8-K

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): November 14, 2007

Woodward Governor Company
__________________________________________
(Exact name of registrant as specified in its charter)

Delaware	0-8408	36-1984010
_____________________ (State or other jurisdiction	_____________ (Commission	______________ (I.R.S. Employer
of incorporation)	File Number)	Identification No.)
1000 E. Drake Road, Fort Collins, Colorado		80525
_________________________________ (Address of principal executive offices)		___________ (Zip Code)

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

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:

[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On November 14, 2007, Woodward Governor Company (the "Registrant") reported its results of operations for its fiscal fourth quarter and year ended September 30, 2007. 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.

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 otherwise expressly incorporated by specific reference to such filing. The information in this report, including the exhibit hereto, shall not be deemed "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabiltiies of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended.

Item 9.01 Financial Statements and Exhibits.

(a) Financial statements:
None

(b) Proforma financial information:
None

(c) Shell company transactions:
None

(d) Exhibits:
99.1 Press Release of Woodward Governor Company dated November 14, 2007

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Woodward Governor Company
November 15, 2007	By:	A. Christopher Fawzy
		Name: A. Christopher Fawzy
		Title: Vice President, General Counsel and Corporate Secretary

Exhibit Index

Exhibit No.	Description
99.1	Press Release of Woodward Governor Company dated November 14, 2007

EX-99.1

News Release

Woodward Governor Company
1000 East Drake Road
Fort Collins, Colorado 80525
Tel: 970-482-5811

FOR IMMEDIATE RELEASE

Woodward Reports Record Sales and Earnings for the Fourth Quarter and Fiscal Year 2007

Fort Collins, Colo., November 14, 2007—Woodward Governor Company (Nasdaq:WGOV) today reported record financial results for its fourth quarter and fiscal year 2007.

Fiscal Year 2007 Highlights

• Record sales of $1.042 billion, an increase of 22 percent over last year with organic sales growth of 11 percent

• Net earnings for the year were $2.79 per share compared to $1.99 per share last year, including the items highlighted below

• Strong financial performance in all segments with total segment earnings up 46 percent

• Cash generated from operations was $117.7 million, an increase of 46 percent over prior year

• New business segment structure aligns better with market focus

Net sales for the fourth quarter were $290.8 million, up 25 percent from $232.9 million for the same quarter last year. Net earnings for the quarter were $36.0 million, or $1.02 per share, compared with $17.1 million, or $0.49 per share, in the previous year’s fourth quarter.

Net sales for the full fiscal year were $1.042 billion, up 22 percent from $854.5 million for the prior year. Net earnings for the year were $98.2 million, or $2.79 per share, compared with $69.9 million, or $1.99 per share, in the previous year.

Earnings for the quarter and full year included the items highlighted below:

	Three Months Ended September 30				Year Ended September 30
	In millions, net of		Per share		In millions, net of			Per share
	income tax				income tax
Items that increased (decreased) net earnings in 2007:
Net tax adjustments	$	10.3	$	0.29	$	10.3		$	0.30
Impact of adverse arbitration ruling						(2.5	)		(0.07	)
Items that increased (decreased) net earnings in 2006:
Change in valuation allowance for deferred taxes						13.7			0.39
Expense accruals for certain legal matters						(5.3	)		(0.15	)

This year’s and quarter’s results include the effect of the SEG acquisition in October 2006. This quarter’s results reflect two tax adjustments, a favorable resolution of issues with tax authorities resulting in a reduction of tax expense of $13.3 million, and a reduction in deferred tax assets resulting in tax expense of $3.0 million due to a decrease in the German statutory income tax rate.

“The strength of our targeted end-markets and our offerings to them raised Woodward sales over the $1 billion mark this year, confirming the successful execution of our strategies,” said President and Chief Executive Officer Thomas A. Gendron. “As energy costs and environmental concerns escalate, our strategy of addressing increasing efficiency and lowering emissions is being well received in the marketplace.”

Turbine Systems’ Results

Total net sales (including intersegment sales) for the fourth quarter were $143.8 million, an increase of 12.0 percent from $128.3 million for the fourth quarter a year ago. Segment earnings for the quarter increased to $21.0 million from $20.3 million for the same quarter a year ago, an increase of 3.8 percent. Segment earnings as a percent of sales for the quarter decreased to 14.6 percent from 15.8 percent a year ago.

Total net sales for the full year were $523.8 million, an increase of 14.1 percent from $458.9 million for last year. Segment earnings for the full year increased to $87.4 million from $67.6 million for the same period a year ago, an increase of 29.3 percent. Segment earnings as a percent of total net sales for the year improved to 16.7 percent from 14.7 percent a year ago.

Engine Systems’ Results

Total net sales for the fourth quarter were $124.7 million, an increase of 9.4 percent from $113.9 million for the fourth quarter a year ago. Segment earnings for the quarter increased to $17.2 million from $11.2 million for the same quarter a year ago, an increase of 54.5 percent. Segment earnings as a percent of sales for the quarter improved to 13.8 percent from 9.8 percent a year ago.

