Financial Derivatives

12 Months Ended

Sep. 30, 2013

Financial Derivatives

Financial Derivatives

11. 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 $91.9 million at September 30, 2013 and $34.1 million at September 30, 2012.

Interest Rate Hedging

Swaps

In conjunction with our 7.5% Bonds issued in June 2009, we executed $250.0 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 $250.0 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 $300.0 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 fair value hedges against changes in the fair value 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.

Treasury Locks

During 2013, we executed interest rate lock transactions to reduce exposure to fluctuations in treasury interest rates in anticipation of the 5.35% Bonds issued on September 19, 2013. These transactions fixed the treasury yield component of the coupon rate on an aggregate notional amount of $250.0 million and matured on August 15, 2013 and September 19, 2013. There was no ineffectiveness. The total gain of $12.6 million was recorded to AOCI, net of $4.6 million tax, and will be amortized over the 10-year term of the 5.35% Bonds as a yield adjustment to reduce interest expense.

Presentation of Derivative Amounts

Balance Sheet Location and Fair Value  at September 30,	2013		2012
Non-designated Hedges
Foreign currency contracts:  Other assets and deferred costs (current)	$	0.5	$	0.1
Foreign currency contracts:  Other accrued liabilities		1.1		0.2
Designated Hedges
Interest rate swaps:  Other assets and deferred costs (noncurrent)	$	66.5	$	118.1
Interest rate swaps:  Long-term debt		71.1		119.5
Interest rate locks:  AOCI		8.0		-

Income Statement Location and Gain (Loss) For Fiscal Years	2013			2012		2011
Non-designated Hedges
Foreign currency contracts:  Other income (expense)	$	(0.5	)	$	0.5	$	2.6
Designated Hedges
Interest rate swaps - ineffectiveness:  Other income (expense)	$	(3.2	)	$	1.5	$	(2.9	)
Interest rate swaps - effectiveness:  Interest expense		25.9			24.5		22.1