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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
{ X }Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (Fee Required)
For the fiscal year ended September 30, 1995 or
{ } Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (No Fee Required)
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) (Zip Code)
Registrant's telephone number, including area code (815) 877-7441
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Common stock, par value $.0625 per share
(Title of Class)
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. {X}
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 November 30, 1995, 2,901,578 shares of common stock with a par value
of $.0625 per share were outstanding. The aggregate market value on this
date of the voting stock held by non-affiliates of the registrant was
approximately $131,251,419 (such aggregate market value does not include
voting stock beneficially owned by directors, officers, the Woodward
Governor Company Profit Sharing Trust or the Woodward Governor Company
Charitable Trust).
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's annual report for the fiscal year ended
September 30, 1995, a copy of which is attached hereto, are incorporated by
reference into Parts I, II and IV hereof, to the extent indicated herein.
Portions of the registrant's proxy statement dated December 4, 1995, are
incorporated by reference into Part III hereof, to the extent indicated
herein.
Part I
Item 1. Business
(a)General Description of Business
Woodward Governor Company, established in 1870,designs and
manufactures engine fuel delivery and engine control
systems, subsystems and components. Products range from
devices that are used on diesel engines, steam turbines,
industrial and aircraft gas turbines and hydraulic turbines.
Woodward sells directly to original equipment manufacturers,
service providers and equipment users world wide.
There have been no material changes in the mode of
conducting the business during the last five years.
(b)Industry Segments
Information with respect to business segments is set forth
in Note M to the consolidated financial statements on Page
29 of the registrant's annual report for the fiscal year
ended September 30, 1995 and is hereby incorporated by
reference.
(c)(1) Narrative Description of Business
(i) Information with respect to business segments is set
forth in Note M to the consolidated financial
statements on Page 29 of the registrant's annual
report for the fiscal year ended September 30, 1995
and is hereby incorporated by reference.
(ii) There has been no public information regarding a new
product or line of business requiring the investment
of a material amount of total assets.
(iii) Most of the Company's products are machined from cast
iron, cast aluminum and bar steel. In addition to the
machined parts, there is an increasing number of
purchased electrical components used. There are
numerous sources of most of the raw materials and
components used by the Company in its operations, and
they are believed to be in adequate supply. Woodward
products utilize software or purchased electromagnetic
products as their core technology.
(iv) The Company has pursued a policy of applying for
patents in both the United States and certain other
countries on inventions made in the course of its
development work. The Company regards its patents
collectively as important, but does not consider its
business dependent upon any one of such patents.
Item 1. Business (Con't)
(v) The Company's business is not subject to significant
seasonal variation.
(vi) The Company maintains inventory levels sufficient to
meet customer demands. The Company's working capital
requirements are not materially affected by return
policies or extended credit terms provided to
customers.
(vii) One customer, General Electric Company, accounted for
approximately 16% of consolidated sales during the
fiscal year ended September 30, 1995. Nine other
customers in total accounted for approximately 18% of
consolidated sales in the fiscal year ended September
30, 1995. Sales to these customers involve several
autonomous divisions and agencies. Products are supplied
on the basis of individual purchase orders and contracts.
There are no other material relationships between the
Company and such customers.
(viii) Unfilled orders at September 30, 1995 totalled
$175,336,000 or 13% higher than the September 30, 1994
total of $155,006,000. Management believes that
unfilled orders is not necessarily an indicator of
future shipment levels. As customers demand shorter
lead times and flexibility in delivery schedules, they
have also revised their purchasing practices. As a result,
orders may become firm only within thirty to sixty days of
delivery. Consequently, the backlog of unfilled orders at
the year-end cannot be relied upon as a valid indication of
profitability in a subsequent year. Of the September 30,
1995 total, $152,599,000 currently is scheduled for fiscal
year 1996 delivery.
(ix) The Company does business with various U.S. government
agencies, principally in the defense area, as both a
prime contractor and a subcontractor. Substantially
all contracts are firm fixed price and may require
cost data to be submitted in connection with contract
negotiations. The contracts are subject to government
audit and review. It is anticipated that adjustments,
if any, with respect to determination of reimbursable
costs, will not have a material effect on the
Company's financial condition. Substantially all of
the Company's business, including both commercial and
government contracts, is subject to cancellation by
the customer. The military portion of all shipments
has dropped from almost 10 percent of total company
shipments last year to approximately 7 percent this
year. Military shipments are principally made by the
Company's Aircraft Controls business.
