Woodward Governor Company (NASDAQ: WGOV) today reported financial
results for its fourth quarter and fiscal year 2009. (All per share
amounts are presented on a fully diluted basis.)
Quarterly Highlights
-- Sales for the quarter were $365 million, up approximately 4 percent
from $351 million in the fourth quarter of last year.
-- Earnings per share were $0.34 for the quarter as compared with $0.50
for the same quarter last year.
-- Free cash flow for the quarter was $92 million compared to $27 million
for the same period in the prior year.
-- $121 million of debt was repaid in the fourth quarter.
-- Final resolution in November 2009 of MPC's government matter
consistent with expectations.
-- Organic net sales (which excludes Airframe Systems segment external
sales of $109.6 million) for the fiscal 2009 fourth quarter were $255
million, down 27 percent from $351 million in the fiscal 2008 fourth
quarter. Organic operating earnings (earnings before interest and taxes
excluding the Airframe Systems segment) in the fourth quarter of fiscal
2009 were $30.1 compared to fiscal 2008 of $50.9.
Annual Highlights
-- Annual sales were $1.4 billion, up 14 percent from fiscal 2008.
-- Reported earnings per share for fiscal 2009 were $1.37 compared to
$1.75 per share for fiscal 2008. Excluding special charges highlighted in
the reconciliation below, adjusted earnings per share were $1.57.
-- Free cash flow generated during fiscal 2009 was $190 million, up from
$88 million generated in fiscal 2008.
-- Organic net sales for fiscal 2009 were $1.1 billion, down 12 percent
from the prior fiscal year. Reported organic operating earnings were $143.9
million compared to $183.6 million for fiscal 2008.
Net sales for the fiscal 2009 fourth quarter were $364.5
million, up approximately 4 percent from $350.5 million for the
fiscal 2008 fourth quarter. Net earnings for the fiscal 2009 fourth
quarter were $23.8 million, or $0.34 per share, compared with $34.4
million, or $0.50 per share, in the fiscal 2008 fourth quarter.
Foreign currency exchange rates had a negative impact on net sales
of approximately $5 million in the fiscal 2009 fourth quarter.
Organic net sales (which excludes Airframe Systems' segment
external sales of $109.6 million) for the fiscal 2009 fourth
quarter were $255.0 million, down approximately 27 percent from
$350.5 million in the fiscal 2008 fourth quarter. Organic operating
earnings (earnings before interest and taxes excluding the Airframe
Systems segment) were down 41 percent compared to the fiscal 2008
fourth quarter.
Net sales for fiscal 2009 were $1.430 billion, up 14 percent
from $1.258 billion for fiscal 2008. Net earnings for the year were
$94.4 million, or $1.37 per share, compared with $121.9 million, or
$1.75 per share for fiscal 2008. Net earnings included the special
items noted in the reconciliation below. Foreign currency exchange
rates had a negative impact on net sales of approximately 3 percent
and approximately $0.09 per share on net earnings for fiscal 2009
as compared to fiscal 2008.
Organic net sales for fiscal 2009 were $1.111 billion, down 12
percent from the prior fiscal year. Reported organic operating
earnings were $143.9 million. Adjusted organic operating earnings,
excluding the special charges described below totaling $16.6
million taken in the second quarter of 2009, were $160.5 million
compared to $183.6 million for fiscal 2008. Foreign currency
exchange rates had a negative impact on net organic sales of
approximately 9 percent and approximately $6 million on organic
operating earnings for fiscal 2009 as compared to fiscal 2008.
RECONCILIATION OF EARNINGS PER SHARE TO ADJUSTED EARNINGS PER SHARE
Three Months
Ended Year Ended
------------ -----------
September 30, 2009
-------------------------
Earnings Per Share as reported $ 0.34 $ 1.37
Purchase Accounting - Inventory - 0.12
Workforce Management and Other Special Charges - 0.15
Favorable Resolution - Tax Issues - (0.07)
------------ -----------
Adjusted Earnings Per Share $ 0.34 $ 1.57
============ ===========
Note: See statement regarding non-GAAP measures at the end of
this release.
"During this challenging period, we delivered solid financial
results by maintaining operating margins and delivering strong cash
flow," said Chairman and Chief Executive Officer Thomas A. Gendron.
