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[TEXT]
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
{ X } QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended December 31, 1993 Commission File #0-8408
OR
{ } TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
WOODWARD GOVERNOR COMPANY
(Exact name of registrant as specified in its charter)
Delaware 36-1984010
(State or other jurisdiction of I.R.S. Employer identification No.)
incorporation or organization)
5001 North Second Street, Rockford, Illinois 61125-7001
(Address of principal executive offices)
Registrant's telephone number - (815) 877-7441
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
As of January 31, 1994, 2,956,517 shares of common stock with a par value of
6.25 cents per share were outstanding.
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WOODWARD GOVERNOR COMPANY
FORM 10-Q
For the Quarter Ended December 31, 1993
INDEX
Description
Part I. Financial Information
Item 1. Financial Statements
Statements of Consolidated Earnings for the
Three Months Ended December 31, 1993 and 1992
Consolidated Balance Sheets as of
December 31, 1993 and September 30, 1993
Statements of Consolidated Cash Flows for the
Three Months Ended December 31, 1993 and 1992
Note to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Part II. Other Information
Signatures
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<TABLE>
WOODWARD GOVERNOR COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED EARNINGS
for the three months ended December 31,
(in thousands except per share amounts)
(Unaudited)
<CAPTION>
1993 1992
-------- ----------
(restated)
<S> <C> <C> <C> <C>
Net billings for products and services $73,940 $77,849
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Costs and expenses:
Cost of goods sold 54,536 58,419
Sales, service and administrative
expenses 12,757 13,002
Other (income) and expense, net:
Interest (income) ($182) ($196)
Interest expense 738 829
Miscellaneous expense, net 1,203 1,759 1,149 1,782
------ -------- ------ ----------
Total costs and expenses 69,052 73,203
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Earnings before income taxes and cumulative
effect of accounting changes 4,888 4,646
Income taxes 2,102 1,765
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Earnings before cumulative effect
of accounting changes 2,786 2,881
Cumulative effect of accounting changes,
net of tax benefit of $11,360 - (17,417)
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Net earnings (loss) $2,786 ($14,536)
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Net earnings (loss) per share:
Before cumulative effect of
accounting changes $0.94 $0.97
Cumulative effect of accounting changes,
net of tax - (5.86)
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Net earnings (loss) per share $0.94 ($4.89)
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Average shares outstanding 2,970 2,973
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Cash dividends per share $0.93 $0.93
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<FN>
See accompanying note to consolidated financial statements.
</TABLE>
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<TABLE>
WOODWARD GOVERNOR COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE
(in thousands of dollars)
<CAPTION>
December September
31,1993 30,1993
------------- ----------
(Unaudited)
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $3,880 $10,497
Accounts receivable, less allowance
for losses of $2,004 for December
and $1,989 for September 57,717 64,024
Inventories 82,618 83,128
Deferred income taxes 12,519 12,519
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Total current assets 156,734 170,168
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Property, plant and equipment, at cost:
Land 5,971 6,156
Buildings and improvements 140,318 140,780
Machinery and equipment 164,140 158,043
Construction in progress 1,722 3,792
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312,151 308,771
Less allowance for depreciation 170,461 164,755
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Property, plant and equipment - net 141,690 144,016
Intangibles and other assets 6,577 5,887
Deferred income taxes 12,366 12,390
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Total Assets $317,367 $332,461
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Liabilities and Shareholders' Equity
Current Liabilities:
Short-term borrowings $12,112 $18,123
Current portion of long-term debt 3,889 3,889
Accounts payable and accrued expense 29,125 35,915
Taxes on income 3,655 4,432
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Total current liabilities 48,781 62,359
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Long-term debt, less current portion 36,199 36,246
Other liabilities 27,634 27,634
Commitments and contingencies - -
Shareholders' equity represented by:
Preferred stock - -
Common stock 190 190
Additional paid-in capital 13,884 13,884
Unearned stock plan compensation (22,189) (22,327)
Currency translation adjustment 11,497 12,786
Retained earnings 208,054 207,924
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211,436 212,457
Less treasury stock, at cost 6,683 6,235
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204,753 206,222
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Total liabilities and shareholders' equity $317,367 $332,461
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<FN>
See accompanying note to consolidated financial statements.