Item 1. Business (Con't)
(x) The Company competes with several other manufacturers,
including divisions of large diversified and
integrated manufacturers. The Company also competes
with other divisions of its major customers. Although
competition has increased worldwide, the Company
believes it maintains a significant competitive
position within its line of business. The Company has
several competitors in all product applications. Published
information pertinent to the Company's product line
is not available in sufficient detail to permit an accurate
assessment of its current relative competitive position.
The principal methods of competition in the industry are
price, product quality and customer service. In the opinion
of management, the Company's prices are generally competitive
and its product quality and customer service are favorable
competitive factors.
(xi) Information with respect to research and development
is set forth in Note A to the consolidated financial
statements on Page 24 of the registrant's annual
report for the fiscal year ended September 30, 1995
and is hereby incorporated by reference. The
Company's products, whether proposed by the Company or
requested by a customer, are offered for sale as
proprietary designs and products of the Company.
Consequently, all activities associated with basic research,
the development of new products and the refinement of
existing products are Company-sponsored.
(xii) Compliance with provisions regulating the discharge of
materials into the environment has caused and will
continue to require capital expenditures. The Company
is involved in certain environmental matters, in
several of which it has been designated a "de minimis
potentially responsible party" with respect to the
cost of investigation and cleanup of third-party sites.
The Company's current accrual for these matters is based
on costs incurred to date that have been allocated to the
Company and its estimate of the most likely future
investigation and cleanup costs. There is, as in the case
of most environmental litigation, the theoretical possibility
of joint and several liability being imposed upon the Company
for damages which may be awarded.
It is the opinion of management, after consultation
with legal counsel, that additional liabilities, if
any, resulting from these matters are not expected to
have a material adverse effect on the financial
condition of the Company, although such matters could
have a material effect on quarterly or annual
operating results when (or if) resolved in a future period.
(xiii) Information with respect to the number of persons
employed by the Company is set forth in the "Summary
of Operations/Ten Year Record" on Page 31 of the
registrant's annual report for the fiscal year ended
September 30, 1995 and is hereby incorporated by
reference. As of November 30, 1995, 3094 members were
employed by the Company.
Item 1. Business (Con't)
(d) Company Operations
Information with respect to operations in the United States
and other countries is set forth in Note M to the
consolidated financial statements on Page 29 of the
registrant's annual report for the fiscal year ended
September 30, 1995 and is hereby incorporated by reference.
Management is of the opinion there are no unusual risks
attendant to the conduct of its operations in other countries.
Item 2. Description of Property
The registrant has plants located in six communities in the United
States. Aircraft controls are manufactured in Rockford, Illinois,
and Buffalo, New York while industrial controls are manufactured
in Fort Collins and Loveland, Colorado. Test equipment is
manufactured in Avon, Connecticut. The overhaul and repair of
aircraft controls and sales of aircraft controls spare parts are
done in the Rockton, Illinois facility. The registrant has nine
facilities located overseas. Industrial controls are manufactured
in Hoofddorp, The Netherlands; Reading, England; Aken, Germany;
and Tomisato, Chiba, Japan. Aircraft controls are assembled in
Reading as well. A European aircraft product service center for
overhaul and repair of aircraft controls is located in Hoofddorp,
The Netherlands. Service shops are maintained in Sydney,
Australia; Kobe, Japan; Campinas, Sao Paulo, Brazil; Singapore,
Republic of Singapore; and Ballabgarh, India.
In 1995, the Stevens Point plant was closed except for a small
portion of the plant currently being leased to a Woodward
contractor who was established through Company assistance. The
plant has been placed for sale with an international real estate
broker. As yet, no offers have been received. The Company has
also attempted to sell Bauer Aerospace in Avon, Connecticut during
1995. No acceptable offer has been made and the efforts to sell
this business will continue. Further information is set forth in
"Financial Summary and Analysis" on pages 13 and 14 of the
registrant's annual report for the fiscal year ended September 30,
1995 and is hereby incorporated by reference.