"We believe that we have positioned the business to deliver solid
results in a difficult environment and to leverage our advantages
in the coming rebound. This is a result of a broad effort to manage
costs in each of the businesses while investing in opportunities,
technologies and relationships that will support future
growth."
Quarterly Segment Results
Turbine Systems(1)
Turbine Systems' segment net sales for the fourth quarter, which
includes intersegment sales, were $148.4 million, a decrease of
approximately 15 percent from $175.2 million for the fourth quarter
a year ago. Segment earnings for the fourth quarter of 2009
declined slightly to $32.0 million from $32.6 million for the same
quarter a year ago. Segment earnings as a percent of segment net
sales were 21.6 percent this quarter compared to 18.6 percent in
the same quarter for the prior year.
Our sales performance reflected declines in aerospace OEM and
industrial equipment markets, while aftermarket sales remained
consistent with the prior year. This favorable mix, along with cost
controls, allowed us to maintain segment earnings despite the
decline in sales.
Airframe Systems
Airframe Systems' segment net sales for the fourth quarter,
which includes intersegment sales, were $110.4 million, reflecting
stable defense markets and weakness in the business and regional
jet markets. Reported segment earnings were $12.0 million or 10.9
percent of segment net sales for the fourth quarter of 2009.
Excluding the effects of purchase accounting as shown on the
attached schedule of Airframe Systems - Adjusted Segment Earnings,
segment earnings were $18.3 million or 16.6 percent of net segment
sales. Consistent with our expectations, the sequential improvement
in profitability reflects significant cost reductions and
synergies. As a result of the improved profitability, our airframe
acquisitions were accretive to earnings in the fourth quarter.
Electrical Power Systems
Electrical Power Systems' segment net sales for the fourth
quarter, which includes intersegment sales, were $53.7 million, a
decrease of 40 percent from $89.7 million for the fourth quarter a
year ago. Segment earnings for this quarter were $5.1 million
compared to $14.8 million for the same quarter a year ago.
Excluding the effects of foreign currency exchange rates, net
segment sales would have been approximately $57 million for the
quarter. This quarter's sales results reflected a broad decline in
all markets served by the Electrical Power Systems segment.
Approximately one-half of the decline was related to a significant
slowdown in wind converter sales. This decrease was driven by
ongoing tightness in credit markets and delays in stimulus funding
and tax credit availability. Segment earnings as a percent of sales
decreased to 9.5 percent this quarter compared to 16.5 percent for
the same quarter last year. Our profitability in this segment was
affected by the significant decline in volume, although cost
controls mitigated this impact.
Engine Systems(1)
Engine Systems' segment net sales for the fourth quarter, which
includes intersegment sales, were $73.8 million compared to $120.0
million for last year's fourth quarter, a decrease of 38 percent.
Segment earnings for this quarter decreased to $2.1 million from
$10.5 million for the same period a year ago. Segment earnings as a
percent of net sales were 2.8 percent this quarter compared to 8.8
percent in the same quarter last year. The lower sales levels were
attributable to broad declines across all of our served markets.
The impact of foreign currency exchange rates on net sales and
segment earnings was not significant when compared to the prior
year. Profitability was significantly affected by the decrease in
volumes, partially offset by cost reduction actions taken
predominantly in the second half of 2009.
Nonsegment
Nonsegment expenses totaled $9.1 million for the fourth quarter
of 2009, compared to $7.0 million for the same quarter last year.
This reflects costs associated with a continuous improvement
project impacting all business segments.
(1) The steam turbine product line was moved from Engine Systems to Turbine
Systems in the fourth quarter of 2009. Segment information for all periods
presented has been recast.
Full Year Fiscal 2009 Segment Results
Turbine Systems
Turbine Systems' segment net sales for fiscal 2009 were $632.2
million, a slight decrease from $634.7 million for the same period
a year ago. Segment earnings for the year increased 6 percent to
$136.1 million from $128.9 million for last year. Segment earnings
as a percent of net sales were 21.5 percent for fiscal 2009
compared to 20.3 percent in the prior year.
