XML 76 R27.htm IDEA: XBRL DOCUMENT
v3.20.1

Income Taxes | 6 Months Ended
--- | ---
Mar. 31, 2020
Income Taxes [Abstract] |
Income Taxes | Note 19. Income taxes U.S. GAAP requires the interim tax provision be determined as follows: At the end of each quarter, Woodward estimates the tax that will be provided for the current fiscal year stated as a percentage of estimated “ordinary income.” The term ordinary income refers to earnings from continuing operations before income taxes, excluding significant unusual or infrequently occurring items. The estimated annual effective rate is applied to the year-to-date ordinary income at the end of each quarter to compute the estimated year-to-date tax applicable to ordinary income. The tax expense or benefit related to ordinary income in each quarter is equal to the difference between the most recent year-to-date and the prior quarter year-to-date computations. The tax effects of significant unusual or infrequently occurring items are recognized as discrete items in the interim period in which the events occur. The impact of changes in tax laws or rates on deferred tax amounts, the effects of changes in judgment about beginning of the year valuation allowances, and changes in tax reserves resulting from the finalization of tax audits or reviews are examples of significant unusual or infrequently occurring items that are recognized as discrete items in the interim period in which the events occur. The determination of the annual effective tax rate is based upon a number of significant estimates and judgments. In addition, as a global commercial enterprise, Woodward’s tax expense can be impacted by changes in tax rates or laws, the finalization of tax audits and reviews, changes in the estimate of the amount of undistributed foreign earnings that Woodward considers indefinitely reinvested, and other factors that cannot be predicted with certainty. As such, there can be significant volatility in interim tax provisions. Within the calculation of Woodward’s annual effective tax rate, Woodward has used assumptions and estimates that may change as a result of future guidance, interpretation, and rule-making from the IRS, the SEC, and the FASB and/or various other tax jurisdictions. Changes in corporate tax rates, the net deferred tax assets and/or liabilities relating to Woodward’s U.S. operations, the taxation of foreign earnings, and the deductibility of expenses contained in the Tax Act or other future tax reform legislation could have a material impact on Woodward’s future income tax expense. The following table sets forth the tax expense and the effective tax rate for Woodward’s earnings before income taxes:
|  | Three-Months Ended |  | Six-Months Ended
|  | March 31, |  | March 31,
|  | 2020 |  | 2019 |  | 2020 |  | 2019
Earnings before income taxes |  | $ | 107,199 |  | $ | 90,168 |  | $ | 168,747 |  | $ | 151,683
Income tax expense |  |  | 15,881 |  |  | 12,589 |  |  | 24,056 |  |  | 24,984
Effective tax rate |  |  | 14.8% |  |  | 14.0% |  |  | 14.3% |  |  | 16.5%
The increase in the effective tax rate for the three-months ended March 31, 2020, compared to the three-months ended March 31, 2019 is primarily attributable to smaller favorable net excess income tax benefits from stock-based compensation. This increase is partially offset by a reduction of India’s tax on dividend distributions, decreased foreign earnings in higher taxed jurisdictions, and the effects of lower full-year projected earnings in the second quarter of fiscal year 2020 compared to the full-year projected earnings in the first quarter of fiscal year 2020. The decrease in the effective tax rate for the six-months ended March 31, 2020 compared to the six-months ended March 31, 2019 is primarily attributable to a reduction of India’s tax on dividend distributions, a decrease to foreign earnings in higher taxed jurisdictions, and the tax benefit with the impairment of assets held for sale. This decrease is partially offset by a smaller favorable increase in the net excess income tax benefits from stock-based compensation. Gross unrecognized tax benefits were $11,613 as of March 31, 2020, and $10,305 as of September 30, 2019. At March 31, 2020, the amount of the liability for unrecognized tax benefits that, if recognized, would impact Woodward’s effective tax rate was $5,022. At this time, Woodward does not believe it is reasonably possible that the liability for unrecognized tax benefits will decrease in the next twelve months. Woodward accrues for potential interest and penalties related to unrecognized tax benefits and all other interest and penalties related to tax payments in tax expense. Woodward had accrued gross interest and penalties of $541 as of March 31, 2020 and $437 as of September 30, 2019. In March 2020, the U.S. Congress passed the “Coronavirus Aid, Relief, and. Economic Security Act” (the “CARES Act”). The Cares Act provides relief from the certain economic impacts of COVID-19 to companies and individuals. Non-income tax impacts of the CARES Act include (i) extension of payment deadliness for certain U.S. payroll taxes and (ii) tax credits for certain qualifying costs incurred by the Company in connection with certain facility closures due to COVID-19. Non-income tax credits are generally recognized as a reduction to costs in the period in which the related costs the credits are intended to compensate are incurred. The non-income tax impacts of the CARES Act were insignificant to the results of operations for the three and six-months ended March 31, 2020. Woodward’s tax returns are subject to audits by U.S. federal, state, and foreign tax authorities, and these audits are at various stages of completion at any given time. Reviews of tax matters by authorities and lapses of the applicable statutes of limitation may result in changes to tax expense. Woodward’s fiscal years remaining open to examination for U.S. Federal income taxes include fiscal years 2017 and thereafter. Woodward is currently under examination by the Internal Revenue Service (“IRS”) for fiscal year 2017, which included a foreign tax credit carryback to fiscal year 2016. Woodward’s fiscal years remaining open to examination for significant U.S. state income tax jurisdictions include fiscal years 2015 and thereafter. Woodward’s fiscal years remaining open to examination in significant foreign jurisdictions include 2016 and thereafter.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration