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Revenue (Tables) | 6 Months Ended
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Mar. 31, 2019
Revenue |
Schedule of Revenue Recognition Time |
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﻿ |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿ | Three-Months Ended March 31, 2019 |  | Six-Months Ended March 31, 2019
﻿ | Aerospace |  | Industrial |  | Consolidated |  | Aerospace |  | Industrial |  | Consolidated
﻿Point in time | $ | 208,183 |  | $ | 163,623 |  | $ | 371,806 |  | $ | 372,197 |  | $ | 335,785 |  | $ | 707,982
﻿Over time |  | 274,771 |  |  | 112,267 |  |  | 387,038 |  |  | 503,644 |  |  | 200,029 |  |  | 703,673
﻿Total net sales | $ | 482,954 |  | $ | 275,890 |  | $ | 758,844 |  | $ | 875,841 |  | $ | 535,814 |  | $ | 1,411,655
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﻿
Schedule of Contract Asset and Liability |
﻿ |  |  |  |  |  |
﻿ |  | March 31, 2019 |  | September 30, 2018
Billed receivables |  |  |  |  |  |
Trade accounts receivable |  | $ | 399,150 |  | $ | 403,590
Other (Chinese financial institutions) |  |  | 60,537 |  |  | 23,191
Less: Allowance for uncollectible amounts |  |  | (4,033) |  |  | (3,938)
Net billed receivables |  |  | 455,654 |  |  | 422,843
Current unbilled receivables (contract assets), net |  |  | 136,682 |  |  | 9,160
Total accounts receivable, net |  | $ | 592,336 |  | $ | 432,003
﻿
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﻿ |  | March 31, 2019 |  | September 30, 2018
﻿ |  |  | Current |  |  | Noncurrent |  |  | Current |  |  | Noncurrent
Deferred revenue from material rights from GE joint venture formation |  | $ | 6,897 |  | $ | 235,961 |  | $ | 7,087 |  | $ | 235,300
Deferred revenue from advance invoicing and/or prepayments from customers |  |  | 4,766 |  |  | - |  |  | 2,572 |  |  | -
Liability related to customer supplied inventory |  |  | 17,258 |  |  | - |  |  | - |  |  | -
Deferred revenue from material rights related to engineering and development funding |  |  | 1,610 |  |  | 95,303 |  |  | - |  |  | -
Net contract liabilities |  | $ | 30,531 |  | $ | 331,264 |  | $ | 9,659 |  | $ | 235,300
﻿
Schedule of Impact of the Adoption ASC 606 on Financial Statement | The following schedule quantifies the impact of adopting ASC 606 on the Condensed 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: ﻿
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﻿ |  | 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 |  |  | 104,907 |  |  | 536,910
﻿Inventories (1)(2) |  |  | 549,596 |  |  | (55,002) |  |  | 494,594
﻿Income taxes receivable (5) |  |  | 6,397 |  |  | (959) |  |  | 5,438
﻿Other current assets |  |  | 43,207 |  |  | (154) |  |  | 43,053
﻿Total current assets |  |  | 1,114,797 |  |  | 48,792 |  |  | 1,163,589
﻿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 |  |  | (975) |  |  | 15,595
﻿Other assets (1)(2)(3) |  |  | 85,144 |  |  | 85,865 |  |  | 171,009
﻿Total assets |  | $ | 3,790,649 |  | $ | 131,163 |  | $ | 3,921,812
﻿ |  |  |  |  |  |  |  |  |
