Item 1.	Business
	(a) General Description of Business
	 Woodward Governor Company, established in 1870,designs and 	 manufactures engine fuel delivery and engine control systems, 	 subsystems and components. Products include devices that are 	 used on diesel engines, steam turbines, industrial and 	 aircraft gas turbines and hydraulic turbines.
Woodward sells directly to original equipment manufacturers, 	 service providers and equipment users world wide.
There have been no material changes in the mode of conducting 	 the business during the last five years.
	(b) Industry Segments
Information with respect to business segments is set forth in 	 Note N to the consolidated financial statements on Page 29 of 	 the registrant's annual report for the fiscal year ended 	 September 30, 1996 and is hereby incorporated by reference.
	(c)(1) Narrative Description of Business
(i) Information with respect to business segments is set forth 	 in Note N to the consolidated financial statements on Page 	 29 of the registrant's annual report for the fiscal year 	 ended September 30, 1996 and is hereby incorporated by 	 reference.
(ii) There has been no public information regarding a new 	 product or line of business requiring the investment of a 	 material amount of total assets. 	 	 (iii)Most of the Company's products are machined from cast iron, 	 cast aluminum and bar steel. Many of the Company's 	 machined products are produced by contractors. In 	 addition to the machined parts, there is an increasing 	 number of purchased electrical components used. There are 	 numerous sources of most of the raw materials and 	 components used by the Company in its operations, and they 	 are believed to be in adequate supply. Woodward products 	 utilize software or purchased electromagnetic products as 	 their core technology.
(iv) The Company has pursued a policy of applying for patents in both the United States and certain other countries on 	 inventions made in the course of its development work. The 	 Company regards its patents collectively as important, but 	 does not consider its business dependent upon any one of 	 such patents.
	 (v) The Company's business is not subject to significant seasonal 	 variation.
(vi) The Company maintains inventory levels sufficient to meet 	 customer demands. The Company's working capital 	 requirements are not materially affected by return policies 	 or extended credit terms provided to customers.
(vii)One customer, General Electric Company, accounted for 	 approximately 17% of consolidated sales during the fiscal 	 year ended September 30, 1996. Seven other customers in 	 total accounted for approximately 18% of consolidated sales 	 in the fiscal year ended September 30, 1996. Sales to 	 these customers involve several autonomous divisions and 	 agencies. Products are supplied on the basis of individual 	 purchase orders and contracts. There are no other material 	 relationships between the Company and such customers.
(viii)Unfilled orders at September 30, 1996 totalled $218,020,000 	 or 24% higher than the September 30, 1995 total of 	 $175,336,000. Management believes that unfilled orders is 	 not necessarily an indicator of future shipment levels. As 	 customers demand shorter lead times and flexibility in 	 delivery schedules, they have also revised their purchasing 	 practices. As a result, orders may become firm only within 	 thirty to sixty days of delivery. Consequently, the 	 backlog of unfilled orders at the year-end cannot be relied 	 upon as a valid indication of profitability in a subsequent 	 year. Of the September 30, 1996 total, $172,017,000 	 currently is scheduled for fiscal year 1997 delivery.
(ix) 	The Company does business with various U.S. government 	 agencies, principally in the defense area, as both a prime 	 contractor and a subcontractor. Substantially all 	 contracts are firm fixed price and may require cost data to 	 be submitted in connection with contract negotiations. The 	 contracts are subject to government audit and review. It 	 is anticipated that adjustments, if any, with respect to 	 determination of reimbursable costs, will not have a 	 material effect on the Company's financial condition. 	 Substantially all of the Company's business, including both 	 commercial and government contracts, is subject to 	 cancellation by the customer. The military portion of all 	 shipments has increased from approximately 7 percent of 	 total company shipments last year to 10 percent this year. 	 Military shipments are principally made by the Company's 	 Aircraft Controls business.
