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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-K

FOR THE FISCAL YEAR ENDED OCTOBER 2, 2004

Commission file number 0-5971

WOODHEAD INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

(847) 236-9300

Registrants Telephone Number, including area code

SECURITIES REGISTERED PURSUANT TO SECTION 12 (g) OF THE ACT

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  ¨.

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. ¨

Indicate by a check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the act).    Yes  x.    No  ¨.

The aggregate market value of the voting stock held by non-affiliates of the Registrant as of March 27, 2004 was $185,915,317. The number of common shares outstanding as of December 1, 2004 was 12,207,274.

DOCUMENTS INCORPORATED BY REFERENCE

Certain information contained in the Proxy Statement for the Annual Meeting of Stockholders of

registrant to be held February 3, 2005 is incorporated by reference into Part III hereof.

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TABLE OF CONTENTS

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PART I

GENERAL

Woodhead Industries, Inc. (the Company, which may be referred to as “we”, “us”, or “our”) is engaged in two business segments serving a diverse group of customers and industries worldwide. We develop, manufacture and market network and electrical infrastructure products engineered for performance in harsh, demanding and hazardous industrial environments.

Where reference is made in any Item of this Annual Report on Form 10-K to information in the Proxy Statement for the Annual Meeting of Stockholders of the Company to be held on February 3, 2005, such information shall be deemed to be incorporated therein by such reference.

BUSINESS SEGMENTS

Our operating segments are based on the organization of business groups comprised of similar products and services. Revenues in our Industrial Communications and Connectivity Products Segment (Connectivity Segment) are primarily derived from sales of system components for devices in open networks for automated manufacturing and distribution applications. Revenues in our Electrical Safety & Industrial Products Segment (Electrical Segment) are primarily derived from sales of specialized products to support enhanced safety and productivity on the factory floor.

Selected financial information by business segment for each of the last three fiscal years is contained in Note 13 of the Notes to Consolidated Financial Statements.

PRODUCTS

Woodhead Industries develops, manufactures and markets network and electrical infrastructure products engineered for performance in harsh, demanding and hazardous industrial environments. We are known in the global industrial market by our recognized brands that include Brad Harrison^®, SST^™, Daniel Woodhead^®, mPm^®, applicom^®, Aero-Motive^® and RJ-Lnxx^®. Our expertise ranges from mechanical, electrical and electronics to communication software products and technologies.

Woodhead operates from 21 locations in 10 countries spanning North America, Europe and Asia/Pacific.

DISTRIBUTION

We sell our products to stocking distributors, original equipment manufacturers (OEM) and system integrators. Our direct sales force, as well as manufacturers’ agencies, service our customers and promote our products to end-customers.

RAW MATERIALS

Parts and materials for our products are readily available from a variety of suppliers. It has been our practice to develop more than one source of supply for critical items.

PATENTS AND INTELLECTUAL PROPERTY RIGHTS

We hold patents, trademarks and licensing agreements on certain of our products. We believe these trademarks and patents are valuable but not essential to the future growth of our businesses.

CUSTOMERS

We sell our products to a broad customer base. No single customer accounts for ten percent or more of our sales revenue.

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BACKLOG

The backlog of unfilled orders was $15.5 million, $16.0 million and $14.3 million at the end of fiscal years 2004, 2003 and 2002, respectively. The 2004 Connectivity segment backlog as compared to the prior year was up 5.7%. The Electrical segment recorded a 29.4% decrease in backlog when compared to fiscal 2003. This decrease was mainly due to the divestiture of an Aero-Motive product line in the first quarter of fiscal 2004.

COMPETITION

Similar products of the type sold by us are also available from competitors. We believe delivery time, as well as quality and customer service are important to our success. Our ability to manufacture high-quality products that serve specialized needs, as well as our multiple channels of distribution, differentiate us from the competition.

INTERNATIONAL OPERATIONS

A significant portion of our business is from outside the United States and fluctuations in foreign currency exchange rates can impact our results of operations and financial condition. Since most of our international manufacturing costs and operating expenses are incurred in local currencies, the impact of changes in exchange rates on reported net income is partially mitigated. Selected financial information by major geographical region for each of the last three fiscal years is contained in Note 13 of the Notes to Consolidated Financial Statements.

RESEARCH & DEVELOPMENT

Selected financial information related to research and development is contained in Note 12 of the Notes to Consolidated Financial Statements.

ENVIRONMENTAL MATTERS

Our operations are subject to international, federal, state and local environmental laws and regulations. We are party to an environmental matter, which obligates us to investigate, remediate, or mitigate the effects on the environment of the release of certain substances at one of our manufacturing facilities. It is possible that this matter could affect cash flows and results of operations. Additional details on the environmental exposure can be found in Note 16 of the Notes to Consolidated Financial Statements.

EMPLOYEES

At the end of fiscal year 2004 we had 1,558 full-time employees.

AVAILABILITY OF REPORTS

Our Internet Web site address is www.woodhead.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities and Exchange Act of 1934 are available free of charge through our Web site as soon as reasonably practicable after they are electronically filed with, or furnished to, the Securities and Exchange Commission.

FORWARD-LOOKING STATEMENTS

The Securities and Exchange Commission encourages companies to disclose forward-looking information, so that investors can better understand a company’s future prospects, and make informed investment decisions. This report, and other written and oral statements that we make from time to time, contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements set out anticipated results based on management’s plans and assumptions. We have tried, wherever possible, to identify such statements by using words such as “anticipate”, “estimate”, “expect”, “plan”, “believe”, and words and terms of similar substance, in connection with any discussion of future operating or financial performance.

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We cannot guarantee that any forward-looking statement will be realized, although we believe we have been prudent in our plans and assumptions. Achievement of future results is subject to risks, uncertainties, and inaccurate assumptions.

In particular, such risks include statements relating to future actions, prospective products, future performance or results of current or anticipated products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, general economic and business conditions, currency fluctuations, and competition.

International-based revenues and substantial international assets result in our exposure to currency exchange rate fluctuations. We continue to evaluate the economic and operational impact of all foreign currencies, including its impact on competition, pricing, and foreign currency exchange risks. There is no guarantee, however, that all problems have been foreseen and corrected, or that no material disruption will occur in our businesses.

Growth in costs and expenses, changes in product mix, and the impact of acquisitions, restructuring, divestitures and other unusual items that could result from evolving business strategies could affect future results. Changes in the U.S. tax code and the tax laws in other countries can affect our net earnings. Claims have been brought against us and our subsidiaries for various legal, environmental, and tax matters, and additional claims arise from time to time. It is possible that our cash flows and results of operations could be affected by the resolution of these matters.

Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could vary materially from those anticipated, estimated or projected. Investors should bear this in mind as they consider forward-looking statements.

This discussion of potential risks and uncertainties is by no means complete but is designed to highlight important factors that may impact our outlook. We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events, or otherwise.

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We own facilities in the following locations:

We own all of the above properties in fee, except the land in Ebbw Vale, UK, which is held under a lease expiring in 2105, and the land in Bretten, Germany, which is held under a lease expiring in 2046.

We lease the following properties for use in our operations. In addition to rent, the leases require us to pay directly for taxes, insurance, maintenance and other operating expenses or to pay higher rent when operating expenses increase.

We believe we have sufficient capacity available to meet our needs in fiscal year 2005.

Selected financial information related to current legal proceedings is contained in Note 16 of the Notes to Consolidated Financial Statements.

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During the fourth quarter of fiscal year 2004, which ended on October 2, 2004, there were no matters submitted to a vote of security holders either through solicitation of proxies or otherwise.

Executive Officers of the Registrant

All officers are elected each year at the Annual Meeting of the Board of Directors, which is held immediately following the Annual Meeting of Stockholders. The next Annual Meeting of Stockholders will be held on February 3, 2005. The name, age, executive office, position held since and principal occupation and employment during at least the past five years for each of our executive officers as of October 2, 2004, are as follows:

Mr. Philippe Lemaitre joined the Company in October 1999 as its President and Chief Operating Officer. On January 1, 2001, Mr. Lemaitre became the Company’s President and Chief Executive Officer and on August 1, 2003 he was appointed Chairman of the Board. Prior to joining the Company, he had served as Corporate Vice President, Chief Technology Officer at Amp, Inc. since 1997.

Mr. Robert H. Fisher joined Woodhead in December 2000 as Vice President, Finance and Chief Financial Officer. He previously served as Executive Vice President of Finance for Rockwell International’s Electronic Commerce group from 1998 to 2000. Before that he was Vice President of Finance for US Robotics/3 Com’s Personal Communication business, and Vice President/Controller for Zenith Electronics Corporation.

