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EXCEL - IDEA: XBRL DOCUMENT - Woodward, Inc.Financial_Report.xls

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March  31, 2015

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

 

 

 

Commission file number 000-08408

WOODWARD, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

 

36-1984010

 

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

1000 East Drake Road, Fort Collins, Colorado

 

80525

 

(Address of principal executive offices)

 

(Zip Code)

(970) 482-5811

 

(Registrant’s telephone number, including area code)

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     No 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer     Accelerated filer    Non-accelerated filer    Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  No

As of April 16, 2015,  65,320,656 shares of the registrant’s common stock with a par value of $0.001455 per share were outstanding.

 


 

 

 

 

 

 

TABLE OF CONTENTS

 

 

Page

PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements

2

 

Condensed Consolidated Statements of Earnings

2

 

Condensed Consolidated Statements of Comprehensive Earnings

3

 

Condensed Consolidated Balance Sheets

4

 

Condensed Consolidated Statements of Cash Flows

5

 

Condensed Consolidated Statements of Stockholders’ Equity

6

 

Notes to Condensed Consolidated Financial Statements

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

24 

 

Forward Looking Statements

24 

 

Overview

27 

 

Results of Operations

28 

 

Liquidity and Capital Resources

29 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

29 

Item 4.

Controls and Procedures

29 

 

PART II – OTHER INFORMATION

 

Item 1.

Legal Proceedings

29 

Item 1A.

Risk Factors

29 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

29 

Item 6.

Exhibits

29 

 

Signatures

29 

1

 


 

 

PART I – FINANCIAL INFORMATION

Item 1.Financial Statements

 

WOODWARD, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three-Months Ended

 

Six-Months Ended

 

March 31,

 

March 31,

 

2015

 

2014

 

2015

 

2014

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

493,222 

 

$

482,467 

 

$

980,868 

 

$

911,509 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

    Cost of goods sold

 

355,602 

 

 

340,028 

 

 

699,362 

 

 

655,494 

    Selling, general and administrative expenses

 

38,450 

 

 

35,283 

 

 

78,293 

 

 

72,611 

    Research and development costs

 

30,328 

 

 

35,805 

 

 

64,357 

 

 

65,229 

    Amortization of intangible assets

 

7,227 

 

 

8,657 

 

 

14,802 

 

 

17,141 

    Interest expense

 

5,329 

 

 

6,185 

 

 

11,278 

 

 

12,247 

    Interest income

 

(221)

 

 

(57)

 

 

(348)

 

 

(116)

    Other (income) expense, net (Note 15)

 

(1,084)

 

 

(190)

 

 

(1,539)

 

 

(797)

Total costs and expenses

 

435,631 

 

 

425,711 

 

 

866,205 

 

 

821,809 

Earnings before income taxes

 

57,591 

 

 

56,756 

 

 

114,663 

 

 

89,700 

Income tax expense

 

13,736 

 

 

11,958 

 

 

27,024 

 

 

21,519 

Net earnings

$

43,855 

 

$

44,798 

 

$

87,639 

 

$

68,181 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share (Note 3):

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

$

0.67 

 

$

0.67 

 

$

1.34 

 

$

1.01 

Diluted earnings per share

$

0.66 

 

$

0.66 

 

$

1.32 

 

$

1.00 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Common Shares Outstanding (Note 3):

 

 

 

 

 

 

 

 

 

 

 

Basic

 

65,159 

 

 

66,633 

 

 

65,242 

 

 

67,182 

Diluted

 

66,540 

 

 

67,905 

 

 

66,641 

 

 

68,463 

Cash dividends per share paid to Woodward common stockholders

$

0.10 

 

$

0.08 

 

$

0.18 

 

$

0.16 

 

See accompanying Notes to Condensed Consolidated Financial Statements

2

 


 

WOODWARD, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three-Months Ended

 

Six-Months Ended

 

March 31,

 

March 31,

 

2015

 

2014

 

2015

 

2014

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings

$

43,855 

 

$

44,798 

 

$

87,639 

 

$

68,181 

Other comprehensive earnings:

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

(22,012)

 

 

(243)

 

 

(34,945)

 

 

4,231 

Taxes on changes in foreign currency translation adjustments

 

