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Financial Instruments and Fair Value Measurements | 12 Months Ended
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Sep. 30, 2020
Fair Value Disclosures [Abstract] |
Financial Instruments and Fair Value Measurements | Note 8. Financial instruments and fair value measurements The table below presents information about Woodward’s financial assets and liabilities that are measured at fair value on a recurring basis and indicates the fair value hierarchy of the valuation techniques Woodward utilized to determine such fair value.
|  | At September 30, 2020 |  |  | At September 30, 2019 |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Financial assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash |  | $ | 112,817 |  |  | $ | — |  |  | $ | — |  |  | $ | 112,817 |  |  | $ | 52,971 |  |  | $ | — |  |  | $ | — |  |  | $ | 52,971 |
Investments in reverse repurchase agreements |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 886 |  |  |  | — |  |  |  | — |  |  |  | 886 |
Investments in term deposits with foreign banks |  |  | 40,453 |  |  |  | — |  |  |  | — |  |  |  | 40,453 |  |  |  | 45,216 |  |  |  | — |  |  |  | — |  |  |  | 45,216 |
Equity securities |  |  | 25,381 |  |  |  | — |  |  |  | — |  |  |  | 25,381 |  |  |  | 20,504 |  |  |  | — |  |  |  | — |  |  |  | 20,504 |
Cross currency interest rate swaps |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 24,758 |  |  |  | — |  |  |  | 24,758 |
Total financial assets |  | $ | 178,651 |  |  | $ | — |  |  | $ | — |  |  | $ | 178,651 |  |  | $ | 119,577 |  |  | $ | 24,758 |  |  | $ | — |  |  | $ | 144,335 |
Financial liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cross currency interest rate swaps |  | $ | — |  |  | $ | 51,387 |  |  | $ | — |  |  | $ | 51,387 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Total financial liabilities |  | $ | — |  |  | $ | 51,387 |  |  | $ | — |  |  | $ | 51,387 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Investments in reverse repurchase agreements: Woodward sometimes invests excess cash in reverse repurchase agreements. Under the terms of Woodward’s reverse repurchase agreements, Woodward purchases an interest in a pool of securities and is granted a security interest in those securities by the counterparty to the reverse repurchase agreement. At an agreed upon date, generally the next business day, the counterparty repurchases Woodward’s interest in the pool of securities at a price equal to what Woodward paid to the counterparty plus a rate of return determined daily per the terms of the reverse repurchase agreement. Woodward believes that the investments in these reverse repurchase agreements are with creditworthy financial institutions and that the funds invested are highly liquid. The investments in reverse repurchase agreements are reported at fair value, with realized gains from interest income recognized in earnings, and are included in “Cash and cash equivalents” in the Consolidated Balance Sheets. Since the investments are generally overnight, the carrying value is considered to be equal to the fair value as the amount is deemed to be a cash deposit with no risk of change in value as of the end of each fiscal quarter. During the second quarter of fiscal year 2020, the Company terminated its existing investments in reverse repurchase agreements. Investments in term deposits with foreign banks: Woodward’s foreign subsidiaries sometimes invest excess cash in various highly liquid financial instruments that Woodward believes are with creditworthy financial institutions. Such investments are reported in “Cash and cash equivalents” at fair value, with realized gains from interest income recognized in earnings. The carrying value of Woodward’s investments in term deposits with foreign banks are considered equal to the fair value given the highly liquid nature of the investments. Equity securities: Woodward holds marketable equity securities, through investments in various mutual funds, related to its deferred compensation program. Based on Woodward’s intentions regarding these instruments, marketable equity securities are classified as trading securities. The trading securities are reported at fair value, with realized gains and losses recognized in “Other (income) expense, net” on the Consolidated Statements of Earnings. The trading securities are included in “Other assets” in the Consolidated Balance Sheets. The fair values of Woodward’s trading securities are based on the quoted market prices for the net asset value of the various mutual funds. Cross currency interest rate swaps: Woodward holds cross currency interest rate swaps, which are accounted for at fair value. The