Accrued Liabilities

12 Months Ended

Sep. 30, 2019

Accrued Liabilities

Accrued Liabilities

Note 15. Accrued liabilities

	At September 30,
	2019		2018
Salaries and other member benefits	$	115,649	$	88,643
Warranties		27,309		20,130
Interest payable		13,808		18,611
Accrued retirement benefits		3,587		3,571
Current portion of loss reserve on contractual lease commitments		1,245		1,245
Net current contract liabilities (Note 3)		27,891		9,659
Restructuring charges		507		16,522
Taxes, other than income		15,708		21,128
Other		22,423		15,004
	$	228,127	$	194,513

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 as revenue is recognized on a non-specific basis whenever past experience indicates a normal and predictable pattern exists. Changes in accrued product warranties were as follows:

	Twelve-Months Ended September 30,
	2019		2018		2017
Warranties, beginning of period	$	20,130	$	13,597	$	15,993
Increases due to acquisition of L'Orange		-		6,045		-
Impact from adoption of ASC 606 (Note 3)		705		-		-
Expense, net of recoveries		14,559		5,158		9,135
Reductions for settling warranties		(7,540)		(4,413)		(11,692)
Foreign currency exchange rate changes		(545)		(257)		161
Warranties, end of period	$	27,309	$	20,130	$	13,597

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, and recorded a loss reserve on the estimated remaining contractual lease commitment, net of anticipated sublease income. During the third quarter of fiscal year 2017, Woodward entered into another sublease agreement with a third party related to a portion of the vacated Skokie facility. Woodward recorded a reduction in the loss reserve associated with the vacated Skokie facility of $2,322 related to the anticipated sublease income it will receive.

The summary for the activity in the loss reserve during the fiscal years ended September 30, 2019, 2018, and 2017 is as follows:

p
	Twelve-Months Ended September 30,
	2019		2018			2017
Loss reserve on contractual lease commitments, beginning of period	$	3,931	$	5,270	$	9,242
Payments		(932)		(1,339)		(1,650)
Non-cash adjustments		-		-		(2,322)
Loss reserve on contractual lease commitments, end of period	$	2,999	$	3,931	$	5,270

Other liabilities included $1,754 and $2,686 of accrued loss reserve on contractual lease commitments as of September 30, 2019 and September 30, 2018, respectively, which are not expected to be settled or paid within twelve months of the respective balance sheet date, net of expected sublease income.

Restructuring charges

In fiscal year 2018, the Company recorded restructuring charges totaling $17,013, the majority of which relate to the Company’s decision to relocate its Duarte, California operations to the Company’s newly renovated Drake Campus in Fort Collins, Colorado. The Duarte facility, which manufactures thrust reverser actuation systems, is part of the Company’s Aerospace segment. The remaining restructuring charges recognized during the fiscal year ended September 30, 2018 consist of workforce management costs related to aligning the Company’s industrial turbomachinery business, which is part of the Company’s Industrial segment, with the then current market conditions. All of the restructuring charges recorded during the

fiscal year ended September 30, 2018 were recorded as nonsegment expenses and are expected to be paid within one year of the balance sheet date.

The summary of activity in accrued restructuring charges during the fiscal years ended September 30, 2019 and September 30, 2018 is as follows:

				Period Activity
	Balances as of October 1, 2018			Charges (gains)	Cash receipts (payments)		Non-cash activity		Balances as of September 30, 2019
Workforce management costs associated with:
Duarte plant relocation	$	12,504	$	-	$	(8,685)	$	(3,379)	$	440
Industrial turbomachinery business realignment		4,018		-		(3,760)		(191)		67
Total	$	16,522	$	-	$	(12,445)	$	(3,570)	$	507
				Period Activity
	Balances as of October 1, 2017			Charges (gains)	Cash receipts (payments)		Non-cash activity		Balances as of September 30, 2018
Workforce management costs associated with:
Duarte plant relocation	$	-	$	12,504	$	-	$	-	$	12,504
Industrial turbomachinery business realignment		-		4,509		(491)		-		4,018
Total	$	-	$	17,013	$	(491)	$	-	$	16,522

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