﻿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 |  |  | 4,141 |  |  | 20,886
﻿Accrued liabilities (2)(3) |  |  | 194,513 |  |  | 15,672 |  |  | 210,185
﻿Total current liabilities |  |  | 591,178 |  |  | 19,813 |  |  | 610,991
﻿Long-term debt, less current portion |  |  | 1,092,397 |  |  | - |  |  | 1,092,397
﻿Deferred income tax liabilities (5) |  |  | 170,915 |  |  | 3,833 |  |  | 174,748
﻿Other liabilities (3) |  |  | 398,055 |  |  | 78,631 |  |  | 476,686
﻿Total liabilities |  |  | 2,252,545 |  |  | 102,277 |  |  | 2,354,822
﻿Stockholders’ equity: |  |  |  |  |  |  |  |  |
﻿Preferred stock |  |  | - |  |  | - |  |  | -
﻿Common stock |  |  | 106 |  |  | - |  |  | 106
﻿Additional paid-in capital |  |  | 185,705 |  |  | - |  |  | 185,705
﻿Accumulated other comprehensive losses |  |  | (74,942) |  |  | (41) |  |  | (74,983)
﻿Deferred compensation |  |  | 8,431 |  |  | - |  |  | 8,431
﻿Retained earnings |  |  | 1,966,643 |  |  | 28,927 |  |  | 1,995,570
﻿ |  |  | 2,085,943 |  |  | 28,886 |  |  | 2,114,829
﻿Treasury stock at cost |  |  | (539,408) |  |  | - |  |  | (539,408)
﻿Treasury stock held for deferred compensation |  |  | (8,431) |  |  | - |  |  | (8,431)
﻿Total stockholders’ equity |  |  | 1,538,104 |  |  | 28,886 |  |  | 1,566,990
﻿Total liabilities and stockholders’ equity |  | $ | 3,790,649 |  | $ | 131,163 |  | $ | 3,921,812
﻿
| (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 unbilled receivables included in “Accounts receivable,” “Other assets,” and “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.
The following schedule quantifies the impact of adopting ASC 606 on the Condensed Consolidated Statements of Earnings for the three and six-months ended March 31, 2019. The effect of the new standard represents the increase (decrease) in the line item based on the adoption of ASC 606. ﻿
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﻿ |  | Three-Months Ended March 31, 2019 |  |  | Six-Months Ended March 31, 2019
﻿ |  | Under previous standard |  | Effect of ASC 606 |  | As reported |  |  | Under previous standard |  | Effect of ASC 606 |  | As reported
﻿Net sales |  | $ | 723,227 |  | $ | 35,617 |  | $ | 758,844 |  |  | $ | 1,355,868 |  | $ | 55,787 |  | $ | 1,411,655
﻿Costs and expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Cost of goods sold |  |  | 539,364 |  |  | 27,477 |  |  | 566,841 |  |  |  | 1,008,054 |  |  | 50,961 |  |  | 1,059,015
﻿Selling, general, and administrative expenses |  |  | 54,979 |  |  | (122) |  |  | 54,857 |  |  |  | 107,005 |  |  | (221) |  |  | 106,784
﻿Research and development costs |  |  | 45,637 |  |  | (1,806) |  |  | 43,831 |  |  |  | 84,351 |  |  | (1,653) |  |  | 82,698
﻿Interest expense |  |  | 11,480 |  |  | - |  |  | 11,480 |  |  |  | 23,358 |  |  | - |  |  | 23,358
﻿Interest income |  |  | (294) |  |  | - |  |  | (294) |  |  |  | (665) |  |  | - |  |  | (665)
﻿Other expense (income), net |  |  | (8,039) |  |  | - |  |  | (8,039) |  |  |  | (11,218) |  |  | - |  |  | (11,218)
﻿Total costs and expenses |  |  | 643,127 |  |  | 25,549 |  |  | 668,676 |  |  |  | 1,210,885 |  |  | 49,087 |  |  | 1,259,972
