Quarterly report pursuant to Section 13 or 15(d)

Derivatives and Hedging Activities

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Derivatives and Hedging Activities
 9 Months Ended
Jun. 30, 2024
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 June 30, 2024 and September 30, 2023, derivative instruments were reflected on a gross-basis in the consolidated balance sheets as follows:
Derivatives: June 30, 2024 September 30, 2023
Interest Rate Swaps Cross- Currency Swaps Interest Rate Swaps Cross- Currency Swaps
Current assets:    
Other current assets $ 616  $ —  $ 920  $ — 
Long-term assets:    
Other assets 1,641  —  3,086  — 
Current liabilities:    
Other current liabilities —  (17,416) —  — 
Long-term liabilities:    
Other liabilities —  (3,863) —  (2,766)
Total derivatives $ 2,257  $ (21,279) $ 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:
June 30, 2024 September 30, 2023
Notional amount $ 175,000  $ 175,000 
Weighted-average maturity period (years) 3.4 4.1
Weighted-average received rate 5.34  % 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 gain of $2,257 ($1,685 after tax) at June 30, 2024 and $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 $4,751 ($3,549 after tax) and $8,084 ($6,041 after tax) related to previously terminated LIBOR-based swaps were also included in AOCI as of June 30, 2024 and September 30, 2023, respectively. Assuming market rates remain constant with the rates at June 30, 2024, a gain (net of tax) of approximately $2,580 included in AOCI is expected to be recognized in earnings over the next twelve months.

The Company has a U.S. Dollar/Euro cross currency swap with a notional amount of $81,392, as of June 30, 2024 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 $2,884 (net of income taxes of $979) 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 June 30, 2024 and September 30, 2023, respectively. Income of $306 and $891, 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 and nine months ended June 30, 2024, respectively. Income of $284 and $866, 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 and nine months ended June 30, 2023, respectively. At June 30, 2024 and September 30, 2023, the swap totaled $3,863 and $2,766, respectively, and was included in other accrued liabilities in the Consolidated Balance Sheets.
Note 8.   Derivatives and Hedging Activities (continued)

During the third quarter of fiscal 2024, the Company entered into a U.S. Dollar/SEK cross currency swap with a notional amount of SEK 212.7 million ($20,000), which was designated as a net investment hedge of foreign operations. The swap contract matures in June 2025. In connection with this transaction, the Company received $17,416 from the counterparty, representing partial advance payment of amounts due under the U.S. Dollar leg of the swap. The Company assesses hedge effectiveness for this contract based on changes in fair value attributable to changes in spot prices. At June 30, 2024, the swap totaled $17,416 and was included in other current liabilities in the Consolidated Balance Sheet.

The Company uses certain foreign currency debt instruments as net investment hedges of foreign operations with a notional amount of €55.0 million ($58,947) as of June 30, 2024. Currency losses of $1,693 (net of income taxes of $574), which represent effective hedges of net investments, were reported as a component of AOCI within currency translation adjustment at June 30, 2024.

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.