(x) 	The Company competes with several other manufacturers, 	 including divisions of large diversified and integrated 	 manufacturers. The Company also competes with other 	 divisions of its major customers. Although competition has 	 increased worldwide, the Company believes it maintains a 	 significant competitive position within its line of 	 business. The Company has several competitors in all 	 product applications. Published information pertinent to 	 the Company's product line and its competitors is not 	 available in sufficient detail to permit an accurate 	 assessment of its current relative competitive position. 	 The principal methods of competition in the industry are 	 price, product quality and customer service. In the 	 opinion of management, the Company's prices are generally 	 competitive and its product quality and customer service 	 are favorable competitive factors.
(xi) 	Information with respect to research and development is set 	 forth in Note A to the consolidated financial statements on 	 Page 24 of the registrant's annual report for the fiscal 	 year ended September 30, 1996 and is hereby incorporated by 	 reference. The Company's products, whether proposed by the 	 Company or requested by a customer, are offered for sale as 	 proprietary designs and products of the Company. 	 Consequently, all activities associated with basic 	 research, the development of new products and the 	 refinement of existing products are Company-sponsored.
(xii)Compliance with provisions regulating the discharge of 	 materials into the environment has caused and will continue 	 to require capital expenditures. The Company is involved in 	 certain environmental matters, in several of which it has 	 been designated a "de minimis potentially responsible 	 party" with respect to the cost of investigation and 	 cleanup of third-party sites. The Company's current 	 accrual for these matters is based on costs incurred to 	 date that have been allocated to the Company and its 	 estimate of the most likely future investigation and 	 cleanup costs. There is, as in the case of most 	 environmental litigation, the theoretical possibility of 	 joint and several liability being imposed upon the Company 	 for damages which may be awarded. 		 		 It is the opinion of management, after consultation with 	 legal counsel, that additional liabilities, if any, 	 resulting from these matters are not expected to have a 	 material adverse effect on the financial condition of the 	 Company, although such matters could have a material effect 	 on quarterly or annual operating results and cash flows 	 when (or if) resolved in a future period.
(xiii)Information with respect to the number of persons employed 	 by the Company is set forth in the "Summary of 	 Operations/Ten Year Record" on Page 31 of the registrant's 	 annual report for the fiscal year ended September 30, 1996 	 and is hereby incorporated by reference. As of November 	 30, 1996, 3228 members were employed by the Company.
	 (d) Company Operations
		Information with respect to operations in the United States 	 and other countries is set forth in Note N to the consolidated 	 financial statements on Page 29 of the registrant's annual 	 report for the fiscal year ended September 30, 1996 and is 	 hereby incorporated by reference. Management is of the 	 opinion there are no unusual risks attendant to the conduct of 	 its operations in other countries. 	 Item 2.
Item 2.	Description of Property
	 The registrant has plants located in five communities in the 	United States. Aircraft controls and related aircraft components 	are manufactured in Rockford, Illinois, and Buffalo, New York 	while industrial controls are manufactured in Fort Collins and 	Loveland, Colorado. The overhaul and repair of aircraft controls 	and sales of aircraft controls spare parts are done in the 	Rockton, Illinois facility. The registrant has ten facilities 	located overseas. Industrial controls are manufactured in 	Hoofddorp, The Netherlands; Reading, England; Aken and Kelbra 	Germany; and Tomisato, Chiba, Japan. Aircraft controls are 	assembled in Reading as well. A European aircraft product 	service center for overhaul and repair of aircraft controls is 	located in Hoofddorp, The Netherlands. Service shops are 	maintained in Sydney, Australia; Kobe, Japan; Campinas, Sao 	Paulo, Brazil; Singapore, Republic of Singapore; and Ballabgarh, 	India.
	All facilities were in excellent condition at the year-end and 	adequate production capacity is available to satisfy the 	Company's customers' needs throughout the coming year.
	In 1995, a plant in Stevens Point, Wisconsin was closed except 	for a small portion of the plant currently being leased to a 	Woodward contractor. The plant has been placed for sale with an 	international real estate broker. As yet, no acceptable offers 	have been received. The Company sold Bauer Aerospace in Avon, 	Connecticut during fiscal 1996, as discussed in the "Financial 	Summary and Analysis" on page 14 of the registrant's annual 	report for the fiscal year ended September 30, 1996 and is hereby 	incorporated by reference. 	 	 Corporate offices are maintained at the plant in Rockford, 	Illinois. Plants located in Rockford and Rockton, Illinois; Fort 	Collins and Loveland, Colorado; Buffalo, New York; Hoofddorp, The 	Netherlands; and Chiba, Japan are owned by the Company. The 	facilities in Kobe, Japan; Campinas, Sao Paulo, Brazil; Reading, 	England; Sydney, Australia; Ballabgarh, India; Aken and Kelbra 	Germany; and Singapore, Republic of Singapore are leased. 	Additional leased sales offices are maintained worldwide. 	