﻿Earnings before income taxes |  |  | 80,100 |  |  | 10,068 |  |  | 90,168 |  |  |  | 144,983 |  |  | 6,700 |  |  | 151,683
﻿Income tax expense |  |  | 10,472 |  |  | 2,117 |  |  | 12,589 |  |  |  | 23,555 |  |  | 1,429 |  |  | 24,984
﻿Net earnings |  | $ | 69,628 |  | $ | 7,951 |  | $ | 77,579 |  |  | $ | 121,428 |  | $ | 5,271 |  | $ | 126,699
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﻿Earnings per share |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Basic earnings per share |  | $ | 1.12 |  | $ | 0.13 |  | $ | 1.25 |  |  | $ | 1.96 |  | $ | 0.08 |  | $ | 2.04
﻿Diluted earnings per share |  | $ | 1.08 |  | $ | 0.12 |  | $ | 1.20 |  |  | $ | 1.89 |  | $ | 0.08 |  | $ | 1.97
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﻿Weighted Average Common Shares Outstanding (Note 4): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Basic |  |  | 62,175 |  |  |  |  |  | 62,175 |  |  |  | 61,995 |  |  |  |  |  | 61,995
﻿Diluted |  |  | 64,564 |  |  |  |  |  | 64,564 |  |  |  | 64,307 |  |  |  |  |  | 64,307
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 Condensed Consolidated Balance Sheet as of March 31, 2019. The effect of the new standard represents the increase (decrease) in the line item based on the adoption of ASC 606. ﻿
﻿ |  |  |  |  |  |  |  |  |
﻿ |  | March 31, 2019 under previous standard |  | Effect of ASC 606 |  | March 31, 2019 as reported
﻿ASSETS |  |  |  |  |  |  |  |  |
﻿Current assets: |  |  |  |  |  |  |  |  |
﻿Cash and cash equivalents |  | $ | 65,303 |  | $ | - |  | $ | 65,303
﻿Accounts receivable, net |  |  | 460,216 |  |  | 132,120 |  |  | 592,336
﻿Inventories |  |  | 604,418 |  |  | (70,098) |  |  | 534,320
﻿Income taxes receivable |  |  | 20,497 |  |  | (6,529) |  |  | 13,968
﻿Other current assets |  |  | 38,143 |  |  | 22 |  |  | 38,165
﻿Total current assets |  |  | 1,188,577 |  |  | 55,515 |  |  | 1,244,092
﻿Property, plant and equipment, net |  |  | 1,064,388 |  |  | - |  |  | 1,064,388
﻿Goodwill |  |  | 804,461 |  |  | - |  |  | 804,461
﻿Intangible assets, net |  |  | 648,413 |  |  | (2,319) |  |  | 646,094
﻿Deferred income tax assets |  |  | 16,187 |  |  | (993) |  |  | 15,194
﻿Other assets |  |  | 91,197 |  |  | 100,523 |  |  | 191,720
﻿Total assets |  | $ | 3,813,223 |  | $ | 152,726 |  | $ | 3,965,949
﻿ |  |  |  |  |  |  |  |  |
﻿LIABILITIES AND STOCKHOLDERS' EQUITY |  |  |  |  |  |  |  |  |
﻿Current liabilities: |  |  |  |  |  |  |  |  |
﻿Short-term borrowings |  | $ | 160,000 |  | $ | - |  | $ | 160,000
﻿Accounts payable |  |  | 259,665 |  |  | - |  |  | 259,665
﻿Income taxes payable |  |  | 18,361 |  |  | - |  |  | 18,361
﻿Accrued liabilities |  |  | 184,260 |  |  | 20,326 |  |  | 204,586
﻿Total current liabilities |  |  | 622,286 |  |  | 20,326 |  |  | 642,612
﻿Long-term debt, less current portion |  |  | 1,000,468 |  |  | - |  |  | 1,000,468
﻿Deferred income tax liabilities |  |  | 159,155 |  |  | 3,676 |  |  | 162,831
﻿Other liabilities |  |  | 372,591 |  |  | 94,596 |  |  | 467,187
﻿Total liabilities |  |  | 2,154,500 |  |  | 118,598 |  |  | 2,273,098