411 

 

 

(139)

 

 

1,260 

 

 

294 

 

 

(21,601)

 

 

(382)

 

 

(33,685)

 

 

4,525 

Reclassification of net realized losses on derivatives to earnings

 

24 

 

 

24 

 

 

49 

 

 

49 

Taxes on changes in derivative transactions

 

(8)

 

 

(9)

 

 

(18)

 

 

(18)

 

 

16 

 

 

15 

 

 

31 

 

 

31 

Minimum retirement benefit liability adjustments (Note 17)

 

 

 

 

 

 

 

 

 

 

 

Amortization of:

 

 

 

 

 

 

 

 

 

 

 

Net prior service cost (benefit)

 

57 

 

 

(22)

 

 

113 

 

 

(44)

Net loss

 

127 

 

 

195 

 

 

257 

 

 

389 

Foreign currency exchange rate changes on minimum retirement benefit liabilities

 

518 

 

 

(124)

 

 

1,058 

 

 

(220)

Taxes on changes in minimum retirement liability adjustments, net of foreign currency exchange rate changes

 

(252)

 

 

(18)

 

 

(509)

 

 

(45)

 

 

450 

 

 

31 

 

 

919 

 

 

80 

Total comprehensive earnings

$

22,720 

 

$

44,462 

 

$

54,904 

 

$

72,817 

 

See accompanying Notes to Condensed Consolidated Financial Statements

 

3

 


 

 

WOODWARD, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

September 30,

 

2015

 

2014

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

80,761 

 

$

115,287 

Accounts receivable, less allowance for uncollectible amounts of $6,546 and $7,078, respectively

 

311,078 

 

 

346,858 

Inventories

 

475,957 

 

 

451,944 

Income taxes receivable

 

20,298 

 

 

6,574 

Deferred income tax assets

 

41,157 

 

 

40,774 

Other current assets

 

43,822 

 

 

47,207 

Total current assets

 

973,073 

 

 

1,008,644 

Property, plant and equipment, net

 

632,638 

 

 

513,279 

Goodwill

 

556,500 

 

 

559,724 

Intangible assets, net

 

239,515 

 

 

254,772 

Deferred income tax assets

 

6,576 

 

 

6,292 

Other assets

 

56,346 

 

 

54,491 

Total assets

$

2,464,648 

 

$

2,397,202 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Current portion of long-term debt

$

 -

 

$

 -

Accounts payable

 

237,915 

 

 

160,683 

Income taxes payable

 

9,583 

 

 

6,130 

Deferred income tax liabilities

 

418 

 

 

472 

Accrued liabilities

 

124,373 

 

 

172,731 

Total current liabilities

 

372,289 

 

 

340,016 

Long-term debt, less current portion

 

713,000 

 

 

710,000 

Deferred income tax liabilities

 

89,423 

 

 

85,031 

Other liabilities

 

94,347 

 

 

101,211 

Total liabilities

 

1,269,059 

 

 

1,236,258 

Commitments and contingencies (Note 19)

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

Preferred stock, par value $0.003 per share, 10,000 shares authorized, no shares issued

 

 -

 

 

 -

Common stock, par value $0.001455 per share, 150,000 shares authorized, 72,960 shares issued

 

106 

 

 

106 

Additional paid-in capital

 

124,712 

 

 

112,491 

Accumulated other comprehensive earnings (losses)

 

(36,268)

 

 

(3,533)

Deferred compensation

 

4,485 

 

 

3,915 

Retained earnings

 

1,414,355 

 

 

1,338,468 

 

 

1,507,390 

 

 

1,451,447 

Treasury stock at cost, 7,653  shares and 7,397 shares, respectively

 

(307,316)

 

 

(286,588)

Treasury stock held for deferred compensation, at cost, 191 shares and 198 shares, respectively

 

(4,485)

 

 

(3,915)

Total stockholders' equity

 

1,195,589 

 

 

1,160,944 

Total liabilities and stockholders' equity

$

2,464,648 

 

$

2,397,202 

 

 

 

 

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

4

 


 

WOODWARD, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six-Months Ended March 31,

 

2015

 

2014

Cash flows from operating activities:

 

 

 

 

