow for registration; the Conference ID is 937853. An audio
replay will be available by telephone from 10:30 a.m. CT on July 26 until
11:59 p.m. CT on July 28, 2006. The telephone number to access the replay
is 1-888-266-2081 (domestic) or 1-703-925-2533 (international), reference
access code 937853.
About Woodward
Woodward is the world's largest independent designer, manufacturer, and
service provider of energy control solutions for aircraft engines,
industrial engines and turbines, and power generation and mobile industrial
equipment. The company's innovative control, fuel delivery, and combustion
systems help customers worldwide operate cleaner, more reliable, and cost
effective equipment. Woodward is headquartered in Rockford, Illinois, and
serves global power generation, transportation, process industries, and
aerospace markets from locations worldwide. Woodward is now listed in the
new NASDAQ Global Select Market. Visit our website at www.woodward.com.
The statements in this release concerning the company's future sales,
earnings, business performance, prospects, and the economy in general
reflect current expectations and are forward-looking statements that
involve risks and uncertainties. Actual results could differ materially
from projections or any other forward-looking statement and we have no
obligation to update our forward-looking statements. Factors that could
affect performance and could cause actual results to differ materially from
projections and forward-looking statements are described in Woodward's
Annual Report and Form 10-K for the year ended September 30, 2005 and Form
10-Q for the quarter ended June 30, 2006, expected to be available by
mid-August 2006.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Securities Exchange Act of 1934.
Date of Report: July 25, 2006
(Date of earliest event reported)
Woodward Governor Company
(Exact name of registrant as specified in its charter)
DE
(State or other jurisdiction
of incorporation)
000-08408
(Commission File Number)
36-1984010
(IRS Employer
Identification Number)
5001 North Second Street, Rockford, Illinois
(Address of principal executive offices)
61111
(Zip Code)
815-877-7441
(Registrant's telephone number, including area code)
Not Applicable
(Former Name or Former Address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Item 2.02. Results of Operations and Financial Condition
On July 25, 2006,Woodward Governor Company (the "Registrant") reported its results of operations for its fiscal third quarter ended June 30, 2006. A copy of the news release issued by the Registrant concerning the foregoing results is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.
On July 25, 2006, Woodward Governor Company (the "Registrant") announced that its Board of Directors authorized a stock repurchase program of $50,000,000 for a period of three years. This new authorization replaced the program previously approved by the Board in January 2005.
The information contained herein and in the accompanying exhibit shall not be incorporated by reference into any filing of the Registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference to such filing. The information in this report, including the exhibit hereto, shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended.
A copy of the news release announcing the stock repurchase authorization is furnished as Exhibit 99.2 to this Form 8-K.
(a) Financial statements:
None
(b) Pro forma financial information:
None
(c) Shell company transactions:
None
(d) Exhibits
99.1 Press Release of Woodward Governor Company dated July 25, 2006
Dated: July 25, 2006
WOODWARD GOVERNOR COMPANY
Robert F. Weber, Jr.
Chief Financial Officer and Treasurer
Exhibit No.
Description
99.1
Press Release of Woodward Governor Company dated July 25, 2006
99.2
Press Release of Woodward Governor Company dated July 25, 2006
Woodward Governor Company and Subsidiaries
CONSOLIDATED STATEMENTS OF EARNINGS
Three months ended Nine months ended
June 30, June 30,
(Unaudited - in thousands -------------------- --------------------
except per share amounts) 2006 2005 2006 2005
--------- --------- --------- ---------
Net sales $ 217,053 $ 210,252 $ 621,604 $ 610,196
--------- --------- --------- ---------
Costs and expenses:
Cost of goods sold 154,089 158,867 448,055 459,660
Sales, general, and
administrative expenses 23,234 19,427 69,548 57,683
Research and development
costs 16,793 12,811 41,772 35,106
Amortization of intangible
assets 1,717 1,770 5,230 5,326
Curtailment gain - (7,825) - (7,825)
Interest expense 1,299 1,461 3,901 4,355
Interest income (754) (478) (1,995) (1,515)
Other income (1,072) (1,947) (3,263) (8,318)
Other expense 168 678 481 906
--------- --------- --------- ---------
Total costs and expenses 195,474 184,764 563,729 545,378
--------- --------- --------- ---------
Earnings before income taxes 21,579 25,488 57,875 64,818
Income taxes (7,339) 5,742 5,064 20,098
--------- --------- --------- ---------
Net earnings $ 28,918 $ 19,746 $ 52,811 $ 44,720
========= ========= ========= =========
Per share amounts:
Basic $ 0.84 $ 0.58 $ 1.53 $ 1.31
Diluted $ 0.82 $ 0.56 $ 1.50 $ 1.28
========= ========= ========= =========
Weighted-average number of
shares outstanding:
Basic 34,410 34,269 34,421 34,140
Diluted 35,254 35,190 35,268 35,058
========= ========= ========= =========
Woodward Governor Company and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
