XML 53 R31.htm IDEA: XBRL DOCUMENT v3.25.3
Retirement Benefits
 12 Months Ended
Sep. 30, 2025
Retirement Benefits [Abstract]  
Retirement Benefits

Note 20. Retirement benefits

Woodward provides various retirement benefits to eligible members of the Company, including contributions to various defined contribution plans, pension benefits associated with defined benefit plans, postretirement medical

benefits, and postretirement life insurance benefits. Eligibility requirements and benefit levels vary depending on member location.

Defined contribution plans

Most of the Company’s U.S. members are eligible to participate in the U.S. defined contribution plan. The U.S. defined contribution plan allows members to defer part of their annual income for income tax purposes into their personal 401(k) accounts. The Company makes matching contributions to eligible member accounts, which are also deferred for member personal income tax purposes. Certain non-U.S. members are also eligible to participate in similar non-U.S. plans.

Most of Woodward's U.S. members receive an annual contribution of Woodward stock, equal to 5% of their eligible prior year wages, to their personal Woodward Retirement Savings Plan accounts. In the second quarters of fiscal years 2025, 2024, and 2023, Woodward fulfilled its annual Woodward stock contribution obligation using shares held in treasury stock by issuing a total of 126 shares of common stock for a value of $24,058 in fiscal year 2025, 159 total shares of common stock for a value of $21,889 in fiscal year 2024, and 188 shares of common stock for a value of $19,466 in fiscal year 2023. The Woodward Retirement Savings Plan (the “WRS Plan”) held 2,085 shares of Woodward stock as of September 30, 2025 and 2,222 shares as of September 30, 2024. The shares held in the WRS Plan participate in dividends and are considered issued and outstanding for purposes of calculating basic and diluted earnings per share. Accrued liabilities included obligations to contribute shares of Woodward common stock to the WRS Plan in the amount of $22,010 as of September 30, 2025 and $19,532 as of September 30, 2024.

The amount of expense associated with defined contribution plans was as follows:

 

 

Year Ended September 30,

 

 

 

2025

 

 

2024

 

 

2023

 

Company costs

 

$

55,611

 

 

$

51,148

 

 

$

44,202

 

Defined benefit plans

Woodward has defined benefit plans that provide pension benefits for certain retired members in the United States, the United Kingdom, Japan, and Germany. Woodward also provides other postretirement benefits to its members including postretirement medical benefits and life insurance benefits. Postretirement medical benefits are provided to certain current and retired members and their covered dependents and beneficiaries in the United States and the United Kingdom. Life insurance benefits are provided to certain retirees in the United States under frozen plans, which are no longer available to current members. A September 30 measurement date is utilized to value plan assets and obligations for all of Woodward’s defined benefit pension and other postretirement benefit plans.

Excluding the Woodward HRT Plan, which is only partially frozen to salaried participants, the defined benefit plans in the United States were frozen in fiscal year 2007; no additional members may participate in the U.S. plans, and no additional service costs will be incurred.

Pension Plans

The actuarial assumptions used in measuring the net periodic benefit cost and plan obligations of retirement pension benefits were as follows:

 

 

At September 30,

 

 

 

2025

 

 

2024

 

 

2023

 

United States:

 

 

 

 

 

 

 

 

 

Weighted-average assumptions to determine benefit obligation:

 

 

 

 

 

 

 

 

 

Discount rate

 

 

5.50

%

 

 

5.05

%

 

 

6.20

%

Weighted-average assumptions to determine periodic benefit costs:

 

 

 

 

 

 

 

 

 

Discount rate

 

 

5.05

 

 

 

6.20

 

 

 

5.70

 

Long-term rate of return on plan assets

 

 

6.28

 

 

 

6.03

 

 

 

5.53

 

The discount rate assumption is intended to reflect the rate at which the retirement benefits could be effectively settled based upon the assumed timing of the benefit payments.

In the United States, Woodward uses a bond portfolio matching analysis based on recently traded, non-callable bonds rated AA or better that have at least $50 million outstanding to determine the benefit obligations at year end.

