Annual report pursuant to Section 13 and 15(d)

DERIVATIVES AND HEDGING ACTIVITIES

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DERIVATIVES AND HEDGING ACTIVITIES
 12 Months Ended
Sep. 30, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVES AND HEDGING ACTIVITIES DERIVATIVES AND HEDGING ACTIVITIES:
The Company operates internationally and utilizes certain derivative financial instruments to manage its foreign currency, debt and interest rate exposures. At September 30, 2022 and 2021, derivative instruments were reflected on a gross-basis in the consolidated balance sheets as follows:
Derivatives: September 30, 2022 September 30, 2021
Interest Rate Swaps Cross-Currency Swaps Interest Rate Swaps Cross-Currency Swaps
Current assets:
Other current assets $ 3,358  $ —  $ 31  $ — 
Long-term assets:  
Other assets 7,341  3,722  139  39
Current liabilities:  
Other current liabilities —  —  (1,922) — 
Long-term liabilities:  
Other liabilities —  —  (310) — 
Total derivatives $ 10,699  $ 3,722  $ (2,062) $ 39 
The following table presents information related to interest rate swaps entered into by the Company and designated as cash flow hedges:
September 30, 2022 September 30, 2021
Notional amount $ 125,000  $ 250,000 
Weighted-average maturity period (years) 3.1 2.2
Weighted-average received rate 3.14  % 0.08  %
Weighted-average pay rate 1.04  % 1.34  %

The Company enters into interest rate swaps in order to achieve a mix of fixed and variable rate debt that it deems appropriate. The interest rate swaps have been designated as cash flow hedges of future variable interest payments which are considered probable of occurring.  Based on the Company's assessment, all of the critical terms of each of the hedges matched the underlying terms of the hedged debt and related forecasted interest payments, and as such, these hedges were considered highly effective.

The fair value of the interest rate swaps reflected a net unrealized gain of $10,699 ($7,937 after tax) and a net unrealized loss of $2,062 ($1,558 after tax) at September 30, 2022 and 2021, respectively, that is included in shareholders' equity as part of accumulated other comprehensive income ("AOCI").  Assuming market rates remain constant with the rates at September 30, 2022, a gain (net of tax) of approximately $2,510 included in AOCI is expected to be recognized in earnings over the next twelve months.

During fiscal 2021, the Company entered into a U.S. Dollar/Euro cross currency swap with a notional amount of $94,464, which was designated as a net investment hedge of foreign operations. The swap was settled during fiscal 2022, resulting in cash proceeds of $13,066. Concurrently, the Company entered into a new U.S. Dollar/Euro cross currency swap with a notional amount of $81,392, which was also designated as a net investment hedge of foreign operations. The new swap contract matures in September 2027. The Company assesses hedge effectiveness for the swap contracts based on changes in fair value attributable to changes in spot prices. A gain of $2,782 (net of income taxes of $940) and a gain of $29 (net of income taxes of $10), which represented effective hedges of net investments, were reported as a component of AOCI within currency translation adjustment at September 30, 2022 and September 30, 2021, respectively. Income of $1,645 and $63, which represented the recognized portion of the fair value excluded from the assessment of hedge effectiveness, was included in current period earnings as a component of interest expense for fiscal 2022 and fiscal 2021, respectively. At September 30, 2022 and September 30, 2021, the swaps totaled $3,722 and $39, respectively, and were included in other assets in the Consolidated Balance Sheets.

The Company previously used certain foreign currency debt instruments as net investment hedges of foreign operations. Currency losses of $5,370 (net of income taxes of $1,743), which represent effective hedges of net investments, were reported as a component of AOCI within currency translation adjustment at September 30, 2021.

The Company enters into certain derivative contracts in accordance with its risk management strategy that do not meet the criteria for hedge accounting but which have the economic impact of largely mitigating foreign currency exposure. Changes in the fair value of these economic hedges are recorded in current period earnings as a component of other income (deductions), net. During fiscal 2022, net gains from economic hedges (which largely offset losses from underlying foreign currency exposures) totaled $4,677. No such economic hedge contracts were outstanding as of September 30, 2022 or 2021.

Refer to Note 16, "Accumulated Other Comprehensive Income" for further details regarding amounts recorded in AOCI and the Consolidated Statements of Income (Loss) related to derivatives.