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Credit Facilities, Short-term Borrowings and Long-term Debt | 12 Months Ended
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Sep. 30, 2016
Debt Disclosure |
Credit Facilities, Short-term Borrowings and Long-term Debt | Note 12. Credit facilities, short-term borrowings and long-term debt As of September 30, 2016, Woodward’s short-term borrowings and availability under its various short-term credit facilities follows: ﻿
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﻿ | Total availability |  | Outstanding letters of credit and guarantees |  | Outstanding borrowings |  | Remaining availability
﻿Revolving credit facility | $ | 1,000,000 |  | $ | (7,830) |  | $ | (156,700) |  | $ | 835,470
﻿Foreign lines of credit and overdraft facilities |  | 44,001 |  |  | - |  |  | - |  |  | 44,001
﻿Foreign performance guarantee facilities |  | 8,567 |  |  | (243) |  |  | - |  |  | 8,324
﻿ | $ | 1,052,568 |  | $ | (8,073) |  | $ | (156,700) |  | $ | 887,795
Revolving credit facility Woodward maintains a $1,000,000 revolving credit facility established under a revolving credit agreement among Woodward, a syndicate of lenders and Wells Fargo Bank, National Association, as administrative agent (the “Revolving Credit Agreement”). The Revolving Credit Agreement provides for the option to increase available borrowings to up to $1,200,000, subject to lenders’ participation. Borrowings under the Revolving Credit Agreement generally bear interest at LIBOR plus 0.85% to 1.65%. The Revolving Credit Agreement matures in April 2020. Under the Revolving Credit Agreement, there were $156,700 in principal amount of borrowings outstanding as of September 30, 2016, at an effective interest rate of 1.77%. Under the Revolving Credit Agreement, there were $350,000 in principal amount of borrowings outstanding as of September 30, 2015, at an effective interest rate of 1.44%. As of September 30, 2016, $150,000 of the borrowings under the Revolving Credit Agreement were classified as short-term based on Woodward’s intent and ability to pay this amount in the next twelve months. As of September 30, 2015, the entire outstanding balance on the Revolving Credit Agreement was classified as long-term debt. The Revolving Credit Agreement contains certain covenants customary with such agreements, which are generally consistent with the covenants applicable to Woodward’s long-term debt agreements, and contains customary events of default, including certain cross default provisions related to Woodward’s other outstanding debt arrangements in excess of $60,000, the occurrence of which would permit the lenders to accelerate the amounts due thereunder. In addition, the Revolving Credit Agreement includes the following financial covenants: (i) a maximum permitted leverage ratio of consolidated net debt to consolidated earnings before interest, taxes, depreciation, stock-based compensation, and amortization, plus any usual non-cash charges to the extent deducted in computing net income minus any usual non-cash gains to the extent added in computing net income (“Leverage Ratio”) for Woodward and its consolidated subsidiaries of 3.5 to 1.0, which ratio, subject to certain restrictions, may increase to 4.0 to 1.0 for the fiscal quarter (and the immediately following fiscal quarter) during which a permitted acquisition occurs and to 3.75 to 1.0 for the following two succeeding fiscal quarters, and (ii) a minimum consolidated net worth of $800,000 plus (a) 50% of Woodward’s positive net income for the prior fiscal year and (b) 50% of Woodward’s net cash proceeds resulting from certain issuances of stock, subject to certain adjustments. Woodward’s obligations under the Revolving Credit Agreement are guaranteed by Woodward FST, Inc., Woodward MPC, Inc., and Woodward HRT, Inc., each of which is a wholly owned subsidiary of Woodward. Short-term borrowings A Chinese subsidiary of Woodward has a local uncommitted credit facility with the Hong Kong and Shanghai Banking Company under which it has the ability to borrow up to either $22,700, or the local currency equivalent of $22,700. Any cash borrowings under the local Chinese credit facility are secured by a parent guarantee from Woodward. The Chinese subsidiary may utilize the local facility for cash borrowings to support its operating cash needs. Local currency borrowings on the Chinese credit facility