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Revenue (Tables) | 12 Months Ended
--- | ---
Sep. 30, 2019
Revenue |
Schedule of Revenue Recognition Time |
| Year Ended September 30, 2019
| Aerospace |  | Industrial |  | Consolidated
Point in time | $ | 762,042 |  | $ | 634,219 |  | $ | 1,396,261
Over time |  | 1,118,478 |  |  | 385,458 |  |  | 1,503,936
Total net sales | $ | 1,880,520 |  | $ | 1,019,677 |  | $ | 2,900,197
Schedule of Accounts Receivable |
|  | September 30, 2019 |  | September 30, 2018
Billed receivables |  |  |  |  |  |
Trade accounts receivable |  | $ | 381,942 |  | $ | 403,590
Other (Chinese financial institutions) |  |  | 42,171 |  |  | 23,191
Less: Allowance for uncollectible amounts |  |  | (7,908) |  |  | (3,938)
Net billed accounts receivable |  |  | 416,205 |  |  | 422,843
Current unbilled receivables (contract assets), net |  |  | 175,324 |  |  | 9,160
Total accounts receivable, net |  | $ | 591,529 |  | $ | 432,003
Schedule of Contract Liability |
|  | September 30, 2019 |  | September 30, 2018
|  |  | Current |  |  | Noncurrent |  |  | Current |  |  | Noncurrent
Deferred revenue from material rights from GE joint venture formation |  | $ | 8,317 |  | $ | 230,588 |  | $ | 7,087 |  | $ | 235,300
Deferred revenue from advance invoicing and/or prepayments from customers |  |  | 4,554 |  |  | 141 |  |  | 2,572 |  |  | -
Liability related to customer supplied inventory |  |  | 13,396 |  |  | - |  |  | - |  |  | -
Deferred revenue from material rights related to engineering and development funding |  |  | 1,624 |  |  | 106,436 |  |  | - |  |  | -
Net contract liabilities |  | $ | 27,891 |  | $ | 337,165 |  | $ | 9,659 |  | $ | 235,300
Schedule of Impact of the Adoption ASC 606 on Consolidated Financial Statement | T he following schedule quantifies the impact of adopting ASC 606 on the Consolidated Balance Sheet as of October 1, 2018. The effect of the new standard represents the increase (decrease) in the line item based on the adoption of ASC 606:
|  | September 30, 2018 ‎as reported |  | Effect of ‎ ASC 606 |  | October 1, 2018 ‎as adjusted
ASSETS |  |  |  |  |  |  |  |  |
Current assets: |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 83,594 |  | $ | - |  | $ | 83,594
Accounts receivable, net (1)(2) |  |  | 432,003 |  |  | 135,668 |  |  | 567,671
Inventories (1)(2) |  |  | 549,596 |  |  | (73,606) |  |  | 475,990
Income taxes receivable (5) |  |  | 6,397 |  |  | (1,247) |  |  | 5,150
Other current assets |  |  | 43,207 |  |  | (154) |  |  | 43,053
Total current assets |  |  | 1,114,797 |  |  | 60,661 |  |  | 1,175,458
Property, plant and equipment, net |  |  | 1,060,005 |  |  | - |  |  | 1,060,005
Goodwill |  |  | 813,250 |  |  | - |  |  | 813,250
Intangible assets, net (4) |  |  | 700,883 |  |  | (2,519) |  |  | 698,364
Deferred income tax assets (5) |  |  | 16,570 |  |  | (1,185) |  |  | 15,385
Other assets (1)(2)(3) |  |  | 85,144 |  |  | 85,865 |  |  | 171,009
Total assets |  | $ | 3,790,649 |  | $ | 142,822 |  | $ | 3,933,471
LIABILITIES AND STOCKHOLDERS' EQUITY |  |  |  |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |  |  |  |
Short-term borrowings |  | $ | 153,635 |  | $ | - |  | $ | 153,635
Accounts payable |  |  | 226,285 |  |  | - |  |  | 226,285
Income taxes payable (5) |  |  | 16,745 |  |  | 5,352 |  |  | 22,097
Accrued liabilities (2)(3) |  |  | 194,513 |  |  | 14,625 |  |  | 209,138
Total current liabilities |  |  | 591,178 |  |  | 19,977 |  |  | 611,155
Long-term debt, less current portion |  |  | 1,092,397 |  |  | - |  |  | 1,092,397
Deferred income tax liabilities (5) |  |  | 170,915 |  |  | 5,515 |  |  | 176,430
Other liabilities (3) |  |  | 398,055 |  |  | 78,630 |  |  | 476,685
Total liabilities |  |  | 2,252,545 |  |  | 104,122 |  |  | 2,356,667
Stockholders' equity: |  |  |  |  |  |  |  |  |
Preferred stock |  |  | - |  |  | - |  |  | -
Common stock |  |  | 106 |  |  | - |  |  | 106
Additional paid-in capital |  |  | 185,705 |  |  | - |  |  | 185,705
Accumulated other comprehensive losses |  |  | (74,942) |  |  | (45) |  |  | (74,987)
Deferred compensation |  |  | 8,431 |  |  | - |  |  | 8,431
Retained earnings |  |  | 1,966,643 |  |  | 38,745 |  |  | 2,005,388
|  |  | 2,085,943 |  |  | 38,700 |  |  | 2,124,643
Treasury stock at cost |  |  | (539,408) |  |  | - |  |  | (539,408)
Treasury stock held for deferred compensation |  |  | (8,431) |  |  | - |  |  | (8,431)
Total stockholders' equity |  |  | 1,538,104 |  |  | 38,700 |  |  | 1,576,804
Total liabilities and stockholders' equity |  | $ | 3,790,649 |  | $ | 142,822 |  | $ | 3,933,471