All other facilities were in excellent condition at the year-end
and adequate production capacity is available to satisfy the
Company's customers' needs throughout the coming year.
Corporate offices are maintained at the plant in Rockford,
Illinois. Plants located in Rockford and Rockton, Illinois; Fort
Collins and Loveland, Colorado; Buffalo, New York; Hoofddorp, The
Netherlands; and Chiba, Japan are owned by the Company. The
facilities in Avon, Connecticut; Kobe, Japan; Campinas, Sao Paulo,
Brazil; Reading, England; Sydney, Australia; Ballabgarh, India;
Aken, Germany; and Singapore, Republic of Singapore are leased.
Additional leased sales offices are maintained worldwide.
Item 3. Legal Proceedings
The Company is currently involved in matters of litigation arising
from the normal course of business, including certain
environmental and product liability matters. For a further
discussion of these issues refer to Note K to the consolidated
financial statements on page 28 of the registrant's annual report
for the fiscal year ended September 30, 1995 which is hereby
incorporated by reference.
Item 4. Submission of Matters to a Vote of Shareholders
There were no matters submitted during the fourth quarter of the
year ended September 30, 1995 to a vote of shareholders, through
the solicitation of proxies or otherwise.
Executive Officers of the Registrant
John A. Halbrook, age 50, is Chairman and Chief Executive Officer. On
January 10, 1995 he was elected Chairman of the Board in addition to his
duties as President and Chief Executive Officer. He was elected Chief
Executive Officer on November 16, 1993 and served as President since
November 1991. He also served as Chief Operating Officer from November
1991 until November 16, 1993. He had formerly been Senior Vice President
in charge of Domestic Operations since January 1990.
Vern H. Cassens, age 63, is Senior Vice President and Treasurer and Chief
Financial Officer and was elected to this position during 1988. Prior to
this appointment he had been a Vice President since 1983 and Treasurer of
the Company from 1968 to 1983.
Ronald E. Fulkrod, age 51, is a Vice President of the Company and Corporate
Facilities Manager and Facilities Planner. He was elected to the Vice
President position in January 1993. He has been employed by the Company in
management positions for the last five years.
Peter A. Gomm, age 64, is a Vice President of the Company and
Asia/Pacific/Brazil General Manager. He was elected a Vice President in
1983 and was General Manager of the International Industrial Controls
Division from January 1988 to January 1992.
Duane L. Miller, age 47, is a Vice President of the Company and General
Manager of Industrial Controls. He was elected to the position of Vice
President in January 1993 and has been employed by the Company in management
positions for the last five years.
C. Phillip Turner, age 55, is a Vice President of the Company and Manager of
Aircraft Controls. He was elected Vice President in 1988. He was Treasurer
of the Company from 1983 to 1988, and Secretary of the Company from 1977 to
1991.
Carol J. Manning, age 46, is Secretary of the Company. She was elected to
this position in June 1991. She also served as Administrative Assistant to
the Chairman of the Board from 1984 to 1994.
All of the executive officers were elected to their present positions at the
January 11, 1995 Board of Directors' meeting to serve until the organizational
meeting of the Board of Directors to be held on January 10, 1996 and until
their respective successors shall have been elected and qualified.
Part II
Item 5. Market for the Registrant's Common Stock
and Related Shareholder Matters
Information with respect to number of shareholders is set forth
in "Financial Highlights" which appears on Page 1 in the
registrant's annual report for the fiscal year ended September
30, 1995 and is hereby incorporated by reference. Information
with respect to common stock and dividends is set forth in the
"Financial Summary and Analysis" on Page 18 of the registrant's
annual report for the fiscal year ended September 30, 1995 and
is hereby incorporated by reference.
Item 6. Selected Financial Data
Information with respect to this matter is set forth in the
"Summary of Operations/Ten Year Record" on Page 31 of the
registrant's annual report for the fiscal year ended September
30, 1995 and is hereby incorporated by reference.
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Management's Discussion and Analysis of Financial Condition and
Results of Operations is set forth in the "Financial Summary and
Analysis" on Pages 13 through 18 of the registrant's annual
report for the fiscal year ended September 30, 1995 and is hereby
incorporated by reference.