Mr. Michael H. Gies joined Woodhead in January 2000 as Vice President, Marketing and Product Development, Daniel Woodhead Company. He was appointed President, Aero-Motive Company in February 2002. In January 2003 he was elected a Corporate Vice President and Executive Vice President, Global Marketing, Connectivity. In August 2003 he was appointed Vice President, Corporate Development and Strategy. He previously served as Manager, Transportation Industry Cinch, North American Group, Labinal Inc. from 1995 to 2000.

Mr. Robert A. Moulton joined Woodhead in October 1986 as Manager, Human Resources and was elected Vice President in May 1987. He previously served as Director, Personnel at G.D. Searle and Company from 1981 to 1986.

Mr. Joseph P. Nogal became Woodhead’s Treasurer/Controller in January 1991. He was elected Assistant Secretary in July 1993, and was elected Vice President, Treasurer/Controller in January 1999. He previously served as Controller at Woodhead Canada Limited.

Mr. Robert J. Tortorello became our General Counsel and Secretary in June 1987. He was elected Corporate Vice President in January 1991. He previously served as Assistant Vice President and Assistant to the Chairman at Beatrice Companies, Inc. from 1986 to 1987.

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Mr. Duane E. Wiedor joined Woodhead in April 2001 as President, Aero-Motive Company. In February 2002 he was appointed President, Woodhead Connectivity, N. A. and North American Operations. In January 2003 he was elected a Corporate Vice President and Executive Vice President, Woodhead Connectivity, N. A. In October 2004 he became Executive Vice President, Woodhead North America. He previously served as Business Development Manager/Production Manager at Tessy Plastics Incorporated from 1998 to 2001.

PART II

Selected information regarding the company’s common equity and related stockholder matters is contained in Note 19 of the Notes to Consolidated Financial Statements.

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The following Financial Profile sets forth selected consolidated financial data for our operations. The data should be read in conjunction with the Management Discussion and Analysis of Financial Condition and Results of Operations and the Financial Statements. The consolidated statement of operations data for each of the last five fiscal years, the related consolidated balance sheet data and other data have been derived from our audited consolidated financial statements.

Financial Profile

(Amounts in thousands; except per share data, employees and stockholders)

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Results of Operations 2004, 2003 and 2002

Woodhead Industries develops, manufactures and markets network and electrical infrastructure products engineered for performance in demanding, harsh or hazardous environments. We are known in the global industrial market by our recognized brands which include Brad Harrison^®, SST^™, Daniel Woodhead^®, mPm^®, applicom^®, Aero-Motive^® and RJ-Lnxx^®. Our expertise extends from mechanical, electrical and electronics products to communication software products and technologies.

Woodhead operates from twenty-one locations in ten countries spanning North America, Europe and Asia/Pacific.

Sales

Our sales increased 12.7% in fiscal 2004 when compared to 2003. Sales increased year-over-year 5.2% in fiscal year 2003 but declined 10.5% in fiscal year 2002.

Total revenue for fiscal year 2004 was $201.7 million compared to $179.0 million in fiscal 2003, a 12.7% increase. Sales increased mainly due to the implementation of several sales, marketing and engineering initiatives that we initiated in early 2004 and the strengthening business climate in both the U.S. and international manufacturing markets. Also contributing to the increase were the positive effects from changes in exchange rates, which accounted for $8.9 million or 5.0 points of the increase, and an additional week of operations this fiscal year due to our statistical calendar. Partially offsetting these increases were $4.4 million of lost revenue from the divestiture of two Aero-Motive product lines and $8.5 million of lost revenue from a North American OEM account in the data communication industry. We recorded sales improvements in all regions of the world. In constant dollars, sales increased in North America, Europe and Asia by 3.8%, 12.6% and 46.3%, respectively.

Connectivity segment sales were $147.0 million in fiscal 2004 compared to $126.3 million in fiscal 2003, a 16.4% increase. Favorable exchange rates accounted for $8.9 million of the increase and we experienced solid growth in Germany, Italy, Japan and France. This growth was partially offset by the lost revenue of a North American OEM account. Connectivity sales represented 72.9% of our total sales in fiscal 2004 compared to 70.6% in fiscal 2003.

Electrical segment sales were $54.7 million in fiscal 2004 compared to $52.7 million in fiscal 2003, a 3.7% increase. This increase was mainly due to the strong performance of our U.S. Electrical business, which was partially offset by the $4.4 million of lost revenue from the divestiture of two Aero-Motive product lines. Electrical sales represented 27.1% of our total sales in fiscal 2004 compared to 29.4% in fiscal 2003.

Sales volume in 2004 compared to 2003 was also negatively impacted by slightly lower selling prices (less than 1%), which resulted from reduced prices in the United States.