(1)The adoption of ASC 606 changed the revenue recognition practices for a number of revenue generating activities across Woodward’s businesses, although the most significant impacts are concentrated in product being produced for customers that have no alternative use to Woodward and Woodward has an enforceable right to payment with a profit, and MRO. The revenue related to these activities, which previously was accounted for on a point in time basis, is now required to use an over time model because the associated contracts meet one or more of the mandatory criteria established in ASC 606, as described above, and are included as current unbilled receivables in “Accounts receivable” and noncurrent unbilled receivables in “Other assets.” The change in the timing of revenue recognized in connection with over time contracts similarly changed the timing of manufacturing cost recognition and certain engineering and development costs, which are reflected as a reduction to inventory. (2)The value of noncash consideration in the form of exchanged products and other customer provided inventory is reflected in “Inventories,” and in contract liabilities, which are included in “Accrued liabilities.” (3)Woodward recorded customer funding of product engineering and development identified as material rights as current and noncurrent deferred revenue contract liabilities included in “Accrued liabilities” and “Other liabilities.” The related customer funded product engineering and development costs were capitalized as costs to fulfill a contract, to the extent of the contractually committed customer funded payments, and are recorded as “Other assets.” (4) The net book value of the backlog and customer relationships and contracts intangible assets was adjusted concurrent with the change in the timing of the associated revenue, resulting in a reduction in the net book value of these assets as of the date of adoption. (5)The value of tax assets and tax liabilities was impacted by the change in timing of the recognition of assets and liabilities within tax jurisdictions. T he following schedule quantifies the impact of adopting ASC 606 on the Consolidated Statements of Earnings for the fiscal year ended September 30, 2019. The effect of the new standard represent the increase (decrease) in the line item based on the adoption of ASC 606.
|  | Year Ended September 30, 2019
|  | Under previous standard |  | Effect of ‎ASC 606 |  | As reported
Net sales |  | $ | 2,790,557 |  | $ | 109,640 |  | $ | 2,900,197
Costs and expenses: |  |  |  |  |  |  |  |  |
Cost of goods sold |  |  | 2,088,087 |  |  | 104,567 |  |  | 2,192,654
Selling, general, and administrative expenses |  |  | 211,307 |  |  | (102) |  |  | 211,205
Research and development costs |  |  | 160,402 |  |  | (1,295) |  |  | 159,107
Interest expense |  |  | 44,001 |  |  | - |  |  | 44,001
Interest income |  |  | (1,413) |  |  | - |  |  | (1,413)
Other expense (income), net |  |  | (25,969) |  |  | - |  |  | (25,969)
Total costs and expenses |  |  | 2,476,415 |  |  | 103,170 |  |  | 2,579,585
Earnings before income taxes |  |  | 314,142 |  |  | 6,470 |  |  | 320,612
Income tax expense |  |  | 60,175 |  |  | 835 |  |  | 61,010
Net earnings |  | $ | 253,967 |  | $ | 5,635 |  | $ | 259,602
Earnings per share |  |  |  |  |  |  |  |  |
Basic earnings per share |  | $ | 4.10 |  | $ | 0.09 |  | $ | 4.19
Diluted earnings per share |  | $ | 3.94 |  | $ | 0.08 |  | $ | 4.02
Weighted Average Common Shares Outstanding (Note 4): |  |  |  |  |  |  |  |  |
Basic |  |  | 61,950 |  |  |  |  |  | 61,950
Diluted |  |  | 64,498 |  |  |  |  |  | 64,498
The adoption of ASC 606 resulted in an increase to net sales and cost of goods sold primarily due to the recognition of noncash consideration in the form of customer supplied inventory and the accelerated recognition of revenue and associated cost of goods sold for over time contracts, which would have been recognized at a point in time under the previous standard. The increases were offset by decreases in revenue and cost of goods sold related to the deferral of amounts due from customers recognized as material rights and over time contracts recognized as of the date of adoption, both of which would otherwise have been recognized as revenue during the periods under the previous standard. The following schedule quantifies the impact of adopting ASC 606 on the Consolidated Balance Sheet as of September 30, 2019. The effect of the new standard represents the increase (decrease) in the line item based on the adoption of ASC 606.