</TABLE>
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<TABLE>
WOODWARD GOVERNOR COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1993 AND 1992
(in thousands of dollars)
(Unaudited)
<CAPTION>
1993 1992
----------- -----------
(restated)
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $2,786 ($14,536)
----------- -----------
Adjustments to reconcile net earnings to
net cash provided (used) by operating activities:
Cumulative effect of accounting changes,
net of tax - 17,417
Depreciation 6,682 6,584
Deferred income taxes, noncurrent 24 26
Stock plan compensation expense 138 200
Changes in assets and liabilities:
Accounts receivable 5,837 18,679
Inventories 65 (1,716)
Current liabilities, other than short-term
borrowings and current portion of
long-term debt (7,511) (16,579)
Other, net (701) 233
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Total adjustments 4,534 24,844
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Net cash provided by operating activities 7,320 10,308
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Cash flows from investing activities:
Payments for purchase of property, plant
and equipment (4,935) (5,133)
Other 25 (236)
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Net cash (used) in investing activities (4,910) (5,369)
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Cash flows from financing activities:
Cash dividends paid (2,760) (2,765)
Purchase of treasury stock (450) -
Proceeds from issuance of long-term debt - (30)
Payments of long-term debt (46) -
Short-term borrowings, by original maturity:
More than three months - proceeds - -
More than three months - payments - -
Three months or less, net (5,900) (5,461)
Tax benefit applicable to ESOP dividend 103 91
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Net cash (used) in financing activities (9,053) (8,165)
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Effect of exchange rate changes on cash 26 (361)
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Net change in cash and cash equivalents (6,617) (3,587)
Cash and cash equivalents, beginning of year 10,497 7,633
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Cash and cash equivalents, end of quarter $3,880 $4,046
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SUPPLEMENTAL CASH FLOW INFORMATION:
Interest expense paid
(net of amount capitalized) $649 $457
Income taxes paid $2,560 $2,012
<FN>
See accompanying note to consolidated financial statements.
</TABLE>
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WOODWARD GOVERNOR COMPANY AND SUBSIDIARIES
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
The consolidated balance sheets as of December 31, 1993, and the statements of
consolidated earnings and cash flows for the three month periods ended
December 31, 1993 and 1992, have been prepared by the Company, without audit.
The September 30, 1993 consolidated balance sheet was derived from audited
financial statements, but does not include all disclosures required by
generally accepted accounting principles. Information furnished in this 10-Q
report is based in part on approximations and is subject to year-end
adjustment and audit. The figures do reflect all adjustments necessary, in the
opinion of management, to present fairly the Company's financial position as
of December 31, 1993, and the results of its operations for the three months
ended December 31, 1993 and 1992, and cash flows for the three months then
ended. All such adjustments are of a normal and recurring nature. The
statements have been prepared in accordance with accounting policies set forth
in the Company's 1993 annual report on Form 10-K and should be read in
conjunction with the Notes to Consolidated Financial Statements therein. The
results for the last fiscal year have been restated to reflect the adoption of
Statements of Financial Accounting Standards No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions", No. 109 "Accounting for
Income Taxes", and No. 112 "Employers' Accounting for Post-employment
Benefits", which the company adopted in the fourth quarter of fiscal 1993.
The statements of consolidated earnings for the three month period ended
December 31, 1993 is not necessarily indicative of the results to be expected
for other interim periods or for the full year.
