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DERIVATIVES | 12 Months Ended
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Sep. 30, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
DERIVATIVES | DERIVATIVES Derivative financial instruments are used principally in the management of its foreign currency exchange rate exposures. The Company does not hold or issue derivative financial instruments for trading purposes. Cash Flow Hedges The Company periodically enters into forward foreign exchange contracts to hedge a portion of the risk from forecasted foreign currency denominated third-party and intercompany sales or payments. These obligations generally require the Company to exchange foreign currencies for Australian Dollars, Canadian Dollars, Euros, Japanese Yen, Mexican Peso, Pound Sterling or U.S. Dollars. These foreign exchange contracts are cash flow hedges of fluctuating foreign exchange related to inventory purchases or the sale of product. Until the sale or purchase is recognized, the fair value of the related hedge is recorded in AOCI and as a derivative hedge asset or liability, as applicable. At the time the sale or purchase is recognized, the fair value of the related hedge is reclassified as an adjustment to purchase price variance in Cost of Goods Sold on the Consolidated Statements of Income. At September 30, 2024, the Company had a series of foreign exchange derivative contracts outstanding through June 2026. The derivative net loss estimated to be reclassified from AOCI into earnings over the next 12 months is $7.6 million, net of tax. At September 30, 2024 and 2023, the Company had foreign exchange derivative contracts designated as cash flow hedges with a notional value of $351.7 million and $320.2 million, respectively. For derivative instruments that are designated and qualify as cash flow hedges, the gain or loss on the effective portion of the derivative is reported as a component of AOCI and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The following table summarizes the impact of the effective and ineffective portions of designated hedges and the gain or loss recognized in the Consolidated Statements of Income for the years ended September 30, 2024, 2023 and 2022:
|  | Gain (Loss) in OCI |  | Reclassified to Continuing Operations |  |
(in millions) |  | 2024 |  | 2023 |  | 2022 |  | Line Item |  | 2024 |  | 2023 |  | 2022 |  |  |  |  |  |
Foreign exchange contracts |  | $ | 0.1 |  |  | $ | 0.3 |  |  | $ | 0.2 |  |  | Net sales |  | $ | 0.3 |  |  | $ | 0.2 |  |  | $ | 0.1 |  |  |  |  |  |  |
Foreign exchange contracts |  | (20.1) |  |  | (34.8) |  |  | 30.9 |  |  | Cost of goods sold |  | (15.5) |  |  | (12.4) |  |  | 20.1 |  |  |  |  |  |  |
Total |  | $ | (20.0) |  |  | $ | (34.5) |  |  | $ | 31.1 |  |  |  |  | $ | (15.2) |  |  | $ | (12.2) |  |  | $ | 20.2 |  |  |  |  |  |  |
Derivative Contracts Not Designated as Hedges for Accounting Purposes The Company periodically enters into forward exchange contracts to economically hedge a portion of the risk from third-party and intercompany payments resulting from existing obligations. These obligations generally require the Company to exchange foreign currencies for, among others, Canadian Dollars, Colombian Peso, Czech Koruna, Euros, Japanese Yen, Mexican Peso, Pound Sterling, Singapore Dollar, Swiss Franc, Turkish Lira, or U.S. Dollars. These foreign exchange contracts are fair value hedges of a related liability or asset recorded in the Consolidated Statements of Financial Position. The gain or loss on the derivative hedge contracts is recorded in earnings as an offset to the change in value of the related liability or asset at each period end. At September 30, 2024, the Company had a series of forward exchange contracts outstanding through October 2024. At September 30, 2024 and 2023, the Company had $466.9 million and $671.5 million, respectively, of notional value for such foreign exchange derivative contracts outstanding. The following table summarizes the gain or loss associated with derivative contracts not designated as hedges in the Consolidated Statements of Income for the years ended September 30, 2024, 2023 and 2022.
(in millions) |  | Line Item |  | 2024 |  | 2023 |  | 2022
Foreign exchange contracts |  | Other non-operating (income) expense |  | $ | (20.1) |  |  | $ | (14.3) |  |  | $ | 25.6 |
Fair Value of Derivative Instruments The fair value of the Company’s outstanding derivative instruments in the Consolidated Statements of Financial Position are as follows:
(in millions) |  | Line Item |  | 2024 |  | 2023
Derivative Assets |  |  |  |  |  |
Foreign exchange contracts - designated as hedge |  | Other receivables |  | $ | 1.4 |  |  | $ | 1.4 |
Foreign exchange contracts - designated as hedge |  | Deferred charges and other |  | 0.1 |  |  | 0.1 |
Foreign exchange contracts - not designated as hedge |  | Other receivables |  | 0.3 |  |  | 1.8 |
Total Derivative Assets |  |  |  | $ | 1.8 |  |  | $ | 3.3 |
Derivative Liabilities |  |  |  |  |  |
Foreign exchange contracts - designated as hedge |  | Accounts payable |  | $ | 11.5 |  |  | $ | 8.1 |
Foreign exchange contracts - designated as hedge |  | Other long-term liabilities |  | 1.4 |  |  | — |
Foreign exchange contracts - not designated as hedge |  | Accounts payable |  | 2.4 |  |  | 0.9 |
Total Derivative Liabilities |  |  |  | $ | 15.3 |  |  | $ | 9.0 |
The Company is exposed to the risk of default by the counterparties with which it transacts and generally does not require collateral or other security to support financial instruments subject to credit risk. The Company monitors counterparty credit risk on an individual basis by periodically assessing each counterparty’s credit rating exposure. The maximum loss due to credit risk equals the fair value of the gross asset derivatives that are concentrated with certain domestic and foreign financial institution counterparties. The Company considers these exposures when measuring its credit reserve on its derivative assets, which were not significant for the years ended September 30, 2024 and 2023. The Company’s standard contracts do not contain credit risk related contingent features whereby the Company would be required to post additional cash collateral because a credit event. However, the Company is typically required to post collateral in the normal course of business to offset its liability positions. As of September 30, 2024, and 2023, there was no cash collateral outstanding and had no posted standby letters of credit related to such liability positions. Net Investment Hedge SBI had €425.0 million aggregate principal amount of the 2026 Notes designated as a non-derivative economic hedge, or net investment hedge, of the translation of the Company’s net investments in Euro denominated subsidiaries at the time of issuance. The hedge effectiveness is measured on the beginning balance of the net investment and re-designated every three months. Any gains and losses attributable to the translation of the Euro denominated debt designated as net investment hedge are recognized as a component of foreign currency translation within AOCI, and gains and losses attributable to the translation of the undesignated portion are recognized as foreign currency translation gains or losses within Other Non-Operating Expense, Net. Net unrealized gains or losses from the net investment hedge are reclassified from AOCI into earnings upon liquidation event or deconsolidation of Euro denominated subsidiaries. Effective June 20, 2024, the net investment hedge is no longer outstanding due to the full redemption of the 2026 Notes. See Note 11 - Debt for additional detail. The cumulative unrealized gain of $11.9 million related to the net investment hedge will remain in AOCI until a liquidation event or deconsolidation of the underlying Euro denominated subsidiaries. The following summarizes the pre-tax (loss) gain from the net investment hedge recognized in Other Comprehensive Income for the year ended September 30, 2024, through redemption of the 2026 Notes, and the years ended September 30, 2023 and 2022:
(Loss) Gain in OCI (in millions) |  | 2024 |  | 2023 |  | 2022
Net investment hedge |  | $ | (13.2) |  |  | $ | (31.7) |  |  | $ | 75.8 |

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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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