 

Net earnings

$

87,639 

 

$

68,181 

Adjustments to reconcile net earnings to net cash provided by operating activities:

 

 

 

 

 

Depreciation and amortization

 

37,249 

 

 

38,835 

Net (gain) loss on sales of assets

 

(718)

 

 

136 

Stock-based compensation

 

7,890 

 

 

6,330 

Excess tax benefits from stock-based compensation

 

(736)

 

 

(2,163)

Deferred income taxes

 

3,628 

 

 

(2,306)

Loss on derivatives reclassified from accumulated comprehensive earnings into earnings

 

49 

 

 

49 

Changes in operating assets and liabilities, net of business acquisitions:

 

 

 

 

 

Accounts receivable

 

26,417 

 

 

59,408 

Inventories

 

(36,085)

 

 

(27,698)

Accounts payable and accrued liabilities

 

6,231 

 

 

(23,884)

Current income taxes

 

(9,173)

 

 

15,158 

Retirement benefit obligations

 

(2,490)

 

 

(2,486)

Other

 

2,639 

 

 

(4,916)

Net cash provided by operating activities

 

122,540 

 

 

124,644 

Cash flows from investing activities:

 

 

 

 

 

Payments for purchase of property, plant, and equipment

 

(109,402)

 

 

(68,560)

Proceeds from sale of assets

 

2,345 

 

 

154 

Net cash used in investing activities

 

(107,057)

 

 

(68,406)

Cash flows from financing activities:

 

 

 

 

 

Cash dividends paid

 

(11,752)

 

 

(10,754)

Proceeds from sales of treasury stock

 

2,460 

 

 

6,147 

Payments for repurchases of common stock

 

(32,118)

 

 

(99,655)

Excess tax benefits from stock compensation

 

736 

 

 

2,163 

Borrowings on revolving lines of credit and short-term borrowings

 

255,000 

 

 

256,071 

Payments on revolving lines of credit and short-term borrowings

 

(252,000)

 

 

(151,069)

Proceeds from issuance of long-term debt

 

 -

 

 

250,000 

Payments of long-term debt

 

 -

 

 

(300,000)

Payments of debt financing costs

 

 -

 

 

(1,297)

Net cash used in financing activities

 

(37,674)

 

 

(48,394)

Effect of exchange rate changes on cash and cash equivalents

 

(12,335)

 

 

265 

Net change in cash and cash equivalents

 

(34,526)

 

 

8,109 

Cash and cash equivalents at beginning of period

 

115,287 

 

 

48,556 

Cash and cash equivalents at end of period

$

80,761 

 

$

56,665 

 

 

 

 

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

 

5

 


 

 

WOODWARD, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of shares

 

Stockholders' equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated other comprehensive (loss) earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock

 

Common stock

 

Treasury stock

 

Treasury stock held for deferred compensation

 

Common stock

 

Additional paid-in capital

 

Foreign currency translation adjustments

 

Unrealized derivative gains (losses)

 

Minimum retirement benefit liability adjustments

 

Total accumulated other comprehensive (loss) earnings

 

Deferred compensation

 

Retained earnings

 

Treasury stock at cost

 

Treasury stock held for deferred compensation

 

Total stockholders' equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances as of October 1, 2013

 

 -

 

72,960 

 

(4,883)

 

(232)

 

$

106 

 

$

101,147 

 

$

25,742 

 

$

43 

 

$

(10,670)

 

$

15,115 

 

$

4,007 

 

$

1,193,887

 

$

(167,710)

 

$

(4,007)

 

$

1,142,545 

Net earnings

 

 -

 

 -

 

 -

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

68,181 

 

 

 -

 

 

 -

 

 

68,181 

Other comprehensive income (loss), net of tax

 

 -

 

 -

 

 -

 

 -

 

 

 -

 

 

 -

 

 

4,525 

 

 

31 

 

 

80 

 

 

4,636 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

4,636 

Cash dividends paid

 

 -

 

 -

 

 -

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

(10,754)

 

 

 -

 

 

 -

 

 

(10,754)

Purchases of treasury stock

 

 -

 

 -

 

(2,388)

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

(101,241)

 

 

 -

 

 

(101,241)

