UNITED STATES 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 quarterly period ended June 30, 1999
OR
{ } TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from...............to...............
Commission file number 0-8408
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)
(815) 877-7441
(Registrant's telephone number, including area code)
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
APPLICABLE ONLY TO ISSUERS INVOLVED
IN BANKRUPTCY PROCEEDINGS DURING
THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by a court. Yes... No...
As of July 31, 1999, 11,261,250 shares of common stock with a par value of
$.00875 cents per share were outstanding.
WOODWARD GOVERNOR COMPANY
FORM 10-Q
For the Quarter Ended June 30, 1999
INDEX
Description
Part I. Financial Information
Item 1. Financial Statements
Statements of Consolidated Earnings for the
three months ended June 30, 1999 and 1998
Statements of Consolidated Earnings for the nine
months ended June 30, 1999 and 1998
Consolidated Balance Sheets as of June 30, 1999
and September 30, 1998
Statements of Consolidated Cash Flows for the nine
months ended June 30, 1999 and 1998
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Part II. Other Information
Signatures
<TABLE>
WOODWARD GOVERNOR COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED EARNINGS
for the three months ended June 30, 1999 and 1998
(in thousands except per share amounts)
(Unaudited)
<CAPTION>
1999 1998
<S> <C> <C>
Net billings for products and services $139,239 $119,399
Costs and expenses:
Cost of goods sold 100,245 87,186
Sales, service, and administrative expenses 19,914 19,655
Amortization of intangible assets 1,698 867
Interest expense 2,856 1,018
Interest income (218) (117)
Other expense--net 779 1,555
Total costs and expenses 125,274 110,164
Earnings before income taxes and equity in loss
of unconsolidated affiliate 13,965 9,235
Income taxes 5,578 3,714
Earnings before equity in loss of
unconsolidated affiliate 8,387 5,521
Equity in loss of unconsolidated affiliate,
net of tax 308 630
Net earnings $8,079 $4,891
Basic and diluted earnings per share $0.72 $0.43
Weighted average number of basic shares
outstanding 11,258 11,299
Weighted average number of diluted shares
outstanding 11,292 11,337
Cash dividends per share $0.2325 $0.2325
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
WOODWARD GOVERNOR COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED EARNINGS
for the nine months ended June 30, 1999 and 1998
(in thousands except per share amounts)
(Unaudited)
<CAPTION>
1999 1998
<S> <C> <C>
Net billings for products and services $428,555 $330,699
Costs and expenses:
Cost of goods sold 317,824 241,808
Sales, service, and administrative expenses 59,611 57,786
Amortization of intangible assets 5,104 1,421
Restructuring expense 8,174 -
Interest expense 9,379 1,803
Interest income (693) (541)
Other expense--net 1,960 3,016
Total costs and expenses 401,359 305,293
Earnings before income taxes and equity in loss
of unconsolidated affiliate 27,196 25,406
Income taxes 10,870 10,163
Earnings before equity in loss of
unconsolidated affiliate 16,326 15,243
Equity in loss of unconsolidated affiliate,
net of tax 979 2,479
Net earnings $15,347 $12,764
Basic and diluted earnings per share $1.36 $1.12
Weighted average number of basic shares
outstanding 11,275 11,355
Weighted average number of diluted shares
outstanding 11,292 11,399
Cash dividends per share $0.6975 $0.6975
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
WOODWARD GOVERNOR COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands of dollars)
<CAPTION>
JUNE SEPTEMBER
30, 1999 30, 1998
(Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $16,294 $12,426
Accounts receivable, less allowance
for losses of $4,584 for June
and $4,451 for September 94,357 108,212
Inventories 109,347 106,404
Deferred income taxes 19,993 20,001
Total current assets 239,991 247,043
Property, plant and equipment, at cost:
Land 5,783 6,127
Buildings and improvements 127,014 127,054
Machinery and equipment 222,849 215,358
Construction in progress 3,217 2,855
358,863 351,394
Less allowance for depreciation 235,060 221,342
Property, plant and equipment - net 123,803 130,052
Intangibles - net 159,265 162,229
Other assets 3,947 4,540
Deferred income taxes 19,637 19,571
Total assets $546,643 $563,435
Liabilities and shareholders' equity
Current liabilities:
Short-term borrowings $7,901 $12,927