Airframe Systems
Segment net sales for fiscal 2009 were $322.0 million and
segment earnings for the year were $11.0 million. Segment earnings
reflect the $12.5 million charge related to purchase accounting
effects on inventory related to the recent acquisition of HR
Textron ("HRT") and $19.6 million of intangible amortization
related to both of the MPC Products Corporation ("MPC") and HRT
acquisitions, all of which were non-cash charges.
Electrical Power Systems
Electrical Power Systems' segment net sales for fiscal 2009 were
$243.1 million, a decrease of approximately 16 percent from $289.3
million for a year ago. Segment earnings for fiscal 2009 decreased
approximately 15 percent to $35.9 million from $42.3 million for a
year ago. Segment earnings as a percent of net sales increased to
14.8 percent for fiscal 2009 compared to 14.6 percent for last
year.
Engine Systems
Engine Systems' segment net sales for fiscal 2009 were $341.0
million compared to $469.4 million for last year, a decrease of 27
percent. Segment earnings for fiscal 2009 decreased 58 percent to
$18.5 million from $43.7 million for last year. Segment earnings as
a percent of net sales were 5.4 percent in fiscal 2009 compared to
9.3 percent in fiscal 2008.
Nonsegment
Nonsegment expenses for fiscal 2009 were $46.6 million, compared
to $31.3 million for last year. Excluding special charges,
nonsegment expenses were $30.0 million or 2.1 percent of net sales
for 2009, compared to 2.5 percent of net sales for the prior
year.
Cash Flow and Financial Position
Net cash generated from operating activities improved to $218.7
million for the year ended September 30, 2009 compared with $125.4
million for fiscal 2008, reflecting our continuing focus on working
capital and operating cash flow initiatives. Free cash flow was
$189.7 million for the 2009 fiscal year as compared to $87.8
million for 2008. We believe this level of cash generation should
continue in 2010. Capital expenditures for the twelve-month period
were $28.9 million compared with $37.5 million last year.
Our ratio of debt to debt-plus-equity was 44.7 percent at
September 30, 2009 compared to 50.1 percent at the end of the prior
quarter and 7.2 percent at September 30, 2008, reflecting the
financing and partial debt repayments connected with the recent
acquisitions.
Outlook
Though near-term visibility has improved somewhat, we still
expect the environment to remain challenging through at least the
first half of fiscal 2010. This may include sequential revenue
declines in some of our businesses. For fiscal 2010, we expect our
sales to be approximately flat compared to fiscal 2009. We expect
Airframe Systems sales to increase due to the mid-year acquisition
of HR Textron, but anticipate sequential declines through the first
half of the year. We are optimistic that most of our businesses are
bottoming out now or will in the near future. Signs of
stabilization and a possible second-half recovery are appearing in
many of our markets.
Therefore, for fiscal 2010 we expect our sales to be between
$1.4 billion and $1.5 billion and our diluted earnings per share to
be between $1.40 and $1.60.
**********
Non-GAAP Measures: Adjusted earnings per share, segment
earnings, operating earnings, EBITDA and free cash flow are
non-GAAP financial measures. The use of these measures is not
intended to be considered in isolation of, or as a substitute for,
the financial information prepared and presented in accordance with
accounting principles generally accepted in the United States of
America. Securities analysts, investors, and others frequently use
adjusted earnings per share, segment earnings, operating earnings,
EBITDA and free cash flow in their evaluation of companies,
particularly those with significant property, plant, and equipment,
and intangible assets that are subject to amortization. Management
uses operating earnings to evaluate its performance without
financing and tax related considerations, as these elements may not
fluctuate with operating results. EBITDA is used in reviewing
compliance with our debt covenants and in evaluating capital
structure impacts of various strategic scenarios. Free cash flow is
a non-GAAP financial measure which Woodward and others define as
cash from operations less capital expenditures.
Conference Call
Woodward will hold an investor conference call at 5:00 p.m. EST
on Wednesday, November 18, 2009 to provide an overview of the
financial performance for the fourth quarter and fiscal 2009,
business highlights, and outlook for fiscal 2010. 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 1-866-835-8893
(domestic) or 1-703-639-1409 (international). Participants should
call prior to the start time to allow for registration; the
Conference ID is 1403951. An audio replay will be available by
telephone from 8:00 p.m. EST on November 18 until 11:59 p.m. EST on
November 20, 2009. The telephone number to access the replay is
1-888-266-2081 (domestic) or 1-703-925-2533 (international),
reference access code 1403951.