Sales activity in 2003 started to show improvement from the economic conditions that affected the U.S. and international manufacturing environments beginning in 2001. Total revenues for fiscal 2003 were $179.0 million compared to $170.2 million in fiscal 2002. This increase was all in our Connectivity segment, which had sales of $126.3 million in 2003, a 12.6% increase from fiscal 2002. The increase was mainly due to favorable exchange rates (a $9.0 million gain when compared to 2002) and improved performance in our European operations, primarily in the Physical Media and DIN product lines. Connectivity sales accounted for 70.6% of total revenue in 2003 and 65.9% in 2002.

Electrical segment sales were $52.7 million in 2003, a 9.1% decrease from fiscal 2002. This decrease was mainly due to the sale of our AKAPP operation, which accounted for $5.7 million of revenue in 2002. Electrical sales accounted for 29.4% of total sales in 2003 and 34.1% in 2002.

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Sales volume in 2003 compared to 2002 was also negatively impacted by slightly lower selling prices (less than 1%), which resulted from competitive market pressures.

Sales by Region

Sales to customers in the United States were $111.4 million, $107.3 million and $106.4 million in 2004, 2003 and 2002, respectively. Sales to customers outside the U.S. were $90.4 million in 2004, $71.7 million in 2003 and $63.8 million in 2002. European sales increased 26.1% in fiscal 2004 mainly due to the positive effects from changes in exchange rates and strong performance in Germany, Italy and France. Sales in 2004 to customers in Canada and the Far East increased by 14.0% and 56.9%, respectively. The increase in Canada was mainly due to the positive effects from changes in the Canadian dollar and the increase in our SST product line sales. In 2003 European sales increased 11% mainly due to the changes in the Euro exchange rate. In 2003 sales in Canada and the Far East also increased by 8% and 60%, respectively when compared to 2002.

We collected 45%, 40% and 38% of our revenue in foreign currencies during 2004, 2003 and 2002, respectively.

Backlog

The backlog of unfilled orders was $15.5 million, $16.0 million and $14.3 million at the end of 2004, 2003 and 2002, respectively. The 2004 Connectivity segment backlog as compared to the prior year was up 5.7% from $12.0 million in fiscal 2003 to $12.7 million in fiscal 2004. The Electrical segment backlog decreased from $4.0 million in fiscal 2003 to $2.8 million in fiscal 2004, a 29.4% decrease. This decrease was due to the divestiture of the Aero-Motive product line during 2004.

Gross Profit

In 2004 gross profit as a percent of sales increased to 37.7% from 36.9% in 2003. We are starting to show improvements in our gross margins as our operating efficiencies improve due to the increase in sales volume. Margin rates will continue to increase as our sourcing programs progress and our product mix improves. Partially offsetting these favorable improvements to gross margins were increases in commodity prices, reductions in selling prices (mainly in our North American operations), start-up costs associated with the Aero-Motive production move to Mexico and lower margins in the telecommunications market.

In 2003 gross profit as a percent of sales increased to 36.9% from 36.7% in 2002. This increase was mainly due to improved efficiencies and productivity improvements, particularly from the migration of production to our Juarez, Mexico facility. Also contributing to this increase in the gross profit level was a $0.7 million decrease in obsolescence expense. Partially offsetting these improvements were lower pricing, the shift in sales mix by location and lower margins in the telecommunications market.

Operating Expenses

Operating expenses as a percent of sales were 32.8% in 2004, 31.8% in 2003 and 32.0% in 2002. Operating expenses increased to $66.2 million in fiscal 2004 from $56.9 million in fiscal 2003, a 16.4% increase. Operating expenses, excluding the Aero-Motive restructuring charge, were $65.1 million in fiscal 2004 compared to $54.8 million in fiscal 2003, an 18.8% increase. The increase in operating expenses was driven by the planned growth initiatives in sales, marketing and engineering. Included in these growth initiatives was the hiring of additional experienced sales professionals in North America, a branding study to maximize the value of our brand names, the development of a new E-Catalog, the improvement of our marketing tools and programs to increase our customer awareness. Changes in exchange rates had a negative impact of $2.7 million on fiscal 2004 operating expenses and an additional week of operations due to our statistical calendar also contributed to the increase. Also contributing to the year-over-year increase was the modification of our retiree medical program. In fiscal 2004 this change resulted in a credit of $0.8 million compared to the credit of $1.5 million in fiscal 2003. The Aero-Motive restructuring program is now complete with charges in fiscal 2004 of $1.1 million compared to $2.1 million in fiscal 2003. Included in the 2004 restructuring charge was $0.4 million of pension settlement expense triggered by reduced employment levels that required us to recognize past gains and losses in our pension plan accounts.