 

 

At September 30,

 

 

 

2025

 

 

2024

 

 

2023

 

United Kingdom:

 

 

 

 

 

 

 

 

 

Weighted-average assumptions to determine benefit obligation:

 

 

 

 

 

 

 

 

 

Discount rate

 

 

4.90

%

 

 

5.28

%

 

 

5.85

%

Rate of compensation increase

 

 

3.20

 

 

 

3.40

 

 

 

3.60

 

Weighted-average assumptions to determine periodic benefit costs:

 

 

 

 

 

 

 

 

 

Discount rate - service cost

 

 

5.41

 

 

 

5.91

 

 

 

4.99

 

Discount rate - interest cost

 

 

5.13

 

 

 

5.84

 

 

 

5.71

 

Rate of compensation increase

 

 

3.40

 

 

 

3.60

 

 

 

4.00

 

Long-term rate of return on plan assets

 

 

4.70

 

 

 

4.90

 

 

 

4.80

 

 

 

 

At September 30,

 

 

 

2025

 

 

2024

 

 

2023

 

Japan:

 

 

 

 

 

 

 

 

 

Weighted-average assumptions to determine benefit obligation:

 

 

 

 

 

 

 

 

 

Discount rate

 

 

2.90

%

 

 

1.92

%

 

 

2.01

%

Rate of compensation increase

 

 

4.00

 

 

 

3.00

 

 

 

2.00

 

Weighted-average assumptions to determine periodic benefit costs:

 

 

 

 

 

 

 

 

 

Discount rate - service cost

 

 

2.10

 

 

 

2.20

 

 

 

1.78

 

Discount rate - interest cost

 

 

1.53

 

 

 

1.58

 

 

 

1.17

 

Rate of compensation increase

 

 

3.00

 

 

 

2.00

 

 

 

2.00

 

Long-term rate of return on plan assets

 

 

3.75

 

 

 

3.25

 

 

 

2.75

 

 

 

 

At September 30,

 

 

 

2025

 

 

2024

 

 

2023

 

Germany:

 

 

 

 

 

 

 

 

 

Weighted-average assumptions to determine benefit obligation:

 

 

 

 

 

 

 

 

 

Discount rate

 

 

4.05

%

 

 

3.58

%

 

 

4.27

%

Rate of compensation increase

 

 

2.50

 

 

 

2.50

 

 

 

2.50

 

Weighted-average assumptions to determine periodic benefit costs:

 

 

 

 

 

 

 

 

 

Discount rate - service cost

 

 

3.64

 

 

 

4.23

 

 

 

3.95

 

Discount rate - interest cost

 

 

3.47

 

 

 

4.29

 

 

 

3.91

 

Rate of compensation increase

 

 

2.50

 

 

 

2.50

 

 

 

2.50

 

In the United Kingdom, Germany, and Japan, Woodward uses a high-quality corporate bond yield curve matched with separate cash flows to develop a single rate to determine the single rate equivalent to settle the entire benefit obligations in each jurisdiction. For the fiscal years ended September 30, 2025 and 2024, the discount rate used to determine periodic service cost and interest cost components of the overall benefit costs was based on spot rates derived from the same high-quality corporate bond yield curve used to determine the September 30, 2024 and 2023 benefit obligation, respectively, matched with separate cash flows for each future year.

Compensation increase assumptions, where applicable, are based upon historical experience and anticipated future management actions.

In determining the long-term rate of return on plan assets, Woodward assumes that the historical long-term compound growth rates of equity and fixed-income securities will predict the future returns of similar investments in the plan portfolio. Investment management and other fees paid out of the plan assets are factored into the determination of asset return assumptions.

Mortality assumptions are based on published mortality studies developed primarily based on past experience of the broad population and modified for projected longevity trends. The projected benefit obligations in the United States as of September 30, 2025 and September 30, 2024 were based on the Society of Actuaries (“SOA”) Pri-2012 Mortality Tables Report using the SOA’s Mortality Improvement Scale MP-2019 (“MP-2019”) and projected forward using a custom projection scale based on MP-2019 with a 5-year convergence period and a long-term rate of 0.75%.

As of September 30, 2025, mortality assumptions in Japan were based on the Standard rates 2025, compared to the Standard rates 2020 as of September 30, 2024. Mortality assumptions for the United Kingdom pension scheme were based on the self-administered pension scheme (“SAPS”) S3 “all” tables with a projected 1.5% annual improvement rate. As of September 30, 2025 and September 30, 2024, mortality assumptions in Germany were based on the Heubeck 2018G mortality tables.

