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Derivative Financial Instruments and Hedging | 3 Months Ended
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Dec. 31, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Financial Instruments and Hedging | DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING In the ordinary course of business, the Company is exposed to commodity price risks relating to the purchases of raw materials and supplies, interest rate risks relating to variable rate debt and foreign currency exchange rate risks. The Company utilizes derivative financial instruments, including (but not limited to) futures contracts, option contracts, forward contracts and 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 December 31, 2020, the Company’s derivative instruments, none of which were designated as hedging instruments under ASC Topic 815, “Derivatives and Hedging,” consisted of: •Commodity and energy futures, swaps and option contracts, which relate to inputs that generally will be utilized within the next two years; •foreign currency forward contracts maturing in the next year that have the effect of hedging currency fluctuations between the Euro and the Pound Sterling and the United States (“U.S.”) Dollar and the Pound Sterling; •interest rate swaps that have the effect of hedging interest payments on debt expected to be issued but not yet priced, including: ◦pay-fixed, receive-variable interest rate swaps maturing in May 2021 and May 2024 that require monthly settlements; ◦rate-lock interest rate swaps that require nine lump sum settlements with the first settlement occurring in July 2021 and th e last in July 2026; and ◦interest rate swaps that mature in July 2021 and give the Company the option of pay-variable, receive-fixed lump sum settlements; and •pay-fixed, receive-variable interest rate swaps maturing in December 2022 that require monthly settlements and have the effect of hedging forecasted interest payments on BellRing’s variable rate debt. In the first quarter of fiscal 2020, contemporaneously with the repayment of its term loan, the Company changed the designation of one of its interest rate swap contracts from a cash flow hedge to a non-designated hedging instrument. In connection with the de-designation, the Company reclassified losses previously recorded in accumulated other comprehensive income (“OCI”) of $7.2 to “Interest expense, net” in the Condensed Consolidated Statement of Operations for the three months ended December 31, 2019. As of April 1, 2020, the Company changed the designation of its interest rate swap contracts that are used as hedges of forecasted interest payments on BellRing’s variable rate debt from cash flow hedges to non-designated hedging instruments as the swaps were no longer effective (as defined by ASC Topic 815). In connection with the de-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 BellRing’s variable rate debt. Mark-to-market adjustments related to these swaps will also be included in “Interest expense, net” in the Condensed Consolidated Statements of Operations. At December 31, 2020 and September 30, 2020, the remaining net loss before taxes to be amortized was $8.9 and $9.4, respectively. The following table shows the notional amounts of derivative instruments held.
|  | December 31, 2020 |  | September 30, 2020
Commodity contracts |  | $ | 36.9 |  |  | $ | 24.7 |
Energy contracts |  | 76.0 |  |  | 87.1 |
Foreign exchange contracts - Forward contracts |  | 39.0 |  |  | 28.9 |
Interest rate swaps |  | 621.3 |  |  | 621.7 |
Interest rate swaps - Rate-lock swaps |  | 1,666.0 |  |  | 1,666.0 |
Interest rate swaps - Options |  | 433.3 |  |  | 433.3 |
The following table presents the balance sheet location and fair value of the Company’s derivative instruments. The Company does not offset derivative assets and liabilities within the Condensed Consolidated Balance Sheets.
|  | Balance Sheet Location |  | December 31, 2020 |  | September 30, 2020 |  |  |  |
Asset Derivatives: |  |  |  |  |  |  |  |  |  |
Commodity contracts |  | Prepaid expenses and other current assets |  | $ | 6.6 |  |  | $ | 5.0 |  |  |  |  |
Energy contracts |  | Prepaid expenses and other current assets |  | 1.6 |  |  | 1.8 |  |  |  |  |
Commodity contracts |  | Other assets |  | 5.9 |  |  | 0.1 |  |  |  |  |
Energy contracts |  | Other assets |  | 1.7 |  |  | 0.9 |  |  |  |  |
Foreign exchange contracts |  | Prepaid expenses and other current assets |  | — |  |  | 0.1 |  |  |  |  |
Interest rate swaps |  | Prepaid expenses and other current assets |  | 2.1 |  |  | 6.8 |  |  |  |  |
Interest rate swaps |  | Other assets |  | 7.7 |  |  | — |  |  |  |  |
|  |  |  | $ | 25.6 |  |  | $ | 14.7 |  |  |  |  |
Liability Derivatives: |  |  |  |  |  |  |  |  |  |
Commodity contracts |  | Other current liabilities |  | $ | 0.9 |  |  | $ | 1.4 |  |  |  |  |
Energy contracts |  | Other current liabilities |  | 3.8 |  |  | 10.1 |  |  |  |  |
Energy contracts |  | Other liabilities |  | 0.9 |  |  | 3.9 |  |  |  |  |
Foreign exchange contracts |  | Other current liabilities |  | 1.4 |  |  | — |  |  |  |  |
Interest rate swaps |  | Other current liabilities |  | 164.1 |  |  | 176.4 |  |  |  |  |
Interest rate swaps |  | Other liabilities |  | 322.3 |  |  | 351.3 |  |  |  |  |
|  |  |  | $ | 493.4 |  |  | $ | 543.1 |  |  |  |  |
The following tables present the effects of the Company’s derivative instruments on the Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Comprehensive Income for the three months ended December 31, 2020 and 2019.