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While operating expenses as a percent of sales decreased in 2003, the actual expenses increased to $56.9 million in 2003 from $54.5 million in 2002. The dollar increase was mainly due to the $2.1 million restructuring charge for the migration of our operations from our Aero-Motive subsidiary to Juarez, Mexico. Also contributing to the increase in operating expenses in 2003 was the $2.6 million negative impact from foreign exchange rate changes and the upgrading in the sales, marketing and engineering areas. Partially offsetting these increases were the $1.5 million credit to operating expense due to the modification of our retiree medical program, the non-recurrence of a restructuring charge for $1.0 million to account for severance and related costs to eliminate approximately 10% of our salaried positions worldwide in 2002 and the elimination of AKAPP operating expenses, which were $1.8 million.

Segment Operating Income

Income from operations in our Connectivity segment decreased to $4.6 million, or 3.1% of sales, in fiscal 2004 from $5.1 million, or 4.0% of sales, in fiscal 2003. This decrease was mainly due to a shift in product mix and the increase in operating costs from our growth initiatives. Income from operations in our Electrical segment increased to $6.6 million, or 12.0% of sales, in fiscal 2004 from $4.8 million, or 9.1% of sales, in fiscal 2003. The increase in the Electrical segment operating income was the result of our efforts to improve cost efficiencies and the decrease in the Aero-Motive restructuring charge to $1.1 million in fiscal 2004 from $2.1 million in fiscal 2003. Partially offsetting this increase was the $4.4 million of lost revenue from the divestiture of two Aero-Motive product lines.

Income from operations in our Connectivity segment increased to $5.1 million, or 4.0% of sales, in 2003 from $2.9 million, or 2.6% of sales, in 2002. This increase was mainly due to higher sales and lower obsolescence expense. A shift in sales mix and the weak telecommunications market partially offset these improvements. Income from operations in our Electrical segment declined to $4.8 million, or 9.1% of sales, from $5.8 million, or 9.9% of sales, in 2002. The decrease in our Electrical segment was mainly due to the $2.1 million restructuring charge for the Aero-Motive actions in 2003 and the $0.4 million from the AKAPP divestiture.

Interest (Income) / Expense

Interest expense was $2.5 million in 2004, $3.1 million in 2003 and $3.0 million in 2002 primarily for interest paid on our long-term debt incurred in connection with the mPm and SST acquisitions in 1998. The decrease in interest expense during fiscal 2004 was due to a $4.2 million reduction in our senior guaranteed notes, which occurred on September 30, 2003. The increase in interest expense in 2003 compared to 2002 was due to $0.3 million of interest paid on a value added tax ruling in Mexico.

Other (Income) / Expense

Other (income)/expense in 2004 was ($2.3) million compared to ($2.9) million in 2003. The 2004 income consisted mainly of a $1.2 million gain on the sale of the Aero-Motive government hose reel product line and a $1.0 million gain realized from exchange rate changes, due primarily to a U.S. Dollar denominated loan that our Canadian subsidiary used to acquire the assets of SST in early 1998.

Other (income)/expense in 2003 was ($2.9) million compared to ($0.1) million in 2002. The 2003 income consisted mainly of a $2.4 million gain realized from exchange rate changes on the U.S. Dollar denominated loan, a $0.8 million gain from the sale of the Aero-Motive workstation product line and $0.2 million of expense related to an adverse value added tax ruling in Mexico.

Income from Continuing Operations

Income from continuing operations was $8.0 million, or 4.0% of net sales, in 2004, $5.8 million, or 3.3% of net sales, in 2003 and $2.5 million, or 1.5% of net sales, in 2002. The 2004 increase in income from continuing operations was mainly due to increased revenue and improved margins, which was the result of improved operating efficiencies in both our Connectivity and Electrical segments and a lower Aero-Motive restructuring charge. Also contributing to the increase was the lower effective tax rate in fiscal 2004, which was 18.4%, compared to 34.1% in fiscal 2003.

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The 2003 increase in income from continuing operations when compared to 2002 was mainly due to the gain from exchange rate changes on the U.S. dollar loan that our Canadian subsidiary has outstanding, improved operating efficiencies, and the sale of the Aero-Motive workstation product line. Also contributing to the increase was the lower effective tax rate in fiscal 2003, which was 34.1%, compared to 50.3% in fiscal 2003. The increases were partially offset by the Aero-Motive restructuring charges.