Sales of treasury stock

   

 -

 

 -

 

354 

 

 -

 

 

 -

 

 

(4,203)

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

11,065 

 

 

 -

 

 

6,862 

Common shares issued from treasury stock for benefit plans

 

 -

 

 -

 

260 

 

 -

 

 

 -

 

 

2,837 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

8,356 

 

 

 -

 

 

11,193 

Tax benefit attributable to exercise of stock options

 

 -

 

 -

 

 -

 

 -

 

 

 -

 

 

2,046 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

2,046 

Stock-based compensation

 

 -

 

 -

 

 -

 

 -

 

 

 -

 

 

6,330 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

6,330 

Purchases of stock by deferred compensation plan

 

 -

 

 -

 

 -

 

(6)

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

276 

 

 

 -

 

 

 -

 

 

(276)

 

 

 -

Distribution of stock from deferred compensation plan

 

 -

 

 -

 

 -

 

23 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

(274)

 

 

 -

 

 

 -

 

 

274 

 

 

 -

Balances as of March 31, 2014

 

 -

 

72,960 

 

(6,657)

 

(215)

 

$

106 

 

$

108,157 

 

$

30,267 

 

$

74 

 

$

(10,590)

 

$

19,751 

 

$

4,009 

 

$

1,251,314 

 

$

(249,530)

 

$

(4,009)

 

$

1,129,798 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances as of October 1, 2014

 

 -

 

72,960 

 

(7,397)

 

(198)

 

$

106 

 

$

112,491 

 

$

10,819 

 

$

105 

 

$

(14,457)

 

$

(3,533)

 

$

3,915 

 

$

1,338,468 

 

$

(286,588)

 

$

(3,915)

 

$

1,160,944 

Net earnings

 

 -

 

 -

 

 -

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

87,639 

 

 

 -

 

 

 -

 

 

87,639 

Other comprehensive income (loss), net of tax

 

 -

 

 -

 

 -

 

 -

 

 

 -

 

 

 -

 

 

(33,685)

 

 

31 

 

 

919 

 

 

(32,735)

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

(32,735)

Cash dividends paid

 

 -

 

 -

 

 -

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

(11,752)

 

 

 -

 

 

 -

 

 

(11,752)

Purchases of treasury stock

 

 -

 

 -

 

(622)

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

(32,118)

 

 

 -

 

 

(32,118)

Sales of treasury stock

 

 -

 

 -

 

107 

 

 -

 

 

 -

 

 

(846)

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

3,306 

 

 

 -

 

 

2,460 

Common shares issued from treasury stock for benefit plans

 

 -

 

 -

 

259 

 

 -

 

 

 -

 

 

4,490 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

8,084 

 

 

 -

 

 

12,574 

Tax benefit attributable to exercise of stock options

 

 -

 

 -

 

 -

 

 -

 

 

 -

 

 

687 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

687 

Stock-based compensation

 

 -

 

 -

 

 -

 

 -

 

 

 -

 

 

7,890 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

7,890 

Purchases of stock by deferred compensation plan

 

 -

 

 -

 

 -

 

(17)

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

859 

 

 

 -

 

 

 -

 

 

(859)

 

 

 -

Distribution of stock from deferred compensation plan

 

 -

 

 -

 

 -

 

24 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

(289)

 

 

 -

 

 

 -

 

 

289 

 

 

 -

Balances as of March 31, 2015

 

 -

 

72,960 

 

(7,653)

 

(191)

 

$

106 

 

$

124,712 

 

$

(22,866)

 

$

136 

 

$

(13,538)

 

$

(36,268)

 

$

4,485 

 

$

1,414,355 

 

$

(307,316)

 

$

(4,485)

 

$

1,195,589 

See accompanying Notes to Condensed Consolidated Financial Statements.

