Derivative Financial Instruments (Notes)

9 Months Ended

Jun. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative financial instruments and hedging

DERIVATIVE FINANCIAL INSTRUMENTS

In the ordinary course of business, the Company is exposed to commodity price risks relating to the acquisition of raw materials and supplies, interest rate risks relating to floating rate debt and foreign currency exchange rate risks. The Company utilizes swaps to manage certain of these exposures by hedging when it is practical to do so. The Company does not hold or issue financial instruments for speculative or trading purposes.

At June 30, 2020, the Company had pay-fixed, receive-variable interest rate swaps with a notional amount of $350.0 maturing in December 2022 that require monthly settlements which began on January 31, 2020 and are used to hedge forecasted interest payments on its variable rate debt (see Note 15). As of April 1, 2020, the Company changed the designation of the interest rate swaps from cash flow hedges to non-designated hedging instruments as the swaps were no longer effective (as defined by GAAP). In connection with the new designation, the Company started reclassifying losses previously recorded in accumulated OCI to “Interest expense, net” in the Condensed Consolidated Statements of Operations on a straight-line basis over the term of the related debt. No derivative instruments were held by the Company at September 30, 2019.

At June 30, 2020, accumulated OCI included a $10.0 net hedging loss before taxes ($9.3 after taxes). Approximately $2.3 of the net hedging loss reported in accumulated OCI at June 30, 2020 is expected to be reclassified into earnings within the next 12 months.

The following table presents the balance sheet location and fair value of the Company’s derivative instruments on a gross basis. The Company does not offset derivative assets and liabilities within the Condensed Consolidated Balance Sheet.

	June 30, 2020
Other liabilities	$	4.4
Other noncurrent liabilities	6.8
Total other liabilities	$	11.2

The following table presents the components of the Company’s net hedging losses on interest rate swaps which are included in “Interest expense, net” in the Condensed Consolidated Statements of Operations.

	Three Months Ended June 30, 2020		Nine Months Ended June 30, 2020
Mark-to-market adjustments	$	0.6	$	0.6
Cash settlements paid, net	0.9		0.7
Net loss amortized from accumulated OCI	0.6		0.6
Total net hedging losses	$	2.1	$	1.9