Derivative Financial Instruments

12 Months Ended

Sep. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

7. Derivative Financial Instruments

Cash Flow Hedge — Interest Rate Swap

On October 14, 2022, we entered into a floating-to-fixed interest rate swap agreement to mitigate exposure to interest rate increases related to our Term Loans. See Note 6 Debt for further information on our financing arrangements. The total notional amount of the interest rate swap was $25 million as of September 30, 2023. The interest rate swap agreement expires October 1, 2027. As a result of this agreement, every month we pay fixed interest at 4.455% in exchange for interest received at Term SOFR, and the fixed interest rate per annum on the first $25 million of notional value of the Term Loans will be 10.205% through its maturity. The interest rate swap agreement requires the Company to make deposits of cash collateral, which may increase or be refunded commensurate with fluctuations in current and forecasted interest rates. We have the contractual right to reclaim this cash collateral receivable.

The interest rate swap has been designated as a cash flow hedge. Consequently, changes in the fair value of the interest rate swap are recorded in accumulated other comprehensive loss ("AOCL") within stockholders' equity on the consolidated balance sheets. The unrealized gains (losses) on the interest rate swap associated with the interest payments on the Term Loans that are still forecasted to occur are included in AOCL. These gains (losses) will be reclassified into interest expense on the consolidated statements of operations over the life of the swap agreement as the hedged interest payments occur. Upon termination of the derivative instrument or a change in the hedged item, any remaining fair value recorded on the consolidated balance sheets will be recorded as interest expense consistent with the cash flows associated with the underlying hedged item. Cash flows associated with the interest rate swap are included in cash flows from operating activities on the consolidated statements of cash flows.

The net fair value of designated hedge derivatives subject to master netting arrangements reported on the consolidated balance sheets was as follows:

	Asset (Liability)
(In thousands)	Gross Recognized Amount		Gross Offset Amount		Net Amount Presented		Cash Collateral Receivable		Net Amount Reported		Balance Sheet Location
September 30, 2023
Interest rate swap	$	183	$	—	$	183	$	—	$	183	Other long-term assets
September 30, 2022
—	$	—	$	—	$	—	$	—	$	—	—

The pre-tax amounts recognized in AOCL on the interest rate swap were as follows:

	Fiscal Year
(In thousands)	2023			2022		2021
Beginning unrealized net gain (loss) in AOCL	$	—		$	—	$	—
Net gain (loss) recognized in other comprehensive income (loss)		260			—		—
Reclassification of net (gain) loss to interest expense		(77	)		—		—
Ending unrealized net gain (loss) in AOCL	$	183		$	—	$	—