Item 3.
Item 3.	Legal Proceedings
	The Company is currently involved in matters of litigation 	arising from the normal course of business, including certain 	environmental and product liability matters. For a further 	discussion of these issues refer to Note L to the consolidated 	financial statements on page 28 of the registrant's annual report 	for the fiscal year ended September 30, 1996 which is hereby 	incorporated by reference.
Item 4.
Item 4.	Submission of Matters to a Vote of Shareholders
There were no matters submitted during the fourth quarter of the 	year ended September 30, 1996 to a vote of shareholders, through 	the solicitation of proxies or otherwise.
Executive Officers of the Registrant
John A. Halbrook, age 51, is chairman and chief executive officer and was elected to this position on January 10, 1995. He was elected chief executive officer on November 16, 1993 and served as president from November 1991 until January 1995. He also served as chief operating officer from November 1991 until November 16, 1993. He had formerly been senior vice president in charge of Domestic Operations since January 1990.
Vern H. Cassens, age 64, is senior vice president and chief financial officer and was elected to this position during 1988. Prior to this appointment he had been a vice president since 1983 and treasurer of the company from 1968 to 1983. He was also treasurer of the Company from 1988 until September 1996.
Stephen P. Carter, age 45, was elected a vice president and treasurer of the Company in September, 1996. He had been serving as assistant treasurer since January 1994. He has been employed by the Company in management positions for the last five years.
Ronald E. Fulkrod, age 52, is a vice president of the Company and Industrial Controls Manufacturing manager. He was elected to the vice president position in January 1993. He has been employed by the Company in management positions for the last five years.
Chuck Kovac, age 40, was elected vice president of the Company and manager of the Industrial Controls Group in August 1996. He started with the Company in 1988 and has been employed in management positions for the last five years.
C. Phillip Turner, age 56, is a vice president of the Company and manager of the Aircraft Controls Group. He was elected vice president in 1988. He was treasurer of the Company from 1983 to 1988, and secretary of the Company from 1977 to 1991.
Carol J. Manning, age 47, is secretary of the Company. She was elected to this position in June 1991. She also served as administrative assistant to the chairman of the board from 1984 to 1994.
All of the executive officers, unless otherwise noted, were elected to their present positions at the January 10, 1996 Board of Directors' meeting to serve until the organizational meeting of the Board of Directors to be held on January 8, 1997 or until their respective successors shall have been elected and qualified.
Part II
Item 5.
Item 5.	Market for the Registrant's Common Stock 	and Related Shareholder Matters 	 	 Information with respect to number of shareholders is set forth 	in "Financial Highlights" which appears on Page 1 in the 	registrant's annual report for the fiscal year ended September 	30, 1996 and is hereby incorporated by reference. Information 	with respect to common stock and dividends is set forth in the 	"Financial Summary and Analysis" on Page 18 of the registrant's 	annual report for the fiscal year ended September 30, 1996 and is 	hereby incorporated by reference. No equity securities of the 	Company were sold by the Company during the fourth quarter of the 	fiscal year ended September 30, 1996.
Item 6.
Item 6.	Selected Financial Data
	Information with respect to this matter is set forth in the 	"Summary of Operations/Ten Year Record" on Page 31 of the 	registrant's annual report for the fiscal year ended September 	30, 1996 and is hereby incorporated by reference.
Item 7.
Item 7.	Management's Discussion and Analysis of 	Financial Condition and Results of Operations
	Management's Discussion and Analysis of Financial Condition and 	Results of Operations is set forth in the "Financial Summary and 	Analysis" on Pages 13 through 18 of the registrant's annual 	report for the fiscal year ended September 30, 1996 and is hereby 	incorporated by reference.