Net periodic benefit costs consist of the following components reflected as expense in Woodward’s Consolidated Statement of Earnings:

 

 

Year Ended September 30,

 

 

 

United States

 

 

Other Countries

 

 

Total

 

 

 

2025

 

 

2024

 

 

2023

 

 

2025

 

 

2024

 

 

2023

 

 

2025

 

 

2024

 

 

2023

 

Service cost

 

$

917

 

 

$

775

 

 

$

893

 

 

$

1,432

 

 

$

1,244

 

 

$

1,333

 

 

$

2,349

 

 

$

2,019

 

 

$

2,226

 

Interest cost

 

 

6,875

 

 

 

7,598

 

 

 

7,297

 

 

 

2,983

 

 

 

3,213

 

 

 

3,137

 

 

 

9,858

 

 

 

10,811

 

 

 

10,434

 

Expected return on plan assets

 

 

(10,992

)

 

 

(9,084

)

 

 

(8,297

)

 

 

(2,496

)

 

 

(2,406

)

 

 

(2,300

)

 

 

(13,488

)

 

 

(11,490

)

 

 

(10,597

)

Amortization of:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss (gain)

 

 

171

 

 

 

226

 

 

 

292

 

 

 

(413

)

 

 

(679

)

 

 

(620

)

 

 

(242

)

 

 

(453

)

 

 

(328

)

Net prior service cost

 

 

762

 

 

 

698

 

 

 

698

 

 

 

23

 

 

 

23

 

 

 

22

 

 

 

785

 

 

 

721

 

 

 

720

 

Net periodic (benefit) cost

 

$

(2,267

)

 

$

213

 

 

$

883

 

 

$

1,529

 

 

$

1,395

 

 

$

1,572

 

 

$

(738

)

 

$

1,608

 

 

$

2,455

 

The following tables provide a reconciliation of the changes in the projected benefit obligation and fair value of assets for the defined benefit pension plans:

 

 

At or for the Year Ended September 30,

 

 

 

United States

 

 

Other Countries

 

 

Total

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Changes in projected benefit obligation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Projected benefit obligation at beginning of year

 

$

140,955

 

 

$

127,222

 

 

$

77,347

 

 

$

67,263

 

 

$

218,302

 

 

$

194,485

 

Plan amendment

 

 

—

 

 

 

1,121

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,121

 

Service cost

 

 

917

 

 

 

775

 

 

 

1,432

 

 

 

1,244

 

 

 

2,349

 

 

 

2,019

 

Interest cost

 

 

6,875

 

 

 

7,598

 

 

 

2,983

 

 

 

3,213

 

 

 

9,858

 

 

 

10,811

 

Net actuarial (gains) losses

 

 

(6,027

)

 

 

13,249

 

 

 

(944

)

 

 

4,128

 

 

 

(6,971

)

 

 

17,377

 

Contribution by participants

 

 

—

 

 

 

—

 

 

 

12

 

 

 

12

 

 

 

12

 

 

 

12

 

Benefits paid

 

 

(9,112

)

 

 

(9,010

)

 

 

(3,818

)

 

 

(3,647

)

 

 

(12,930

)

 

 

(12,657

)

Foreign currency exchange rate changes

 

 

—

 

 

 

—

 

 

 

1,615

 

 

 

5,134

 

 

 

1,615

 

 

 

5,134

 

Projected benefit obligation at end of year

 

$

133,608

 

 

$

140,955

 

 

$

78,627

 

 

$

77,347

 

 

$

212,235

 

 

$

218,302

 

Changes in fair value of plan assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value of plan assets at beginning of year

 

$

179,917

 

 

$

155,370

 

 

$

57,476

 

 

$

50,775

 

 

$

237,393

 

 

$

206,145

 

Actual return on plan assets

 

 

7,778

 

 

 

33,382

 

 

 

1,687

 

 

 

3,866

 

 

 

9,465

 

 

 

37,248

 

Contributions by the Company

 

 

—

 

 

 

175

 

 

 

1,423

 

 

 

1,863

 

 

 

1,423

 

 

 

2,038

 

Contributions by plan participants

 

 

—

 

 

 

—

 

 

 

12

 

 

 

12

 

 

 

12

 

 

 

12

 

Benefits paid

 

 

(9,112

)

 

 

(9,010

)

 

 

(3,818

)

 

 

(3,647

)

 

 

(12,930

)

 

 

(12,657

)

Foreign currency exchange rate changes

 

 

—

 

 

 

—

 

 

 

(222

)

 

 

4,607

 

 

 

(222

)

 

 

4,607

 

Fair value of plan assets at end of year

 

$

178,583

 

 

$

179,917

 

 

$

56,558

 

 

$

57,476

 

 

$

235,141

 

 

$

237,393

 

Net over/(under) funded status at end of year

 

$

44,975

 

 

$

38,962

 

 

$

(22,069

)

 

$

(19,871

)

 

$

22,906

 

 

$

19,091

 

At September 30, 2025, the Company’s defined benefit pension plans in the United Kingdom, Japan, and Germany represented $36,377, $6,246, and $36,004 of the total projected benefit obligation, respectively. At September 30, 2025, the United Kingdom and Japan pension plan assets represented $47,208 and $9,350 of the total fair value of all plan assets, respectively. The German pension plans are unfunded and have no plan assets.