About Woodward
Woodward is an independent designer, manufacturer, and service
provider of energy control and optimization solutions used in
global infrastructure equipment. We serve the aerospace, power
generation and distribution, and transportation markets. Our
systems and components optimize the performance of commercial
aircraft; military aircraft, ground vehicles and other equipment;
gas and steam turbines; wind turbines; reciprocating engines; and
electrical power systems. The company's innovative fluid energy,
combustion control, electrical energy, and motion control systems
help customers offer cleaner, more reliable and more cost-effective
equipment. Our customers include leading original equipment
manufacturers and end users of their products. Woodward is
headquartered in Fort Collins, Colo., USA. Visit our website at
www.woodward.com.
Information in this press release contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995 that involve risks and uncertainties, including,
but not limited to, statements regarding future sales, earnings,
liquidity, relative profitability, and the impact of economic
conditions and downturns on Woodward. Readers are cautioned that
these forward-looking statements are only predictions and are
subject to risks, uncertainties, and assumptions that are difficult
to predict. Factors that could cause actual results and the timing
of certain events to differ materially from the forward-looking
statements include, but are not limited to, the recent instability
of the credit markets and other adverse economic and industry
conditions; our ability to comply with the terms of the civil and
criminal settlements related to the U.S. Department of Justice
investigation of the pre-June 2005 government contract pricing
practices of MPC Products Corporation and the related
administrative agreement with the U.S. Department of Defense;
Woodward's ability to implement and realize the intended effects of
its restructuring efforts; Woodward's ability to reduce its
expenses in proportion to any sales shortfalls; the ability of
Woodward's suppliers to meet their obligations; Woodward's ability
to integrate acquisitions and manage the costs related thereto;
Woodward's substantial debt obligations, debt service requirements
and its ability to operate its business and pursue business
strategies in the light of certain restrictive covenants in its
outstanding debt documents; unforeseen events that significantly
reduce commercial airline travel; risks from operating
internationally, including the impact on reported earnings from
fluctuations in foreign currency exchange rates, and other risk
factors described in Woodward's Annual Report on Form 10-K for the
year ended September 30, 2008 and any subsequently filed Quarterly
Report on Form 10-Q.
Woodward Governor Company and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
Three Months Ended Year Ended
(Unaudited - in September 30, September 30,
thousands except per ------------------------ ------------------------
share amounts) 2009 2008 2009 2008
----------- ----------- ----------- -----------
Net sales $ 364,527 $ 350,541 $ 1,430,125 $ 1,258,204
----------- ----------- ----------- -----------
Costs and expenses:
Cost of goods sold 262,176 249,834 1,029,095 882,996
Selling, general, and
administrative
expenses 33,947 29,318 128,682 115,399
Research and
development costs 19,980 20,013 78,536 73,414
Amortization of
intangible assets 7,951 1,571 26,120 6,830
Restructuring and
special charges - - 15,159 -
Interest expense 9,499 865 33,629 3,834
Interest income (229) (650) (1,131) (2,120)
Other, net (1,590) (1,088) (2,377) (4,059)
----------- ----------- ----------- -----------
Total costs and
expenses 331,734 299,863 1,307,713 1,076,294
----------- ----------- ----------- -----------
Earnings before income
taxes 32,793 50,678 122,412 181,910
Income taxes (8,976) (16,251) (28,060) (60,030)
----------- ----------- ----------- -----------
Net earnings $ 23,817 $ 34,427 $ 94,352 $ 121,880
=========== =========== =========== ===========
Earnings per share
amounts:
Basic $ 0.35 $ 0.51 $ 1.39 $ 1.80
Diluted $ 0.34 $ 0.50 $ 1.37 $ 1.75
=========== =========== =========== ===========
Weighted average number
of shares outstanding:
Basic 67,998 67,486 67,821 67,564
Diluted 69,219 69,463 69,033 69,560
=========== =========== =========== ===========
Cash dividends per
share $ 0.060 $ 0.060 $ 0.240 $ 0.235
=========== =========== =========== ===========
Woodward Governor Company and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
At September 30,
(Unaudited - in thousands) 2009 2008
----------- -----------
Assets
Current assets:
Cash and cash equivalents $ 100,863 $ 109,833
Accounts receivable 209,626 178,128
Inventories 302,339 208,317
Income taxes receivable 16,302 -
Deferred income tax assets 45,413 25,128
