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Derivative Instruments and Hedging Activities | 6 Months Ended
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Mar. 31, 2026
Derivative Instruments and Hedges, Assets [Abstract] |
Derivative Instruments and Hedging Activities | Note 8. Derivative instruments and hedging activities Derivative instruments not designated or qualifying as hedging instruments In May 2020, Woodward entered into five fixed-rate cross-currency interest rate swap agreements (the “2020 Fixed-Rate Cross-Currency Swaps”), with an aggregate notional value of $400,000, which effectively reduced the interest rates on the underlying fixed-rate debt under the 2018 Notes (as defined in Note 15, Credit facilities, short-term borrowings, and long-term debt, in the Notes to the Consolidated Financial Statements included in Part II, Item 8 of Woodward’s most recently filed Form 10-K) and Woodward’s then existing revolving credit agreement. The net interest income of the 2020 Fixed-Rate Cross-Currency Swaps is recorded as a reduction to “Interest expense” in Woodward’s Condensed Consolidated Statements of Earnings. The total notional value of the 2020 Fixed-Rate Cross-Currency Swaps was $315,000 at March 31, 2026. See Note 7, Financial Instruments and fair value measurements for the related fair value of the derivative instruments as of March 31, 2026. Derivative instruments in cash flow hedging relationships In May 2020, Woodward entered into five U.S. dollar intercompany loans payable, with identical terms and notional values of each tranche of the 2020 Fixed-Rate Cross-Currency Swaps, together with reciprocal fixed-rate intercompany cross-currency interest rate swaps. The agreements were entered into by Woodward Barbados Euro Financing SRL ("Euro Barbados"), a wholly owned subsidiary of Woodward, and are designated as cash flow hedges under the criteria prescribed in ASC 815. The objective of these derivative instruments is to hedge the risk of variability in cash flows attributable to the foreign currency exchange risk for future principal and interest payments associated with the U.S. dollar denominated intercompany loans over a 13 year period, as Euro Barbados maintains a Euro functional currency. For each of the fixed-rate intercompany cross-currency interest rate swaps, changes in the fair values of the derivative instruments are recognized in accumulated OCI and reclassified to foreign currency transaction gain or loss included in “Selling, general and administrative expenses” in Woodward’s Condensed Consolidated Statements of Earnings. Reclassifications out of accumulated OCI of the change in fair value occur each reporting period based upon changes in the spot rate remeasurement of the Euro and U.S. dollar denominated intercompany loans, including associated interest. Hedge effectiveness is assessed based on the fair value changes of the derivative instruments, and such hedges are deemed to be highly effective in offsetting exposure to variability in foreign exchange rates. There are no credit-risk-related contingent features associated with these fixed-rate cross-currency interest rate swaps. Derivatives instruments in net investment hedging relationships On September 23, 2016, Woodward and Woodward International Holding B.V., a wholly owned subsidiary of Woodward organized under the laws of The Netherlands (the “BV Subsidiary”), each entered into a note purchase agreement (the “2016 Note Purchase Agreement”) relating to the sale by Woodward and the BV Subsidiary of an aggregate principal amount of €160,000 of senior unsecured notes in a series of private placement transactions. Woodward issued €40,000 aggregate principal amount of Woodward’s Series M Senior Notes due September 23, 2026 (the “Series M Notes”). Woodward designated the Series M Notes as a hedge of a foreign currency exposure of Woodward’s net investment in its Euro denominated functional currency subsidiaries. Related to the Series M Notes, included in foreign currency translation adjustments within total comprehensive (losses) earnings were a net foreign exchange gain of $1,153 for the three months and a foreign exchange gain of $1,069 for the six months ended March 31, 2026, compared to a net foreign exchange loss of $1,712 for the three months and a foreign exchange gain of $1,351 for the six months ended March 31, 2025. Impact of derivative instruments designated as qualifying hedging instruments The following table discloses the amounts recognized in relation to the cash flow hedges designated as qualifying hedging instruments:
|  |  |  | Three months ended March 31, |  |  | Six months ended March 31, |
Derivatives in: |  | Location |  | 2026 |  |  | 2025 |  |  | 2026 |  |  | 2025 |
(Gain) loss reclassified from accumulated OCI into earnings |  | Selling, general and administrative expenses |  | $ | (7,791 | ) |  | $ | 16,560 |  |  | $ | (7,257 | ) |  | $ | (11,123 | )
(Gain) loss recognized in accumulated OCI |  | Selling, general and administrative expenses |  |  | (7,329 | ) |  |  | 11,402 |  |  |  | (9,177 | ) |  |  | (8,966 | )
The remaining unrecognized gains and losses in Woodward’s Condensed Consolidated Balance Sheets associated with derivative instruments that were previously entered into by Woodward, which are classified in accumulated OCI, were net losses of $4,322 as of March 31, 2026 and $5,830 as of September 30, 2025.

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