Note 15. Accrued liabilities



	December 31,		September 30,
	2018		2018
Salaries and other member benefits	$	61,187	$	88,643
Warranties		20,156		20,130
Interest payable		7,014		18,611
Current portion of acquired contractual obligations and unfavorable contracts (1)		1,160		1,627
Accrued retirement benefits		3,571		3,571
Current portion of loss reserve on contractual lease commitments		1,245		1,245
Restructuring charges		15,843		16,522
Taxes, other than income		17,290		21,128
Net current contract liabilities (2)		28,190		9,659
Other		15,481		13,377
	$	171,137	$	194,513

(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 obligations for contractual commitments that are expected to result in future economic losses. In addition, Woodward assumed current and long-term contractual 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.

(2)

See Note 3, Revenue for more information on net current contract 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:



	Three-Months Ended December 31,
		2018		2017
Warranties, beginning of period	$	20,130	$	13,597
Impact from adoption of ASC 606 (Note 3)		594		-
Expense, net of recoveries		2,072		(2,030)
Reductions for settlement of previous warranty liabilities		(2,537)		1,377
Foreign currency exchange rate changes		(103)		73
Warranties, end of period	$	20,156	$	13,017

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 and recognized a loss reserve against the estimated remaining contractual lease commitments, less anticipated sublease income. Changes in the loss reserve were as follows.



	Three-Months Ended December 31,
		2018		2017
Loss reserve on contractual lease commitments, beginning of period	$	3,931	$	5,270
Payments, net of sublease income		(117)		(553)
Loss reserve on contractual lease commitments, end of period	$	3,814	$	4,717

Other liabilities included $2,569 and $2,686 of accrued loss reserve on contractual lease commitments as of December 31, 2018 and September 30, 2018, respectively, which are not expected to be settled or paid within twelve months of the respective balance sheet date.

Restructuring charges

In the second quarter of fiscal year 2018, the Company recorded restructuring charges totaling $17,013, the majority of which relate to the Company’s decision to relocate its Duarte, California operations to the Company’s newly renovated Drake Campus in Fort Collins, Colorado. The Duarte facility, which manufactures thrust reverser actuation systems, is part of the Company’s Aerospace segment. The remaining restructuring charges recognized during the year ended September 30, 2018 consist of workforce management costs related to aligning the Company’s industrial turbomachinery business, which is part of the Company’s Industrial segment, with current market conditions. All of the restructuring charges recorded during the year ended September 30, 2018 were recorded as nonsegment expenses and are expected to be paid within one year of the balance sheet date.

The summary of activity in accrued restructuring charges during the three-months ended December 31, 2018 is as follows:


				Period Activity
	Balances as of October 1, 2018			Charges (gains)	Cash receipts (payments)		Non-cash activity		Balances as of December 31, 2018
Workforce management costs associated with:
Duarte plant relocation	$	12,504	$	-	$	-	$	-	$	12,504
Industrial turbomachinery business realignment		4,018		-		(679)		-		3,339
Total	$	16,522	$	-	$	(679)	$	-	$	15,843