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New Accounting Standards | 12 Months Ended
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Sep. 30, 2016
Recent Accounting Pronouncements |
New Accounting Pronouncements and Changes in Accounting Principles [Text Block] | Note 2. New accounting standards From time to time, the Financial Accounting Standards Board (“FASB”) or other standards setting bodies issue new accounting pronouncements. Updates to the FASB Accounting Standards Codification (“ASC”) are communicated through issuance of an Accounting Standards Update (“ASU”). In October 2016, the FASB issued ASU 2016-16, “Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory.” The purpose of ASU 2016-16 is to eliminate the exception, other than for inventory transfers, under current U.S. GAAP under which the tax effects of intra-entity asset transfers (intercompany sales) are deferred until the transferred asset is sold to a third party or ot herwise recovered through use. U pon adoption of ASU 2016-16, Woodward will recognize the tax expense from the sale of that asset in the seller’s tax jurisdiction when the transfer occurs, even though the pre-tax effects of that transaction are eliminated in consolidation. Any deferred tax asset that arises in the buyer’s jurisdiction would also be recognized at the time of the transfer. ASU 2016-16 is effective for fiscal years beginning after December 15, 2017 (fiscal year 2019 for Woodward), including interim period s within the year of adoption. Early adoption is allowed only in the first quarter of fiscal year 2017 or the first quarter of fiscal year 2018. Modified retrospective adoption is required with any cumulative-effect adjustment recorded to retained earnings as of the beginning of the period of adoption. The cumulative-effect adjustment, if any, would consist of the net impact from (1) the write-off of any unamortized tax expense previously deferred and (2) recognition of any previously unrecognized deferred tax assets, net of any necessary valuation allowances. Woodward is currently assessing the impact this guidance may have on its Consolidated Financial Statements. In August 2016, the FASB issued ASU 2016-15, “State ment of Cash flows (Topic 230).” ASU 2016-15 is designed to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. As permitted, Woodward adopted ASU 2016-15 as of September 30, 2016, using the retrospective transition method, as required and made an accounting policy election upon adoption to use the cumulative earnings approach to classify distributions received from equity method investments. Woodward received no distributions from equity method investments in fiscal years 2016, 2015 and 2014. The adoption of ASU 2016-15 had no impact on the reported cash flows of the company for any period presented. In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Los ses on Financial Instruments.” ASU 2016-13 adds a current expected credit loss (“CECL”) impairment model to U.S. GAAP that is based on expected losses rather than incurred losses. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019 (fiscal year 2021 for Woodward), including interim periods within the year of adoption. Early adoption is permitted for fiscal years beginning after December 15, 2018 (fiscal year 2020 for Woodward), including interim periods within those fiscal years. Woodward has not determined in which period it will adopt the new guidance but does not expect the application of the CECL impairment model to have a significant impact on Woodward’s allowance for uncollectible amounts for accounts receivable and notes receivable from municipalities. In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting,” to simplify financial reporting of the income tax impacts of share-based compensation arrangements. As early adoption is allowed, Woodward adopted ASU 2016-09 during the second quarter of fiscal year 2016. Under ASU 2016-09 Woodward classifies the excess income tax benefits from stock-based compensation arrangements as a discrete item within income tax expense, rather than recognizing such excess income tax benefits in additional paid-in capital. As required by ASU 2016-09, Woodward applied this classification guidance effective as of October 1, 2015. Under ASU 2016-09, excess income tax benefits from stock-based compensation arrangements are classified as cash flow from operations, rather than as cash flow from financing activities. In addition, when Woodward withholds shares from an employee’s exercise of stock options to fund payment by Woodward of the employee’s taxes, the payment is classified as a financing activity. Woodward has elected to apply the cash flow classification guidance of ASU 2016-09 retrospectively to all prior periods presented. Woodward has elected to continue to estimate the number of stock-based awards expected to vest, as permitted by ASU 2016-09, rather than electing to account for forfeitures as they occur. The following table shows the impact of retrospectively applying this guidance to the Condensed Consolidated Statement of Earnings and Condensed Consolidated Statement of Cash Flows for the three-months ended December 31, 2015. ﻿
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﻿ |  |  |  |  |  |  |  |
﻿ | Three-Months Ended December 31, 2015
﻿ | As previously reported |  | Adjustment |  | As recast
﻿Statement of Earnings: |  |  |  |  |  |  |  |
﻿Earnings before income taxes | $ | 27,956 |  | $ | - |  | $ | 27,956
﻿Income tax expense |  | 2,345 |  |  | (209) |  |  | 2,136
﻿Net earnings | $ | 25,611 |  | $ | 209 |  | $ | 25,820
﻿ |  |  |  |  |  |  |  |
﻿Earnings per share: |  |  |  |  |  |  |  |
﻿Basic earnings per share | $ | 0.41 |  | $ | - |  | $ | 0.41
﻿Diluted earnings per share | $ | 0.40 |  | $ | - |  | $ | 0.40