Current portion of long-term debt 24,950 25,033
Accounts payable and accrued expenses 74,301 82,916
Taxes on income 5,684 6,661
Total current liabilities 112,836 127,537
Long-term debt, less current portion 167,650 175,685
Other liabilities 42,106 40,111
Commitments and contingencies - -
Shareholders' equity represented by:
Preferred stock, par value $.003
per share, authorized 10,000
shares, no shares issued - -
Common stock, par value $.00875
per share, authorized 50,000
shares, issued 12,160 shares 106 106
Additional paid-in capital 13,322 13,304
Unearned ESOP compensation (9,894) (9,723)
Accumulated other comprehensive
earnings 7,070 9,849
Retained earnings 234,417 226,736
245,021 240,272
Less treasury stock, at cost 20,970 20,170
224,051 220,102
Total liabilities and shareholders' equity $546,643 $563,435
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
WOODWARD GOVERNOR COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
for the nine months ended June 30, 1999 and 1998
(in thousands of dollars)
(Unaudited)
<CAPTION>
1999 1998
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 15,347 $12,764
Adjustments to reconcile net earnings to
net cash provided (used) by operating
activities:
Depreciation and amortization 24,922 19,775
Net gain on sale of property, plant and equipment (948) -
Deferred income taxes (59) -
Equity in loss of unconsolidated affiliate 1,574 4,132
Changes in assets and liabilities:
Accounts receivable 11,817 6,006
Inventories (3,866) (9,938)
Current liabilities, other than short-term borrowings
and current portion of long-term debt (7,485) (6,955)
Other-net 52 (2,886)
Total adjustments 26,007 10,134
Net cash provided by operating activities 41,354 22,898
Cash flows from investing activities:
Payments for purchase of property, plant,
and equipment (17,436) (14,627)
Investment in unconsolidated affiliate (1,235) (4,375)
Business acquisitions, net of cash (62) (169,451)
Proceeds from sale of property, plant and equipment 4,144 -
Other - 650
Net cash used in investing activities (14,589) (187,803)
Cash flows from financing activities:
Cash dividends paid (7,864) (7,915)
Proceeds from sales of treasury stock - 38
Purchases of treasury stock (1,029) (4,866)
Borrowings on term note - 100,000
Net proceeds from borrowings under revolving lines (8,000) -
Payments of long-term debt (118) (5,197)
Net proceeds from (payments on) short-term
borrowings (4,384) 75,616
Tax benefit applicable to ESOP dividend 286 279
Net cash provided by (used in) financing
activities (21,109) 157,955
Effect of exchange rate changes on cash (1,788) (628)
Net change in cash and cash equivalents 3,868 (7,578)
Cash and cash equivalents, beginning of year 12,426 14,999
Cash and cash equivalents, end of period $16,294 $ 7,421
Supplemental cash flow information:
Interest expense paid $ 9,211 $ 1,240
Income taxes paid $11,308 $ 6,596
Noncash investing and financing activities:
Liabilities assumed in business acquisitions $ 1,994 $25,446
See accompanying notes to consolidated financial statements.
</TABLE>
WOODWARD GOVERNOR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) The consolidated balance sheet as of June 30, 1999, and the
statements of consolidated earnings for the three and nine month
periods ended June 30, 1999 and 1998, and the statements of
consolidated cash flows for the nine month periods then ended, have
been prepared by the company without audit. The September 30, 1998
consolidated balance sheet was derived from audited financial
statements, but does not include all disclosures required by generally
accepted accounting principles. Information furnished in this 10-Q
report is based in part on approximations and is subject to year-end
adjustment and audit. The figures do reflect all adjustments
necessary, in the opinion of management, to present fairly the
company's financial position as of June 30, 1999, and the results of
its operations for the three and nine month periods ended June 30,
1999 and 1998, and cash flows for the nine month periods 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 1998 annual report on Form 10-K and should
be read in conjunction with the Notes to Consolidated Financial
Statements therein. The statements of consolidated earnings for the
three and nine month periods ended June 30, 1999 are not necessarily
indicative of the results to be expected for other interim periods or
for the full year.