At June 30, At September 30,
(Unaudited - in thousands) 2006 2005
--------- ---------
Assets
Current assets:
Cash and cash equivalents $ 66,938 $ 84,597
Accounts receivable 109,930 107,403
Inventories 157,623 149,336
Income taxes receivable 2,897 5,330
Deferred income taxes 21,261 18,700
Other current assets 5,230 4,207
--------- ---------
Total current assets 363,879 369,573
Property, plant, and equipment-net 117,066 114,787
Goodwill 131,748 131,035
Other intangibles-net 73,427 78,564
Deferred income taxes 12,469 2,310
Other assets 8,657 9,197
--------- ---------
Total assets $ 707,246 $ 705,466
========= =========
Liabilities and shareholders' equity
Current liabilities:
Short-term borrowings $ - $ 8,419
Current portion of long-term debt 14,590 14,426
Accounts payable 36,705 37,015
Accrued liabilities 57,672 68,647
--------- ---------
Total current liabilities 108,967 128,507
Long-term debt, less current portion 59,402 72,942
Other liabilities 69,595 71,548
--------- ---------
Total liabilities 237,964 272,997
Shareholders' equity 469,282 432,469
--------- ---------
Total liabilities and shareholders' equity $ 707,246 $ 705,466
========= =========
Woodward Governor Company and Subsidiaries
OTHER SELECTED INFORMATION
Three Months Ended Nine Months Ended
June 30, June 30,
-------------------- --------------------
(Unaudited - in thousands) 2006 2005 2006 2005
--------- --------- --------- ---------
External net sales:
Industrial Controls $ 137,930 $ 136,592 $ 394,419 $ 394,978
Aircraft Engine Systems 79,123 73,660 227,185 215,218
Segment earnings:
Industrial Controls 16,406 9,469 41,058 24,619
Aircraft Engine Systems 14,753 14,321 45,619 48,555
Earnings reconciliation:
Total segment earnings 31,159 23,790 86,677 73,174
Curtailment gain - 7,825 - 7,825
Nonsegment expenses (9,035) (5,144) (26,896) (13,341)
Interest expense and income,
net (545) (983) (1,906) (2,840)
--------- --------- --------- ---------
Consolidated earnings before
income tax $ 21,579 $ 25,488 $ 57,875 $ 64,818
========= ========= ========= =========
Workforce management costs:
Member termination benefits $ - $ 469 $ 70 $ 1,341
Related costs of facility
consolidation - 943 - 943
Member termination benefits
adjustments - (83) - (2,198)
--------- --------- --------- ---------
Total workforce management
costs $ - $ 1,329 $ 70 $ 86
========= ========= ========= =========
Capital expenditures $ 6,679 $ 6,639 $ 19,661 $ 16,325
Depreciation expense 5,871 5,794 17,110 18,960
========= ========= ========= =========
CONTACT: Robert F. Weber, Jr. Chief Financial Officer and Treasurer 970-498-3112 Woodward Governor Company 5001 North Second Street P.O. Box 7001 Rockford, IL 61125-7001 Tel: 815-877-7441 Fax: 815-639-6050
Woodward Expands Stock Repurchase Program
ROCKFORD, IL -- (MARKET WIRE) -- July 25, 2006 -- Woodward Governor Company (NASDAQ: WGOV) announced today that its Board of Directors authorized a new stock repurchase program of $50,000,000. This new authorization replaced the program previously approved by the Board in January 2005 under which less than $10,000,000 remained.
Under the stock repurchase authorizations, shares may be purchased periodically both in open market and private transactions during the three-year period ending July 2009. Shares of purchased stock will be held in treasury and used to satisfy company obligations in connection with employee stock options or for other purposes the Board advises in compliance with applicable law.
"Woodward's strong cash position has allowed us to repurchase approximately $21.9 million in shares since January 2005, even while supporting increased development activities and reducing debt. The Board's action today reflects the strength of the company's prospects for growth and cash flow, as well as our belief that our shares represent a sound investment," said Thomas A. Gendron, President and Chief Executive Officer.
About Woodward
Woodward is the world's largest independent designer, manufacturer, and service provider of energy control solutions for aircraft engines, industrial engines and turbines, power generation, and process automation equipment. The company's innovative control, fuel delivery, combustion, and automation systems help customers worldwide operate cleaner, more cost effective, and more reliable equipment. Woodward is headquartered in Rockford, Illinois, and serves global markets from locations worldwide. Woodward is listed in the NASDAQ Global Select Market. Visit our website at www.woodward.com.
The statements in this release concerning the company's future sales, earnings, business performance, prospects, and the economy in general reflect current expectations and are forward-looking statements that involve risks and uncertainties. Actual results could differ materially from projections or any other forward-looking statement and we have no obligation to update our forward-looking statements. Factors that could affect performance and could cause actual results to differ materially from projections and forward-looking statements are described in Woodward's Annual Report and Form 10-K for the year ended September 30, 2005, and Form 10-Q for the quarter ended June 30, 2006, expected to be available by mid-August.
CONTACT:
Robert F. Weber, Jr.
Chief Financial Officer and Treasurer
970-498-3112
Woodward Governor Company
5001 North Second Street
P.O. Box 7001
Rockford, IL 61125-7001
Tel: 815-877-7442
Fax: 815-639-6050