FORT COLLINS, CO -- (Marketwire - July 28, 2010) - Woodward Governor Company (NASDAQ: WGOV) today reported financial results for its third quarter of fiscal year 2010. (All per share amounts are presented on a fully diluted basis.)
Quarterly Highlights
- -- Net sales for the third quarter of fiscal 2010 were $356.4 million,
a decrease of 8 percent from $386.2 million in the third quarter of
last year.
- -- Earnings per share(1) were $0.45 for the quarter as compared with $0.36
for the same quarter last year. Special items were included in the
results for both periods, as shown in the table below.
- -- Total EBIT(2) for the quarter was $44.9 million compared to $37.4
million in the third quarter of the prior year, which included
special items as shown in the table below.
- -- Free cash flow (defined as cash provided by operating activities less
capital expenditures) for the third quarter of 2010 was $30.9 million.
"Sales in our Turbine, Airframe and Engine Systems business segments improved sequentially this quarter, while orders in our Electrical Power Systems segment for deliveries beginning in the fourth quarter increased substantially," said Thomas A. Gendron, Chairman and Chief Executive Officer. "During the quarter, we saw increasing evidence of the effectiveness of our strategies as contract awards increased Woodward's content and share with customers, and important programs advanced through the development and production phases."
Net sales for the fiscal 2010 third quarter were $356.4 million, a decrease of 8 percent from $386.2 million for the 2009 third quarter. Foreign currency exchange rates had an unfavorable impact on net sales of approximately $4 million for the 2010 third quarter.
Special Items
2010 Three Months Nine Months
Ended Ended
6/30/10 6/30/10
------------------------- -------------------------
Pre-tax Tax EPS Pre-tax Tax EPS
(Charge) Benefit Effect (Charge) Benefit Effect
------- -------- ------- ------- -------- -------
Tax Adjustments 6,416 0.09 6,416 0.09
NOTE: Of the $0.09 in special tax items, $0.04 was anticipated and included
in our previous guidance.
2009 Three Months Nine Months
Ended Ended
6/30/09 6/30/09
------------------------- -------------------------
Pre-tax Tax EPS Pre-tax Tax EPS
(Charge) Benefit Effect (Charge) Benefit Effect
------- -------- ------- ------- -------- -------
Restructuring,
Inventory
Write-downs,
and Other Charges (16,605) (0.16)
Purchase Accounting -
Inventory (12,500) (0.12) (12,500) (0.12)
Favorable Resolution
- Tax Issues 4,992 0.07 0.07
------- -------
Total (0.05) (0.21)
Net earnings(1) for the 2010 third quarter were $31.7 million, or $0.45 per share, compared with $25.0 million, or $0.36 per share, in the 2009 third quarter. Included in this quarter were $6.4 million of tax benefits, or $0.09 per share, of which $2.7 million or $0.04 per share were anticipated and included in our previous guidance. Earnings per share for the current quarter, adjusted only for the remaining $3.7 million unanticipated favorable tax benefits, were $0.40 per share. Earnings per share were $0.36 after adjusting for all special tax benefits occurring in the quarter. Earnings per share for the prior year quarter adjusted for special items were $0.41.
EBIT was $44.9 million for the third quarter of 2010 compared to $37.4 million for the third quarter of 2009, which included $12.5 million of pre-tax special items as noted in the table above. The current quarter EBIT was significantly impacted by sales volume declines across almost all reported business segments, partially offset by favorable selling price and mix impacts together with savings resulting from cost reduction actions primarily taken in 2009. Foreign currency exchange rates had a minor impact on EBIT for the 2010 third quarter.
Quarterly Segment Results
Turbine Systems
Turbine Systems' segment net sales for the third quarter of fiscal 2010, which include intersegment sales, were $151.2 million, a decrease of 5 percent from $159.0 million for the third quarter a year ago. Segment earnings for the third quarter of 2010 increased to $35.9 million from $33.3 million for the same quarter a year ago. Segment earnings as a percent of segment net sales were 23.8 percent this quarter compared to 20.9 percent in the same quarter of the prior year.
While aerospace sales increased during the quarter, the increase was more than offset by sales declines in our industrial gas turbine products. Segment earnings benefitted from a favorable sales mix, partially offset by the decline in volumes.
Airframe Systems
Airframe Systems' segment net sales for the third quarter of fiscal 2010, which include intersegment sales, were $94.1 million, a decrease of 13 percent from $107.7 million in the third quarter a year ago. Segment earnings for this quarter were $2.9 million compared to a loss of $6.0 million in the third quarter of 2009. Segment earnings as a percent of segment net sales were 3.0 percent this quarter compared to the loss reported in the same quarter for the prior year. Excluding the $12.5 million special item for purchase accounting noted above, segment earnings in the third quarter of 2009 were $6.5 million, or 6.0 percent of sales.