	Information with respect to forward-looking statements is set 	forth in the "Financial Summary and Analysis" on page 13 of the 	registrant's annual report for the fiscal year ended September 	30, 1996 and is hereby incorporated by reference.
Item 8.
Item 8.	Financial Statements and Supplementary Data
	Information with respect to this matter is set forth in the 	registrant's annual report for the fiscal year ended September 	30, 1996 (Financial Statements), as further set forth in the 	Index to Consolidated Financial Statements and Schedules (See 	Item 14) and is hereby incorporated by reference.
Item 9.
Item 9.	Changes in and Disagreements on Accounting and Financial 	Disclosure										 	 	 The accounting firm of Coopers & Lybrand L.L.P. has been engaged 	since 1940. There have been no disagreements on any matter of 	accounting principles or practices or financial statement 	disclosure.
Part III
Item 10.
Item 10.	Directors and Executive Officers of the Registrant
Information with respect to directors and executive officers, 	except for the information with respect to executive officers 	which appears in Part I of this report, is set forth under the 	caption "Election of Directors" on Pages 7 and 8 of the 	registrant's proxy statement dated December 3, 1996, which was 	filed with the Securities and Exchange Commission within 120 days 	following the end of the registrant's fiscal year ended September 	30, 1996, and is made a part hereof.
Item 11.
Item 11.	Executive Compensation
	Information with respect to executive compensation is set forth 	under the caption "Executive Compensation" on Pages 9 through 13 	of the registrant's proxy statement dated December 3, 1996, 	which is made a part hereof.
Item 12.
Item 12.	Security Ownership of Certain 		Beneficial Owners and Management
	Information with respect to security ownership of certain 	beneficial owners and management is set forth under the captions 	"Security Ownership of Principal Holders and Executive Officers" 	on Page 6 and "Election of Directors" on Pages 7 and 8 of the 	registrant's proxy statement dated December 3, 1996, which is 	made a part hereof.
Item 13.
Item 13.	Certain Relationships and Related Transactions
	Information with respect to certain relationships and related 	transactions is set forth under the caption "Compensation 	Committee Interlocks and Insider Participation" on Page 13 of the 	registrant's proxy statement dated December 3, 1996, which is 	made a part hereof.
Part IV
Item 14.
Item 14.	 	Exhibits, Financial Statement 	Schedule, and Reports on Form 8-K
(a) Index to Consolidated Financial Statements and Schedule
Reference Form 10-K Annual Report Annual Report to Shareholders Page Page
Data incorporated by reference to the registrant's annual report to shareholders for the fiscal year ended September 30, 1996:
Statements of Consolidated Earnings (Loss) for the years ended September 30, 1996, 1995 and 1994 - 20
Consolidated Balance Sheets at September 30, 1996 and 1995 - 21
Statements of Consolidated Shareholders' Equity for the years ended September 30,	 1996, 1995 and 1994 - 22
Statements of Consolidated Cash Flows for the years ended September 30, 1996, 1995 and 1994 - 23
Notes to Consolidated Financial Statements - 24-29
Report of Independent Accountants - 30
Financial Statement Schedule:
Report of Independent Accountants S-1 - 	 II. Valuation and Qualifying Accounts S-2 -
	Exhibits, Financial Statement 	Schedule, and Reports on Form 8-K (continued)
	Financial statements and schedules other than those listed on the 	preceding page are omitted for the reason that they are not applicable, 	are not required, or the information is included in the financial 	statements or the footnotes therein.
	(b) There were no reports filed on Form 8-K during the fourth quarter of 	 	 the fiscal year ended September 30, 1996.
	(c) The following exhibits are filed as part of this report:
(3)Articles of incorporation Articles of incorporation are and by-laws set forth in the exhibits filed with Form 10-K for the fiscal year ended September 30, 1977 and are hereby incorporated by reference.
Two amendments to the Articles of incorporation effective January 14, 1981 are set forth in the exhibits filed with Form 10-K for the fiscal year ended September 30, 1981 and are hereby incorporated by reference.
Two amendments to the Articles of incorporation effective January 11, 1984 are set forth in exhibits filed with Form 10-K for the fiscal year ended September 30, 1984 and are hereby incorporated by reference.
