Quarterly report pursuant to Section 13 or 15(d)


3 Months Ended
Dec. 31, 2021
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Interest Rate Derivative Instrument
In June 2021, the Company entered into an interest rate swap agreement for a notional amount of $300.0 million, effective June 28, 2021, with an expiration date of May 28, 2026, which hedges the floating LIBOR on a portion of the term loan (Term Loan A, $1.10 billion balance) under the Credit Agreement to a fixed rate of 0.986%. The Company elected to designate this interest rate swap as a cash flow hedge for accounting purposes.
As this cash flow hedge is considered effective, any future gains and losses are reflected within Accumulated Other Comprehensive Income in the Consolidated Statements of Comprehensive Income. Derivatives in a net asset position are recorded in "Prepaid expenses and other current assets" on our Consolidated Balance Sheets and derivatives in a net liability position are recorded in "Other current liabilities" on our Consolidated Balance Sheets. No ineffectiveness was recorded on this contract during the three months ended December 31, 2021.
Table 8.1: Details of Derivatives Fair Value
December 31, 2021 September 30, 2021
(in thousands)
Interest rate swap $ 3,233  $ — 
Total assets $ 3,233  $ — 
Interest rate swap $ —  $ 410 
Total liabilities $ —  $ 410 
Table 8.2: Gains on Derivatives
For the Three Months Ended
December 31, 2021 December 31, 2020
(in thousands)
Net gains recognized in AOCI on derivatives, net of tax (1) $ 2,177  $ — 
Amounts reclassified to earnings from accumulated other comprehensive loss (2) 508  — 
Net current period other comprehensive income $ 2,685  $ — 
(1)Amount is net of tax expense of $0.8 million for the three months ended December 31, 2021.
(2)Amount is net of tax benefit for $0.2 million for the three months ended December 31, 2021.
Counterparty Risk
The Company is exposed to credit losses in the event of nonperformance by the counterparty to our derivative instrument. Our counterparty has investment grade credit ratings; accordingly, we anticipate that the counterparty will be able to fully satisfy its obligations under the contracts. Our agreements outline the conditions upon which it or the counterparty are required to post collateral. As of December 31, 2021, there was no collateral posted with its counterparty related to the derivatives.