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Recent Accounting Pronouncements | 6 Months Ended
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Mar. 31, 2016
Recent Accounting Pronouncements |
Recent Accounting Pronouncements | Note 2. Recent accounting pronouncements 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 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-b ased 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 any 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. ﻿
﻿ |  |  |  |  |  |  |  |
﻿ |  |  |  |  |  |  |  |
﻿ | 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 shows the impact of retrospectively applying this guidance to the Condensed Consolidated Statement of Cash Flows for the six-months ended March 31, 2015. ﻿
﻿ |  |  |  |  |  |  |  |
﻿ |  |  |  |  |  |  |  |
﻿ | Six-Months Ended March 31, 2015
﻿ | As previously reported |  | Adjustment |  | As recast
﻿Statement of Cash Flows: |  |  |  |  |  |  |  |
﻿Net cash provided by operating activities | $ | 122,540 |  | $ | 736 |  | $ | 123,276
﻿Net cash used in investing activities |  | (107,057) |  |  | - |  |  | (107,057)
﻿Net cash used in financing activities |  | (37,674) |  |  | (736) |  |  | (38,410)
﻿Effect of exchange rate changes on cash and cash equivalents |  | (12,335) |  |  | - |  |  | (12,335)
﻿Net change in cash and cash equivalents | $ | (34,526) |  | $ | - |  | $ | (34,526)
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 in fiscal year 2015, none of which was recognized on the balance sheet, was $7,299. As of September 30, 2015, future minimum rental payments required under operating leases, none of which were recognized on the balance sheet, were $19,546. 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, 201 6 (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 following table shows the impact of retrospectively applying this guidance to the Condensed Consolidated Balance Sheet deferred tax assets and liabilities as of September 30, 2015.
﻿ |  |  |  |  |  |  |  |
﻿ |  |  |  |  |  |  |  |
﻿ | September 30, 2015
﻿ | As previously reported |  | Adjustment |  | As recast
﻿Current deferred income tax assets | $ | 29,766 |  | $ | (29,766) |  | $ | -
﻿Total current assets |  | 947,476 |  |  | (29,766) |  |  | 917,710
﻿Noncurrent deferred income tax assets |  | 9,388 |  |  | 3,717 |  |  | 13,105
﻿Total assets |  | 2,539,965 |  |  | (26,049) |  |  | 2,513,916
﻿ |  |  |  |  |  |  |  |
﻿Current deferred income tax liabilities |  | 14 |  |  | (14) |  |  | -
﻿Total current liabilities |  | 338,222 |  |  | (14) |  |  | 338,208
﻿Noncurrent deferred income tax liabilities |  | 82,449 |  |  | (26,035) |  |  | 56,414
﻿Total liabilities |  | 1,386,861 |  |  | (26,049) |  |  | 1,360,812
﻿Total liabilities and stockholders' equity |  | 2,539,965 |  |  | (26,049) |  |  | 2,513,916
﻿ |  |  |  |  |  |  |  |
﻿Net deferred tax liabilities |  | 43,309 |  |  | - |  |  | 43,309
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. Woodward has not determined in which period it will adopt the new guidance. Retrospective adoption is required. Woodward had unamortized debt issuance costs of $4,921 as of March 31, 2016 and $5,521 as of September 30, 2015. Long-term debt issuance costs will be reclassified from other assets to long-term debt upon adoption. 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.” The purpose of ASU 2014-09 is to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and IFRS. The amendments (i) remove inconsistencies and weaknesses in revenue requirements, (ii) provide a more robust framework for addressing revenue issues, (iii) improve comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets, (iv) provide more useful information to users of financial statements through improved disclosure requirements, and (v) simplify the preparation of financial statements by reducing the number of requirements to which an entity must refer. In July 2015, the FASB delayed the effective date for the adoption of ASU 2014-09 by one year, and as a result, ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2017 (fiscal year 2019 for Woodward), including interim periods within the reporting period. Early adoption in fiscal year 2018 is permitted for Woodward. An entity should adopt the amendments using one of the following methods: retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application. Woodward has not determined what transition method it will use. In March and April 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)” and ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing” which provide supplemental adoption guidance and clarification to ASC 2014-09. ASU 2016-08 and ASU 2016-10 must be adopted concurrently with the adoption of ASU 2014-09. Woodward is currently assessing the impact that the future adoption of these guidances may have on its Condensed Consolidated Financial Statements.

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