The largest contributor to the net actuarial gains affecting the funded status for the defined benefit pension plans in the United States, United Kingdom, Japan, and Germany is due to an increase in the discount rates.

The accumulated benefit obligations of the Company’s defined benefit pension plans at September 30, 2025 was $133,608 in the United States, $35,912 in the United Kingdom, $5,280 in Japan, and $36,004 in Germany, and at September 30, 2024 was $140,955 in the United States, $33,766 in the United Kingdom, $5,958 in Japan, and $36,380 in Germany.

 

 

 

Plans with accumulated
benefit obligation in
excess of plan assets

 

 

Plans with accumulated
benefit obligation less
than plan assets

 

 

 

At September 30,

 

 

At September 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Projected benefit obligation

 

$

(36,197

)

 

$

(56,783

)

 

$

(176,038

)

 

$

(161,519

)

Accumulated benefit obligation

 

 

(36,163

)

 

 

(56,757

)

 

 

(174,641

)

 

 

(160,302

)

Fair value of plan assets

 

 

—

 

 

 

20,053

 

 

 

235,141

 

 

 

217,340

 

The following tables provide the amounts recognized in the Consolidated Balance Sheets and accumulated other comprehensive (earnings) losses for the defined benefit pension plans:

 

 

Year Ended September 30,

 

 

 

United States

 

 

Other Countries

 

 

Total

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Amounts recognized in the Consolidated Balance Sheets consist of:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other non-current assets

 

$

44,975

 

 

$

39,148

 

 

$

14,129

 

 

$

16,673

 

 

$

59,104

 

 

$

55,821

 

Accrued liabilities

 

 

—

 

 

 

—

 

 

 

(1,372

)

 

 

(1,166

)

 

 

(1,372

)

 

 

(1,166

)

Other non-current liabilities

 

 

—

 

 

 

(186

)

 

 

(34,826

)

 

 

(35,378

)

 

 

(34,826

)

 

 

(35,564

)

Net over/(under) funded status at end of year

 

$

44,975

 

 

$

38,962

 

 

$

(22,069

)

 

$

(19,871

)

 

$

22,906

 

 

$

19,091

 

Amounts recognized in accumulated other
comprehensive (earnings) losses consist of:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrecognized net prior service cost

 

$

2,437

 

 

$

3,200

 

 

$

488

 

 

$

509

 

 

$

2,925

 

 

$

3,709

 

Unrecognized net (gains) losses

 

 

(5,733

)

 

 

(2,749

)

 

 

(4,886

)

 

 

(4,655

)

 

 

(10,619

)

 

 

(7,404

)

Total amounts recognized

 

 

(3,296

)

 

 

451

 

 

 

(4,398

)

 

 

(4,146

)

 

 

(7,694

)

 

 

(3,695

)

Deferred taxes

 

 

(2,557

)

 

 

(3,499

)

 

 

(27

)

 

 

(191

)

 

 

(2,584

)

 

 

(3,690

)

Amounts recognized in accumulated other comprehensive (earnings) losses

 

$

(5,853

)

 

$

(3,048

)

 

$

(4,425

)

 

$

(4,337

)

 

$

(10,278

)

 

$

(7,385

)

The following table reconciles the changes in accumulated other comprehensive (earnings) losses for the defined benefit pension plans:

 

 

Year Ended September 30,

 

 

 

United States

 

 

Other Countries

 

 

Total

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Beginning of year

 

$

451

 

 

$

11,304

 

 

$

(4,146

)

 

$

(7,360

)

 

$

(3,695

)

 

$

3,944

 

Net (gain) loss

 

 

(2,814

)

 

 

(11,050

)

 

 

(135

)

 

 

2,668

 

 

 

(2,949

)

 

 

(8,382

)

Prior service cost

 

 

