Quarterly report pursuant to Section 13 or 15(d)

Derivatives and Hedging Activities

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Derivatives and Hedging Activities
 3 Months Ended
Dec. 31, 2023
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 December 31, 2023 and September 30, 2023, derivative instruments were reflected on a gross-basis in the consolidated balance sheets as follows:
Derivatives: December 31, 2023 September 30, 2023
Interest Rate Swaps Cross- Currency Swaps Interest Rate Swaps Cross- Currency Swaps
Current assets:    
Other current assets $ 129  $ —  $ 920  $ — 
Long-term assets:    
Other assets 419  —  3,086  — 
Current liabilities:    
Other current liabilities (504) —  —  — 
Long-term liabilities:    
Other liabilities (1,389) (6,819) —  (2,766)
Total derivatives $ (1,345) $ (6,819) $ 4,006  $ (2,766)

The following table presents information related to interest rate swaps entered into by the Company and designated as cash flow hedges:
December 31, 2023 September 30, 2023
Notional amount $ 175,000  $ 175,000 
Weighted-average maturity period (years) 3.9 4.1
Weighted-average received rate 5.35  % 5.32  %
Weighted-average pay rate 3.83  % 3.83  %

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 loss of $1,345 ($1,004 after tax) at December 31, 2023 and a net unrealized gain of $4,006 ($2,991 after tax) at September 30, 2023, that is included in shareholders' equity as part of accumulated other comprehensive income (loss) ("AOCI"). Unrecognized gains of $6,898 ($5,155 after tax) and $8,084 ($6,041 after tax) related to previously terminated LIBOR-based swaps were also included in AOCI as of December 31, 2023 and September 30, 2023, respectively. Assuming market rates remain constant with the rates at December 31, 2023, a gain (net of tax) of approximately $2,577 included in AOCI is expected to be recognized in earnings over the next twelve months.

Note 8.   Derivatives and Hedging Activities (continued)

The Company has a U.S. Dollar/Euro cross currency swap with a notional amount of $81,392, as of December 31, 2023 and September 30, 2023, which has been designated as a net investment hedge of foreign operations. The swap contract matures in September 2027. The Company assesses hedge effectiveness for this contract based on changes in fair value attributable to changes in spot prices. A loss of $5,091 (net of income taxes of $1,728) and a loss of $2,065 (net of income taxes of $701), which represented effective hedges of net investments, were reported as a component of AOCI within currency translation adjustment at December 31, 2023 and September 30, 2023, respectively. Income of $259 and $272, which represented the recognized portion of the fair value of cross currency swaps excluded from the assessment of hedge effectiveness, was included in current period earnings as a component of interest expense for the three months ended December 31, 2023 and 2022, respectively. At December 31, 2023 and September 30, 2023, the swap totaled $6,819 and $2,766, respectively, and was included in other accrued liabilities in the Consolidated Balance Sheets.

The Company uses certain foreign currency debt instruments as net investment hedges of foreign operations with a notional amount of €55.0 million ($60,710) as of December 31, 2023. Currency losses of $1,129 (net of income taxes of $383), which represent effective hedges of net investments, were reported as a component of AOCI within currency translation adjustment at December 31, 2023.

Refer to Note 12, "Accumulated Other Comprehensive Income" for further details regarding amounts recorded in AOCI and the Consolidated Statements of Income (Loss) related to derivatives.