Net sales for Airframe Systems reflect volume declines in most of the segment's product lines, as well as the effect of the August 2009 sale of the Fuel and Pneumatics product line. The 2009 third quarter included a $12.5 million special charge for the amortization of the purchase accounting step-up in inventory as shown in the table above. After adjusting for this special charge, segment earnings declined as a result of the decline in volumes and the sale of the Fuel and Pneumatics product line, partially offset by cost controls.
Electrical Power Systems
Electrical Power Systems' segment net sales for the third quarter of fiscal 2010, which include intersegment sales, were $47.3 million, a decrease of 32 percent from $69.1 million for the third quarter a year ago. Segment earnings for this quarter were $3.1 million compared to $12.5 million for the same quarter last year. Segment earnings as a percent of segment net sales were 6.5 percent this quarter compared to 18.1 percent in the same quarter for the prior year.
Sales declines were tied to continued weakness in wind converter deliveries, which appear to have reached the bottom of the cycle with orders for fourth quarter deliveries up significantly. Foreign currency exchange rates contributed approximately $3 million of negative sales impact. Segment earnings largely reflected the decreased volumes.
Engine Systems
Engine Systems' segment net sales for the third quarter of fiscal 2010, which include intersegment sales, were $86.1 million compared to $76.6 million for last year's third quarter, an increase of 12 percent. Segment earnings for this quarter increased to $9.1 million from $3.9 million for the same period a year ago. Segment earnings as a percent of segment net sales were 10.6 percent this quarter compared to 5.1 percent in the same quarter last year.
Sales related to short-cycle engine products supporting construction and transportation markets continued to improve but were partially offset by declines in sales for large engine applications in the marine and power generation markets. Segment earnings improved due to the increased volumes and cost controls.
Nonsegment
Nonsegment expenses totaled $6.1 million for the third quarter of fiscal 2010, compared to $6.3 million for the same quarter last year. Nonsegment expenses were 1.7 percent of net external sales for the third quarter of 2010 compared to 1.6 percent in the prior year quarter.
Year-to-Date Results
Net sales for the first nine months of fiscal 2010 were $1.045 billion, a decrease of 2 percent from $1.066 billion from the nine-month period last year. Organic net sales for the first nine months of 2010 were $927.7 million, down 13 percent from $1.066 billion in the first nine months of 2009.
Net earnings for the first nine months of 2010 were $78.2 million, or $1.12 per share, compared with $70.5 million, or $1.02 per share, in the same period last year. Earnings per share for the first nine months of 2010, adjusted for special tax benefits not anticipated in our original guidance, were $1.07. Earnings per share for the first nine months were $1.03 after adjusting for all special tax benefits occurring in the quarter. Earnings per share for the prior year period, adjusted for special items were $1.23. Foreign currency exchange rates had a favorable impact of approximately 1 percent on net sales and approximately $0.01 per share on net earnings for the first nine months of 2010.
Year-to-date EBIT was $127.6 million compared to $112.8 million in the same period of the prior year. Adjusting for special charges (highlighted in the table above) and acquisition impacts, EBIT in the first nine months of 2010 was $113.2 million, compared to $141.9 million in the first nine months of 2009.
Cash Flow and Financial Position
Net cash generated from operating activities increased to $161.6 million for the nine-month period of fiscal 2010 compared with $115.7 million for the first nine months of 2009. Free cash flow was $142.8 million the first nine months of 2010 compared to $97.8 million for the same period of 2009. Capital expenditures for the nine-month period were $18.8 million compared with $17.9 million for the first nine months of last year.
During the nine months ended June 30, 2010, total debt was reduced by $118.7 million. As a result, the ratio of debt-to-debt-plus-equity was 37.7 percent at June 30, 2010 compared to 44.6 percent at September 30, 2009.
Outlook
"Customer orders continue to increase across all of our business segments, and we look forward to closing the fiscal year with substantial sequential sales improvement," added Mr. Gendron. "As a result, and largely consistent with our previous guidance, we expect net sales to be approximately $1.44 billion and reported diluted earnings per share to be approximately $1.56, including the special tax items recorded in our third quarter of this year."