﻿ |  |  |  |  |  |  |  |
﻿Weighted average common shares outstanding: |  |  |  |  |  |  |  |
﻿Basic |  | 63,054 |  |  | - |  |  | 63,054
﻿Diluted |  | 64,373 |  |  | 79 |  |  | 64,452
﻿ |  |  |  |  |  |  |  |
﻿Statement of Cash Flows: |  |  |  |  |  |  |  |
﻿Net cash provided by operating activities | $ | 37,112 |  | $ | 248 |  | $ | 37,360
﻿Net cash used in investing activities |  | (31,279) |  |  | - |  |  | (31,279)
﻿Net cash used in financing activities |  | (1,131) |  |  | (248) |  |  | (1,379)
﻿Effect of exchange rate changes on cash and cash equivalents |  | (2,482) |  |  | - |  |  | (2,482)
﻿Net change in cash and cash equivalents | $ | 2,220 |  | $ | - |  | $ | 2,220
The following table s shows the impact of retrospectively applying this guidance to the Consolidated Statement s of Cash Flows for the fiscal year s ended September 30, 2015 and September 30, 2014. ﻿
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﻿ |  |  |  |  |  |  |  |
﻿ | Fiscal Year Ended September 30, 2015
﻿ | As previously reported |  | Adjustment |  | As recast
﻿Statement of Cash Flows: |  |  |  |  |  |  |  |
﻿Net cash provided by operating activities | $ | 287,429 |  | $ | 8,561 |  | $ | 295,990
﻿Net cash used in investing activities |  | (284,083) |  |  | - |  |  | (284,083)
﻿Net cash used in financing activities |  | (25,445) |  |  | (8,561) |  |  | (34,006)
﻿Effect of exchange rate changes on cash and cash equivalents |  | (10,986) |  |  | - |  |  | (10,986)
﻿Net change in cash and cash equivalents | $ | (33,085) |  | $ | - |  | $ | (33,085)
﻿ ﻿
﻿ |  |  |  |  |  |  |  |
﻿ |  |  |  |  |  |  |  |
﻿ | Fiscal Year Ended September 30, 2014
﻿ | As previously reported |  | Adjustment |  | As recast
﻿Statement of Cash Flows: |  |  |  |  |  |  |  |
﻿Net cash provided by operating activities | $ | 268,083 |  | $ | 5,487 |  | $ | 273,570
﻿Net cash used in investing activities |  | (205,829) |  |  | - |  |  | (205,829)
﻿Net cash provided by (used in) financing activities |  | 9,477 |  |  | (5,487) |  |  | 3,990
﻿Effect of exchange rate changes on cash and cash equivalents |  | (5,000) |  |  | - |  |  | (5,000)
﻿Net change in cash and cash equivalents | $ | 66,731 |  | $ | - |  | $ | 66,731
In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” The purpose of ASU 2016-02 is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 (fiscal year 2020 for Woodward), including interim periods within the year of adoption. In transition, Woodward will be required to recognize and measure leases beginning in the earliest period presented using a modified retrospective approach; therefore, Woodward anticipates restating its Consolidated Financial Statements for the two fiscal years prior to the year of adoption. Early adoption is permitted. Woodward has not determined in which period it will adopt the new guidance and is currently assessing the impact this guidance may have on its Consolidated Financial Statements, including which of its existing operating leases will be impacted by the new guidance. Rent expense for all operating leases, none of which was recognized on the balance sheet, was $7,359 in fiscal year 2016, $7,299 in fiscal year 2015, and $10,897 in fiscal year 2014. F uture minimum rental payments required under operating leases, none of which were recognized on the balance sheet, were $15,612 as of September 30, 2016. In November 2015, the FASB issued ASU 2015-17, “Balance Sheet Classification of Deferred Taxes,” to simplify financial reporting and more closely conform U.S. GAAP with International Financial Reporting Standards (“IFRS”). Under ASU 2015-17, Woodward will classify all deferred tax assets and liabilities by taxing jurisdiction, along with any related valuation allowances, as either a single non-current asset or liability on the balance sheet. ASU 2015-17 is effective for fiscal years − and interim periods within those fiscal years − beginning after December 15, 2016 (fiscal year 2018 for Woodward). As early adoption is allowed, Woodward adopted ASU 2015-17 during its second quarter of fiscal year 2016, and retrospectively applied the guidance to its deferred tax assets and liabilities as of September 30, 2015. The table below shows the impact of retrospectively applying this guidance to the Consolidated Balance Sheet deferred tax assets and liabilities as of September 30, 2015. In April 2015, the FASB issued ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs.” Under ASU 2015-03, Woodward will present debt issuance costs in the balance sheet as a reduction from the related debt liability rather than as an asset. Amortization of such costs will continue to be reported as interest expense. ASU 2015-03 is effective for fiscal years − and interim periods within those fiscal years − beginning after December 15, 2015 (fiscal year 2017 for Woodward). Early adoption is allowed. In August 2015, the FASB issued ASU 2015-15, “Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements.” ASU 2015-15 supplements the requirements of ASU 2015-03 by allowing an entity to defer and present debt issuance costs related to a line of credit arrangement as an asset and subsequently amortize the deferred costs ratably over the term of the line of credit arrangement. As early adoption is allowed, Woodward adopted ASU 2015-03 and ASU 2015-15 during its fourth quarter of fiscal year 2016, and retrospectively applied the guidance to its unamortized debt issuance costs as of September 30, 2015. As permitted by ASU 2015-15, Woodward will continue to present debt issuance costs related to line-of-credit arrangements as an asset on its balance sheet. The table below shows the impact of retrospectively applying ASU 2015-17 and ASU 2015-03 to the Consolidated Balance Sheet as of September 30, 2015.