|  | September 30, 2019 ‎under previous standard |  | Effect of ‎ASC 606 |  | September 30, 2019 ‎as reported
ASSETS |  |  |  |  |  |  |  |  |
Current assets: |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 99,073 |  | $ | - |  | $ | 99,073
Accounts receivable, net |  |  | 419,471 |  |  | 172,058 |  |  | 591,529
Inventories |  |  | 614,941 |  |  | (98,105) |  |  | 516,836
Income taxes receivable |  |  | 19,100 |  |  | (11,001) |  |  | 8,099
Other current assets |  |  | 54,665 |  |  | 1,026 |  |  | 55,691
Total current assets |  |  | 1,207,250 |  |  | 63,978 |  |  | 1,271,228
Property, plant and equipment, net |  |  | 1,058,775 |  |  | - |  |  | 1,058,775
Goodwill |  |  | 797,853 |  |  | - |  |  | 797,853
Intangible assets, net |  |  | 611,992 |  |  | - |  |  | 611,992
Deferred income tax assets |  |  | 19,449 |  |  | (1,288) |  |  | 18,161
Other assets |  |  | 91,482 |  |  | 107,035 |  |  | 198,517
Total assets |  | $ | 3,786,801 |  | $ | 169,725 |  | $ | 3,956,526
LIABILITIES AND STOCKHOLDERS' EQUITY |  |  |  |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |  |  |  |
Short-term borrowings |  | $ | 220,000 |  | $ | - |  | $ | 220,000
Accounts payable |  |  | 240,460 |  |  | - |  |  | 240,460
Income taxes payable |  |  | 15,011 |  |  | 3,838 |  |  | 18,849
Accrued liabilities |  |  | 209,907 |  |  | 18,220 |  |  | 228,127
Total current liabilities |  |  | 685,378 |  |  | 22,058 |  |  | 707,436
Long-term debt, less current portion |  |  | 864,899 |  |  | - |  |  | 864,899
Deferred income tax liabilities |  |  | 153,521 |  |  | (2,159) |  |  | 151,362
Other liabilities |  |  | 400,197 |  |  | 105,891 |  |  | 506,088
Total liabilities |  |  | 2,103,995 |  |  | 125,790 |  |  | 2,229,785
Stockholders' equity: |  |  |  |  |  |  |  |  |
Preferred stock |  |  | - |  |  | - |  |  | -
Common stock |  |  | 106 |  |  | - |  |  | 106
Additional paid-in capital |  |  | 207,120 |  |  | - |  |  | 207,120
Accumulated other comprehensive losses |  |  | (102,863) |  |  | (443) |  |  | (103,306)
Deferred compensation |  |  | 9,382 |  |  | - |  |  | 9,382
Retained earnings |  |  | 2,180,541 |  |  | 44,378 |  |  | 2,224,919
|  |  | 2,294,286 |  |  | 43,935 |  |  | 2,338,221
Treasury stock at cost |  |  | (602,098) |  |  | - |  |  | (602,098)
Treasury stock held for deferred compensation |  |  | (9,382) |  |  | - |  |  | (9,382)
Total stockholders' equity |  |  | 1,682,806 |  |  | 43,935 |  |  | 1,726,741
Total liabilities and stockholders' equity |  | $ | 3,786,801 |  | $ | 169,725 |  | $ | 3,956,526
The underlying causes of the impacts of the adoption of ASC 606 on the Consolidated Balance Sheet as of September 30, 2019 are consistent with those as of the date of adoption, October 1, 2018, as discussed above. The following schedule quantifies the impact of adopting ASC 606 on the Consolidated Statement of Cash Flows as of September 30, 2019. The effect of the new standard represents the increase (decrease) in the line item based on the adoption of ASC 606.