Discontinued Operations

In the first fiscal quarter of 2003 we sold our AKAPP operations for $4.9 million in cash. This sale resulted in a gain of $0.7 million and was recorded as Income from Discontinued Operations. The results of operations related to AKAPP for fiscal 2003 were also recorded as Income from Discontinued Operations.

Net Income

Net income was $8.0 million, or 4.0% of net sales, in 2004, $6.6 million, or 3.7% of net sales, in 2003 and $2.5 million, or 1.5% of net sales, in 2002. The 2004 increase in net income was due to the increase in income from continuing operations, the reduced interest expense and the lower effective tax rate.

The 2003 increase in net income when compared to 2002 was due to the increase in income from continuing operations, specifically the positive exchange rate changes, improved efficiencies, the Aero-Motive product line sale and income generated from the AKAPP sale.

Our effective tax rate was 18.4% in 2004, 34.1% in 2003 and 50.3% in 2002. In 2004 the low tax rate was due to improved international operations, a change in the valuation allowance related to our French operations, higher tax credits and the utilization of capital loss carryforwards created in 2001. The 2003 income tax rate was close to the U.S. federal statutory rate. In 2002 the low level of profitability combined with certain items not deductible in Europe resulted in the high effective tax rate.

Financial Condition, Liquidity and Capital Resources

Assets

At fiscal year-end 2004 we had $16.7 million in cash and short-term investments, down from $22.5 million at the end of 2003. The decrease in our cash balance was mainly due to operating cash flow of $12.4 million, which was more than offset by $7.4 million for the purchase of property, plant and equipment, the long-term debt payment of $5.7 million and dividend payments of $4.8 million. Operating cash flow was negatively impacted by increases in our accounts receivable and inventory levels during fiscal 2004. Both accounts increased due to revenue increases and inventories were also up due to the temporary build up in inventory to facilitate the migration of Aero-Motive products to Juarez, Mexico. The change in exchange rates also increased our asset values.

Working capital in 2004 increased to $52.8 million from $48.2 million in 2003. This increase in working capital was mainly due to increased inventory and accounts receivable levels and the exchange rate effects on our foreign assets.

We continued to invest in property, plant and equipment, including new machinery, computer systems and facility improvements. Purchases of property, plant and equipment were a more normal $7.4 million in 2004 compared to $4.5 million in 2003. In 2004 we started the process of upgrading and standardizing our ERP and financial reporting systems. The project will be completed worldwide in 2006.

Our cash and short-term investments are available for strategic investments, acquisitions and other potential cash needs that may arise. We believe that existing cash and short-term investments, together with funds generated from operations, will be sufficient to meet our operating requirements in 2005.

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Liabilities

At fiscal year-end 2004 we had $30.9 million of long-term debt outstanding ($5.7 million shown as current debt) and we had unused credit facilities that provide for additional borrowings of up to $25.0 million. On April 28, 2004 we entered into a new three-year revolving credit agreement with our existing bank that will continue to provide for borrowings up to $25.0 million at the bank’s prime or offered rate. This agreement will expire on April 28, 2007. This new revolving credit agreement states that the maximum ratio of debt to EBITDA, as defined, shall be no greater than 2.5 to 1.0 and the minimum interest coverage ratio, as defined, shall be no less than 2.5 to 1.0. Additional information on debt covenants can be found in Note 2 A of the Notes to Consolidated Financial Statements.

Contractual Obligations

A summary of our contractual obligations as of October 2, 2004 is as follows:

Unconditional purchase obligations include amounts committed under legally enforceable contracts or purchase orders for goods and services with defined terms as to price, quantity and delivery. Other long-term liabilities represent the cost to terminate the agreement on the fair value of our cross-currency swap. The fair value of the swap is valued at the balance sheet date, October 2, 2004.

Cash Flows

Net cash flow provided by operating activities was $12.4 million in 2004, down from $17.5 million in 2003 and $24.5 million in 2002. The decrease in 2004 operating cash flow was primarily due to the increase in accounts receivable and inventory levels compared to reductions in fiscal 2003. The increase in accounts receivable was due mainly to the sales results in the fourth quarter of 2004 and the higher percentage of sales coming from Europe. The increase in inventory was due to the temporary build up in inventory to facilitate the migration of Aero-Motive products to Mexico and the impact of exchange rates on our foreign balances. Partially offsetting these increases was an increase to both accounts payable and other liabilities. The decrease in 2003 operating cash flows was due to a smaller reduction in inventory and an increase in prepaid expenses when compared to fiscal 2002. The increase in prepaid expense was due to a $2.0 million contribution to the pension plan.

