108312--11/20/2009--WOODWARD_GOVERNOR

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{property, intellectual, protect}

{debt, indebtedness, cash}

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We have engaged in restructuring activities and may need to implement further restructurings in the future, and there can be no assurance that our restructuring efforts will have the intended effects. Additional fines, sanctions, suspensions or debarment may result from our inability to comply with the terms of the MPC Products plea agreement, probation or administrative agreement could have a material adverse effect on us. Our profitability may suffer if we are unable to reduce our expenses in proportion to sales declines. Suppliers may be unable to provide us with materials of sufficient quality or quantity required to meet our production needs at favorable prices or at all. Subcontractors may fail to perform contractual obligations. Our product development activities may not be successful or may be more costly than currently anticipated. Activities necessary to integrate acquisitions may result in costs in excess of current expectations or be less successful than anticipated. Our substantial debt obligations could adversely affect our business and limit our ability to plan for or respond to changes in our business. Certain restrictive covenants limit our ability to operate our business and to pursue our business strategies, and if we fail to comply with these covenants, it could result in an acceleration of payments for our outstanding indebtedness. Our business may be affected by government contracting risks. The U.S. government may reduce defense funding or the mix of programs to which such funding is allocated. Changes in the estimates of fair value of reporting units or of long-lived assets may result in future impairment charges, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. Future subsidiary results or changes in domestic or international tax statutes may change the amount of valuation allowances provided for deferred income tax assets. Manufacturing activities may result in future environmental costs or liabilities. Our performance depends on continued access to a stable workforce and on favorable labor relations with our employees. A natural disaster could have a material adverse effect on our business, financial condition, results of operations and cash flows. Our intellectual property rights may not be sufficient to protect all our products or technologies. If third parties claim we are infringing on their intellectual property rights, we could face significant litigation, indemnification or licensing expenses, or be prevented from marketing our products. Product liability claims, product recalls or other liabilities associated with the products and services we provide may force us to pay substantial damage awards and other expenses that could exceed our accruals and insurance coverage. Amounts accrued for contingencies may be inadequate to cover the amount of loss when the matters are ultimately resolved. Changes in the legal and regulatory environments of the countries in which we operate may affect future sales and expenses. Operations and suppliers may be subject to physical and other risks that could disrupt production. We have significant investments outside the United States and significant sales and purchases in foreign denominated currencies, creating exposure to foreign currency exchange rate fluctuations. Changes in assumptions may increase the amount of retirement pension and healthcare benefit obligations and related expense. Our net pension liabilities may grow, and the fair value of our pension plan assets may decrease, which could require us to make additional and/or unexpected cash contributions to our pension plans, affect our liquidity or affect our ability to comply with the terms of our outstanding debt arrangements. Competitors may develop breakthrough technologies that are adopted by our customers. Industry consolidation trends could reduce our sales opportunities, decrease sales prices, and drive down demand for our product. We operate in a highly competitive industry. Unforeseen events may occur that significantly reduce commercial aviation. Increasing emission standards that drive certain product sales may be eased or delayed. Natural gas prices may increase significantly and disproportionately to other sources of fuels used for power generation.

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108312--11/20/2009--WOODWARD_GOVERNOR_CO