—

 

 

 

1,121

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,121

 

Amortization of:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) gain

 

 

(171

)

 

 

(226

)

 

 

413

 

 

 

679

 

 

 

242

 

 

 

453

 

Prior service cost

 

 

(762

)

 

 

(698

)

 

 

(23

)

 

 

(23

)

 

 

(785

)

 

 

(721

)

Foreign currency exchange rate changes

 

 

—

 

 

 

—

 

 

 

(507

)

 

 

(110

)

 

 

(507

)

 

 

(110

)

End of year

 

$

(3,296

)

 

$

451

 

 

$

(4,398

)

 

$

(4,146

)

 

$

(7,694

)

 

$

(3,695

)

Pension benefit payments are made from the assets of the pension plans. The German pension plans are unfunded; therefore, benefit payments are made from Company contributions into these plans as required to meet the payment obligations. Using foreign exchange rates as of September 30, 2025 and expected future service assumptions, it is anticipated that the future benefit payments will be as follows:

Year Ending September 30,

 

United States

 

 

Other
Countries

 

 

Total

 

2026

 

$

9,790

 

 

$

3,693

 

 

$

13,483

 

2027

 

 

10,142

 

 

 

3,776

 

 

 

13,918

 

2028

 

 

10,410

 

 

 

4,057

 

 

 

14,467

 

2029

 

 

10,633

 

 

 

4,225

 

 

 

14,858

 

2030

 

 

10,759

 

 

 

4,888

 

 

 

15,647

 

2031-2035

 

 

53,000

 

 

 

24,718

 

 

 

77,718

 

 

Woodward expects its pension plan contributions in fiscal year 2026 will be $305 in the United Kingdom, $150 in Japan, $1,386 in Germany, and $433 in the United States.

Pension plan assets

The overall investment objective of the pension plan assets is to earn a rate of return over time that, when combined with Company contributions, satisfies the benefit obligations of the pension plans and maintains sufficient liquidity to pay benefits.

As the timing and nature of the plan obligations varies for each Company sponsored pension plan, investment strategies have been individually designed for each pension plan with a common focus on maintaining diversified investment portfolios that provide for long-term growth while minimizing the risk to principal associated with short-term market behavior. The strategy for each of the plans balances the requirements to generate returns, using investments expected to produce higher returns, such as equity securities, with the need to control risk within the pension plans using less volatile investment assets, such as debt securities. A strategy of more equity-oriented allocation is adopted for those plans that have a longer-term investment plan based on the timing of the associated benefit obligations.

Risks associated with the plan assets include interest rate fluctuation risk, market fluctuation risk, risk of default by debt issuers, and liquidity risk. To manage these risks, the assets are managed by established, professional investment firms and performance is evaluated regularly by the Company’s investment committee against specific benchmarks and each plan’s investment objectives. Liability management and asset class diversification are central to the Company’s risk management approach and overall investment strategy.

The assets of the U.S. plans are invested in actively managed mutual funds. The assets of the plans in the United Kingdom and Japan are invested in actively managed pooled investment funds. Each individual mutual fund or pooled investment fund has been selected based on the investment strategy of the related plan, which mirrors a specific asset class within the associated target allocation. The plans in Germany are unfunded and have no plan assets. Pension plan assets at September 30, 2025 and 2024 do not include any direct investment in Woodward’s common stock.

The asset allocations are monitored and rebalanced regularly by investment managers assigned to the individual pension plans. The actual allocations of pension plan assets and target allocation ranges by asset class are as follows:

 

 

At September 30,

 

 

2025

 

2024

 

 

Percentage of Plan
Assets

 

Target Allocation
Ranges

 

Percentage of Plan
Assets

 

Target Allocation
Ranges

United States:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset Class

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity Securities

 

31.6%

 

2.1%

 

 

—

 

 

51.1%

 

30.5%

 

2.3%

 

 

—

 

 

51.1%

Debt Securities

 

67.2%

 

58.9%

 

 

—

 

 

96.8%

 

67.6%

 

58.9%

 

 

—

 

 

96.7%

Other

 

1.2%

 

0.0%

 

1.9%

 

0.0%

 

 

100.0%

 

 

 

 

 

 

 

 

100.0%

 

 

 

 

 

 

 

United Kingdom:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset Class

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt Securities

 

0.0%

 

0.0%

 

95.8%

 

90.0%

 

 

—

 

 

100.0%

Insurance Contract

 

