Financial Derivatives

12 Months Ended

Sep. 30, 2014

Financial Derivatives

Financial Derivatives

FOREIGN CURRENCY HEDGING

The notional amount of foreign currency contracts hedging our exposure related to monetary assets and liabilities denominated in nonfunctional currency totaled $58.7 million at September 30, 2014 and $91.9 million at September 30, 2013.

INTEREST RATE HEDGING

In conjunction with our 7.5% bonds issued in June 2009, we executed $250 million notional value of interest rate swaps that exchange 7.5% fixed interest payments for variable rate interest payments, at one-month LIBOR plus 342 bps, reset two business days before the 15th of each month. In April 2011, we additionally executed $250 million notional value interest rate swaps that exchange the remaining fixed interest payments on these bonds for variable rate interest payments, based on six-month LIBOR plus 409 bps, reset in arrears two business days before June 15 and December 15 each year. All of these swaps terminate on June 15, 2019.

In conjunction with our 5.5% bonds issued in June 2010, we executed $300 million notional value of interest rate swaps that terminate on June 15, 2020. These swaps effectively exchange 5.5% fixed interest payments for variable rate interest payments, based on the six-month LIBOR plus 186 bps, reset in arrears two business days before June 15 and December 15 each year. These swaps terminate on June 15, 2020.

Our interest rate swaps are designated FV hedges against changes in the FV of a portion of their related bonds. Net amounts receivable or payable under our swaps settle semiannually on June 15 and December 15. Our assessments have determined that these interest rate swaps are highly effective.

PRESENTATION OF DERIVATIVE AMOUNTS

All derivatives are recorded gross, except counter-party netting of our swaps' interest receivable and payable.

Balance Sheet Location and Fair Value	September 30, 2014					September 30, 2013
	Assets			Liabilities		Assets			Liabilities
Non-designated Hedges: Foreign Currency Contracts
Other assets and deferred costs (current)	$	2.1		$	-	$	0.5		$	-
Other accrued liabilities		-			0.3		-			1.1
Designated Hedges: Interest Rate Swaps
Other assets and deferred costs (noncurrent)		55.4			-		66.5			-
Long-term debt		-			57.8		-			71.1
Gross Derivatives		57.5			58.1		67.0			72.2
Counter-party Netting: Swaps Interest Receivable and Payable
Accounts receivable
Due from counter-party		15.5			-		15.6			-
Due to counter-party		(7.8	)		-		(8.0	)		-
Net Derivatives	$	65.2		$	58.1	$	74.6		$	72.2

Income Statement Location and Income (expense)

Years Ended September 30,	2014		2013			2012
Non-designated Hedges: Foreign Currency Contracts
Other income (expense)	$	2.6	$	(0.5	)	$	0.5
Designated Hedges: Interest Rate Swaps
Effectiveness - Interest expense	$	27.0	$	25.9		$	24.5
Ineffectiveness - Other income (expense)		2.2		(3.2	)		1.5