Total net sales for the full year were $455.2 million, an increase of 5.8 percent from $430.4 million last year. Segment earnings for the full year increased to $57.0 million from $40.8 million last year, an increase of 39.6 percent. Segment earnings as a percent of sales for the year improved to 12.5 percent from 9.5 percent a year ago.

Electrical Power Systems’ Results

Total net sales for the fourth quarter increased to $54.6 million from $20.9 million for the fourth quarter a year ago. Organic sales growth for the quarter was 12 percent. Segment earnings for the quarter increased to $5.1 million from $0.6 million for the same quarter a year ago. Segment earnings as a percent of sales for the quarter improved to 9.3 percent from 2.7 percent a year ago.

Total net sales for the full year were $181.4 million as compared to $76.2 million last year. Organic sales growth for the full year was 14 percent. Segment earnings for the full year increased to $20.3 million from $4.5 million last year. Segment earnings as a percent of sales for the year improved to 11.2 percent from 5.9 percent a year ago.

“During the course of the year we have won significant long-term sourcing agreements with many of our key customers,” Mr. Gendron continued. “By teaming with our customers early in the development process and maintaining a competitive cost structure, we continue to earn their business.”

Cash Flow and Financial Position

Net cash provided by operating activities was $117.7 million for the full year compared with $80.5 million for last year. Capital expenditures for the year were $32.0 million compared to $31.7 million during the same period last year. The debt to total capitalization ratio was 10.8 percent at September 30, 2007 compared to 13.3 percent at the end of the prior year.

Outlook

Mr. Gendron concluded, “We believe the strength in our end markets will continue through 2008 and our efforts to improve our overall cost structure will deliver enhanced margins and improved profitability. As a result, for fiscal 2008 we have targeted sales growth for Woodward in the range of 8-10 percent and earnings of $3.05 — $3.15 per diluted share.”

Conference Call

Woodward will hold an investor conference call at 6:00 p.m. EST on Wednesday, November 14, 2007, to provide an overview of the financial performance for the fourth quarter and 2007 financial performance, business highlights, and outlook for the next year. You are invited to listen to the live webcast of our conference call or a recording and view or download accompanying presentation slides at our website, www.woodward.com.

You may also listen to the call by dialing 1-866-814-1917 (domestic) or 1-703-639-1361 (international). Participants should call prior to the start time to allow for registration; the Conference ID is 1157382. An audio replay will be available by telephone from 9:00 p.m. EST on November 14 until 11:59 p.m. EST on November 16, 2007. The telephone number to access the replay is 1-888-266-2081 (domestic) or 1-703-925-2533 (international), reference access code 1157382.

About Woodward

Woodward is the largest independent designer, manufacturer, and service provider of energy control and optimization solutions for aircraft engines, industrial engines and turbines, and electrical power equipment. The company’s innovative fluid energy, combustion control, electrical energy, and motion control systems help customers offer cleaner, more reliable, and cost-effective equipment. Woodward is headquartered in Fort Collins, Colorado USA and serves global markets in aerospace, power and process industries and transportation. Visit our website at www.woodward.com.

CONTACT:

Robert F. Weber, Jr.

Chief Financial Officer and Treasurer
970-498-3112

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, 2006 and Form 10-Q for the quarters ended December 31, 2006 and March 31, and June 30, 2007. Woodward’s Form 10-K for the year ended September 30, 2007 will be issued by early-December 2007.

Woodward Governor Company and Subsidiaries
CONSOLIDATED STATEMENTS OF EARNING S
	Three months ended				Year ended
	September 30,				September 30,
(Unaudited - in thousands except per share amounts)	2007		2006		2007		2006
Net sales	$	290,765	$	232,911	$	1,042,337	$	854,515
Costs and expenses:
Cost of goods sold		208,850		164,208		728,820		612,263
Sales, general, and administrative expenses		26,979		22,465		111,297		92,013
Research and development costs		18,383		18,089		65,294		59,861
Amortization of intangible assets		1,640		1,723		7,496		6,953
Interest expense		1,046		1,188		4,527		5,089
Interest income		(2,041)		(755)		(3,604)		(2,750)
Other income		(1,108)		(982)		(4,186)		(4,245)
Other expense		230		353		705		834
Total costs and expenses		253,979		206,289		910,349		770,018
Earnings before income taxes		36,786		26,622		131,988		84,497
Income taxes		752		9,533		33,831		14,597
Net earnings	$	36,034	$	17,089	$	98,157	$	69,900
Per share amounts:
Basic	$	1.05	$	0.50	$	2.87	$	2.03
Diluted	$	1.02	$	0.49	$	2.79	$	1.99
Weighted-average number of shares outstanding:
Basic		34,259		34,145		34,245		34,351
Diluted		35,334		34,966		35,244		35,191