76.2%

 

90.0%

 

 

—

 

 

100.0%

 

0.0%

 

0.0%

Other

 

23.8%

 

0.0%

 

 

—

 

 

10.0%

 

4.2%

 

0.0%

 

 

—

 

 

10.0%

 

 

100.0%

 

 

 

 

 

 

 

 

100.0%

 

 

 

 

 

 

 

Japan:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset Class

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity Securities

 

40.8%

 

36.0%

 

 

—

 

 

44.0%

 

39.7%

 

36.0%

 

 

—

 

 

44.0%

Debt Securities

 

58.3%

 

55.0%

 

 

—

 

 

63.0%

 

59.4%

 

55.0%

 

 

—

 

 

63.0%

Other

 

1.0%

 

0%

 

 

—

 

 

2.0%

 

0.9%

 

0.0%

 

 

—

 

 

2.0%

 

 

100.0%

 

 

 

 

 

 

 

 

100.0%

 

 

 

 

 

 

 

Actual allocations to each asset class can vary from target allocations due to periodic market value fluctuations, investment strategy changes, and the timing of benefit payments and contributions.

The following tables present Woodward’s pension plan assets using the fair value hierarchy established by U.S. GAAP:

 

 

At September 30, 2025

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

 

 

 

 

United
States

 

 

Other
Countries

 

 

United
States

 

 

Other
Countries

 

 

United
States

 

 

Other
Countries

 

 

Total

 

Asset Category:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

2,181

 

 

$

11,332

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

13,513

 

Mutual funds:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. corporate bond fund

 

 

120,010

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

120,010

 

U.S. equity large cap fund

 

 

35,001

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

35,001

 

International equity large cap growth fund

 

 

21,391

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

21,391

 

Pooled funds:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Japanese equity securities

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2,000

 

 

 

—

 

 

 

—

 

 

 

2,000

 

International equity securities

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,818

 

 

 

—

 

 

 

—

 

 

 

1,818

 

Japanese fixed income securities

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4,046

 

 

 

—

 

 

 

—

 

 

 

4,046

 

International fixed income securities

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,397

 

 

 

—

 

 

 

—

 

 

 

1,397

 

Insurance Contracts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.K. Insurance contract

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

35,965

 

 

 

35,965

 

Total assets

 

$

178,583

 

 

$

11,332

 

 

$

—

 

 

$

9,261

 

 

$

—

 

 

$

35,965

 

 

$

235,141

 

 

 

 

At September 30, 2024

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

 

 

 

 

United
States

 

 

Other
Countries

 

 

United
States

 

 

Other
Countries

 

 

United
States

 

 

Other
Countries

 

 

Total

 

Asset Category:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

3,370

 

 

$

2,130

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

5,500

 

Mutual funds:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. corporate bond fund

 

 

121,581

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

121,581

 

U.S. equity large cap fund

 

 

33,454

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

33,454

 

International equity large cap growth fund

 

 

21,512

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

21,512

 

Pooled funds:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Japanese equity securities

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,939

 

 

 

—

 

 

 

—

 

 

 

1,939

 

International equity securities

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,786

 

 

 

—

 

 

 

—

 

 

 

1,786

 

Japanese fixed income securities

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4,157

 

 

 

—

 

 

 

—

 

 

 

4,157

 

International fixed income securities

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,409

 

 

 

—

 

 

 

—

 

 

 

1,409

 

Index linked U.K. corporate bonds fund

 

 

—

 

 

 

—

 

 

 

—

 

 

 

17,085

 

 

 

—

 

 

 

—

 

 

 

17,085

 

Index linked U.K. government securities fund

 

 

—

 

 

 

—

 

 

 

—

 

 

 

12,049

 

 

 

—

 

 

 

—

 

 

 

12,049

 

Index linked U.K. long-term government securities fund

 

 

—

 

 

 

—

 

 

 

—

 

 

 

14,924

 

 

 

—

 

 

 

—

 

 

 

14,924

 

Index U.K. long-term government securities fund

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,997

 

 

 

—

 

 

 

—

 

 

 

1,997

 

Total assets

 

$

179,917

 

 

$

2,130

 

 

$

—

 

 

$

55,346

 

 

$

—

 

 

$

—

 

 

$

237,393

 

Cash and cash equivalents: Cash and cash equivalents held by the Company’s pension plans are held on deposit with creditworthy financial institutions. The fair value of the cash and cash equivalents are based on the quoted market price of the respective currency in which the cash is maintained.

