Woodward Reports Record Fourth Quarter and Fiscal 1999 Results
17 November 1999
Woodward Reports Record Fourth Quarter and Fiscal 1999 Results
ROCKFORD, Ill.--Nov. 16, 1999--Woodward Governor Company today reported record financial results for the fourth fiscal quarter and year ended September 30, 1999. Earnings comparisons were strong for both periods, reflecting benefits from the second-quarter reorganization of Industrial Controls and the continued growth of Aircraft Engine Systems, boosted by the successful integration of Woodward FST.Net billings for products and services for the fourth fiscal quarter, historically the strongest of the year, were $168,349,000, up 5 percent from $159,777,000 a year ago. Net earnings totaled $15,482,000, or $1.37 per share, compared with $8,828,000, or $0.78 per share (all per-share amounts are diluted). Results for the latest quarter included an after-tax gain on the sale of real estate of $1,153,000, or $0.10 per share. Excluding the gain, earnings for the quarter were $14,329,000, or $1.27 per share.
Net billings for the full fiscal year rose 22 percent to $596,904,000 from $490,476,000, primarily reflecting contributions from Woodward FST, acquired in June 1998. Net earnings were $30,829,000, or $2.73 per share, up 43 percent from $21,592,000 a year ago, or $1.90 per share. Results for fiscal 1999 included restructuring expense of $0.42 per share and gains from sales of real estate in the second and fourth quarters totaling $0.15 per share. Without the restructuring expense and gains on sales of real estate, earnings for the year would have been $3.00 per share. These results were achieved despite initially challenging conditions in the company's industrial markets in Asia and in the oil and gas industry, as well as continued development spending on new products for small industrial engines.
John A. Halbrook, chairman and chief executive officer, commented, "This year's results reinforces my optimism about the future. Industrial Controls will continue to benefit from its streamlined cost structure and from growing recognition of its capabilities by engine OEMs. In addition, our Six Sigma and other operational improvement initiatives will support Woodward's longer-term objective to become an increasingly valuable contributor to our customers' competitiveness, enabling us to further build revenues, profitability, and shareholder value."
As a result of a change in its internal organization in March 1999, and in accordance with Statement of Financial Accounting Standards No. 131, Woodward has modified and expanded its reporting by business segment. Aircraft Engine Systems provides fuel control systems and components primarily to original equipment manufacturers of aircraft engines. Industrial Controls provides fuel control systems and components primarily to original equipment manufacturers of industrial engines and turbines. Other operations include Global Services, which provides controls systems and related services to industrial engine users in retrofit situations, and Automotive Products, which is developing products for small industrial engines. Information for the segments will be shown in the fiscal 1999 Annual Report and Form 10-K. The table below provides segment information for external net billings and segment earnings (losses) for fiscal 1999. Comparative information for fiscal 1998 is available and shown for Aircraft Engine Systems; comparative information is not available for the reorganized Industrial Controls or other operations.
Woodward provides innovative engine controls and fuel delivery systems designed for a wide variety of applications. Serving global markets from locations worldwide, Woodward is a leading producer of fuel control systems and components for aircraft and industrial engines and turbines. The company's products and services are used in aviation, marine, automotive, locomotive, large off-road vehicle, power generation, gas generation, and oil and gas process industries.
The statements in this release concerning the company's billings, business performance, and prospects reflect current expectations and are forward-looking statements that involve risks and uncertainties. Actual results could differ materially from projections or any other forward-looking statement. Factors which could affect performance and could cause actual results to differ materially from projections and forward-looking statements are described in Woodward's Annual Report and Form 10-K for the year ended September 30, 1998, Form 10-Q for the periods ended December 31, 1998, March 31, 1999, and June 30, 1999, and in the Annual Report and Form 10-K for the year ended September 30, 1999 (expected to be available by the end of calendar 1999).
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SCHEDULE OF SELECTED SEGMENT INFORMATION
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For the year ended September 30,
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(In thousands) 1999 1998
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External net billings:
Aircraft Engine Systems $325,915 $234,173
Industrial Controls 191,568 207,403
Other 79,421 48,900
Segment earnings (losses):
Aircraft Engine Systems $ 57,752 $ 39,202
Industrial Controls 36,008 NA
Other (3,541) NA
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Segment earnings (losses) reflected in the table above do not
reflect restructuring expense, interest, corporate expenses, and
income taxes. Segment earnings (losses) is not available for
Industrial Controls and other operations on a comparable basis in 1998
and has been marked "NA". On a combined basis, net segment earnings
for Industrial Controls and other operations were $21,680 in 1998.
Woodward Governor Company and Subsidiaries
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S T A T E M E N T S O F C O N S O L I D A T E D E A R N I N G S
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Three months Year ended
ended September 30, ended September 30,
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(In thousands except per
share amounts) 1999 1998 1999 1998
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Net billings for products
and services $168,349 $159,777 $596,904 $490,476
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Costs and expenses:
Cost of goods sold 119,297 114,994 437,121 356,802
Sales, general, and
administrative expenses 19,432 21,546 79,043 79,332
Amortization of
intangible assets 1,665 1,506 6,769 2,927
Restructuring expense (285) - 7,889 -
Interest expense 3,367 3,424 12,746 5,227
Interest income (134) (167) (827) (708)
Other expense--net (1,095) 2,534 865 5,550
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Total costs and
expenses 142,247 143,837 543,606 449,130
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Earnings before income
taxes and equity in
loss of unconsolidated
affiliate 26,102 15,940 53,298 41,346
Income taxes 10,312 6,563 21,182 16,726
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Earnings before equity
in loss of unconsolidated
affiliate 15,790 9,377 32,116 24,620
Equity in loss of
unconsolidated affiliate,
net of tax 308 549 1,287 3,028
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Net earnings $ 15,482 $ 8,828 $ 30,829 $ 21,592
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Basic earnings per share $ 1.37 $ .78 $ 2.74 $ 1.90
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Diluted earnings per
share $ 1.37 $ .78 $ 2.73 $ 1.90
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Weighted average number
of basic shares
outstanding 11,264 11,395 11,272 11,340
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Weighted average number
of diluted shares
outstanding 11,231 11,422 11,292 11,379
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C O N D E N S E D C O N S O L I D A T E D B A L A N C E S H E E T S
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At September 30,
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(In thousands) 1999 1998
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Assets
Total current assets $247,444 $247,043
Property, plant, and equipment, net 124,122 130,052
Intangibles, net 156,802 162,229
Other assets 4,287 4,540
Deferred income taxes 18,009 19,571
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Total assets $550,664 $563,435
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Liabilities and shareholders' equity
Total current liabilities $123,052 $127,537
Long-term debt, less current portion 139,000 175,685
Other liabilities 46,620 40,111
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Total liabilities 308,672 343,333
Shareholders' equity 241,992 220,102
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Total liabilities and shareholders' equity $550,664 $563,435
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