Other current assets 21,701 16,649
----------- -----------
Total current assets 696,244 538,055
Property, plant, and equipment-net 208,885 168,651
Goodwill 442,802 139,577
Other intangibles - net 327,773 66,106
Deferred income tax assets 8,200 6,208
Other assets 12,518 8,420
----------- -----------
Total assets $ 1,696,422 $ 927,017
=========== ===========
Liabilities and stockholders' equity
Current liabilities:
Short-term borrowings $ - $ 4,031
Current portion of long-term debt 45,569 11,560
Accounts payable 81,108 65,427
Income taxes payable 8,084 2,235
Accrued liabilities 127,317 85,591
----------- -----------
Total current liabilities 262,078 168,844
Long-term debt, less current portion 526,771 33,337
Deferred income tax liabilities 86,048 27,513
Other liabilities 112,287 67,695
----------- -----------
Total liabilities 987,184 297,389
Stockholders' equity 709,238 629,628
----------- -----------
Total liabilities and stockholders' equity $ 1,696,422 $ 927,017
=========== ===========
Woodward Governor Company and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended
September 30,
--------------------
(Unaudited - in thousands) 2009 2008
--------- ---------
Net cash provided by operating activities $ 218,652 $ 125,354
--------- ---------
Cash flows from investing activities:
Business acquisitions (749,820) -
Business dispositions 48,000 -
Payments for purchase of property, plant, and
equipment (28,947) (37,516)
Proceeds from sale of assets 16,637 1,607
--------- ---------
Net cash used in investing activities (714,130) (35,909)
--------- ---------
Cash flows from financing activities:
Cash dividends paid (16,289) (15,872)
Proceeds from sales of treasury stock as a result of
exercises of stock options 4,631 9,440
Purchases of treasury stock (866) (39,801)
Excess tax benefits from stock compensation 2,695 15,355
Proceeds from issuance of long-term debt 620,000 -
Payments of long-term debt (92,392) (16,257)
Borrowings on revolving lines of credit and
short-term borrowings 145,702 45,791
Payments on revolving lines of credit and short-term
borrowings (149,731) (47,256)
Payment of long-term debt assumed in MPC acquisition (18,610) -
Net proceeds from (payments for) cash flow hedges (1,308) 108
Debt issuance costs (5,892) (412)
--------- ---------
Net cash provided by (used in) financing activities 487,940 (48,904)
--------- ---------
Effect of exchange rate changes on cash and cash
equivalents (1,432) (2,343)
--------- ---------
Net change in cash and cash equivalents (8,970) 38,198
Cash and cash equivalents, beginning of period 109,833 71,635
--------- ---------
Cash and cash equivalents, end of period $ 100,863 $ 109,833
========= =========
Woodward Governor Company and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
Three Months Ended Year Ended
September 30, September 30,
(Unaudited - in thousands -------------------- ------------------------
except per share amounts) 2009 2008 2009 2008
--------- --------- ----------- -----------
Segment net sales *:
Turbine Systems $ 148,353 $ 175,159 $ 632,222 $ 634,658
Airframe Systems 110,352 - 321,956 -
Electrical Power Systems 53,718 89,748 243,146 289,294
Engine Systems 73,838 120,029 340,995 469,432
--------- --------- ----------- -----------
Total segment net sales $ 386,261 $ 384,936 $ 1,538,319 $ 1,393,384
========= ========= =========== ===========
Intersegment net sales:
Turbine Systems $ (3,149) $ (5,241) $ (14,272) $ (18,470)
Airframe Systems (785) - (2,947) -
Electrical Power Systems (9,176) (16,986) (48,146) (66,571)
Engine Systems (8,624) (12,168) (42,829) (50,139)
--------- --------- ----------- -----------
Total sales $ 364,527 $ 350,541 $ 1,430,125 $ 1,258,204
========= ========= =========== ===========
Segment earnings**:
Turbine Systems $ 31,978 $ 32,561 $ 136,120 $ 128,930
As a percent of segment
sales 21.6% 18.6% 21.5% 20.3%
Airframe Systems 11,979 - 11,023 -
As a percent of segment
sales 10.9% N/A 3.4% N/A
Electrical Power Systems 5,087 14,785 35,891 42,303
As a percent of segment
sales 9.5% 16.5% 14.8% 14.6%
Engine Systems 2,074 10,549 18,454 43,737
As a percent of segment
sales 2.8% 8.8% 5.4% 9.3%
--------- --------- ----------- -----------
Total segment earnings 51,118 57,895 201,488 214,970
Nonsegment expenses (9,055) (7,002) (46,578) (31,346)
--------- --------- ----------- -----------
Operating earnings 42,063 50,893 154,910 183,624
Interest expense and
income, net (9,270) (215) (32,498) (1,714)
--------- --------- ----------- -----------
Consolidated earnings
before income taxes $ 32,793 $ 50,678 $ 122,412 $ 181,910
========= ========= =========== ===========
Capital expenditures $ 11,032 $ 12,999 $ 28,947 $ 37,516
Depreciation expense 9,931 6,704 37,828 28,620
========= ========= =========== ===========
* This schedule reconciles segment sales, which include intersegment
sales, with consolidated external sales.