Woodward Governor Company and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
	At September 30,		At September 30,
(Unaudited - in thousands)	2007		2006
Assets
Current assets:
Cash and cash equivalents	$	71,635	$	83,718
Accounts receivable		152,826		117,254
Inventories		172,500		149,172
Income taxes receivable		9,461		1,787
Deferred income taxes		23,754		23,526
Other current assets		8,429		5,777
Total current assets		438,605		381,234
Property, plant, and equipment-net		158,998		124,176
Goodwill		141,215		132,084
Other intangibles-net		73,018		71,737
Deferred income taxes		11,250		16,687
Other assets		6,681		9,579
Total assets	$	829,767	$	735,497
Liabilities and shareholders’ equity
Current liabilities:
Short-term borrowings	$	5,496	$	517
Current portion of long-term debt		15,940		14,619
Accounts payable		57,668		38,978
Accrued liabilities		83,890		66,877
Total current liabilities		162,994		120,991
Long-term debt, less current portion		45,150		58,379
Deferred income taxes		19,788		6,248
Other liabilities		57,404		71,190
Total liabilities		285,336		256,808
Shareholders’ equity		544,431		478,689
Total liabilities and shareholders’ equity	$	829,767	$	735,497

Woodward Governor Company and Subsidiaries
CONDENSED CONSOLIDATED	STATEMENTS OF	CASH FLOWS
		Year ended
		September 30,
(Unaudited - in thousands)		2007			2006
Net cash provided by operating activities		$	117,718		$	80,536
Cash flows from investing activities:
Business acquisitions, net of cash acquired			(35,289	)		—
Payments for purchase of property, plant, and equipment			(31,984	)		(31,713	)
Proceeds from sale of property, plant, and equipment			225			698
Net cash used in investing activities			(67,048	)		(31,015	)
Cash flows from financing activities:
Cash dividends paid			(14,747	)		(13,742	)
Proceeds from sales of treasury stock			7,856			4,163
Purchases of treasury stock			(50,952	)		(22,306	)
Excess tax benefits from stock compensation			9,788			3,305
Payments from borrowings under revolving lines			(2,760	)		(8,025	)
Payments of long-term debt			(15,681	)		(14,510	)
Other payments			—			(318	)
Net cash used in financing activities			(66,496	)		(51,433	)
Effect of exchange rate changes on cash			3,743			1,033
Net change in cash and cash equivalents			(12,083	)		(879	)
Cash and cash equivalents, beginning of year			83,718			84,597
Cash and cash equivalents, end of period		$	71,635		$	83,718

Woodward Governor Company and Subsidiaries
SELECTED FINANCIAL INFORMATION
	Three months ended						Year ended
	September 30,						September 30,
(Unaudited - in thousands)	2007			2006			2007			2006
Sales Reconciliation*:
Turbine Systems	$	143,767		$	128,327		$	523,842		$	458,923
Engine Systems		124,690			113,927			455,200			430,448
Electrical Power Systems		54,601			20,874			181,366			76,186
Less intersegment sales		(32,293	)		(30,217	)		(118,071	)		(111,042	)
Total external sales		290,765			232,911			1,042,337			854,515
Earnings Reconciliation:
Turbine Systems		21,036			20,266			87,353			67,584
Engine Systems		17,225			11,152			56,984			40,829
Electrical Power Systems		5,092			571			20,294			4,475
Total segment earnings		43,353			31,989			164,631			112,888
Nonsegment expenses		(7,562	)		(4,934	)		(31,720	)		(26,052	)
Interest expense and income, net		995			(433	)		(923	)		(2,339	)
Consolidated earnings before income taxes	$	36,786		$	26,622		$	131,988		$	84,497
Capital expenditures	$	9,317		$	12,052		$	31,984		$	31,713
Depreciation expense		4,737			4,954			25,428			22,064

*This schedule reconciles segment sales, which include intersegment sales, with Woodward external sales.

Woodward Governor Company and Subsidiaries
RECONCILIATION O F	NET EARNINGS TO				EBITDA
		Three months ended						Year ended
		September 30,						September 30,
(Unaudited - in thousands)		2007			2006			2007			2006
Net earnings		$	36,034		$	17,089		$	98,157		$	69,900
Income taxes (benefit)			752			9,533			33,831			14,597
Interest expense			1,046			1,188			4,527			5,089
Interest income			(2,041	)		(755	)		(3,604	)		(2,750	)
Amortization of intangible assets			1,640			1,723			7,496			6,953
Depreciation expense			4,737			4,954			25,428			22,064
EBITDA		$	42,168		$	33,732		$	165,835		$	115,853

EBITDA (earnings before interest, taxes, depreciation, and amortization) is a non-GAAP financial measure. The use of this measure is not intended to be considered in isolation of or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles. Securities analysts, investors, and others frequently use EBITDA in their evaluation of companies, particularly those with significant property, plant, and equipment, and intangible assets that are subject to amortization.