Note 13. Accrued liabilities



	March 31,		September 30,
	2016		2015
Salaries and other member benefits	$	53,808	$	90,472
Warranties		15,553		13,741
Interest payable		11,025		12,526
Current portion of acquired performance obligations and unfavorable contracts (1)		4,663		6,651
Accrued retirement benefits		2,479		2,481
Current portion of loss reserve on contractual lease commitments		1,840		-
Current portion of deferred income from JV formation (Note 4)		6,109		-
Deferred revenues		7,688		10,004
Taxes, other than income		8,709		8,723
Other		11,523		11,338
	$	123,397	$	155,936

(1)

In connection with Woodward’s acquisition of GE Aviation Systems LLC’s (the “Seller”) thrust reverser actuation systems business located in Duarte, California (the “Duarte Acquisition”) in fiscal year 2013, Woodward assumed current and long-term performance obligations for contractual commitments that are expected to result in future economic losses. In addition, Woodward assumed current and long-term performance obligations for services to be provided to the Seller and others, partially offset by current and long-term assets related to contractual payments due from the Seller. The current portion of both obligations is included in Accrued liabilities.

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



	Six-Months Ended March 31,
		2016		2015
Warranties, beginning of period	$	13,741	$	16,916
Expense		6,411		3,922
Reductions for settling warranties		(4,743)		(5,965)
Foreign currency exchange rate changes		144		(866)
Warranties, end of period	$	15,553	$	14,007

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. During the first quarter of fiscal year 2016 Woodward fully vacated the Skokie facility and therefore recorded a charge of $8,165 to recognize a loss reserve against the estimated remaining contractual lease commitments, less anticipated sublease income.

The summary for the activity in the loss reserve during the three and six-months ended March 31, 2016 is as follows:



	Three-Months Ended		Six-Months Ended
	March 31, 2016		March 31, 2016
Loss reserve on contractual lease commitments, beginning of period	$	10,629	$	2,464
Additions		-		8,165
Reductions		(857)		(857)
Loss reserve on contractual lease commitments, end of period	$	9,772	$	9,772

Other liabilities included $7,932 of accrued loss reserve on contractual lease commitments that are not expected to be settled or paid within twelve months of March 31, 2016.