Non-U.S. GAAP Financial Measures: EBIT (earnings before interest and taxes), EBITDA (earnings before interest, taxes, depreciation and amortization) and free cash flow are financial measures not prepared and presented in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). Management uses EBIT to evaluate Woodward's performance without financing and tax related considerations, as these elements may not fluctuate with operating results. Management uses EBITDA in evaluating Woodward's operating performance, making business decisions, including developing budgets, managing expenditures, forecasting future periods, and evaluating capital structure impacts of various strategic scenarios. Management uses free cash flow, which is derived from cash flows provided by operating activities, in reviewing the financial performance of Woodward's various business segments and evaluating cash levels. Securities analysts, investors, and others frequently use EBIT, 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. The use of these non-U.S. GAAP financial measures is not intended to be considered in isolation of, or as a substitute for, the financial information prepared and presented in accordance with U.S. GAAP. As EBIT and EBITDA exclude certain financial information compared with net income, the most comparable U.S. GAAP financial measure, users of this financial information should consider the information that is excluded. Free cash flow does not necessarily represent funds available for discretionary use and is not necessarily a measure of our ability to fund our cash needs. Management's calculations of EBIT, EBITDA and free cash flow may differ from similarly titled measures used by other companies, limiting their usefulness as comparative measures.
(1) Represents net earnings or earnings per share (as applicable) attributable to Woodward Governor Company (i.e., excluding any non-controlling interests).
(2) EBIT is defined as net earnings attributable to both Woodward Governor Company and any non-controlling interest before interest and taxes.
(3) Organic net sales or organic EBIT refer to financial information of Woodward businesses excluding the appropriate impacts of the April 3, 2009 acquisition of the HR Textron ("HRT") business. HRT is now part of the Airframe Systems business segment.
Conference Call
Woodward will hold an investor conference call at 4:30 p.m. EDT on Wednesday, July 28, 2010 to provide an overview of the financial performance for the three- and nine-month periods, business highlights, and outlook for the remainder of 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 1-866-253-6509 (domestic) or 1-703-639-1208 (international). Participants should call prior to the start time to allow for registration; the Conference ID is 1469705. An audio replay will be available by telephone from 8:00 p.m. EDT on July 28, 2010 until 11:59 p.m. EDT on August 2, 2010. The telephone number to access the replay is 1-888-266-2081 (domestic) or 1-703-925-2533 (international), reference access code 1469705.
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 and defense, 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 and electrical energy and combustion 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; any failure to fully comply, to the U.S. Government's satisfaction, with any of the terms of the civil and criminal settlements related to the U.S. Department of Justice's prior 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 manage its expenses relative to sales; 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 any limitations regarding its ability to operate its business and pursue business strategies and incur additional debt in 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, 2009, and any subsequently filed Quarterly Report on Form 10-Q.
Woodward Governor Company and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
Three Months Ended Nine Months Ended
June 30, June 30,
------------------------ ------------------------
(Unaudited - in
thousands except per
share amounts) 2010 2009 2010 2009
----------- ----------- ----------- -----------
Net sales $ 356,367 $ 386,193 $ 1,045,027 $ 1,065,598
----------- ----------- ----------- -----------
Costs and expenses:
Cost of goods sold 249,966 287,094 733,834 766,919
Selling, general, and
administrative
expenses 31,394 33,182 98,359 94,735
Research and
development costs 21,419 20,676 59,431 58,556
Amortization of
intangible assets 8,635 8,286 26,471 18,169
Restructuring and
other charges - - - 15,159
Interest expense 6,949 10,886 22,524 24,130
Interest income (97) (19) (327) (902)
Other income (7) (606) (834) (975)
Other expense 56 137 209 237
----------- ----------- ----------- -----------
Total costs and
expenses 318,315 359,636 939,667 976,028
----------- ----------- ----------- -----------
Earnings before income
taxes 38,052 26,557 105,360 89,570
Income taxes (6,187) (1,696) (26,873) (19,084)
----------- ----------- ----------- -----------