In fiscal 2004 cash flows from investing activities included $7.4 million of capital additions. In fiscal 2003 cash flows from investing activities included $4.5 million of capital additions and cash received of $4.2 million from the sale of AKAPP operations.

Net cash used for financing activities in 2004, 2003 and 2002 includes the repayment of debt in the amounts of $5.7 million, $4.2 million and $4.9 million, respectively, and dividend payments to our shareholders of $4.8 million, $4.3 million and $4.2 million, respectively. In fiscal 2004 we increased our dividend per share to $0.40 from $0.36, which explains the increase in dividend payments during the fiscal year.

Financial Instruments

In our global operating activities, and in the normal course of our business, we are exposed to changes in foreign currency exchange rates that may adversely affect our results of operations and financial condition. We seek to minimize those risks through our regular operating activities and, when deemed appropriate, through the use of

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financial instruments. We use financial instruments to selectively hedge our foreign currency risk and do not use financial instruments for speculative purposes. Additional details on our foreign exchange exposures can be found in Note 2 B and C of the Notes to Consolidated Financial Statements.

Contingent Liabilities and Environmental Matters

Our operations are subject to international, federal, state and local environmental laws and regulations. We are party to an environmental matter, which obligates us to investigate, remediate or mitigate the effects on the environment of the release of certain substances at one of our manufacturing facilities. It is possible that this matter could affect cash flows and results of operations. Additional details on the environmental exposure can be found in Note 16 of the Notes to Consolidated Financial Statements.

Critical Accounting Policies

Our financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. These estimates and assumptions are affected by management’s application of accounting policies. Critical accounting policies for the business include revenue recognition, valuation of long-lived assets, accounting for contingent liabilities and environmental matters and accounting for income taxes. There were no material changes made to critical accounting estimates compared to prior years.

REVENUE RECOGNITION—We recognize revenue upon transfer of title at the time of shipment or services provided, when all significant contractual obligations have been satisfied, the price is fixed or determinable and collection is reasonably assured. At the end of 2004 we had $1.5 million accrued for warranty costs, sales returns, sales incentives, price adjustments and other allowances based on prior claims experience and other quantitative and qualitative factors. No single customer accounted for more than 10% of revenue.

VALUATION OF LONG-LIVED ASSETS—Our long–lived assets include land, buildings, equipment, molds and dies, purchased software, goodwill and other intangible assets. Long-lived assets, other than goodwill, are depreciated over their estimated useful lives. We review long-lived assets other than goodwill for impairment to assess recoverability from future operations using undiscounted cash flows. Goodwill and indefinite-lived intangible assets are reviewed annually for impairment under the provisions of Statement of Financial Accounting Standards (SFAS) No. 142, “Goodwill and Other Intangible Assets.” Fair values are estimated based upon forecasted cash flows discounted to present value. The fair value of our long-lived assets is dependent on the future performance of individual operations as well as volatility inherent in their external markets. If estimated forecasts are not met and actual cash flows or discount rate estimates change, we may have to record an impairment charge not previously recognized. We currently have $36.8 million of goodwill on our consolidated balance sheet. No impairment charges were recorded in 2004, 2003 or 2002.

ACCOUNTING FOR CONTINGENT LIABILITIES AND ENVIRONMENTAL MATTERS—We have incurred and expect to incur assessment, remediation and related costs at one of our facilities for the costs of cleaning up contamination resulting from past spills, disposal or other releases of hazardous substances. We have been conducting an investigation of soil and groundwater at the site with oversight by the Michigan Department of Environmental Quality (“DEQ”). We estimate that $1.7 million of investigation and remediation expense remain to be incurred over the next 14 years. We have a reserve for such purpose. Our cost estimates are subject to uncertainty because of the extent of the contamination area, changes in remediation technology and ongoing DEQ feedback. We may incur significant additional assessment, remediation and related costs at the site and such costs could materially and adversely affect our consolidated net income for the period in which such costs are incurred.

ACCOUNTING FOR INCOME TAXES—SFAS No. 109, “Accounting for Income Taxes”, establishes financial accounting and reporting standards for the effect of income taxes. The objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for future tax consequences of events that have been recognized in our financial statements or tax returns.