**This schedule reconciles segment earnings, which excludes certain
costs, to consolidated earnings before taxes.
Woodward Governor Company and Subsidiaries
RECONCILIATION OF NET EARNINGS TO OPERATING EARNINGS AND EBITDA
Three Months Ended Year Ended
September 30, September 30,
------------------ --------------------
(Unaudited - in thousands) 2009 2008 2009 2008
-------- -------- --------- ---------
Net earnings $ 23,817 $ 34,427 $ 94,352 $ 121,880
Income taxes 8,976 16,251 28,060 60,030
Interest expense 9,499 865 33,629 3,834
Interest income (229) (650) (1,131) (2,120)
-------- -------- --------- ---------
OPERATING EARNINGS 42,063 50,893 154,910 183,624
Amortization of intangible assets 7,951 1,571 26,120 6,830
Depreciation expense 9,931 6,704 37,828 28,620
-------- -------- --------- ---------
EBITDA $ 59,945 $ 59,168 $ 218,858 $ 219,074
======== ======== ========= =========
OPERATING EARNINGS $ 42,063 $ 50,893 $ 154,910 $ 183,624
Less: Airframe Systems operating
income (11,979) - (11,023) -
-------- -------- --------- ---------
ORGANIC OPERATING EARNINGS $ 30,084 $ 50,893 $ 143,887 $ 183,624
======== ======== ========= =========
Operating earnings (earnings before interest and taxes) and
EBITDA (earnings before interest, taxes, depreciation, and
amortization) are non-GAAP financial measures. The use of these
measures is not intended to be considered in isolation of, or as a
substitute for, the financial information prepared and presented in
accordance with accounting principles generally accepted in the
United States of America. Securities analysts, investors, and
others frequently use both Operating Earnings and EBITDA in their
evaluation of companies, particularly those with significant
property, plant, and equipment, and intangible assets that are
subject to amortization.
Management uses Operating Earnings to evaluate its performance
without financing and tax related considerations as these elements
may not fluctuate with operating results. EBITDA is used in
reviewing compliance with its debt covenants and in evaluating
capital structure impacts of various strategic scenarios.
Woodward Governor Company and Subsidiaries
RECONCILIATION OF CASH FLOW FROM OPERATIONS TO FREE CASH FLOW
Three Months Ended Year Ended
September 30, September 30,
-------------------- --------------------
(Unaudited - in thousands) 2009 2008 2009 2008
--------- --------- --------- ---------
Net cash provided by operating
activities $ 103,494 $ 40,003 $ 218,652 $ 125,354
Capital expenditures (11,032) (12,999) (28,947) (37,516)
--------- --------- --------- ---------
Free cash flow $ 92,462 $ 27,004 $ 189,705 $ 87,838
========= ========= ========= =========
Free cash flow 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 accounting principles generally accepted in the
United States of America. Securities analysts, investors, and
others frequently use free cash flow in their evaluation of
companies, particularly those with significant property, plant, and
equipment, and intangible assets that are subject to
amortization.
Management uses free cash flow in reviewing the financial
performance of its various business segments.