|  |  | September 30, 2019 ‎under previous standard |  |  | Effect of ‎ASC 606 |  |  | September 30, 2019 ‎as reported
Cash flows from operating activities: |  |  |  |  |  |  |  |  |
Net earnings |  | $ | 253,967 |  | $ | 5,635 |  | $ | 259,602
Adjustments to reconcile net earnings to net cash provided by operating activities: |  |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | 144,432 |  |  | (2,428) |  |  | 142,004
Net loss on sales of assets |  |  | 1,925 |  |  | - |  |  | 1,925
Stock-based compensation |  |  | 18,146 |  |  | - |  |  | 18,146
Deferred income taxes |  |  | (2,439) |  |  | (7,626) |  |  | (10,065)
Changes in operating assets and liabilities: |  |  |  |  |  |  |  |  |
Trade accounts receivable |  |  | 6,692 |  |  | (5,851) |  |  | 841
Unbilled receivables (contract assets) |  |  | - |  |  | (31,353) |  |  | (31,353)
Costs to fulfill a contract |  |  | - |  |  | (20,656) |  |  | (20,656)
Inventories |  |  | (73,250) |  |  | 24,065 |  |  | (49,185)
Accounts payable and accrued liabilities |  |  | 50,038 |  |  | (2,034) |  |  | 48,004
Contract liabilities |  |  | (4,024) |  |  | 33,106 |  |  | 29,082
Income taxes |  |  | (6,155) |  |  | 8,238 |  |  | 2,083
Retirement benefit obligations |  |  | (3,705) |  |  | - |  |  | (3,705)
Other |  |  | 4,981 |  |  | (1,096) |  |  | 3,885
Net cash provided by operating activities |  | $ | 390,608 |  | $ | - |  | $ | 390,608
Cash flows from investing activities: |  |  |  |  |  |  |  |  |
Payments for purchase of property, plant, and equipment |  |  | (99,066) |  |  | - |  |  | (99,066)
Proceeds from sale of assets |  |  | 1,010 |  |  | - |  |  | 1,010
Proceeds from sales of short-term investments |  |  | 22,252 |  |  | - |  |  | 22,252
Payments for purchases of short-term investments |  |  | (26,723) |  |  | - |  |  | (26,723)
Net cash used in investing activities |  | $ | (102,527) |  | $ | - |  | $ | (102,527)
Cash flows from financing activities: |  |  |  |  |  |  |  |  |
Cash dividends paid |  |  | (39,066) |  |  | - |  |  | (39,066)
Proceeds from sales of treasury stock |  |  | 36,044 |  |  | - |  |  | 36,044
Payments for repurchases of common stock |  |  | (110,311) |  |  | - |  |  | (110,311)
Borrowings on revolving lines of credit and short-term borrowings |  |  | 1,683,542 |  |  | - |  |  | 1,683,542
Payments on revolving lines of credit and short-term borrowings |  |  | (1,690,035) |  |  | - |  |  | (1,690,035)
Payments of long-term debt and capital lease obligations |  |  | (143,535) |  |  | - |  |  | (143,535)
Payments of debt financing costs |  |  | (2,238) |  |  | - |  |  | (2,238)
Net cash used in financing activities |  |  | (265,599) |  |  | - |  |  | (265,599)
Effect of exchange rate changes on cash and cash equivalents |  |  | (7,003) |  |  | - |  |  | (7,003)
Net change in cash and cash equivalents |  |  | 15,479 |  |  | - |  |  | 15,479
Cash and cash equivalents, including restricted cash, at beginning of year |  |  | 83,594 |  |  | - |  |  | 83,594
Cash and cash equivalents, including restricted cash, at end of year |  | $ | 99,073 |  | $ | - |  | $ | 99,073
Schedule of Disaggregation of Revenue | Revenue by primary market for the Aerospace reportable segment was as follows:
| Year Ended
| September 30, 2019
Commercial OEM | $ | 659,336
Commercial aftermarket |  | 497,795
Defense OEM |  | 529,940
Defense aftermarket |  | 193,449
Total Aerospace segment net sales | $ | 1,880,520
Revenue by primary market for the Industrial reportable segment was as follows:
| Year Ended
| September 30, 2019
Reciprocating engines | $ | 751,136
Industrial turbines |  | 210,064
Renewables |  | 58,477
Total Industrial segment net sales | $ | 1,019,677
The customers who account for approximately 10% or more of net sales to each of Woodward’s reportable segments for the fiscal year ended September 30, 2019 follow:
| Customer
Aerospace | The Boeing Company, General Electric Company, United Technologies
Industrial | Rolls-Royce, General Electric Company, Weichai Westport
Net sales by geographic area, as determined based on the location of the customer, were as follows:
| Year Ended September 30, 2019
| Aerospace |  | Industrial |  | Consolidated
United States | $ | 1,415,880 |  | $ | 212,184 |  | $ | 1,628,064
Germany |  | 72,907 |  |  | 229,177 |  |  | 302,084
Europe, excluding Germany |  | 178,905 |  |  | 252,511 |  |  | 431,416
Asia |  | 85,483 |  |  | 293,834 |  |  | 379,317
Other countries |  | 127,345 |  |  | 31,971 |  |  | 159,316
Total net sales | $ | 1,880,520 |  | $ | 1,019,677 |  | $ | 2,900,197

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