On January 4, 2016, Woodward and General Electric Company (“GE”), acting through its GE Aviation business unit, consummated the formation of a strategic joint venture between Woodward and GE (the “JV”) to develop, manufacture and support fuel systems for specified existing and all future GE commercial aircraft engines that produce thrust in excess of fifty thousand pounds.

Unamortized deferred revenue from material rights in connection with the JV formation included:

	September 30, 2020		September 30, 2019
Accrued liabilities	$	4,066	$	8,317
Other liabilities		234,240		230,588

Amortization of the deferred revenue (material right) recognized as an increase to sales was $5,493 for the fiscal year ended September 30, 2020, $7,652 for the fiscal year ended September 30, 2019, and $5,854 for the fiscal year ended September 30, 2018.

Woodward and GE jointly manage the JV and any significant decisions and/or actions of the JV require the mutual consent of both parties. Neither Woodward nor GE has a controlling financial interest in the JV, but both Woodward and GE do have the ability to significantly influence the operating and financial decisions of the JV. Therefore, Woodward is accounting for its 50% ownership interest in the JV using the equity method of accounting. The JV is a related party to Woodward. In addition, GE will continue to pay contingent consideration to Woodward consisting of fifteen annual payments of $4,894 each, which began on January 4, 2017, subject to certain claw-back conditions. Woodward received its third and fourth annual payments of $4,894 during the three-months ended March 31, 2019 and March 31, 2020, respectively, which were recorded as deferred income and included in Net cash provided by operating activities on the Consolidated Statements of Cash Flows. Neither Woodward nor GE contributed any tangible assets to the JV.

Other income related to Woodward’s equity interest in the earnings of the JV was as follows:

For the Year

Ended September 30,

2020

2019

2018

Other income

15,580

12,932

3,339

Cash distributions to Woodward from the JV, recognized in Net cash provided by operating activities on the Consolidated Statements of Cash Flows, from the JV include:

Year Ended

September 30,

2020

2019

2018

Cash distributions

14,000

15,000

—

For the Year

Ended September 30,

2020

2019

2018

Net sales¹

48,222

60,955

72,511

(1)

Net sales include a reduction of $23,904 for the fiscal year ended September 30, 2020, $34,236 for the fiscal year ended September 30, 2019, and $26,023 for the fiscal year ended September 30, 2018 related to royalties owed to the JV by Woodward on sales by Woodward directly to third party aftermarket customers.

The Consolidated Balance Sheets include “Accounts receivable” related to amounts the JV owed Woodward, “Accounts payable” related to amounts Woodward owed the JV, and “Other assets” related to Woodward’s net investment in the JV, as follows:

	September 30, 2020		September 30, 2019
Accounts receivable	$	3,062	$	5,906
Accounts payable		1,502		4,270
Other assets		9,123		7,543

Woodward records in “Other liabilities” amounts invoiced to the JV for support of the JV’s engineering and development projects as an increase to contract liabilities, and records in “Other assets” related incurred expenditures as costs to fulfill a contract. Woodward’s contract liabilities classified as “Other liabilities” included amounts invoiced to the JV as of September 30, 2020 of $70,618 compared to $69,079 as of fiscal year ended September 30, 2019. Woodward’s costs to fulfill a contract included in “Other assets” related to JV activities were $70,618 as of September 30, 2020 and $69,079 as of fiscal year ended September 30, 2019. In the fiscal year ended September 30, 2020, Woodward recognized a $6,609 reduction in the contract liability in “Other liabilities” and a $6,261 reduction in costs to fulfill a contract in “Other assets” related to the termination of a JV engineering and development project previously recognized as a material right, compared to a $2,774 reduction in the cost to fulfill a contract in “Other assets” but a reduction of $2,790 in the contract liability in “Other liabilities” for the fiscal year ended September 30, 2019.