On January 4, 2016, Woodward and General Electric Company (“GE”), acting through its GE Aviation business unit, consummated the formation of a strategic joint venture between Woodward and GE (the “JV”) to develop, manufacture and support fuel systems for specified existing and all future GE commercial aircraft engines that produce thrust in excess of fifty thousand pounds.

Unamortized deferred revenue from material rights in connection with the JV formation included:


	December 31, 2019		September 30, 2019
Accrued liabilities	$	8,186	$	8,317
Other liabilities		229,011		230,588

Amortization of the deferred income (material right) recognized as an increase to sales was $1,708 for the three-months ended December 31, 2019 and $1,777 for the three-months ended December 31, 2018.

Woodward and GE jointly manage the JV and any significant decisions and/or actions of the JV require the mutual consent of both parties. Neither Woodward nor GE has a controlling financial interest in the JV, but both Woodward and GE do have the ability to significantly influence the operating and financial decisions of the JV. Therefore, Woodward is accounting for its 50% ownership interest in the JV using the equity method of accounting. The JV is a related party to Woodward.

For the three-months ended December 31, 2019 and 2018, other income related to Woodward’s equity interest in the earnings of the JV:


	Three-Months Ended December 31,
	2019		2018
Other income	$	3,212	$	1,465

For the three-months ended December 31, 2019 and 2018, cash distributions, recognized in Net cash provided by operating activities on the Consolidated Statements of Cash Flows, from the JV include:


	Three-Months Ended December 31,
	2019		2018
Cash distributions	$	3,000	$	4,500

For the three-months ended December 31, 2019 and 2018 net sales to the JV were as follows:


	Three-Months Ended December 31,
	2019		2018
Net sales ⁽¹⁾	$	14,878	$	12,833

(1)Woodward recorded a reduction to sales of $7,234 for the three-months ended December 31, 2019 related to royalties paid to the JV by Woodward on sales by Woodward directly to third party aftermarket customers, compared to a reduction to sales of $9,182 for the three-months ended December 31, 2018.

The Condensed Consolidated Balance Sheets include “Accounts receivable” related to amounts the JV owed Woodward, “Accounts payable” related to amounts Woodward owed the JV, and “Other assets” related to Woodward’s net investment in the JV, as follows:


	December 31, 2019		September 30, 2019
Accounts receivable	$	5,442	$	5,906
Accounts payable		2,504		4,270
Other assets		7,755		7,543

Woodward recognized revenue for the JV’s engineering and development projects as an increase to contract liabilities in “Other liabilities” and costs recognized as costs to fulfill a contract as an increase in “Other assets.” Woodward’s contract liabilities included in “Other liabilities” as of December 31, 2019 were $71,364 compared to $69,079 as of fiscal year ended September 30, 2019. Woodward’s costs to fulfill a contract included in “Other assets” were $71,364 as of December 31, 2019 and $69,079 as of fiscal year ended September 30, 2019.