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We have on our balance sheet net deferred tax assets of $1.0 million. Judgment is required in assessing the future tax consequences of events that have been recognized in our financial statements or tax returns. Fluctuations in the actual outcome of these tax consequences could impact our financial position or the results of operations.

FORWARD-LOOKING STATEMENTS

The Securities and Exchange Commission encourages companies to disclose forward-looking information, so that investors can better understand a company’s future prospects, and make informed investment decisions. This report, and other written and oral statements that we make from time to time, contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements set out anticipated results based on management’s plans and assumptions. We have tried, wherever possible, to identify such statements by using words such as “anticipate”, “estimate”, “expect”, “plan”, “believe”, and words and terms of similar substance, in connection with any discussion of future operating or financial performance.

We cannot guarantee that any forward-looking statement will be realized, although we believe we have been prudent in our plans and assumptions. Achievement of future results is subject to risks, uncertainties, and inaccurate assumptions.

In particular, such risks include statements relating to future actions, prospective products, future performance or results of current or anticipated products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, general economic and business conditions, currency fluctuations, and competition.

International-based revenues and substantial international assets result in our exposure to currency exchange rate fluctuations. We continue to evaluate the economic and operational impact of all foreign currencies, including its impact on competition, pricing, and foreign currency exchange risks. There is no guarantee, however, that all problems have been foreseen and corrected, or that no material disruption will occur in our businesses.

Growth in costs and expenses, changes in product mix, and the impact of acquisitions, restructuring, divestitures and other unusual items that could result from evolving business strategies could affect future results. Changes in the U.S. tax code and the tax laws in other countries can affect our net earnings. Claims have been brought against us and our subsidiaries for various legal, environmental, and tax matters, and additional claims arise from time to time. It is possible that our cash flows and results of operations could be affected by the resolution of these matters.

Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could vary materially from those anticipated, estimated or projected. Investors should bear this in mind as they consider forward-looking statements.

This discussion of potential risks and uncertainties is by no means complete but is designed to highlight important factors that may impact our outlook. We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events, or otherwise.

Selected financial information related to quantitative and qualitative market risk is contained in Note 2 of the Notes to Consolidated Financial Statements.

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Report of Management

Woodhead Industries, Inc. management is responsible for the integrity of the information presented in this Annual Report on Form 10-K, including the Company’s financial statements. These statements have been prepared in conformity with accounting principles generally accepted in the United States and include, where necessary, estimates and judgments by management.

We maintain systems of accounting and internal controls designed to provide assurance that assets are properly accounted for as well as to insure that the financial records are reliable for preparing financial statements. The systems are augmented by qualified personnel and are reviewed on a periodic basis.

Our independent registered public accounting firm, Ernst & Young LLP, conducts annual audits of our financial statements in accordance with auditing standards generally accepted in the United States, which include the review of internal controls for the purpose of establishing audit scope, and issue an opinion on the fairness of such financial statements.

The Audit Committee, which is composed solely of independent directors, meets periodically with management and the independent registered public accounting firm to review the manner in which they are performing their responsibilities and to discuss auditing, internal accounting controls, and financial reporting matters. The independent public accountants periodically meet alone with the Audit Committee and have free access to the Audit Committee at any time.

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Report of Independent Registered Public Accounting Firm

To The Board of Directors and Shareholders of Woodhead Industries, Inc.:

We have audited the accompanying consolidated balance sheets of Woodhead Industries, Inc. (a Delaware corporation) and subsidiaries as of October 2, 2004 and September 27, 2003, and the related consolidated statements of income, stockholders’ investment, comprehensive income and cash flows for each of the three years in the period ended October 2, 2004. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Woodhead Industries, Inc. and subsidiaries at October 2, 2004 and September 27, 2003, and the consolidated results of their operations and their cash flows for each of the three years in the period ended October 2, 2004, in conformity with U.S. generally accepted accounting principles.

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Woodhead Industries, Inc.

Consolidated Balance Sheets

As of October 2, 2004 and September 27, 2003

(Amounts in thousands)

The accompanying notes are an integral part of these statements.

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Woodhead Industries, Inc.

Consolidated Statements of Income

For the years ended October 2, 2004, September 27, 2003, and September 28, 2002

(Amounts in thousands, except per share data)

The accompanying notes are an integral part of these statements.

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Woodhead Industries, Inc.

Consolidated Statements of Cash Flows

For the years ended October 2, 2004, September 27, 2003, and September 28, 2002

(Amounts in thousands)