Net earnings 31,865 24,861 78,487 70,486
Net losses (earnings)
attributable to
noncontrolling
interests, net of tax (120) 136 (318) 49
----------- ----------- ----------- -----------
Net earnings
attributable to
Woodward $ 31,745 $ 24,997 $ 78,169 $ 70,535
=========== =========== =========== ===========
Earnings per share
amounts:
Basic earnings per
share attributable to
Woodward $ 0.46 $ 0.37 $ 1.14 $ 1.04
Diluted earnings per
share attributable to
Woodward $ 0.45 $ 0.36 $ 1.12 $ 1.02
=========== =========== =========== ===========
Weighted average common
shares outstanding:
Basic 68,489 67,875 68,428 67,831
Diluted 69,987 69,012 69,871 69,050
=========== =========== =========== ===========
Cash dividends per
share paid to Woodward
common stockholders $ 0.060 $ 0.060 $ 0.180 $ 0.180
=========== =========== =========== ===========
Woodward Governor Company and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, September 30,
(Unaudited - in thousands) 2010 2009
------------ ------------
Assets
Current assets:
Cash and cash equivalents $ 78,708 $ 100,863
Accounts receivable 195,453 209,626
Inventories 289,655 302,339
Income taxes receivable 8,185 16,302
Deferred income tax assets 39,842 45,413
Other current assets 22,245 21,701
------------ ------------
Total current assets 634,088 696,244
Property, plant, and equipment-net 187,497 208,885
Goodwill 436,144 442,802
Intangible assets - net 300,133 327,773
Deferred income tax assets 7,259 8,200
Other assets 12,467 12,518
------------ ------------
Total assets $ 1,577,588 $ 1,696,422
============ ============
Liabilities and stockholders' equity
Current liabilities:
Short-term borrowings $ - $ -
Current portion of long-term debt 18,488 45,569
Accounts payable 93,622 81,108
Income taxes payable 4,847 8,084
Accrued liabilities 94,171 127,317
------------ ------------
Total current liabilities 211,128 262,078
Long-term debt, less current portion 435,174 526,771
Deferred income tax liabilities 81,068 86,048
Other liabilities 101,186 110,010
------------ ------------
Total liabilities 828,556 984,907
Stockholders' equity 749,032 711,515
------------ ------------
Total liabilities and stockholders' equity $ 1,577,588 $ 1,696,422
============ ============
Woodward Governor Company and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended
June 30,
------------------------
(Unaudited - in thousands) 2010 2009
----------- -----------
Net cash provided by operating activities $ 161,609 $ 115,732
----------- -----------
Cash flows from investing activities:
Business acquisitions, net of cash acquired (25,000) (749,844)
Payments for purchase of property, plant, and
equipment (18,834) (17,915)
Proceeds from sale of other assets 268 4,338
Working capital adjustment on disposal of Fuel
and Pneumatics product line 660 -
----------- -----------
Net cash used in investing activities (42,906) (763,421)
----------- -----------
Cash flows from financing activities:
Cash dividends paid (12,971) (12,783)
Proceeds from sales of treasury stock 2,709 1,646
Purchases of treasury stock (2,383) -
Excess tax benefits from stock compensation 1,588 278
Purchase of noncontrolling interest (8,120) -
Proceeds from issuance of long-term debt - 620,000
Payments of long-term debt (118,492) (14,833)
Borrowings on revolving lines of credit and
short-term borrowings 71,653 140,293
Payments on revolving lines of credit and
short-term borrowings (71,653) (101,324)
Payment of long-term debt assumed in MPC
acquisition - (18,610)
Payment for cash flow hedge - (1,308)
Debt issuance costs - (5,602)
----------- -----------
Net cash provided by (used in) financing
activities (137,669) 607,757
----------- -----------
Effect of exchange rate changes on cash and cash
equivalents (3,189) (2,345)
----------- -----------
Net change in cash and cash equivalents (22,155) (42,277)
Cash and cash equivalents at beginning of period 100,863 109,833
----------- -----------
Cash and cash equivalents at end of period $ 78,708 $ 67,556
=========== ===========
Woodward Governor Company and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
Three Months Ended Nine Months Ended
June 30, June 30,
------------------------ ------------------------
(Unaudited - in
thousands) 2010 2009 2010 2009
----------- ----------- ----------- -----------
Segment net sales *:
Turbine Systems $ 151,168 $ 159,007 $ 440,697 $ 483,869
Airframe Systems 94,127 107,676 276,727 211,604
Electrical Power
Systems 47,280 69,065 158,610 189,428
Engine Systems 86,066 76,629 232,168 267,157
----------- ----------- ----------- -----------
Total segment net sales $ 378,641 $ 412,377 $ 1,108,202 $ 1,152,058
=========== =========== =========== ===========
Intersegment net sales:
Turbine Systems $ (2,545) $ (3,114) $ (7,144) $ (11,123)
Airframe Systems (609) (803) (1,900) (2,162)
Electrical Power
Systems (11,133) (11,745) (29,918) (38,970)
Engine Systems (7,987) (10,522) (24,213) (34,205)
----------- ----------- ----------- -----------