Item 8. Financial Statements and Supplementary Data
Information with respect to this matter is set forth in the
registrant's annual report for the fiscal year ended September
30, 1995 (Financial Statements), as further set forth in the
Index to Consolidated Financial Statements and Schedules (See
Item 14) and is hereby incorporated by reference.
Item 9. Changes in and Disagreements on Accounting and Financial
Disclosure
The accounting firm of Coopers & Lybrand L.L.P. has been engaged
since 1940. There have been no disagreements on any matter of
accounting principles or practices or financial statement
disclosure.
Part III
Item 10.Directors and Executive Officers of the Registrant
Information with respect to directors and executive officers,
except for the information with respect to executive officers
which appears in Part I of this report, is set forth under the
caption "Election of Directors" on Pages 7 and 8 of the
registrant's proxy statement dated December 4, 1995, which was
filed with the Securities and Exchange Commission within 120
days following the end of the registrant's fiscal year ended
September 30, 1995, and is made a part hereof.
Item 11.Executive Compensation
Information with respect to executive compensation is set forth
under the caption "Executive Compensation" on Pages 9 through 12
of the registrant's proxy statement dated December 4, 1995,
which is made a part hereof.
Item 12.Security Ownership of Certain
Beneficial Owners and Management
Information with respect to security ownership of certain
beneficial owners and management is set forth under the captions
"Security Ownership of Principal Holders and Executive Officers"
on Page 6 and "Election of Directors" on Pages 7 and 8 of the
registrant's proxy statement dated December 4, 1995, which is
made a part hereof.
Item 13.Certain Relationships and Related Transactions
Information with respect to certain relationships and related
transactions is set forth under the caption "Executive
Compensation" on Page 10 of the registrant's proxy statement
dated December 4, 1995, which is made a part hereof.
Part IV
Item 14.
Exhibits, Financial Statement
Schedule, and Reports on Form 8-K
(a) Index to Consolidated Financial Statements and Schedule
Reference
Form 10-K Annual Report
Annual Report to Shareholders
Page Page
Data incorporated by reference to the
registrant's annual report to shareholders
for the fiscal year ended September 30, 1995:
Statements of Consolidated Earnings (Loss)
for the years ended September 30, 1995,
1994 and 1993
Consolidated Balance Sheets
at September 30, 1995 and 1994
Statements of Consolidated Shareholders'
Equity for the years ended September 30,
1995, 1994 and 1993
Statements of Consolidated
Cash Flows for the years ended
September 30, 1995, 1994 and 1993
Notes to Consolidated Financial Statements
Report of Independent Accountants
Financial Statement Schedule:
Report of Independent Accountants
II. Valuation and Qualifying Accounts
Item 14 (Con't)
Exhibits, Financial Statement
Schedule, and Reports on Form 8-K (continued)
Financial statements and schedule other than those listed on the preceding
page are omitted for the reason that they are not applicable, are not
required, or the information is included in the financial statements or the
footnotes therein.
(b)There were no reports filed on form 8-K during the fourth quarter of
the fiscal year ended September 30, 1995.
(c)The following exhibits are filed as part of this report:
(3)Articles of incorporation Articles of incorporation are
and by-laws set forth in the exhibits
filed with Form 10-K for the
fiscal year ended September
30, 1977 and are hereby
incorporated by reference.
Two amendments to the Articles
of incorporation effective
January 14, 1981 are set forth
in the exhibits filed with
Form 10-K for the fiscal year
ended September 30, 1981 and
are hereby incorporated by
reference.
Two amendments to the Articles
of incorporation effective
January 11, 1984 are set forth
in exhibits filed with Form
10-K for the fiscal year ended
September 30, 1984 and are
hereby incorporated by reference.
One amendment to the Articles
of incorporation effective
January 13, 1988 is set forth
in exhibits filed with Form
10-K for the fiscal year ended
September 30, 1988 and is hereby
incorporated by reference.
By-laws as amended through
September 30, 1992 together
with three amendments to the
By-laws effective November 16,
1993 are set forth in exhibits
filed with Form 10-K for the
fiscal year ended September 30,
1993 and are hereby incorporated
by reference.
