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Derivative Instruments | 9 Months Ended
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Jun. 30, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments | DERIVATIVE INSTRUMENTS: The Company enters into contractual derivative arrangements to manage changes in market conditions related to interest on debt obligations and exposure to fluctuating gasoline and diesel fuel prices. Derivative instruments utilized during the period include interest rate swap agreements and gasoline and diesel fuel agreements. All derivative instruments are recognized as either assets or liabilities on the balance sheet at fair value at the end of each quarter. The counterparties to the Company's contractual derivative agreements are all major international financial institutions. The Company is exposed to credit loss in the event of nonperformance by these counterparties. The Company continually monitors its positions and the credit ratings of its counterparties and does not anticipate nonperformance by the counterparties. For designated hedging relationships, the Company formally documents the hedging relationship and its risk management objective and strategy for undertaking the hedge, the hedging instrument, the hedged item, the nature of the risk being hedged and how the hedging instrument's effectiveness in offsetting the hedged risk will be assessed prospectively and retrospectively for designated hedges. The Company also formally assesses, both at the hedge's inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting cash flows of hedged items. Cash Flow Hedges The Company has $2.2 billion notional amount of outstanding interest rate swap agreements as of June 30, 2023, which fix the rate on a like amount of variable rate borrowings through December of fiscal 2028. During the first quarter of fiscal 2023, $1.2 billion notional amount of previously forward starting interest rate swap agreements to hedge the cash flow risk of variability in interest payments on variable rate borrowings became effective. During the third quarter of fiscal 2023, the Company entered into $150.0 million notional amount of interest rate swap agreements to hedge the cash flow risk of variability in interest payments on variable rate borrowings. In addition, interest rate swaps with notional amounts of $1.6 billion matured during the nine months ended June 30, 2023. During the third quarter of fiscal 2023, the Company entered into bilateral agreements with its swap counterparties to transition all of its interest rate swap agreements to use SOFR as the reference rate in anticipation of the discontinuance of LIBOR. There were no changes to interest rate swap parties, notional amounts or settlement dates as a result of these amendments. As of June 30, 2023, all of the Company's interest rate swap agreements were indexed to SOFR. Changes in the fair value of a derivative that is designated as and meets all the required criteria for a cash flow hedge are recorded in accumulated other comprehensive loss and reclassified into earnings as the underlying hedged item affects earnings. Amounts reported in accumulated other comprehensive loss related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. As of June 30, 2023 and September 30, 2022, $103.8 million and $114.7 million, respectively, of unrealized net of tax gains related to the interest rate swaps were included in "Accumulated other comprehensive loss" on the Condensed Consolidated Balance Sheets. The following table summarizes the effect of the Company's derivatives designated as cash flow hedging instruments on Other comprehensive income (loss) (in thousands):
| Three Months Ended
| June 30, 2023 |  | July 1, 2022
Interest rate swap agreements | $ | 40,370 |  |  | $ | 12,034 |
| Nine Months Ended
| June 30, 2023 |  | July 1, 2022
Interest rate swap agreements | $ | 26,039 |  |  | $ | 115,361 |
Derivatives not Designated in Hedging Relationships The Company entered into a series of pay fixed/receive floating gasoline and diesel fuel agreements based on the Department of Energy weekly retail on-highway index in order to limit its exposure to price fluctuations for gasoline and diesel fuel. As of June 30, 2023, the Company has contracts for 2.9 million gallons outstanding through December of fiscal 2024. The Company does not record its gasoline and diesel fuel agreements as hedges for accounting purposes. The impact on earnings related to the change in fair value of these unsettled contracts were gains of $1.0 million and $1.7 million for the three and nine months ended June 30, 2023, respectively. The impact on earnings related to the change in fair value of these unsettled contracts were gains of $1.8 million and $1.4 million for the three and nine months ended July 1, 2022, respectively. The change in fair value for unsettled contracts is included in "Selling and general corporate expenses" on the Condensed Consolidated Statements of Income. When the contracts settle, the gain or loss is recorded to "Cost of services provided (exclusive of depreciation and amortization)" on the Condensed Consolidated Statements of Income. The following table summarizes the location and fair value, using Level 2 inputs (see Note 13 for a description of the fair value levels), of the Company's derivatives designated and not designated as hedging instruments on the Condensed Consolidated Balance Sheets (in thousands):
|  | Balance Sheet Location |  | June 30, 2023 |  | September 30, 2022
ASSETS |  |  |  |  |  |
Designated as hedging instruments: |  |  |  |  |  |
Interest rate swap agreements |  | Prepayments and other current assets |  | $ | — |  |  | $ | 5,278 |
Interest rate swap agreements |  | Other Assets |  | 140,297 |  |  | 149,755 |
|  |  |  | $ | 140,297 |  |  | $ | 155,033 |
LIABILITIES |  |  |  |  |  |
Not designated as hedging instruments: |  |  |  |  |  |
Gasoline and diesel fuel agreements |  | Accounts payable |  | 919 |  |  | 2,631 |
|  |  |  | $ | 919 |  |  | $ | 2,631 |
The following table summarizes the location of the (gain) loss reclassified from "Accumulated other comprehensive loss" into earnings for derivatives designated as hedging instruments and the location of the (gain) loss for the Company's derivatives not designated as hedging instruments on the Condensed Consolidated Statements of Income (in thousands):
|  |  |  | Three Months Ended
|  | Income Statement Location |  | June 30, 2023 |  | July 1, 2022
Designated as hedging instruments: |  |  |  |  |  |
Interest rate swap agreements |  | Interest and Other Financing Costs, net |  | $ | (16,545) |  |  | $ | 6,731 |
Not designated as hedging instruments: |  |  |  |  |  |
Gasoline and diesel fuel agreements |  | Cost of services provided (exclusive of depreciation and amortization) / Selling and general corporate expenses |  | 661 |  |  | (4,633) |
|  |  |  | $ | (15,884) |  |  | $ | 2,098 |
|  |  |  | Nine Months Ended
|  | Income Statement Location |  | June 30, 2023 |  | July 1, 2022
Designated as hedging instruments: |  |  |  |  |  |
Interest rate swap agreements |  | Interest and Other Financing Costs, net |  | $ | (40,775) |  |  | $ | 29,735 |
Not designated as hedging instruments: |  |  |  |  |  |
Gasoline and diesel fuel agreements |  | Cost of services provided (exclusive of depreciation and amortization) / Selling and general corporate expenses |  | 1,140 |  |  | (8,578) |
|  |  |  | $ | (39,635) |  |  | $ | 21,157 |
As of June 30, 2023, the Company has a Euro denominated term loan in the amount of €93.5 million. The term loan was designated as a hedge of the Company's net Euro currency exposure represented by certain holdings in the Company's European affiliates. At June 30, 2023, the net of tax gain expected to be reclassified from "Accumulated other comprehensive loss" into earnings over the next twelve months based on current market rates is approximately $52.5 million.

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480237/815-40-50-5 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 5C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480434/815-10-50-5C Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//815/tableOfContent + Details
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