One amendment to the Articles of incorporation effective January 13, 1988 is set forth in exhibits filed with Form 10-K for the fiscal year ended September 30, 1988 and is hereby incorporated by reference. 			 By-laws as amended through September 30, 1992 together with three amendments to the By-laws effective November 16, 1993 are set forth in exhibits filed with Form 10-K for the fiscal year ended September 30, 1993 and are hereby incorporated by reference.
	Exhibits, Financial Statement 	Schedule, and Reports on Form 8-K (continued)
(3) Articles of incorporation One amendment to the by-law and bylaws (continued) effective June 22, 1994 is set forth in exhibits filed with Form 10-K for the fiscal year ended September 30, 1994 and is hereby incorporated by reference.
Three amendments to the by- laws effective January 11, 1995, March 29, 1995 and June 28, 1995 are set forth in exhibits filed with form 10-K for the fiscal year ended September 30, 1995 and are hereby incorporated by reference.
Two amendments to the by-laws effective January 15, 1996 and January 23, 1996 are filed herewith. 	 (4) Instruments defining the Instruments with respect to rights of security holders, long-term debt and the ESOP including indentures debt guarantee are not being filed as they do not individually exceed 10 percent of the registrant's assets. The registrant agrees to furnish a copy of each such instrument to the Commission upon request. 	 (13)Annual report to Except to the extent shareholders for the fiscal specifically incorporated year ended September 30, herein by reference, said 1996 report is furnished solely for the information of the Commission and is not deemed "filed" as part of this report.
(21)Subsidiaries of the Information with respect to registrant subsidiary operations is filed as an exhibit hereto.
(23)Consent of Independent Consent of Independent Accountants Accountants is filed as an exhibit hereto.
(27)Financial data schedule Information with respect to financial data required by electronic filers is filed as an exhibit hereto.
SIGNATURES This report has been prepared in accordance with the rules and regulations of the Securities and Exchange Commission and the financial statements referenced herein have been prepared in accordance with such rules and regulations and with generally accepted accounting principles, by officers and worker members of Woodward Governor Company. This has been done under the general supervision of Vern H. Cassens, senior vice president and chief financial officer. The consolidated financial statements have been audited by Coopers & Lybrand L.L.P., independent accountants, as indicated in their report in the annual report to shareholders for the fiscal year ended September 30, 1996.
This report contains much detailed information of which the various signatories cannot and do not have independent personal knowledge. The signatories believe, however, that the preparation and review processes summarized above are such as to afford reasonable assurance of compliance with applicable requirements.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
	Woodward Governor Company 		(Registrant) 		 Name
/s/ John A. Halbrook Director, Chairman of the John A. Halbrook Board and Chief Executive Officer
/s/ Vern H. Cassens Director, Senior Vice Vern H. Cassens President and Chief Financial and Date 12/19/96 Accounting Officer 					 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated: 	Signature	 	 Title		 Date
	/s/ J. Grant Beadle Director		 J. Grant Beadle
	/s/ Carl J. Dargene	 Director 12/18/96			 Carl J. Dargene
	/s/ Lawrence E. Gloyd	 	Director 12/19/96		 Lawrence E. Gloyd
	/s/ Thomas W. Heenan		 Director		 Thomas W. Heenan
	/s/ J. Peter Jeffery		 Director			 J. Peter Jeffrey
	/s/ Mark Leum 	 Director 12/19/96		 	 Mark Leum
	/s/ Michael T. Yonker		 Director 12/20/96		 Michael T. Yonker
REPORT OF INDEPENDENT ACCOUNTANTS
Shareholders and Worker Members Woodward Governor Company
Our report on the consolidated financial statements of Woodward Governor Company and Subsidiaries has been incorporated by reference in this Form 10-K from Page 30 of the 1996 Annual Report to Shareholders and Worker Members of Woodward Governor Company and Subsidiaries. In connection with our audits of such financial statements, we have also audited the related financial statement schedule listed in the index on Page 11 of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information required to be included therein.
	 		 COOPERS & LYBRAND L.L.P. Chicago, Illinois November 12, 1996