(2)Included in accounts payable and accrued expenses are trade
payables of $19,352 at June 30, 1999 compared to $24,432 at September
30, 1998.
(3) The following is a reconciliation of the numerators and
denominators for the computation of basic and diluted earnings per
share:
<TABLE>
<CAPTION>
Three months Nine months
ended June 30, ended June 30,
(in 000's except per share 1999 1998 1999 1998
amounts)
<S> <C> <C> <C> <C>
Basic Earnings
Net earnings $ 8,079 $ 4,891 $15,347 $12,764
Shares
Weighted average common shares 11,258 11,299 11,275 11,355
Basic Earnings per Share $ 0.72 $ 0.43 $ 1.36 $ 1.12
Diluted Earnings
Net earnings $ 8,079 $ 4,891 $15,347 $12,764
Shares
Weighted average shares from
above 11,258 11,299 11,275 11,355
Add: Additional dilutive effect
of outstanding stock options 34 38 17 44
Weighted average shares, as
adjusted for dilution 11,292 11,337 11,292 11,399
Diluted Earnings per Share $ 0.72 $ 0.43 $ 1.36 $ 1.12
</TABLE>
The following options to purchase common stock were outstanding during
the three months and nine months ended June 30, 1999 and 1998 but were
not included in the computation of diluted earnings per share because
the options' exercise prices were greater than the average market
price of the common shares during the quarter.
<TABLE>
<CAPTION>
Three months ended June 30, Nine months ended June 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Options 227,641 227,641 383,041 215,041
Weighted
average
exercise price $32.35 $32.35 $28.76 $32.44
</TABLE>
(4) Currency translation adjustments are included in other
comprehensive earnings. The company's total comprehensive earnings
were as follows:
<TABLE>
<CAPTION>
Three months ended Nine months ended
June 30, June 30,
(in thousands) 1999 1998 1999 1998
<S> <C> <C> <C> <C>
Net earnings $8,079 $4,891 $15,347 $12,764
Other comprehensive
earnings (loss) (2,406) (362) (2,779) (2,154)
Total comprehensive
earnings $5,673 $4,529 $12,568 $10,610
</TABLE>
(5) In June 1999 the company completed final allocation of the
purchase price of the June 1998 acquisition of the stock of Fuel
Systems Textron, Inc. (subsequently renamed Woodward FST, Inc.). As a
result, intangible assets were increased by $2,521,000. This
adjustment was necessary primarily due to recording the liability
associated with an assumed defined benefit plan. The amount of this
liability was actuarially determined and only recently completed.
PART I - ITEM 2
WOODWARD GOVERNOR COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
During the third quarter of fiscal 1999, the company generated
improved financial performance, primarily reflecting the initial
benefits from Industrial Controls' second quarter restructuring. Cost
of goods sold and sales, service, and administrative expenses were
lower as a percentage of net billings for products and services, and
net earnings advanced 65 percent from the same quarter a year ago.
Results of Operations
Net billings for products and services for the three months ended
June 30, 1999, were up 17 percent from a year ago. Aircraft
Engine Systems' billings increased 34 percent to $73,097,000 for
the three months ended June 30, 1999. This increase reflected
contributions from Woodward FST, Inc., acquired in June 1998,
which offset a 5 percent decline in other billings attributable
to quarterly variability in the timing of shipments. We believe
Aircraft Engine Systems remains on track to report solid
increases in billings for the full year. Industrial Controls'
net billings for the three months were $59,076,000, off 5 percent
from the corresponding period last year, but 5 percent above the
second-quarter level. Challenging conditions in Asia and in oil
and gas-related engine markets earlier in the fiscal year appear
to have stabilized, while certain segments of our turbine
business have strengthened further. Automotive Products' net
billings for the three months of $7,066,000 were up
significantly, primarily because this group was formed near the
middle of the third quarter of fiscal 1998 when Baker Electrical
Products, Inc. was acquired. Automotive Products is targeting
small engine markets with products that combine Woodward's
technology and systems integration capabilities with highly
efficient production techniques characteristic of the automotive
industry.
