DERIVATIVES AND HEDGING ACTIVITIES

12 Months Ended

Sep. 30, 2025

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVES AND HEDGING ACTIVITIES:

The Company operates internationally and utilizes certain derivative financial instruments to manage its foreign currency, debt and interest rate exposures. At September 30, 2025 and 2024, derivative instruments were reflected on a gross-basis in the consolidated balance sheets as follows:


Derivatives:	September 30, 2025				September 30, 2024
	Interest Rate Swaps		Cross-Currency Swaps		Interest Rate Swaps		Cross-Currency Swaps
Current assets:
Other current assets	$	15	$	—	$	—	$	—
Long-term assets:
Other non-current assets	24		—		—		—
Current liabilities:
Other current liabilities	(973)		(45,914)		(863)		(18,042)
Long-term liabilities:
Other non-current liabilities	(1,404)		(12,627)		(1,743)		(48,925)
Total derivatives (1)	$	(2,338)	$	(58,541)	$	(2,606)	$	(66,967)
(1) Cross currency swap amounts at September 30, 2025 and 2024 reflect $40,186 and $58,432, of partial advance payments received from the counterparties to certain swap contracts, respectively (see below).

The following table presents information related to interest rate swaps entered into by the Company and designated as cash flow hedges:


	September 30, 2025			September 30, 2024
Notional amount	$	225,000		$	175,000

Weighted-average maturity period (years)	2.7			3.2
Weighted-average received rate	4.13		%	4.85		%
Weighted-average pay rate	3.80		%	3.83		%

The Company enters into interest rate swaps in order to achieve a mix of fixed and variable rate debt that it deems appropriate. The interest rate swaps have been designated as cash flow hedges of future variable interest payments which are considered probable of occurring. Based on the Company's assessment, all of the critical terms of each of the hedges matched the underlying terms of the hedged debt and related forecasted interest payments, and as such, these hedges were considered highly effective.

The fair value of the interest rate swaps reflected a net unrealized loss of $2,338 ($1,752 after tax) and a net unrealized loss of $2,606 ($1,948 after tax) at September 30, 2025 and 2024, respectively, that is included in shareholders' equity as part of accumulated other comprehensive income ("AOCI"). Unrecognized gains of $1,605 ($1,199 after tax) and $3,848 ($2,874 after tax) related to previously terminated London Interbank Offered Rate ("LIBOR") based swaps were also included in AOCI as of September 30, 2025 and 2024, respectively. Assuming market rates remain constant with the rates at September 30, 2025, a gain (net of tax) of approximately $115 included in AOCI is expected to be recognized in earnings over the next twelve months.

The Company utilizes certain cross currency swaps as net investment hedges of foreign operations and assesses effectiveness for these contracts based on changes in fair value attributable to changes in spot prices. The following table presents information related to cross currency swaps entered into by the Company and designated as net investment hedges:


		Notional Amount				Unrealized Losses (1)
Swap Currencies	Maturity Date	September 30, 2025		September 30, 2024		September 30, 2025			September 30, 2024
USD/EUR	September 2027	$	81,392	$	81,392	$	(9,443)		$	(5,440)
USD/SEK	June 2026	20,000		20,000		(2,571)			(468)
USD/SGD	August 2026	—		20,000		—			(441)
USD/EUR	August 2026	25,000		25,000		(1,689)			(30)
		$	126,392	$	146,392	$	(13,703)	(2)	$	(6,379)	(2)

(1) Unrealized gains/losses are recognized in AOCI unless a portion of a hedge is ineffective. Ineffectiveness was insignificant for the year ended September 30, 2025.

(2) Total unrealized losses are presented net of tax of $4,652 and $2,156, for the years ended September 30, 2025 and 2024, respectively.

In connection with certain of these cross currency swaps, the Company received cash from the counterparties, representing partial advance payments of amounts due under the U.S. dollar leg of the swaps. Outstanding advance payment amounts totaled $40,186 at September 30, 2025, all of which were included in other current liabilities on the Consolidated Balance Sheet. Outstanding advance payment amounts totaled $58,432 at September 30, 2024, of which $17,416 and $41,016 were included in other current liabilities and other non-current liabilities on the Consolidated Balance Sheet, respectively.

During fiscal 2025, certain cross currency swaps were terminated or modified following the sale of the Company's interest in the SGK Business. The Company made payments totaling $37,092 in connection with the settlement or modification of these cross currency swap contracts.

The Company previously used certain foreign currency debt instruments as net investment hedges of foreign operations with a notional amount of €30.0 million ($33,485) as of September 30, 2024. Currency losses of $3,820 (net of income taxes of $1,113), which represent effective hedges of net investments, were reported as a component of AOCI within currency translation adjustment at September 30, 2024.

Refer to Note 18, "Accumulated Other Comprehensive Income" for further details regarding amounts recorded in AOCI and the Consolidated Statements of Income (Loss) related to derivatives.

- 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.

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+ Details

MATTHEWS INTERNATIONAL CORP 10-K