Item 14 (Con't)
Exhibits, Financial Statement
Schedule, and Reports on Form 8-K (continued)
(3)Articles of incorporation One amendment to the by-laws
and by-laws (continued) effective June 22, 1994 is
set forth in exhibits filed
with Form 10-K for the fiscal
year ended September 30, 1994
and is hereby incorporated
by reference.
Three amendments to the by-
laws effective January 11,
1995, March 29, 1995 and June
28, 1995 are filed herewith.
(4)Instruments defining the Instruments with respect to
rights of security holders, long-term debt and the ESOP
including indentures debt guarantee are not being
filed as they do not
individually exceed 10
percent of the registrant's
assets. The registrant agrees
to furnish a copy of each such
instrument to the Commission
upon request.
(13)Annual report to shareholders Except to the extent
for the fiscal year ended specifically incorporated
September 30, 1995 herein by reference, said
report is furnished solely
for the information of the
Commission and is not deemed
"filed" as part of this
report.
(21)Subsidiaries of the registrant Information with respect to
subsidiary operations is filed
as an exhibit hereto.
SIGNATURES
This report has been prepared in accordance with the rules and regulations
of the Securities and Exchange Commission and the financial statements
referenced herein have been prepared in accordance with such rules and
regulations and with generally accepted accounting principles, by officers
and worker members of Woodward Governor Company. This has been done under
the general supervision of Vern H. Cassens, Senior Vice President and
Treasurer and Chief Financial Officer. The consolidated financial
statements have been audited by Coopers & Lybrand L.L.P., independent
accountants, as indicated in their report in the annual report to
shareholders for the fiscal year ended September 30, 1995.
This report contains much detailed information of which the various
signatories cannot and do not have independent personal knowledge. The
signatories believe, however, that the preparation and review processes
summarized above are such as to afford reasonable assurance of compliance
with applicable requirements.
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 Governor Company
(Registrant)
Name
/s/ John A. Halbrook Director, Chairman of
John A. Halbrook the Board and Chief
Executive Officer
/s/ Vern H. Cassens Director, Senior Vice
Vern H. Cassens President and Treasurer
and Chief Financial and
Date 12/21/95 Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated:
Signature Title Date
/s/ J. Grant Beadle Director
J. Grant Beadle
/s/ Carl J. Dargene Director 12/19/95
Carl J. Dargene
/s/ Lawrence E. Gloyd Director 12/19/95
Lawrence E. Gloyd
/s/ Thomas W. Heenan Director 12/20/95
Thomas W. Heenan
/s/ J. Peter Jeffery Director
J. Peter Jeffrey
/s/ Mark Leum Director 12/21/95
Mark Leum
/s/ Michael T. Yonker Director 12/20/95
Michael T. Yonker
INDEPENDENT ACCOUNTANTS
Shareholder and Worker Members
Woodward Governor Company
Our report on the consolidated financial statements of Woodward Governor
Company and Subsidiaries has been incorporated by reference in this Form
10-K from Page 30 of the 1995 Annual Report to Shareholders and Worker
Members of Woodward Governor Company and Subsidiaries. In connection with
our audits of such financial statements, we have also audited the related
financial statement schedule listed in the index on Page 11 of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND L.L.P.
Rockford, Illinois
November 13, 1995
WOODWARD GOVERNOR COMPANY AND SUBSIDIARIES
SCHEDULE II -VALUATION AND QUALIFYING ACCOUNTS
for the years ended September 30, 1995, 1994 and 1993
(In thousands of dollars)
Col. A Col. B Col. C Col. D Col. E
Additions
Balance at Charged to Charged to Balance
Beginning Costs and Other at End
DESCRIPTION of Year Expenses Accounts(B) Deduction(A) of Year
1995:
Allowance for
Doubtful accounts $3,021 $2,192 $32 $640 $4,605
1994:
Allowance for
Doubtful accounts $1,989 $977 $218 $163 $3,021
1993:
Allowance for
Doubtful accounts $2,316 $455 $127 $909 $1,989
NOTE:
(A) Represents accounts written off during the year with overseas currency
translation adjustments increasing the deduction from reserves by $84
in 1993 and decreasing the deduction from reserves by $80 in 1995 and
$71 in 1994.
(B) Recovery of accounts previously written off.