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PART I - ITEM 2
WOODWARD GOVERNOR COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Net billings for products and services delivered to customers in the first
quarter of fiscal year 1994 were down 5% to $73,940,000 from $77,849,000 in
1993. Our efforts to reduce costs and limit expenses resulted in a decrease
of 6% compared to last year. Consequently, earnings before income taxes and
cumulative effect of accounting changes increased from $4,646,000 at December
31, 1992 to $4,888,000 at December 31, 1993. Due to the increase in the
estimated effective income tax rate from 38% to 43%, earnings before the
cumulative effect of accounting changes decreased from $2,881,000 to
$2,786,000 for the same periods. Earnings per share before cumulative effect
of accounting changes decreased from $0.97 per share in the first quarter last
year to $0.94 per share this year.
The results for the last fiscal year have been restated to reflect the
adoption of Statements of Financial Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions", No. 109
"Accounting for Income Taxes", and No. 112 "Employers' Accounting for Post-
employment Benefits", which the company adopted in the fourth quarter of
fiscal 1993, but for reporting purposes must be presented as if adopted at the
beginning of the year. The cumulative effect of adopting these accounting
changes in fiscal 1993 was a charge of $17,417,000 net of the tax benefit of
$11,360,000. The effect on last year's first quarter earnings before income
taxes and cumulative effect of accounting changes was a decrease of $302,000.
Shipments of the Aircraft Controls group were $31,924,000 in the first quarter
of this year, compared to $40,483,000 last year, a decrease of $8,559,000 or
21%, due to the depressed state of the commercial aircraft industry. First
quarter shipments of the Industrial Controls group were $42,016,000, an
increase of $4,650,000 or 12% from last year's total of $37,366,000. Overall,
shipments from the overseas business units of industrial control products were
up $2,250,000 or over 14% from last year. Domestic shipments of industrial
control products also were strong in the first quarter and were up $2,400,000
or 11% from last year.
The 6% decrease in costs and expenses occurred even though there were
additional facility operating expenses for the new Turbomachinery Controls
facility in Loveland, Colorado in the first quarter of this year. The plant
was not opened until the second quarter of fiscal year 1993. Our cost
reduction efforts of the last two years are having a positive impact on
earnings. A significant portion of the decrease in costs and expenses is due
to the decrease in worker membership. Since December 31, 1992, worker
membership has been reduced by more than 10% from 3589 to 3217 at December 31,
1993. This reduction was necessary to balance the membership needed with
current business levels.
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Accounts receivable decreased from $64,024,000 at September 30, 1993 to
$57,717,000 at December 31, 1993 due to collection of large shipments made
near the end of the fiscal year and the lower shipment level for the first
three months of the current fiscal year compared to the fourth quarter of
fiscal year 1993. Accounts payable and accrued expenses decreased as a result
of payments on items recorded at September 30, 1993. As a result of the
activity in these areas and reduction in short-term borrowing, cash and cash
equivalents decreased from $10,497,000 at September 30, 1993 to $3,880,000 at
December 31, 1993. Currency translation adjustment decreased from September
30, 1993 as a result of fluctuations in exchange rates.
The company's effective tax rate for the three months ended December 31, 1993
and 1992 was 43.0% and 38.0% respectively. The increase in the tax rate was
due primarily to the fact that a significant portion of our income was
generated at overseas locations at higher tax rates than in the United States.
The effective tax rate for the fiscal year ended September 30, 1993 was 42.0%.
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PART II - OTHER INFORMATION
Item 4(c)
At the January 12, 1994 annual meeting of the shareholders, the only item
submitted to a vote was the re-election of three directors whose terms expired
this year. The results of the voting were as follows:
Number of Number of Shares Number of
Director Shares For Against/Withheld Abstentions
J. Grant Beadle 2,794,100 47,196 None
J. Peter Jeffrey 2,788,893 52,403 None
Mark Leum 2,789,711 51,585 None
In addition, broker non-votes totalled 50,204.
Item 6(b)
No Form 8-K was filed for the quarter ended December 31, 1993.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WOODWARD GOVERNOR COMPANY
February 7, 1994 /s/ John A. Halbrook
John A. Halbrook, President
and Chief Operating Officer
February 7, 1994 /s/ Vern H. Cassens
Vern H. Cassens, Senior Vice President,
Treasurer, and Chief Financial Officer