Pension assets invested in mutual funds: The assets of the Company’s U.S. pension plans are invested in various mutual funds, which invest in both equity and debt securities. The fair value of the mutual funds is determined based on the quoted market price of each fund.

Pension assets invested in pooled funds: The assets of the Company’s Japan and United Kingdom pension plans are invested in pooled investment funds, which include both equity and debt securities. The assets of the United Kingdom pension plan are invested in index-linked pooled funds, which aim to replicate the movements of an underlying market index to which the fund is linked. Fair value of the pooled funds is based on the net asset value of shares held by the plan as reported by the fund sponsors. All pooled funds held by plans outside of the United States are considered to be invested in international equity and debt securities. Although the underlying securities may be largely domestic to the plan holding the investment assets, the underlying assets are considered international from the perspective of the Company.

Insurance contracts: In August 2025, the Trustee Board of the U.K. defined benefit pension plan entered into an agreement with an insurance company for a “buy-in” insurance contract, for its U.K. defined benefit pension plan to reduce retirement plan risk, while delivering promised benefits to plan participants. This transaction allows the Company to reduce volatility by removing investment, longevity, mortality, interest rate and inflation risk upon the transfer of substantially all of the pension plan assets to the insurer in exchange for the insurance contract. At this time the Company retains both the fair value of the contract within plan assets and the pension benefit obligations related to these participants. The fair value of the buy-in insurance contract is based on the calculated pension benefit obligations covered. The fair value of plan assets categorized as Level 3 during fiscal year 2025 are related to the purchase of the buy-in insurance contract. The Company anticipates an annuity purchase or a “buy-out” will likely occur within the next fiscal year or shortly thereafter, which will trigger a pension settlement that will result in all plan balances, including accumulated pension components within other comprehensive income, being charged to expense as a noncash settlement charge.

Other postretirement benefit plans

Woodward provides other postretirement benefits to its members, including postretirement medical benefits and life insurance benefits. Postretirement medical benefits are provided to certain current and retired members and their covered dependents and beneficiaries in the United States. Benefits include the option to elect company provided medical insurance coverage to age 65 and a Medicare supplemental plan after age 65. Life insurance benefits are also provided to certain retirees in the United States under frozen plans that are no longer available to current members. A September 30 measurement date is utilized to value plan assets and obligations for Woodward’s other postretirement benefit plans.

The postretirement medical benefit plans, other than the plan assumed in an acquisition in fiscal year 2009, were frozen in fiscal year 2006, and no additional members may participate in the plans. Generally, members who had attained age 55 and had rendered 10 or more years of service before the plans were frozen were eligible for these postretirement medical benefits.

Certain participating retirees are required to contribute to the plans in order to maintain coverage. The plans provide postretirement medical benefits for approximately three retired members and their covered dependents and beneficiaries and may provide future benefits to 304 active members and their covered dependents and beneficiaries, upon retirement, if the members elect to participate. All the postretirement medical plans are fully insured for retirees who have attained age 65.

The actuarial assumptions used in measuring the net periodic benefit cost and plan obligations of postretirement benefits were as follows:

 

 

At September 30,

 

 

 

2025

 

 

2024

 

 

2023

 

Weighted-average discount rate used to determine benefit obligation

 

 

5.30

%

 

 

5.00

%

 

 

6.25

%

Weighted-average discount rate used to determine net periodic benefit cost

 

 

5.00

 

 

 

6.25

 

 

 

5.70

 

The discount rate assumption is intended to reflect the rate at which the postretirement benefits could be effectively settled based upon the assumed timing of the benefit payments.

Woodward used a bond portfolio matching analysis based on recently traded, non-callable bonds rated AA or better that have at least $50 million outstanding to determine the benefit obligations at year end.

Mortality assumptions are based on published mortality studies developed primarily based on past experience of the broad population and modified for projected longevity trends. The projected benefit obligations in the United States as of September 30, 2025 and September 30, 2024 were based on the SOA Pri-2012 Mortality Tables Report using the SOA’s MP-2019 and projected forward using a custom projection scale based on MP-2019 with a five-year convergence period and a long-term rate of 0.75%.

