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:

	June 30, 2020		September 30, 2019
Accrued liabilities	$	3,866	$	8,317
Other liabilities		235,602		230,588

Amortization of the deferred revenue (material right) recognized as an increase to sales was $802 for the three-months and $4,331 for the nine-months ended June 30, 2020, and $2,013 for the three-months and $5,712 for the nine-months ended June 30, 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

June 30,

Nine-Months Ended

June 30,

2020

2019

2020

2019

Other income

931

3,290

8,824

7,761

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

June 30,

Nine-Months Ended

June 30,

2020

2019

2020

2019

Cash distributions

4,000

4,500

7,000

12,000

Three-Months Ended

June 30,

Nine-Months Ended

June 30,

2020

2019

2020

2019

Net sales¹

7,026

18,049

38,511

45,176

(1)

Net sales include a reduction of $2,292 for the three-months and $19,305 for the nine-months ended June 30, 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 $6,897 for the three-months and $25,148 for the nine-months ended June 30, 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:

	June 30, 2020		September 30, 2019
Accounts receivable	$	4,354	$	5,906
Accounts payable		1,240		4,270
Other assets		9,367		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 June 30, 2020 of $68,735 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 $68,735 as of June 30, 2020 and $69,079 as of fiscal year ended September 30, 2019. In the three and nine-months ended June 30, 2020, Woodward recognized a $6,207 reduction in both the contract liability in “Other liabilities” and costs to fulfill and contract in “Other assets” related to the termination of a JV engineering and development project previously recognized as a material right, compared to $2,774 in the three and nine-months ended June 30, 2019.