Increases in cost of goods sold and sales, service, and administrative
expenses for the three months ended June 30, 1999, as compared to one
year ago primarily resulted from the impact of the FST and Baker
acquisitions in the third quarter of fiscal 1998, offset by expense
improvements following the reorganization of Industrial Controls in
the second quarter of fiscal 1999. Industrial Controls was
reorganized to separate the units serving engine and turbine
manufacturers from those that serve the retrofit market. This change
enabled Woodward to better focus on the precise needs of its
customers. In addition, we aligned staffing levels with expected
demand. This change has had a positive impact on cost of goods sold
and sales, service, and administrative expenses, reducing both as a
percentage of net billings, and is expected to continue to have a
positive impact over the remainder of the year.
Increases in amortization of intangible assets and interest expense
for the three months ended June 30, 1999, as compared to one year ago
are primarily the result of the FST and Baker acquisitions made during
the third quarter of fiscal 1998.
Other expense--net for the three months ended June 30, 1999 decreased
from a year ago primarily as a result of the settlement of obligations
associated with a foreign government pension program and reductions in
net foreign currency transaction losses.
The company's equity in the loss of its unconsolidated affiliate,
GENXON(TM) Power Systems, LLC for the three months ended June 30, 1999,
decreased from a year ago as a result of reduced expenses within
GENXON(TM).
Differences in effective rates among periods relate primarily to
effects of foreign losses and foreign tax rate differences, and
involve estimates.
Basic and diluted earnings per share for the three months ended June
30, 1999 increased 67 percent over the same period one year ago, only
slightly more than the increase in net earnings. The weighted average
number of basic and diluted shares outstanding decreased less than 0.5
percent.
For the nine months ended June 30, 1999, net billings rose 30
percent from a year ago. Aircraft Engine Systems' billings for
the nine months increased 61 percent to $235,627,000, driven by
the addition of Woodward FST, Inc. and gains in Woodward's other
aircraft business. Industrial Controls' net billings for the
nine months were $173,421,000, off 5 percent from the
corresponding period last year primarily due to softness in Asian
markets and in oil and gas-related industries. Automotive
Products generated net billings of $19,507,000 for the nine
months.
Reasons for changes among costs and expenses, the company's equity in
the loss of its unconsolidated affiliate, and the effective tax rate
during the nine months ended June 30, 1999, are similar to those
discussed above for the three months ended June 30, 1999. In
addition, other expense--net benefited from a gain on the sale of the
Stevens Point, Wisconsin facility in the second quarter of fiscal
1999. The facility had not been used in the company's operations for
several years.
Net earnings for the nine months ended June 30, 1999, were
$15,347,000, or $1.36 per diluted share, compared with $12,764,000, or
$1.12 per diluted share, a year ago. Without the second quarter
restructuring expense and gain on the sale of real estate (which
totaled $4,296,000 after taxes, or $0.38 per share), net earnings
would have been $19,643,000, or $1.74 per share.
Financial Condition
The financial condition of the company remained strong as of June 30,
1999, with total shareholders' equity of $224,051,000, long-term debt
of $167,650,000, and total assets of $546,643,000.
Working capital, representing the excess of current assets over
current liabilities, increased 6 percent between September 30, 1998
and June 30, 1999. Decreases in accounts receivable were more than
offset by reductions in accounts payable and accrued expenses and
short-term borrowings, and increases in cash and cash equivalents and
inventories. Accounts receivable decreased primarily due to
differences in billing levels immediately preceding the end of the
period. Accounts payable and accrued expenses decreased primarily as
a result of normal yearly fluctuations. Cash provided by operating
activities exceeded cash used in investing and financing activities,
including the reduction in short-term borrowings, during the nine
months ended June 30, 1999. Inventories increased in anticipation of
fourth quarter production and shipment requirements.
Property, plant, and equipment - net decreased between September 30,
1998 and June 30, 1999 because of the sale of the Stevens Point,
Wisconsin facility in the second quarter of fiscal 1999, and because
depreciation exceeded related investments made during the period.
Intangibles - net decreased between September 30, 1998 and June 30,
1999 because amortization exceeded related investments made during the
period, including an adjustment made to finalize the allocation of the
purchase price of Fuel Systems Textron, Inc. (subsequently renamed
Woodward FST, Inc.). In the third quarter of fiscal 1999, the
intangibles associated with the acquisition were increased by
$2,521,000, primarily as a result of adjusting the liability
associated with an assumed defined benefit plan to amounts actuarially
determined. This actuarial determination was completed in the third
quarter.
Future cash flows from operations and available revolving lines of
credit are expected to be adequate to meet the company's investing and
financing cash requirements during the next twelve months. However,
it is possible business acquisitions could be made in the future that
would require amendments to existing debt agreements and the need to
obtain additional financing.
On July 22, 1999, the Board of Directors declared a quarterly dividend
of twenty-three and one-quarter cents ($.2325) per share. The
dividend is payable on September 1, 1999 to shareholders of record at
the close of business on August 16, 1999.
Year 2000 Readiness
Woodward recognizes the potential problems associated with the year
2000. In May 1997, the company formed a task force, with
representation from each business unit and location, to address this
risk. The mission statement adopted by the task force is: We will
provide year 2000 compliant products, work with customers who have
existing products to validate year 2000 compliance, and provide other
year 2000 services. We intend to provide uninterrupted, normal
operation of business-critical systems at all Woodward locations
before, during, and after the turn of the century and we will manage
the problems associated with non-critical systems. In addition, we
will encourage similar compliance from customers, suppliers, and
partners as appropriate and we will work with them to achieve this
goal.
The company has identified its year 2000 risks in three categories:
products, internal systems, and external noncompliance by partners and
suppliers.
The company has evaluated its manufactured products, has determined
the year 2000 compliance of such products, and informed its customers
and end-users through the company's internet website and by other
appropriate means. As a stand-alone product and operating system,
Woodward will continue to determine year 2000 compliance, by testing
and other means, to validate our products' compliance. However,
products with time-date function(s) have the capability of being
programmed, configured or otherwise modified for their particular
applications, prior to or following installation. Woodward may or may
not have had any involvement in, or responsibility for, these
modifications. Additionally, in certain cases, our systems have
included auxiliary hardware and software (providing time-date
functions) not manufactured by the company, but provided by third
party suppliers. While Woodward remains committed to supporting and
assisting its customers and end-users as they assess such systems,
limitations imposed by license agreement restrictions, in some cases,
and non-access to source code, in other cases, make it generally
impossible for the company to determine (except by testing individual
systems) the year 2000 compliance of third party supplied hardware and
software not manufactured by the company.
Regarding internal systems, inclusive of information systems,
manufacturing equipment and facilities, the company has completed its
awareness, inventory, assessment, and prioritization tasks. Mission-
critical systems, including our business systems, are compliant. We
have completed the upgrade/remediation, compliance validation, and
contingency plan development tasks associated with these systems.
Non-critical internal systems are being addressed now. Each non-
critical system has been assigned a priority rating. The higher
priority, non-critical systems have been addressed. The company
intends to address the medium priority systems by September 1999 and
low priority by December 1999.
We have contacted partners and suppliers with requests for their year
2000 project status to determine if they will be adversely affected by
the year 2000 and consequently cause disruption to our operations. We
are using phone audits for follow-up and are currently developing
contingency plans for our high-risk critical suppliers.
The company has applied the recently available and beneficial
provisions of the federal "Year 2000 Information and Readiness
Disclosure Act" (the "Act"). Statements such as the mission statement
and other comments above should be regarded as being "Year 2000
Statements" and "Year 2000 Readiness Disclosures," as applicable,
within the meaning of, and subject to, the exclusions prescribed by
the Act.
External costs of corrective efforts, principally system reprogramming
and upgrades, are not anticipated to be material and are currently
estimated to be less than $700,000. Total external costs incurred for
corrective efforts through June 30, 1999 were $217,000, with remaining
budgeted year 2000 costs anticipated to be incurred in 1999. Even
though management feels that planned corrective efforts should
adequately address year 2000 issues, there can be no assurance that
unforeseen difficulties will not arise. There is no assurance that
the failure of any external party to resolve its year 2000 issues
would not have an adverse effect on the company.
New Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income" and SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information." Both are effective in fiscal
year 1999. SFAS No. 130, which establishes standards for reporting
and display of comprehensive income and its components (revenues,
expenses, gains, and losses) in the financial statements, has been
adopted on October 1, 1998 and related disclosures have been included
in the Notes to the Consolidated Financial Statements as of and for
the three months and nine months ended June 30, 1999. SFAS No. 131
revises standards for public companies to report information about
segments of their business and also requires disclosure of selected
segment information in quarterly financial reports. SFAS No. 131 also
establishes standards for related disclosures about products and
services, geographic areas, and major customers. The company has not
yet determined the impact SFAS No. 131 may have on disclosures in the
consolidated financial statements.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities". Following the deferral of the
original implementation date by SFAS No. 137, it is effective in
fiscal year 2001. This statement establishes accounting and reporting
standards for derivative instruments and for hedging activities.
Among other requirements, it requires that an entity recognize all
derivatives as either assets or liabilities in the balance sheet and
measure those instruments at fair value. The accounting for changes
in the fair value of a derivative depends on the intended use of the
derivative. The company has not yet determined the impact this new
statement may have on disclosures in the consolidated financial
statements.
There have been no material changes in the quantitative and
qualitative disclosures about market risk from the end of the
preceding fiscal year as reported in Form 10-K for the fiscal year
ended September 30, 1998.
Forward-looking Statements
This quarterly report contains forward-looking statements, including
financial projections, management plans and objectives for future
operations, expectation of future economic performance, and various
other assumptions relating to the future. While such statements
reflect management's current expectations, all such statements involve
risks and uncertainties. Actual results could differ materially from
projections or any other forward-looking statement. Important factors
that could cause results to differ materially from those projected or
otherwise stated include the following: unanticipated global or
regional economic developments, particularly in, but not limited to,
Asia; changes in business cycles of particular industries served by
our company; fluctuations in currency exchange rates of U.S. and
foreign countries, primarily those located in Europe and Asia;
fluctuations in interest rates, primarily LIBOR, which affect the cost
of borrowing under the company's lines of credit facilities; timing
and acceptance of new products and product enhancements; competitor
actions that adversely impact company orders or pricing; adverse
changes in the business acquisition climate; effects of any business
acquisitions or divestitures; changes in U.S. and other country laws
and regulations involving acquisitions, the environment, and taxes;
relative success of quality and productivity initiatives, such as the
Six Sigma initiative; business interruptions caused by incomplete or
ineffective remediation of computer problems associated with the year
2000 throughout the company's supply chain; the outlook for GENXON(TM)
products and markets and its funding requirements; unusual or
extraordinary events or developments involving litigation or other
potential liabilities.
PART II - OTHER INFORMATION
Item 6(b)
a) Exhibits
3. Section 3.2 of the Bylaws, as amended
27. Financial data schedule
b) No form 8-K was filed for the quarter ended June 30, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
WOODWARD GOVERNOR COMPANY
August 13, 1999 /s/ John A. Halbrook
John A. Halbrook, President
and Chief Executive Officer
August 13, 1999 /s/ Stephen P. Carter
Stephen P. Carter, Vice President,
Chief Financial Officer and Treasurer
Exhibit 3
Section 3.2 of the Bylaws, as amended
The number of directors which shall constitute the whole
Board of Directors shall be ten, consisting of three Class I
directors, four Class II directors, and three Class III
directors.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Financial Statements for the three and nine months ended June
30, 1999, included herein and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> JUN-30-1999
<CASH> 16924
<SECURITIES> 0
<RECEIVABLES> 98941
<ALLOWANCES> 4584
<INVENTORY> 109347
<CURRENT-ASSETS> 239991
<PP&E> 358863
<DEPRECIATION> 235060
<TOTAL-ASSETS> 546643
<CURRENT-LIABILITIES> 112836
<BONDS> 167650
0
0
<COMMON> 106
<OTHER-SE> 223945
<TOTAL-LIABILITY-AND-EQUITY> 546643
<SALES> 428555
<TOTAL-REVENUES> 428555
<CGS> 317824
<TOTAL-COSTS> 377435
<OTHER-EXPENSES> 14545
<LOSS-PROVISION> 0
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</TABLE>
