Note 14. Accrued liabilities



	December 31,		September 30,
	2017		2017
Salaries and other member benefits	$	43,844	$	91,285
Warranties		13,017		13,597
Interest payable		5,392		9,626
Current portion of acquired performance obligations and unfavorable contracts (1)		1,627		1,627
Accrued retirement benefits		2,379		2,413
Current portion of loss reserve on contractual lease commitments		1,244		1,343
Current portion of deferred income from JV formation (Note 4)		6,439		6,451
Deferred revenues		3,568		4,625
Taxes, other than income		10,934		14,401
Other		10,341		9,704
	$	98,785	$	155,072

(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:



	Three-Months Ended December 31,
		2017		2016
Warranties, beginning of period	$	13,597	$	15,993
Expense, net of recoveries		(2,030)		1,923
Reductions for settling warranties		1,377		(2,032)
Foreign currency exchange rate changes		73		(356)
Warranties, end of period	$	13,017	$	15,528

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 and recognized a loss reserve against the estimated remaining contractual lease commitments, less anticipated sublease income. Changes in the loss reserve were as follows:



	Three-Months Ended December 31,
		2017		2016
Loss reserve on contractual lease commitments, beginning of period	$	5,270	$	9,242
Payments, net of sublease income		(553)		(402)
Loss reserve on contractual lease commitments, end of period	$	4,717	$	8,840

Other liabilities included $3,473 and $3,927 of accrued loss reserve on contractual lease commitments as of December 31, 2017 and September 30, 2017, respectively, which are not expected to be settled or paid within twelve months of the respective balance sheet date.