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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 3 Months Ended
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Dec. 31, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES The Company is exposed to market risks, such as changes in interest rates, currency exchange rates and commodity prices. To manage a portion of the volatility related to these exposures, the Company enters into various financial transactions. The utilization of these financial transactions is governed by policies covering acceptable counterparty exposure, instrument types and other hedging practices. The Company does not hold or issue derivative financial instruments for speculative trading purposes. Exchange Rate Risk Management The Company uses currency forward contracts to manage the exchange rate risk associated with intercompany loans and certain other balances denominated in foreign currencies. Currency forward contracts are valued using observable forward rates in commonly quoted intervals for the full term of the contracts. The notional amount of outstanding currency forward contracts was $159.9, $164.2 and $178.6 at December 31, 2022, January 1, 2022 and September 30, 2022, respectively. Contracts outstanding at December 31, 2022 will mature over the next two fiscal quarters. Interest Rate Risk Management The Company enters into interest rate swap agreements as a means to hedge its variable interest rate risk on debt instruments. Net amounts to be received or paid under the swap agreements are reflected as adjustments to interest expense. The Company has outstanding interest rate swap agreements with major financial institutions that effectively convert a portion of the Company’s variable-rate debt to a fixed rate. Interest rate swap agreements are valued based on the present value of the estimated future net cash flows using implied rates in the applicable yield curve as of the valuation date. Swap agreements that were hedging interest payments as of December 31, 2022, January 1, 2022 and September 30, 2022 had a maximum total U.S. dollar equivalent notional amount of $800.0, $600.0 and $800.0, respectively. Refer to “NOTE 7. DEBT” for the terms of the swap agreements outstanding at December 31, 2022. Included in the AOCL balance at December 31, 2022 was a gain of $10.5 related to interest rate swap agreements that is expected to be reclassified to earnings during the next twelve months, consistent with the timing of the underlying hedged transactions. Commodity Price Risk Management The Company enters into hedging arrangements designed to fix the price of a portion of its projected future urea and diesel requirements. Commodity contracts are valued using observable commodity exchange prices in active markets. Included in the AOCL balance at December 31, 2022 was a gain of $4.1 related to commodity hedges that is expected to be reclassified to earnings during the next twelve months, consistent with the timing of the underlying hedged transactions. The Company had the following outstanding commodity contracts that were entered into to hedge forecasted purchases:
Commodity |  | December 31, 2022 |  | January 1, 2022 |  | September 30, 2022
Urea |  | 27,000 tons |  | 58,500 tons |  | 54,000 tons
Diesel |  | 2,058,000 gallons |  | 4,662,000 gallons |  | 3,150,000 gallons
Heating Oil |  | 1,092,000 gallons |  | 2,184,000 gallons |  | 1,218,000 gallons
Fair Values of Derivative Instruments The fair values of the Company’s derivative instruments, which represent Level 2 fair value measurements, were as follows:
|  |  |  | Assets / (Liabilities)
Derivatives Designated as Hedging Instruments |  | Balance Sheet Location |  | December 31, 2022 |  | January 1, 2022 |  | September 30, 2022
Interest rate swap agreements |  | Prepaid and other current assets |  | $ | 14.2 |  |  | $ | — |  |  | $ | 12.8 |
|  | Other assets |  | 16.1 |  |  | 5.2 |  |  | 18.2 |
|  | Other current liabilities |  | — |  |  | (4.3) |  |  | — |
|  | Other liabilities |  | — |  |  | (0.6) |  |  | — |
Commodity hedging instruments |  | Prepaid and other current assets |  | 0.3 |  |  | 9.6 |  |  | 2.4 |
|  | Other current liabilities |  | (2.4) |  |  | — |  |  | — |
Total derivatives designated as hedging instruments |  | $ | 28.2 |  |  | $ | 9.9 |  |  | $ | 33.4 |
Derivatives Not Designated as Hedging Instruments |  | Balance Sheet Location |  |  |  |  |  |
Currency forward contracts |  | Prepaid and other current assets |  | $ | 0.6 |  |  | $ | 1.1 |  |  | $ | 3.4 |
|  | Other current liabilities |  | (0.8) |  |  | (0.2) |  |  | — |
Commodity hedging instruments |  | Prepaid and other current assets |  | 0.7 |  |  | 1.2 |  |  | 0.4 |
Total derivatives not designated as hedging instruments |  | 0.5 |  |  | 2.1 |  |  | 3.8 |
Total derivatives |  | $ | 28.7 |  |  | $ | 12.0 |  |  | $ | 37.2 |
The effect of derivative instruments on AOCL, net of tax, and the Condensed Consolidated Statements of Operations for each of the periods presented was as follows:
Derivatives in Cash Flow Hedging Relationships |  | Amount of Gain / (Loss) Recognized in AOCL
| Three Months Ended |  |
| December 31, 2022 |  | January 1, 2022 |  |  |  |
Interest rate swap agreements |  | $ | 0.5 |  |  | $ | 2.8 |  |  |  |  |
Commodity hedging instruments |  | (5.3) |  |  | 6.8 |  |  |  |  |
Total |  | $ | (4.8) |  |  | $ | 9.6 |  |  |  |  |
Derivatives in Cash Flow Hedging Relationships |  | Reclassified from AOCL into Statement of Operations |  | Amount of Gain / (Loss)
Three Months Ended |  |
December 31, 2022 |  | January 1, 2022 |  |  |  |
Interest rate swap agreements |  | Interest expense |  | $ | 1.4 |  |  | $ | (0.8) |  |  |  |  |
Commodity hedging instruments |  | Cost of sales |  | 2.3 |  |  | 1.0 |  |  |  |  |
Total |  | $ | 3.7 |  |  | $ | 0.2 |  |  |  |  |
Derivatives Not Designated as Hedging Instruments |  | Recognized in Statement of Operations |  | Amount of Gain / (Loss)
Three Months Ended |  |
December 31, 2022 |  | January 1, 2022 |  |  |  |
Currency forward contracts |  | Other income / expense, net |  | $ | (11.3) |  |  | $ | 1.0 |  |  |  |  |
Commodity hedging instruments |  | Cost of sales |  | 1.5 |  |  | 0.6 |  |  |  |  |
Total |  | $ | (9.8) |  |  | $ | 1.6 |  |  |  |  |

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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 https://asc.fasb.org/topic&trid=2229140 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 40 -Section 50 -Paragraph 5 -Subparagraph (f) -URI https://asc.fasb.org/extlink&oid=126731327&loc=d3e90205-114008 + Details
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