Woodward, Inc. 10-K Summary: Fiscal Year Ended September 30, 2002
Business Context and Reporting Period
This Form 10-K covers the fiscal year ended September 30, 2002, for Woodward Governor Company (Woodward, Inc.). Headquartered in Rockford, Illinois, the company designs, manufactures, and services energy control systems and components for aircraft and industrial engines, turbines, and power equipment. Operations are organized into two reportable segments: Industrial Controls and Aircraft Engine Systems. The company serves global markets, with General Electric Company identified as the largest customer for both segments (35% of Industrial Controls sales and 26% of Aircraft Engine Systems sales in 2002).
Key Financial Metrics
Note: Specific revenue, profit, cash flow, and margin figures are incorporated by reference from the 2002 Annual Report and are not explicitly detailed in the provided text. The following metrics are available from the filing text:
- Research and Development (R&D): $36.7 million in 2002 (compared to $30.4 million in 2001 and $29.1 million in 2000).
- Allowance for Doubtful Accounts: Ended the year at $2.716 million (down from $4.720 million at the beginning of the year).
- Backlog Orders (as of October 31, 2002):
- Industrial Controls: $74 million (94% expected to be filled by September 30, 2003).
- Aircraft Engine Systems: $136 million (81% expected to be filled by September 30, 2003).
- Employees: Approximately 3,329 as of October 31, 2002.
- Stock Outstanding: 11,334,146 shares of common stock as of November 19, 2002.
- Market Value: Approximately $365.3 million for voting stock held by non-affiliates as of November 20, 2002.
Material Changes and Operational Updates
- Acquisitions: During 2002, the company acquired Leonard-Reglerbau Dr.-Ing. Adolf Leonhard GmbH and Nolff's Carburetion, Inc. to enhance technological capabilities in the Industrial Controls segment.
- Backlog Trends: Total backlog decreased from the prior year. Industrial Controls backlog fell from $96 million (Oct 2001) to $74 million (Oct 2002). Aircraft Engine Systems backlog fell from $177 million (Oct 2001) to $136 million (Oct 2002).
- Management Changes: Thomas A. Gendron was elected President and Chief Operating Officer in September 2002.
- Customer Concentration: Continued high reliance on General Electric Company, which accounted for significant portions of sales in both segments.
Outlook, Risks, and Contingencies
Management Commentary and Outlook: Management believes the company holds a strong competitive position among independent manufacturers, competing on price, quality, and service. There is increasing demand for products that reduce environmental emissions, particularly in gas turbine applications. The company expects to fill the majority of its current backlog by September 30, 2003.
Risks and Contingencies:
- Legal Proceedings: The company is involved in environmental litigation and other matters arising from the normal course of business. While management does not believe compliance with environmental regulations will materially affect financial condition, such matters could impact quarterly or annual operating results and cash flows.
- Market Risks: Disclosures regarding market risks are incorporated by reference from the Annual Report.
- Forward-Looking Statements: The filing contains forward-looking statements subject to risks and uncertainties detailed in the "Cautionary Statement" of the 2002 Annual Report.
Investor Verification Checklist
- Verify the specific revenue, net income, and cash flow figures in the 2002 Annual Report to Shareholders (incorporated by reference), as these are not explicitly listed in the 10-K text provided.
- Review Note Q of the Consolidated Financial Statements (page 41 of the Annual Report) for details on environmental litigation and potential financial exposure.
- Examine the Segment Information in Note S of the Annual Report (pages 42-43) for a detailed breakdown of revenue and operating income by Industrial Controls and Aircraft Engine Systems.
- Confirm the impact of the acquisitions (Leonard-Reglerbau and Nolff's) on future growth and integration costs.
- Monitor the backlog conversion rate to ensure the projected fill rates (94% for Industrial, 81% for Aircraft) are met in the upcoming fiscal year.