Assumed healthcare cost trend rates at September 30 were as follows:

 

 

2025

 

 

2024

 

Health-care cost trend rate assumed for next year

 

 

7.00

%

 

 

6.00

%

Rate to which the cost trend rate is assumed to decline

 

 

 

 

 

 

(the ultimate trend rate)

 

 

5.00

%

 

 

5.00

%

Year that the rate reaches the ultimate trend rate

 

2033

 

 

2030

 

 

Net periodic benefit costs consist of the following components reflected as expense in Woodward’s Consolidated Statements of Earnings:

 

 

Year Ended September 30,

 

 

 

2025

 

 

2024

 

 

2023

 

Service cost

 

$

—

 

 

$

—

 

 

$

1

 

Interest cost

 

 

717

 

 

 

902

 

 

 

904

 

Amortization of:

 

 

 

 

 

 

 

 

 

Net gain

 

 

(441

)

 

 

(555

)

 

 

(495

)

Net periodic cost

 

$

276

 

 

$

347

 

 

$

410

 

The following table provides a reconciliation of the changes in the accumulated postretirement benefit obligation and fair value of assets for the postretirement benefits:

 

 

Year Ended September 30,

 

 

 

2025

 

 

2024

 

Changes in accumulated postretirement benefit obligation:

 

 

 

 

 

 

Accumulated postretirement benefit obligation at beginning of year

 

$

15,203

 

 

$

15,336

 

Service cost

 

 

—

 

 

 

—

 

Interest cost

 

 

717

 

 

 

902

 

Premiums paid by plan participants

 

 

753

 

 

 

834

 

Net actuarial (gain) loss

 

 

(278

)

 

 

597

 

Benefits paid

 

 

(2,202

)

 

 

(2,466

)

Accumulated postretirement benefit obligation at end of year

 

$

14,193

 

 

$

15,203

 

Changes in fair value of plan assets:

 

 

 

 

 

 

Fair value of plan assets at beginning of year

 

$

—

 

 

$

—

 

Contributions by the company

 

 

1,449

 

 

 

1,632

 

Premiums paid by plan participants

 

 

753

 

 

 

834

 

Benefits paid

 

 

(2,202

)

 

 

(2,466

)

Fair value of plan assets at end of year

 

$

—

 

 

$

—

 

Funded status at end of year

 

$

(14,193

)

 

$

(15,203

)

The following tables provide the amounts recognized in the Consolidated Balance Sheets and accumulated other comprehensive (earnings) losses for the postretirement plans:

 

 

Year Ended September 30,

 

 

 

2025

 

 

2024

 

Amounts recognized in Consolidated Balance Sheets consist of:

 

 

 

 

 

 

Accrued liabilities

 

$

(1,576

)

 

$

(1,668

)

Other non-current liabilities

 

 

(12,617

)

 

 

(13,535

)

Funded status at end of year

 

$

(14,193

)

 

$

(15,203

)

Amounts recognized in accumulated other comprehensive income consist of:

 

 

 

 

 

 

Unrecognized net prior service cost (benefit)

 

$

—

 

 

$

—

 

Unrecognized net gains

 

 

(5,097

)

 

 

(5,260

)

Total amounts recognized

 

 

(5,097

)

 

 

(5,260

)

Deferred taxes

 

 

968

 

 

 

1,009

 

Amounts recognized in accumulated other comprehensive (earnings)

 

$

(4,129

)

 

$

(4,251

)

Woodward pays plan benefits from its general funds; therefore, there are no segregated plan assets as of September 30, 2025 or September 30, 2024.

The accumulated benefit obligations of the Company’s postretirement plans were $14,193 at September 30, 2025 and $15,203 at September 30, 2024. The largest contributor to the actuarial gain affecting the Company’s postretirement plans accumulated benefit obligations was an increase in the discount rate.

The following table reconciles the changes in accumulated other comprehensive (earnings) losses for the other postretirement benefit plans:

 

 

Year Ended September 30,

 

 

 

2025

 

 

2024

 

Beginning of year

 

$

(5,260

)

 

$

(6,412

)

Net (gain) loss

 

 

(278

)

 

 

597

 

Amortization of:

 

 

 

 

 

 

Net gain

 

 

441

 

 

 

555

 

End of year

 

$

(5,097

)

 

$

(5,260

)

Using expected future service, it is anticipated that the future Company contributions to pay benefits for other postretirement benefit plans, excluding participate contributions, will be as follows:

Year Ending September 30,

 

 

 

2026

 

$

2,379

 

2027

 

 

2,318

 

2028

 

 

2,251

 

2029

 

 

2,176

 

2030

 

 

2,087

 

2031-2035

 

 

8,751