6

 


 

 

 

WOODWARD, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)

(Unaudited)

Note 1.  Basis of Presentation

The Condensed Consolidated Financial Statements of Woodward, Inc. (“Woodward” or the “Company”) as of March 31, 2015 and for the three and six-months ended March 31, 2015 and March 31, 2014, included herein, have not been audited by an independent registered public accounting firm.  These Condensed Consolidated Financial Statements reflect all normal recurring adjustments that, in the opinion of management, are necessary to present fairly Woodward’s financial position as of March 31, 2015, and the statements of earnings, comprehensive earnings, cash flows, and changes in stockholders’ equity for the periods presented herein.  The Condensed Consolidated Balance Sheet as of September 30, 2014 was derived from Woodward’s Annual Report on Form 10-K for the fiscal year then ended.  The results of operations for the three and six-months ended March 31, 2015 are not necessarily indicative of the operating results to be expected for other interim periods or for the full fiscal year.  Dollar amounts contained in these Condensed Consolidated Financial Statements are in thousands, except per share amounts.

The Condensed Consolidated Financial Statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim reporting.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations.

These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and Notes thereto included in Woodward’s most recent Annual Report on Form 10-K filed with the SEC and other financial information filed with the SEC.

Management is required to use estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, the reported revenues and expenses recognized during the reporting period, and certain financial statement disclosures, in the preparation of the Condensed Consolidated Financial Statements included herein.  Significant estimates in these Condensed Consolidated Financial Statements include allowances for uncollectible amounts, net realizable value of inventories, customer rebates earned, warranty reserves, useful lives of property and identifiable intangible assets, the evaluation of impairments of property, valuation of identifiable intangible assets and goodwill, the provision for income tax and related valuation reserves, the valuation of assets and liabilities acquired in business combinations, assumptions used in the determination of the funded status and annual expense of pension and postretirement employee benefit plans, the valuation of stock compensation instruments granted to employees and board members, and contingencies.  Actual results could vary materially from Woodward’s estimates.

 

Note 2.  Recent accounting pronouncements

From time to time, the Financial Accounting Standards Board (“FASB”) or other standards setting bodies issue new accounting pronouncements.  Updates to the FASB Accounting Standards Codification (“ASC”) are communicated through issuance of an Accounting Standards Update (“ASU”).

In April 2015, the FASB issued ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs.”  Under ASU 2015-03 Woodward will present debt issuance costs in the balance sheet as a reduction from the related debt liability rather than as an asset.  Amortization of such costs will continue to be reported as interest expense.  ASU 2015-03 is effective for fiscal years  and interim periods within those fiscal years  beginning after December 15, 2015 (fiscal year 2017 for Woodward), but early adoption is allowed.  Woodward has not determined in which period the new guidance will be adopted. Retrospective adoption is required.  Woodward had unamortized debt issuance costs of $3,769 as of March 31, 2015 and $4,276 as of September 30 2014, these costs will be reclassified from other assets to long-term debt upon adoption.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers.”  The purpose of ASU 2014-09 is to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and International Financial Reporting Standards.  The amendments (i) remove inconsistencies and weaknesses in revenue requirements, (ii) provide a more robust framework for addressing revenue issues, (iii) improve comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets, (iv) provide more useful information to users of financial statements through improved disclosure requirements, and (v) simplify the preparation of financial statements by reducing the number of requirements to which an entity must refer.  ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016 (fiscal year 2018 for Woodward), including interim periods within that reporting period.  Early adoption is not permitted.  An entity should adopt the amendments using one of the following

7

 


 

methods: retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application.  Woodward has not determined what transition method it will use and is currently assessing the impact that this guidance may have on its Consolidated Financial Statements.  In April 2015, the FASB announced it plans to propose extending the deadline for the adoption of ASU 2014-09 by one year.   

 

Note 3.  Earnings per share

Basic earnings per share is computed by dividing net earnings available to common stockholders by the weighted-average number of shares of common stock outstanding for the period.

Diluted earnings per share reflects the weighted-average number of shares outstanding after consideration of the dilutive effect of stock options and restricted stock.

The following is a reconciliation of net earnings to basic earnings per share and diluted earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three-Months Ended

 

Six-Months Ended

 

 

March 31,

 

March 31,

 

 

2015

 

2014

 

2015

 

2014

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings 

 

$

43,855 

 

$

44,798 

 

$

87,639 

 

$

68,181 

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

Basic shares outstanding

 

 

65,159 

 

 

66,633 

 

 

65,242 

 

 

67,182 

Dilutive effect of stock options and restricted stock

 

 

1,381