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﻿ |  |  |  |  |  |  |  |  |  |  |
﻿ | September 30, 2015
﻿ | As previously reported |  | Adjustment for ASU 2015-17 |  | Adjustment for ASU 2015-03 |  | As recast
﻿Current deferred income tax assets | $ | 29,766 |  | $ | (29,766) |  | $ | - |  | $ | -
﻿Other current assets |  | 43,791 |  |  | - |  |  | (291) |  |  | 43,500
﻿Total current assets |  | 947,476 |  |  | (29,766) |  |  | (291) |  |  | 917,419
﻿Noncurrent deferred income tax assets |  | 9,388 |  |  | 3,717 |  |  | - |  |  | 13,105
﻿Other assets |  | 44,886 |  |  | - |  |  | (1,221) |  |  | 43,665
﻿Total assets |  | 2,539,965 |  |  | (26,049) |  |  | (1,512) |  |  | 2,512,404
﻿ |  |  |  |  |  |  |  |  |  |  |
﻿Current deferred income tax liabilities |  | 14 |  |  | (14) |  |  | - |  |  | -
﻿Total current liabilities |  | 338,222 |  |  | (14) |  |  | - |  |  | 338,208
﻿Long-term debt, less current portion |  | 850,000 |  |  | - |  |  | (1,512) |  |  | 848,488
﻿Noncurrent deferred income tax liabilities |  | 82,449 |  |  | (26,035) |  |  | - |  |  | 56,414
﻿Total liabilities |  | 1,386,861 |  |  | (26,049) |  |  | (1,512) |  |  | 1,359,300
﻿Total liabilities and stockholders' equity |  | 2,539,965 |  |  | (26,049) |  |  | (1,512) |  |  | 2,512,404
﻿ |  |  |  |  |  |  |  |  |  |  |
﻿Net deferred tax liabilities |  | 43,309 |  |  | - |  |  | - |  |  | 43,309
In April 2015, the FASB issued ASU 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis” in response to stakeholders’ concerns about current accounting for consolidation of certain legal entities and changes the analysis that a reporting entity must perform to determine whether it should consolidate such legal entities. ASU 2015-02 is effective for public business entities for fiscal years − and interim periods within those fiscal years − beginning after December 15, 2015, but early adoption is allowed. Woodward adopted ASU 2015-02 on January 1, 2016, concurrent with the consummation of the joint venture formation described in Note 4, “Joint ventures”. The adoption of ASU 2015-02 had no impact on Woodward’s conclusion that the joint venture described in Note 4 should not be consolidated following the guidance of ASC 810, Consolidation. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers” and has subsequently issued several supplemental and/or clarifying ASUs (collectively “ASC 606”). ASC 606 prescribes a single common revenue standard that replaces most existing U.S. GAAP revenue recognition guidance. ASC 606 outlines a five-step model, under which Woodward will recognize revenue when performance obligations within a customer contract are satisfied. ASC 606 is intended to provide more consistent interpretation and application of the principles outlined in the standard across filers in multiple industries and within the same industries compared to current practices, which should improve comparability. Adoption of ASC 606 is required for annual reporting periods beginning after December 15, 2017 (fiscal year 2019 for Woodward), including interim periods within the reporting period. Woodward may elect to adopt ASC 606 in fiscal year 2018, but does not expect to do so. Upon adoption, Woodward must elect to adopt either retrospectively to each prior reporting period presented or using the cumulative effect transition method with the cumulative effect of initial adoption recognized at the date of initial application. Woodward has not determined what transition method it will use. Woodward is currently assessing the impact that the future adoption of ASC 606 may have on its Consolidated Financial Statements by analyzing its current portfolio of customer contracts, including a review of historical accounting policies and practices to identify potential differences in applying the guidance of ASC 606.

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