﻿Stockholders' equity: |  |  |  |  |  |  |  |  |
﻿Preferred stock |  |  | - |  |  | - |  |  | -
﻿Common stock |  |  | 106 |  |  | - |  |  | 106
﻿Additional paid-in capital |  |  | 204,892 |  |  | - |  |  | 204,892
﻿Accumulated other comprehensive losses |  |  | (64,741) |  |  | (70) |  |  | (64,811)
﻿Deferred compensation |  |  | 8,876 |  |  | - |  |  | 8,876
﻿Retained earnings |  |  | 2,068,152 |  |  | 34,198 |  |  | 2,102,350
﻿ |  |  | 2,217,285 |  |  | 34,128 |  |  | 2,251,413
﻿Treasury stock at cost |  |  | (549,686) |  |  | - |  |  | (549,686)
﻿Treasury stock held for deferred compensation |  |  | (8,876) |  |  | - |  |  | (8,876)
﻿Total stockholders' equity |  |  | 1,658,723 |  |  | 34,128 |  |  | 1,692,851
﻿Total liabilities and stockholders' equity |  | $ | 3,813,223 |  | $ | 152,726 |  | $ | 3,965,949
﻿
Schedule of Disaggregation of Revenue | Revenue by primary market for the Aerospace reportable segment was as follows: ﻿
﻿ |  |  |  |  |
﻿ | Three-Months Ended |  | Six-Months Ended
﻿ | March 31, 2019 |  | March 31, 2019
﻿Commercial OEM | $ | 174,343 |  | $ | 314,851
﻿Commercial aftermarket |  | 139,708 |  |  | 251,056
﻿Defense OEM |  | 123,006 |  |  | 224,842
﻿Defense aftermarket |  | 45,897 |  |  | 85,092
﻿Total Aerospace segment net sales | $ | 482,954 |  | $ | 875,841
Revenue by primary market for the Industrial reportable segment was as follows: ﻿
﻿ |  |  |  |  |
﻿ | Three-Months Ended |  | Six-Months Ended
﻿ | March 31, 2019 |  | March 31, 2019
﻿Reciprocating engines | $ | 209,257 |  | $ | 405,387
﻿Industrial turbines |  | 52,187 |  |  | 101,699
﻿Renewables |  | 14,446 |  |  | 28,728
﻿Total Industrial segment net sales | $ | 275,890 |  | $ | 535,814
The customers who account for approximately 10% or more of net sales to each of Woodward’s reportable segments for the three and six-months ended March 31, 2019 follow: ﻿
﻿ |
﻿ | Customer
﻿Aerospace | The Boeing Company, General Electric Company, United Technologies
﻿Industrial | Rolls-Royce PLC, Weichai Westport, General Electric Company
Net sales by geographic area, as determined based on the location of the customer, were as follows: ﻿ ﻿ ﻿
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﻿ | Three-Months Ended March 31, 2019 |  | Six-Months Ended March 31, 2019
﻿ | Aerospace |  | Industrial |  | Consolidated |  | Aerospace |  | Industrial |  | Consolidated
﻿United States | $ | 351,763 |  | $ | 53,564 |  | $ | 405,327 |  | $ | 638,508 |  | $ | 103,456 |  | $ | 741,964
﻿Germany |  | 25,068 |  |  | 63,725 |  |  | 88,793 |  |  | 37,817 |  |  | 127,089 |  |  | 164,906
﻿Europe, excluding Germany |  | 48,782 |  |  | 65,131 |  |  | 113,913 |  |  | 88,394 |  |  | 124,479 |  |  | 212,873
﻿Asia |  | 23,292 |  |  | 85,463 |  |  | 108,755 |  |  | 47,298 |  |  | 164,881 |  |  | 212,179
﻿Other countries |  | 34,049 |  |  | 8,007 |  |  | 42,056 |  |  | 63,824 |  |  | 15,909 |  |  | 79,733
﻿Total net sales | $ | 482,954 |  | $ | 275,890 |  | $ | 758,844 |  | $ | 875,841 |  | $ | 535,814 |  | $ | 1,411,655
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