Woodward Governor Company and Subsidiaries
SPECIAL ITEM SUMMARY
Year Ended
September 30, 2009
-----------------------
(Unaudited) In Millions Per Share
----------- -----------
Items that decreased (increased) net earnings
in 2009:
Purchase accounting - inventory $ 12.5
Less: income tax impact (4.5)
-----------
8.0 $ 0.12
Workforce management and other charges 16.6
Less: income tax impact (5.8)
-----------
10.8 0.15
Favorable resolution - tax issues (5.0) (0.07)
----------- -----------
Net decrease in net earnings $ 13.8 $ 0.20
=========== ===========
Woodward Governor Company and Subsidiaries
Airframe Systems - Adjusted Segment Earnings
Three Months Ended Year Ended
September 30, September 30,
------------------- -------------------
(Unaudited - in thousands) 2009 2008 2009 2008
--------- --------- --------- ---------
Airframe Systems earnings $ 11,979 $ - $ 11,023 $ -
Purchase accounting - inventory - - 12,500 -
Intangible asset amortization 6,296 - 19,550 -
--------- --------- --------- ---------
ADJUSTED AIRFRAME SYSTEMS EARNINGS $ 18,275 $ - $ 43,073 $ -
========= ========= ========= =========
Adjusted segment earnings 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 accounting principles generally
accepted in the United States of America. Securities analysts,
investors, and others frequently use segment earnings in their
evaluation of companies.
Management uses segment earnings in reviewing the financial
performance of its various business segments.
Woodward Governor Company and Subsidiaries
Recast Segment Information
2009 Fiscal Quarters
------------------------------------------
First Second Third Fourth
--------- --------- --------- ---------
Total segment net sales:
Turbine Systems $ 156,819 $ 168,043 $ 159,007 $ 148,353
Airframe Systems 52,318 51,610 107,676 110,352
Electrical Power Systems 61,842 58,521 69,065 53,718
Engine Systems 105,294 85,234 76,629 73,838
--------- --------- --------- ---------
Total $ 376,273 $ 363,408 $ 412,377 $ 386,261
========= ========= ========= =========
Intersegment sales:
Turbine Systems $ 4,537 $ 3,472 $ 3,114 $ 3,149
Airframe Systems 658 701 803 785
Electrical Power Systems 13,925 13,300 11,745 9,176
Engine Systems 12,409 11,274 10,522 8,624
--------- --------- --------- ---------
Total $ 31,529 $ 28,747 $ 26,184 $ 21,734
========= ========= ========= =========
External net sales:
Turbine Systems $ 152,282 $ 164,571 $ 155,893 $ 145,204
Airframe Systems 51,660 50,909 106,873 109,567
Electrical Power Systems 47,917 45,221 57,320 44,542
Engine Systems 92,885 73,960 66,107 65,214
--------- --------- --------- ---------
Total $ 344,744 $ 334,661 $ 386,193 $ 364,527
========= ========= ========= =========
Segment earnings (losses):
Turbine Systems $ 33,244 $ 37,635 $ 33,263 $ 31,978
Airframe Systems 1,801 3,233 (5,990) 11,979
Electrical Power Systems 9,166 9,137 12,501 5,087
Engine Systems 7,586 4,882 3,912 2,074
--------- --------- --------- ---------
Total $ 51,797 $ 54,887 $ 43,686 $ 51,118
========= ========= ========= =========
Earnings reconciliation:
Total segment earnings $ 51,797 $ 54,887 $ 43,686 $ 51,118
Nonsegment expenses (7,803) (23,594) (6,126) (9,055)
Interest expense and income,
net (5,875) (6,486) (10,867) (9,270)
--------- --------- --------- ---------
Consolidated earnings before
income taxes $ 38,119 $ 24,807 $ 26,693 $ 32,793
========= ========= ========= =========
Note: The steam turbine product line was moved from Engine
Systems to Turbine Systems in the fourth quarter of 2009. Segment
information for all periods presented has been recast.
CONTACT: Robert F. Weber, Jr. Chief Financial Officer and
Treasurer 970-498-3112 Woodward Governor Company 1000 East Drake
Road Fort Collins, Colorado 80525, USA Tel: 970-482-5811 Fax:
970-498-3058
Woodward Governor Company (MM) (NASDAQ:WGOV)
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