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Joint Venture | 6 Months Ended
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Mar. 31, 2020
Joint Venture |
Joint Venture | Note 6. Joint venture 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:
|  | March 31, 2020 |  | September 30, 2019
Accrued liabilities |  | $ | 4,712 |  | $ | 8,317
Other liabilities |  |  | 235,558 |  |  | 230,588
Amortization of the deferred revenue (material right) recognized as an increase to sales was $1,821 for the three-months and $3,529 for the six-months ended March 31, 2020, and $1,922 for the three-months and $3,699 for the six-months ended March 31, 2019. 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 per year, 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 Condensed 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:
| Three-Months Ended March 31, |  | Six-Months Ended March 31,
| 2020 |  | 2019 |  | 2020 |  | 2019
Other income | $ | 4,681 |  | $ | 3,006 |  | $ | 7,893 |  | $ | 4,471
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:
| Three-Months Ended March 31, |  | Six-Months Ended March 31,
| 2020 |  | 2019 |  | 2020 |  | 2019
Cash distributions | $ | - |  | $ | 3,000 |  | $ | 3,000 |  | $ | 7,500
Net sales to the JV were as follows:
| Three-Months Ended March 31, |  | Six-Months Ended March 31,
| 2020 |  | 2019 |  | 2020 |  | 2019
Net sales 1 | $ | 16,606 |  | $ | 14,294 |  | $ | 31,484 |  | $ | 27,127
1)Net sales include a reduction of $9,779 for the three-months and $17,013 for the six-months ended March 31, 2020 related to royalties owed to the JV by Woodward on sales by Woodward directly to third party aftermarket customers, compared to a reduction to sales of $9,069 for the three-months and $18,251 for the six-months ended March 31, 2019. The Condensed 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:
|  | March 31, 2020 |  | September 30, 2019
Accounts receivable |  | $ | 4,376 |  | $ | 5,906
Accounts payable |  |  | 2,429 |  |  | 4,270
Other assets |  |  | 12,436 |  |  | 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 March 31, 2020 of $72,783 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 $72,783 as of March 31, 2020 and $69,079 as of fiscal year ended September 30, 2019.

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- Definition The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 810 -SubTopic 10 -Section S99 -Paragraph 4 -Subparagraph (SX 210.3A-04) -URI http://asc.fasb.org/extlink&oid=116822174&loc=d3e355119-122828 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -URI http://asc.fasb.org/topic&trid=2196965 + Details
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