Derivative Financial Instruments

9 Months Ended

Jun. 30, 2015

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

3.   Derivative Financial Instruments

At June 30, 2015 and September 30, 2014, the Company’s Canadian subsidiary had $27.7 million and $29.8 million, respectively, of Canadian dollar denominated intercompany accounts payable owed to one of the Company’s U.S. subsidiaries.  In order to mitigate its exposure to movements in foreign currency rates between the U.S. dollar and Canadian dollar, the Company routinely enters into foreign currency forward contracts to hedge a portion of its exposure to changes in the value of the Canadian dollar.   Approximately $3.1 million of these Canadian dollar denominated intercompany accounts payable are considered by management to be of a short-term nature whereby the appreciation or devaluation of the Canadian dollar against the U.S. dollar will result in a gain or loss, respectively, to our consolidated statement of operations.  The Company considers the remaining $24.6 million to be of a long-term nature and whereby settlement is not planned or anticipated in the foreseeable future; therefore, any resulting foreign income exchange gains and losses are reported in the consolidated balance sheets as a component of other comprehensive income in accordance with ASC 830 “Foreign Currency Matters”.  In June 2015, the Company entered into a $3.0 million 90-day hedge contract with a United States bank to hedge its short-term Canadian dollar foreign exchange rate exposure.  This contract reduces the impact on cash flows from movements in the Canadian dollar/U.S. dollar currency exchange rate, but has not been designated as a hedge for accounting purposes.

At June 30, 2015, the Company had an accrued unrealized foreign exchange gain of $28,000 under this contract.

The following table summarizes the gross fair value of all derivative instruments, which are not designated as hedging instruments and their location in the consolidated balance sheets (in thousands):

Derivative Instrument	Location	June 30, 2015		September 30, 2014
Foreign Currency Exchange Contract	Prepaid Expenses and Other Current Assets	$	28	$	795

The following table summarizes the impact of the Company’s derivatives on the consolidated statements of operations for the three and nine month periods ended June 30, 2015 and 2014 (in thousands):

		Three Months Ended						Nine Months Ended
		June 30						June 30
Derivative Instrument	Location of Gain (Loss)	2015			2014			2015		2014
Foreign Currency Exchange Contract	Other Income (Expense)	$	(393	)	$	(1,003	)	$	2,555	$	1,114

Amounts in the above table include realized and unrealized derivative gains and losses.