Total consolidated net
sales $ 356,367 $ 386,193 $ 1,045,027 $ 1,065,598
=========== =========== =========== ===========
Segment earnings**:
Turbine Systems $ 35,934 $ 33,263 $ 100,363 $ 104,142
As a percent of segment
sales 23.8% 20.9% 22.8% 21.5%
Airframe Systems 2,852 (5,990) 10,237 (956)
As a percent of segment
sales 3.0% -5.6% 3.7% -0.5%
Electrical Power
Systems 3,072 12,501 15,254 30,804
As a percent of segment
sales 6.5% 18.1% 9.6% 16.3%
Engine Systems 9,131 3,912 18,513 16,380
As a percent of segment
sales 10.6% 5.1% 8.0% 6.1%
----------- ----------- ----------- -----------
Total segment earnings 50,989 43,686 144,367 150,370
Nonsegment expenses (6,085) (6,262) (16,810) (37,572)
----------- ----------- ----------- -----------
EBIT 44,904 37,424 127,557 112,798
Interest expense and
income, net (6,852) (10,867) (22,197) (23,228)
----------- ----------- ----------- -----------
Consolidated earnings
before income taxes $ 38,052 $ 26,557 $ 105,360 $ 89,570
=========== =========== =========== ===========
Capital expenditures $ 4,698 $ 2,561 $ 18,834 $ 17,915
Depreciation expense 9,826 9,422 29,984 27,897
=========== =========== =========== ===========
*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 EBIT AND EBITDA
Three Months Ended Nine Months Ended
June 30, June 30,
-------------------- --------------------
(Unaudited - in thousands) 2010 2009 2010 2009
--------- --------- --------- ---------
Net earnings $ 31,865 $ 24,861 $ 78,487 $ 70,486
Income taxes 6,187 1,696 26,873 19,084
Interest expense 6,949 10,886 22,524 24,130
Interest income (97) (19) (327) (902)
--------- --------- --------- ---------
EBIT 44,904 37,424 127,557 112,798
Amortization of intangible
assets 8,635 8,286 26,471 18,169
Depreciation expense 9,826 9,422 29,984 27,897
--------- --------- --------- ---------
EBITDA $ 63,365 $ 55,132 $ 184,012 $ 158,864
========= ========= ========= =========
EBIT $ 44,904 $ 37,424 $ 127,557 $ 112,798
Less: HRT operating income (a) - - (14,397) -
--------- --------- --------- ---------
ORGANIC EBIT $ 44,904 $ 37,424 $ 113,160 $ 112,798
========= ========= ========= =========
(a)As HRT was acquired at the beginning of our fiscal third quarter of
2009, "organic" comparisons between the three months ended June 30, 2010
and June 30, 2009 are not applicable.
EBIT (earnings before interest and taxes) and EBITDA (earnings before interest, taxes, depreciation, and amortization) are non-U.S. GAAP financial measures. Management uses EBIT to evaluate Woodward's performance without financing and tax related considerations, as these elements may not fluctuate with operating results. Management uses EBITDA in evaluating Woodward's operating performance, making business decisions, including developing budgets, managing expenditures, forecasting future periods, and evaluating capital structure impacts of various strategic scenarios. Securities analysts, investors, and others frequently use EBIT and EBITDA in their evaluation of companies, particularly those with significant property, plant, and equipment, and intangible assets that are subject to amortization. The use of these non-U.S. GAAP financial measures is not intended to be considered in isolation of, or as a substitute for, the financial information prepared and presented in accordance with U.S. GAAP. As EBIT and EBITDA exclude certain financial information compared with net income, the most comparable U.S. GAAP financial measure, users of this financial information should consider the information that is excluded. Management's calculations of EBIT and EBITDA may differ from similarly titled measures used by other companies, limiting their usefulness as comparative measures.
Woodward Governor Company and Subsidiaries
RECONCILIATION OF CASH FLOW FROM OPERATIONS TO FREE CASH FLOW
Nine Months Ended
June 30,
------------------------
(Unaudited - in thousands) 2010 2009
----------- -----------
Net cash provided by operating activities $ 161,609 $ 115,732
Capital expenditures (18,834) (17,915)
----------- -----------
Free cash flow $ 142,775 $ 97,817
=========== ===========
Free cash flow is a non-U.S. GAAP financial measure. Management uses free cash flow, which is derived from cash flows provided by operating activities, in reviewing the financial performance of Woodward's various business segments and evaluating cash levels. 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. The use of this non-U.S. GAAP financial measure is not intended to be considered in isolation of, or as a substitute for, the financial information prepared and presented in accordance with U.S. GAAP. Free cash flow does not necessarily represent funds available for discretionary use and is not necessarily a measure of our ability to fund our cash needs. Management's calculation of free cash flow may differ from similarly titled measures used by other companies, limiting its usefulness as a comparative measure.
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