Note 13. Accrued liabilities



	December 31,		September 30,
	2016		2016
Salaries and other member benefits	$	47,677	$	87,197
Warranties		15,528		15,993
Interest payable		5,789		9,071
Current portion of acquired performance obligations and unfavorable contracts (1)		2,910		2,910
Accrued retirement benefits		2,503		2,505
Current portion of loss reserve on contractual lease commitments		1,840		1,840
Current portion of deferred income from JV formation (Note 4)		6,452		6,552
Deferred revenues		7,577		5,779
Taxes, other than income		9,289		14,580
Other		16,258		10,200
	$	115,823	$	156,627

(1)

In connection with Woodward’s acquisition of GE Aviation Systems LLC’s (the “Seller”) thrust reverser actuation systems business located in Duarte, California (the “Duarte Acquisition”) in fiscal year 2013, Woodward assumed current and long-term performance obligations for contractual commitments that are expected to result in future economic losses. In addition, Woodward assumed current and long-term performance obligations for services to be provided to the Seller and others, partially offset by current and long-term assets related to contractual payments due from the Seller. The current portion of both obligations is included in Accrued liabilities.

Warranties

Provisions of Woodward’s sales agreements include product warranties customary to these types of agreements. Accruals are established for specifically identified warranty issues that are probable to result in future costs. Warranty costs are accrued on a non-specific basis whenever past experience indicates a normal and predictable pattern exists. Changes in accrued product warranties were as follows:



	Three-Months Ended December 31,
		2016		2015
Warranties, beginning of period	$	15,993	$	13,741
Expense, net of recoveries		1,923		3,236
Reductions for settling warranties		(2,032)		(3,469)
Foreign currency exchange rate changes		(356)		(138)
Warranties, end of period	$	15,528	$	13,370

Loss reserve on contractual lease commitments

In connection with the construction of a new production facility in Niles, Illinois, Woodward vacated a leased facility in Skokie, Illinois. During the first quarter of fiscal year 2016 Woodward fully vacated the Skokie facility and therefore recorded a charge of $8,165 to recognize a loss reserve against the estimated remaining contractual lease commitments, less anticipated sublease income.

The summary for the activity in the loss reserve during the three-months ended December 31, 2016 is as follows:



	Three-Months Ended December 31,
		2016		2015
Loss reserve on contractual lease commitments, beginning of period	$	9,242	$	2,464
Additions		-		8,165
Payments		(402)		-
Loss reserve on contractual lease commitments, end of period	$	8,840	$	10,629

Other liabilities included $7,000 of accrued loss reserve on contractual lease commitments that are not expected to be settled or paid within twelve months as of December 31, 2016.