are charged interest at the prevailing interest rate offered by the People’s Bank of China on the date of borrowing, plus a margin equal to 15% of that prevailing rate. U.S. dollar borrowings on the credit facility are charged interest at the lender’s cost of borrowing rate at the date of borrowing, plus 3%. The local credit facility expires in November 2016. The Chinese subsidiary had no outstanding cash borrowings against the local credit facility at September 30, 2016 and September 30, 2015. A Brazilian subsidiary of Woodward has a local uncommitted credit facility with the Banco J.P. Morgan S.A. under which it has the ability to borrow up to 52,000 Brazilian Real. Any cash borrowings under the local Brazilian credit facility are secured by a parent guarantee from Woodward. The Brazilian subsidiary may utilize the local facility to support its operating cash needs. Local currency borrowings on the Brazilian credit facility are charged interest at the lender’s cost of borrowing rate at the date of borrowing, plus 1.75%. The local credit facility e xpires on January 16, 2017. The Brazilian subsidiary had no outstanding cash borrowings at September 30, 2016 and $2,430 of outstanding cash borrowings at September 30, 2015 against the local credit facility. Woodward also has other foreign lines of credit and foreign overdraft facilities at various financial institutions, which are generally reviewed annually for renewal and are subject to the usual terms and conditions applied by the financial institutions. Pursuant to the terms of the related facility agreements, Woodward’s foreign performance guarantee facilities are limited in use to providing performance guarantees to third parties. There were no borrowings outstanding as of September 30, 2016 and September 30, 2015 on Woodward’s other foreign lines of credit and foreign overdraft facilities. Long-term debt
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﻿ |  | September 30, |  | September 30,
﻿ |  | 2016 |  | 2015
﻿Revolving credit facility - Floating rate (LIBOR plus 0.85% - 1.65%), due April 2020, unsecured |  | $ | 156,700 |  | $ | 350,000
﻿Series C notes – 5.92%, due October 2015; unsecured |  |  | - |  |  | 50,000
﻿Series D notes – 6.39%, due October 2018; unsecured |  |  | 100,000 |  |  | 100,000
﻿Series E notes – 7.81%, due April 2016; unsecured |  |  | - |  |  | 57,000
﻿Series F notes – 8.24%, due April 2019; unsecured |  |  | 43,000 |  |  | 43,000
﻿Series G notes – 3.42%, due November 2020; unsecured |  |  | 50,000 |  |  | 50,000
﻿Series H notes – 4.03%, due November 2023; unsecured |  |  | 25,000 |  |  | 25,000
﻿Series I notes – 4.18%, due November 2025; unsecured |  |  | 25,000 |  |  | 25,000
﻿Series J notes – Floating rate (LIBOR plus 1.25%), due November 2020; unsecured |  |  | 50,000 |  |  | 50,000
﻿Series K notes – 4.03%, due November 2023; unsecured |  |  | 50,000 |  |  | 50,000
﻿Series L notes – 4.18%, due November 2025; unsecured |  |  | 50,000 |  |  | 50,000
﻿Series M notes – 1.12% due September 2026; unsecured |  |  | 44,886 |  |  | -
﻿Series N notes – 1.31% due September 2028; unsecured |  |  | 86,406 |  |  | -
﻿Series O notes – 1.57% due September 2031; unsecured |  |  | 48,252 |  |  | -
﻿Total debt |  |  | 729,244 |  |  | 850,000
﻿Less: Current portion of long-term debt |  |  | (150,000) |  |  | -
﻿ Unamortized debt issuance costs |  |  | (2,091) |  |  | (1,512)
﻿Long-term debt, excluding current portion |  | $ | 577,153 |  | $ | 848,488
The Notes In October 2008, Woodward entered into a note purchase agreement relating to the Series C and D Notes (the “2008 Notes”). In April 2009, Woodward entered into a note purchase agreement relating to the Series E and F Notes (the “2009 Notes”). On October 1, 2013, Woodward entered into a note purchase agreement relating to the sale by Woodward of an aggregate principal amount of $250,000 of its senior unsecured notes in a series of private placement transactions. Woodward issued the Series G, H and I Notes (the “First Closing Notes”) on October 1, 2013. Woodward issued the Series J, K and L Notes (the “Second Closing Notes”, and together with the 2008 Notes, 2009 Notes and the First Closing Notes, the “USD Notes”) on November 15, 2013. On September 23, 2016, Woodward and the BV Subsidiary, each entered into note purchase agreements relating to the sale by Woodward and the BV Subsidiary of an aggregate principal amount of €160,000 of senior unsecured notes in a series of private placement transactions. Woodward issued €40,000 aggregate principal amount of Woodward’s Series M Senior Notes (the “Series M Notes”). The BV Subsidiary issued (a) €77,000 aggregate principal amount of the BV Subsidiary’s Series N Senior Notes (the “Series N Notes”) and (b) €43,000 aggregate principal amount of the BV Subsidiary’s Series O Senior Notes (the “Series O Notes” and together with the Series M Notes and the Series N Notes, the “2016 Notes”, and together with the USD Notes, collectively, the “Notes”). Interest on the 2008 Notes, the First Closing Notes, and the Series K and L Notes is payable semi-annually on April 1 and October 1 of each year until all principal is paid. Interest on the 2009 Notes is payable semi-annually on April 15 and October 15 of each year until all principal is paid. Interest on the 2016 Notes will be payable semi-annually on March 23 and September 23 of each year, commencing on March 23, 2017, until all principal is paid. Interest on the Series J Notes is payable quarterly on January 1, April 1, July 1 and October 1 of each year until al l principal is paid. As of September 30, 2016, the Series J Notes bore interest at an effective rate of 2.06%. On October 1, 2015, Woodward paid the entire principal balance of $50,000 on the Series C notes using borrowings under the Revolving Credit Agreement. On April 4, 2016, Woodward paid the entire principal balance of $57,000 on the Series E notes using borrowings under the Revolving Credit Agreement. None of the Notes were registered under the Securities Act of 1933 and they may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. Holders of the Notes do not have any registration rights. All of the issued Notes are held by multiple institutions. Woodward’s obligations under the Notes are guaranteed by (i) Woodward FST, Inc., Woodward MPC, Inc., and Woodward HRT, Inc., each of which is a wholly owned subsidiary of Woodward, and (ii) in the case of the BV Subsidiary’s Series N and O Notes, by Woodward. Woodward’s obligations under the Notes rank equal in right of payment with all of Woodward’s other unsecured unsubordinated debt, including its outstanding debt under its revolving credit facility. The USD Notes and the 2016 Notes contain covenants customary for such financings, including, among other things, covenants that place limits on Woodward’s ability to incur liens on assets, incur additional debt (including a leverage or coverage based maintenance test), transfer or sell Woodward’s assets, merge or consolidate with other persons and enter into material transactions with affiliates. Under the financial covenants contained in the note purchase agreement governing the USD Notes, Woodward’s priority debt may not exceed, at any time, 25% of its consolidated net worth. Woodward’s Leverage Ratio cannot exceed 4.0 to 1.0 during any material acquisition period, or 3.5 to 1.0 at any other time on a rolling four quarter basis. In the event that Woodward’s Leverage Ratio exceeds 3.5 to 1.0 during any material acquisition period, the interest rate on each series of Notes will increase. Further for the USD Notes, Woodward’s consolidated net worth must at all times equal or exceed $800,000, plus 50% of Woodward’s consolidated net earnings for each fiscal year beginning with the fiscal y ear ending September 30, 2014 and for the 2016 Notes, Woodward’s consolidated net worth must at all times equal or exceed $1,046,619 plus 50% of Woodward’s positive net income for each completed fiscal year beginning with the fiscal year ending September 30, 2016. Woodward, at its option, is permitted at any time to prepay all, or any part of the then-outstanding principal amount of any series of the Notes at 100% of the principal amount of the series of Notes to be prepaid (but, in the case of partial prepayment, not less than $1,000 for the USD Notes and not less than €1,000 for the 2016 Notes), together with interest accrued on such amount to be prepaid to the date of payment, plus any applicable prepayment compensation amount. The prepayment compensation amount, as to the USD Notes other than the Series J Notes, is computed by discounting the remaining scheduled payments of interest and principal of the USD Notes being prepaid at a discount rate equal to the sum of 50 basis points and the yield to maturity of U.S. Treasury securities having