Derivatives Not Designated as Hedging Instruments |  | Statement of Operations Location |  | (Gain) Loss Recognized in Statement of Operations
|  | 2020 |  | 2019
Commodity contracts |  | Cost of goods sold |  | $ | (7.4) |  |  | $ | (1.9) |
Energy contracts |  | Cost of goods sold |  | (8.0) |  |  | (2.5) |
Foreign exchange contracts |  | Selling, general and administrative expenses |  | 1.5 |  |  | — |
Interest rate swaps |  | Interest expense, net |  | 0.5 |  |  | — |
Interest rate swaps |  | Income on swaps, net |  | (41.6) |  |  | (61.4) |
Derivatives Designated as Hedging Instruments |  | (Gain) Loss Recognized in OCI including NCI |  | Loss Reclassified from Accumulated OCI including NCI into Earnings (a) |  | Statement of Operations Location
| 2020 |  | 2019 |  | 2020 |  | 2019 |
Interest rate swaps |  | $ | — |  |  | $ | (1.3) |  |  | $ | 0.5 |  |  | $ | 7.2 |  |  | Interest expense, net
Cross-currency swaps |  | — |  |  | 34.6 |  |  | — |  |  | — |  |  | Income on swaps, net
(a)For the three months ended December 31, 2020, this amount includes the amortization of previously unrealized losses on BellRing’s interest rate swaps that were de-designated as hedging instruments as of April 1, 2020. For the three months ended December 31, 2019, this amount includes the amortization of previously unrealized losses on interest rate swaps that were de-designated as hedging instruments in the first quarter of fiscal 2020. The following table presents the components of the Company’s net hedging losses (gains) on interest rate swaps, which are included in “Interest expense, net” and “Income on swaps, net” in the Condensed Consolidated Statements of Operations.
Three Months Ended December 31, |  | Statement of Operations Location |  | Mark-to-Market (Gain), net (a) |  | Cash Settlements Paid, Net (b) |  | Net Loss Reclassified from Accumulated OCI including NCI (c)
|  | Interest expense, net |  | $ | (1.2) |  |  | $ | 1.2 |  |  | $ | 0.5 |
|  | Income on swaps, net |  | (43.1) |  |  | 1.5 |  |  | — |
2020 |  | Total |  | $ | (44.3) |  |  | $ | 2.7 |  |  | $ | 0.5 |
|  | Interest expense, net |  | $ | — |  |  | $ | — |  |  | $ | 7.2 |
|  | Income on swaps, net |  | (80.5) |  |  | 19.1 |  |  | — |
2019 |  | Total |  | $ | (80.5) |  |  | $ | 19.1 |  |  | $ | 7.2 |
(a)Includes non-cash adjustments related to interest rate swaps that were not designated as hedging instruments. (b)Includes cash settlements recognized in earnings related to interest rate swaps that were not designated as hedging instruments. (c)Includes the amortization of previously unrealized losses on BellRing’s interest rate swaps over the term of the related debt that were de-designated as hedging instruments, as well as the reclassification of previously unrealized losses on interest rate swaps that were de-designated as hedging instruments. Accumulated OCI, including amounts reported as NCI, included a $90.7 net gain on hedging instruments before taxes ($68.3 after taxes) at December 31, 2020, compared to a $90.2 net gain before taxes ($67.9 after taxes) at September 30, 2020. Approximately $2.3 of the net hedging losses reported in accumulated OCI at December 31, 2020 are expected to be reclassified into earnings within the next 12 months. Accumulated OCI included settlements of and previously unrealized gains on cross-currency swaps of $99.5 at both December 31, 2020 and September 30, 2020. In connection with the settlements of cross-currency swaps, the Company recognized gains in accumulated OCI of $1.4 during the three months ended December 31, 2019. Reclassification of amounts recorded in accumulated OCI into earnings will only occur in the event United Kingdom-based operations are substantially liquidated. At December 31, 2020 and September 30, 2020, the Company had pledged collateral of $0.3 and $4.9, respectively, related to its commodity and energy contracts. These amounts are classified as “Restricted cash” on the Condensed Consolidated Balance Sheets.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
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