swaps in an asset position are included in “Other assets,” and swaps in a liability position are included in “Other liabilities” in the Consolidated Balance Sheets. The fair values of Woodward’s cross currency interest rate swaps are determined using a market approach that is based on observable inputs other than quoted market prices, including contract terms, interest rates, currency rates, and other market factors. As of September 30, 2020, swaps in a liability position in the amount of $51,387 were included in “Other liabilities” in the Consolidated Balance Sheets. As of September 30, 2019, swaps in an asset position in the amount of $24,758 were included in “Other assets” in the Consolidated Balance Sheets. Trade accounts receivable, accounts payable, and short-term borrowings are not remeasured to fair value, as the carrying cost of each approximates its respective fair value. The estimated fair values and carrying costs of other financial instruments that are not required to be remeasured at fair value in the Consolidated Balance Sheets were as follows:
|  |  |  | At September 30, 2020 |  |  | At September 30, 2019 |
|  | Fair Value Hierarchy Level |  | Estimated Fair Value |  |  | Carrying Cost |  |  | Estimated Fair Value |  |  | Carrying Cost |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Notes receivable from municipalities |  | 2 |  | $ | 13,413 |  |  | $ | 11,846 |  |  | $ | 13,100 |  |  | $ | 12,346 |
Note receivable from sale of disposal group |  | 2 |  |  | 6,341 |  |  |  | 6,061 |  |  |  | — |  |  |  | — |
Investments in short-term time deposits |  | 2 |  |  | 13,678 |  |  |  | 13,671 |  |  |  | 13,468 |  |  |  | 13,509 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Long-term debt |  | 2 |  | $ | 935,610 |  |  | $ | 840,654 |  |  | $ | 928,618 |  |  | $ | 867,377 |
In connection with certain economic incentives related to Woodward’s development of a second campus in the greater-Rockford, Illinois area for its Aerospace segment and Woodward’s development of a new campus at its corporate headquarters in Fort Collins, Colorado, Woodward received long-term notes from municipalities within the states of Illinois and Colorado. The fair value of the long-term notes was estimated based on a model that discounted future principal and interest payments received at an interest rate available to the Company at the end of the period for similarly rated municipal notes of similar maturity, which is a level 2 input as defined by the U.S. GAAP fair value hierarchy. The interest rates used to estimate the fair value of the long-term notes were 1.2% at September 30, 2020 and 1.7% at September 30, 2019. In connection with the sale of the disposal group (See Note 11, Sale of businesses), Woodward received a long-term promissory note from the buyer for deferral of a portion of the purchase price. The fair value of the long-term note was estimated based on a model that discounted future principal and interest payments received at an interest rate available to Woodward at the end of the period for similarly rated promissory notes of similar maturity, which is a level 2 input as defined by the U.S. GAAP fair value hierarchy. The interest rate used to estimate the fair value of the long-term note was 2.3% at September 30, 2020. From time to time, certain of Woodward’s foreign subsidiaries will invest excess cash in short-term time deposits with a fixed maturity date of longer than three months but less than one year from the date of the deposit. Woodward believes that the investments are with creditworthy financial institutions. The fair value of the investments in short-term time deposits was estimated based on a model that discounted future principal and interest payments to be received at an interest rate available to the foreign subsidiary entering into the investment for similar short-term time deposits of similar maturity. This was determined to be a level 2 input as defined by the U.S. GAAP fair value hierarchy. The interest rates used to estimate the fair value of the short-term time deposits was 4.4% at September 30, 2020 and 5.7% at September 30, 2019. The fair value of long-term debt was estimated based on a model that discounted future principal and interest payments at interest rates available to the Company at the end of the period for similar debt of the same maturity, which is a level 2 input as defined by the U.S. GAAP fair value hierarchy. The weighted-average interest rates used to estimate the fair value of long-term debt were 1.5% at September 30, 2020 and 2.5% at September 30, 2019.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=117815213&loc=d3e19207-110258 + Details
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