a maturity equal to the remaining average life of the USD Notes being prepaid. The prepayment compensation amount, as to the Series J Notes, generally is computed as a percentage of the principal amount of the Series J Notes equal to (a) 2%, on or prior to November 15, 2014, (b) 1%, after November 15, 2014 and on or prior to November 15, 2015, and (c) 0% after November 15, 2015. The prepayment compensation amount as to the 2016 Notes that is not subject to a swap agreement is computed by discounting the remaining scheduled payments of interest and principal of such notes being prepaid at a discount rate equal to the sum of 50 basis points and the yield to maturity of the German Bund having a maturity equal to the remaining average life of the 2016 Notes being prepaid. The prepayment compensation amount as to a 2016 Note that is subject to a swap agreement entered into by the holder of such note under which the holder will receive payment in U.S. dollars in exchange for scheduled Euro payments of principal and interest on the Euro denominated 2016 Notes, adjusted for theoretical holder returns foregone on hypothetical reinvestments in U.S. Treasury securities (the “Swapped Notes”) is equal to the excess of an amount equal to the remaining scheduled payments to be paid in respect of such called principal under such swap agreement discounted at a rate equal to 50 basis points and the yield to maturity of U.S. Treasury securities having a maturity equal to the remaining average life of the Swapped Notes being prepaid over the amount of payments in U.S. dollars that would be paid to the holder of the Swapped Note in respect of the called principal under the swap agreement, which amount will be increased or reduced, as applicable, in an amount equal to any net gain or loss realized by the holder of such Swapped Note on swap transactions under such swap agreement as a result of such prepayment. Required future principal payments of the Notes as of September 30, 2016 are as follows: ﻿
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﻿Year Ending September 30: |  |  |
﻿2017 |  | $ | -
﻿2018 |  |  | -
﻿2019 |  |  | 143,000
﻿2020 |  |  | -
﻿2021 |  |  | 100,000
﻿Thereafter |  |  | 329,544
﻿ |  | $ | 572,544
Certain financial and other covenants under Woodward's debt agreements contain customary restrictions on the operation of its business. Management believes that Woodward was in compliance with the covenants under the long-term debt agreements at September 30, 2016. Debt Issuance Costs In connection with the 2016 Note Purchase Agreements, in fiscal year 2016, Woodward incurred $863 in financing costs, which are deferred and will be amortized using the straight-line method over the life of the agreement. In connection with the Revolving Credit Agreement, in fiscal year 2015, Woodward incurred $2,359 in financing costs, which are deferred and are being amortized using the straight-line method over the life of the agreement. As of April 28, 2015, Woodward also had $2,014 remaining of deferred financing costs incurred in connection with the prior revolving credit agreement, which have been combined with the financing costs associated with the Revolving Credit Agreement and are being amortized using the straight-line method over the life of the Revolving Credit Agreement. In connection with the 2013 Note Purchase Agreement, in fiscal year 2014, Woodward incurred $1,297 in financing costs, which are deferred and will be amortized using the straight-line method over the life of the agreement. Amounts recognized as interest expense from the amortization of debt issuance costs were $1,165 in fiscal year 2016, $1,114 in fiscal year 2015, and $1,014 in fiscal year 2014. Unamortized debt issuance costs associated with the 2016 Notes and USD Notes of $2,091 as of September 30, 2016 and $1,512 as of September 30, 2015 have been recorded as a reduction in “Long-term debt, less current portion” at the Consolidated Balance Sheets. Unamortized debt issuance costs associated with the Revolving Credit Agreement of $3,134 as of September 30, 2016 and $4,009 as of September 30, 2015 have been recorded as “Other assets” at the Consolidated Balance Sheets. Amortization of debt issuance costs is included in operating activities in the Consolidated Statements of Cash Flows.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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