Note 13. Accrued liabilities



	At September 30,
	2017		2016
Salaries and other member benefits	$	91,285	$	87,197
Warranties		13,597		15,993
Interest payable		9,626		9,071
Current portion of acquired performance obligations and unfavorable contracts (1)		1,627		2,910
Accrued retirement benefits		2,413		2,505
Current portion of loss reserve on contractual lease commitments		1,343		1,840
Current portion of deferred income from JV formation (Note 4)		6,451		6,552
Deferred revenues		4,625		5,779
Taxes, other than income		14,401		14,580
Other		9,704		10,200
	$	155,072	$	156,627

(1)

In connection with Woodward’s acquisition of GE Aviation Systems LLC’s (the “Seller”) thrust reverser actuation systems business located in Duarte, California (the “Duarte Acquisition”) in fiscal year 2013, Woodward assumed current and long-term performance obligations for contractual commitments that are expected to result in future economic losses. In addition, Woodward assumed current and long-term performance obligations for services to be provided to the Seller and others, partially offset by current and long-term assets related to contractual payments due from the Seller. The current portion of both obligations is included in Accrued liabilities.

Warranties

Provisions of Woodward’s sales agreements include product warranties customary to these types of agreements. Accruals are established for specifically identified warranty issues that are probable to result in future costs. Warranty costs are accrued on a non-specific basis whenever past experience indicates a normal and predictable pattern exists. Changes in accrued product warranties were as follows:



	Twelve-Months Ended September 30,
	2017		2016		2015
Warranties, beginning of year	$	15,993	$	13,741	$	16,916
Expense, net of recoveries		9,135		9,902		10,117
Reductions for settling warranties		(11,692)		(7,802)		(12,416)
Foreign currency exchange rate changes		161		152		(876)
Warranties, end of year	$	13,597	$	15,993	$	13,741

Loss reserve on contractual lease commitments

In connection with the construction of a new production facility in Niles, Illinois, Woodward vacated a leased facility in Skokie, Illinois. During the first quarter of fiscal year 2016, Woodward fully vacated the Skokie facility and therefore recorded a charge of $8,165 to recognize a loss reserve against the estimated remaining contractual lease commitments, less anticipated sublease income. During the third quarter of fiscal year 2017, Woodward entered into an additional sublease agreement with a third party related to a portion of the vacated Skokie facility. Woodward recorded a reduction in the loss reserve associated with the vacated Skokie facility of $2,322 related to the anticipated sublease income it will receive.

The summary for the activity in the loss reserve during the fiscal years ended September 30, 2017 and September 30, 2016 is as follows:



	Twelve-Months Ended September 30,
	2017		2016			2015
Loss reserve on contractual lease commitments, beginning of year	$	9,242	$	2,464	$	3,212
Additions		-		8,165		39
Payments		(1,650)		(1,387)		(787)
Non-cash adjustments		(2,322)		-		-
Loss reserve on contractual lease commitments, end of year	$	5,270	$	9,242	$	2,464

Other liabilities included $3,927 of accrued loss reserve on contractual lease commitments that are not expected to be settled or paid within twelve months as of September 30, 2017.