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Income Taxes (Tables) | 12 Months Ended
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Sep. 30, 2020
Income Tax Disclosure [Abstract] |
Components of Income Tax Expense (Benefit) | Income taxes consisted of the following:
|  | Year Ended September 30, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 15,976 |  |  | $ | 40,173 |  |  | $ | 39,979 |
State |  |  | 1,383 |  |  |  | 2,402 |  |  |  | 3,697 |
Foreign |  |  | 22,588 |  |  |  | 34,660 |  |  |  | 25,968 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | 10,784 |  |  |  | (2,015 | ) |  |  | (10,519 | )
State |  |  | (547 | ) |  |  | (2,948 | ) |  |  | (3,784 | )
Foreign |  |  | (8,698 | ) |  |  | (11,262 | ) |  |  | (16,141 | )
|  | $ | 41,486 |  |  | $ | 61,010 |  |  | $ | 39,200 |
Earnings Before Income Taxes by Geographical Area | Earnings before income taxes by geographical area consisted of the following:
|  | Year Ended September 30, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
United States |  | $ | 180,753 |  |  | $ | 211,267 |  |  | $ | 181,671 |
Other countries |  |  | 101,128 |  |  |  | 109,345 |  |  |  | 37,907 |
|  | $ | 281,881 |  |  | $ | 320,612 |  |  | $ | 219,578 |
Schedule of Deferred Tax Assets and Liabilities | Significant components of deferred income taxes presented in the Consolidated Balance Sheets are related to the following:
|  | At September 30, |
|  | 2020 |  |  | 2019 |
Deferred tax assets: |  |  |  |  |  |  |  |
Defined benefit plans, other postretirement |  | $ | 6,238 |  |  | $ | 6,535 |
Foreign net operating loss carryforwards |  |  | 6,106 |  |  |  | 6,836 |
Inventory |  |  | 53,867 |  |  |  | 51,740 |
Stock-based and other compensation |  |  | 35,919 |  |  |  | 45,839 |
Defined benefit plans, pension |  |  | 5,624 |  |  |  | 11,399 |
Deferred revenue net of unbilled receivables |  |  | 39,990 |  |  |  | 32,310 |
Other reserves |  |  | 10,119 |  |  |  | 11,571 |
Tax credits and incentives |  |  | 14,340 |  |  |  | 13,580 |
Lease obligations |  |  | 5,764 |  |  |  | — |
Other |  |  | 9,223 |  |  |  | 5,611 |
Valuation allowance |  |  | (1,833 | ) |  |  | (3,638 | )
Total deferred tax assets, net of valuation allowance |  |  | 185,357 |  |  |  | 181,783 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Goodwill and intangibles - net |  |  | (218,900 | ) |  |  | (212,926 | )
Property, plant and equipment |  |  | (107,862 | ) |  |  | (97,469 | )
Right of use assets |  |  | (4,837 | ) |  |  | — |
Other |  |  | (2,673 | ) |  |  | (4,589 | )
Total deferred tax liabilities |  |  | (334,272 | ) |  |  | (314,984 | )
Net deferred tax liabilities |  | $ | (148,915 | ) |  | $ | (133,201 | )
Reconciliation of U.S. Statutory Tax Rate to Effective Tax Rate | The following is a reconciliation of the U.S. Federal statutory tax 21% in the fiscal year ended September 30, 2020, 21.0% in fiscal year ended September 30, 2019 and 24.5% in the fiscal year ended September 30, 2018 to Woodward’s effective income tax rate:
|  | Year Ending September 30, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
Percent of pretax earnings |  |  |  |  |  |  |  |  |  |  |  |
Statutory tax rate |  |  | 21.0 | % |  |  | 21.0 | % |  |  | 24.5 | %
State income taxes, net of federal tax benefit |  |  | 0.3 |  |  |  | (0.1 | ) |  |  | (0.5 | )
Taxes on international activities |  |  | (2.1 | ) |  |  | 0.2 |  |  |  | (1.8 | )
Research credit |  |  | (3.6 | ) |  |  | (3.3 | ) |  |  | (4.8 | )
Net excess income tax benefit from stock-based compensation |  |  | (2.8 | ) |  |  | (3.5 | ) |  |  | (1.4 | )
Domestic production activities deduction |  |  | — |  |  | – |  |  |  | (1.6 | )
Adjustments of prior period tax items |  |  | 1.0 |  |  |  | 0.9 |  |  |  | (5.0 | )
Effect of U.S. federal corporate rate reduction on net beginning U.S. deferred tax liability |  |  | — |  |  | – |  |  |  | (5.0 | )
Transition Tax |  |  | — |  |  |  | 3.3 |  |  |  | 6.2 |
Increased deferred tax liability associated with anticipated repatriation taxes |  |  | — |  |  | – |  |  |  | 3.7 |
Effect of U.S. federal corporate rate reduction on net current year U.S. deferred tax activity |  |  | — |  |  | – |  |  |  | 2.0 |
Other items, net |  |  | 0.9 |  |  |  | 0.5 |  |  |  | 1.6 |
Effective tax rate |  |  | 14.7 | % |  |  | 19.0 | % |  |  | 17.9 | %
Reconciliation of the Beginning and Ending Amounts of Gross Unrecognized Tax Benefits | A reconciliation of the beginning and ending amounts of gross unrecognized tax benefits follows:
|  | Year Ending September 30, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
Beginning balance |  | $ | 10,305 |  |  | $ | 8,364 |  |  | $ | 20,132 |
Additions to current year tax positions |  |  | 1,890 |  |  |  | 1,930 |  |  |  | 2,675 |
Reductions to prior year tax positions |  |  | (2,415 | ) |  | – |  |  |  | (14,458 | )
Additions to prior year tax positions |  |  | 71 |  |  |  | 11 |  |  |  | 15 |
Lapse of applicable statute of limitations |  |  | — |  |  | – |  |  | – |
Ending balance |  | $ | 9,851 |  |  | $ | 10,305 |  |  | $ | 8,364 |

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