Financial Instruments and Hedging Activities

3 Months Ended

Dec. 31, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Financial Instruments and Hedging Activities

Financial Instruments and Hedging Activities

Derivatives Not Designated as Hedges

Forward Currency Contracts

We operate our business in countries throughout the world and transact business in various foreign currencies. Our foreign currency exposures typically arise from transactions denominated in currencies other than the functional currency of our operations. We have a program that primarily utilizes foreign currency forward contracts to offset the risks associated with the effect of certain foreign currency exposures. Our program is designed so that increases or decreases in our foreign currency exposures are offset by gains or losses on the foreign currency forward contracts in order to mitigate the risks and volatility associated with our foreign currency transactions. Generally we enter into contracts for less than 90 days, and at December 31, 2013 and September 30, 2013, we had outstanding contracts with a total notional value of $330.8 million and $247.8 million, respectively.

We have not designated these forward contracts as hedging instruments pursuant to ASC 815, Derivatives and Hedging, and accordingly, we record the fair value of these contracts at the end of each reporting period in our consolidated balance sheet, with changes in the fair value recorded in earnings as other expense, net in our consolidated statements of operations.

Security Price Guarantees

From time to time we enter into agreements that allow us to issue shares of our common stock as part or all of the consideration related to partnering and technology acquisition activities. Generally these shares are issued subject to security price guarantees, which are accounted for as derivatives. We have determined that these instruments would not be considered equity instruments if they were freestanding. The security price guarantees require payment from either us to a third party, or from a third party to us, based upon the difference between the price of our common stock on the issue date and an average price of our common stock approximately six months following the issue date. Changes in the fair value of these security price guarantees are reported in earnings in each period as other expense, net in our consolidated statements of operations.

The following is a summary of the outstanding shares subject to security price guarantees at December 31, 2013 (dollars in thousands):

Issue Date	Number of  Shares Issued	Settlement Date	Total Value of Shares on Issue Date
August 15, 2013	934,960	February 15, 2014	$	18,400

The following table provides a quantitative summary of the fair value of our derivative instruments as of December 31, 2013 and September 30, 2013 (dollars in thousands):

Derivatives Not Designated as Hedges:	Balance Sheet Classification	Fair Value
		December 31, 2013			September 30, 2013
Foreign currency contracts	Prepaid expenses and other current assets	$	949		$	2,201
Security Price Guarantees	Accrued expenses and other current liabilities	(4,182		)	(1,044		)
Net fair value of non-hedge derivative instruments		$	(3,233	)	$	1,157

The following tables summarize the activity of derivative instruments for the three months ended December 31, 2013 and 2012 (dollars in thousands):

		Amount of Gain (Loss) Recognized in Income
Derivatives Not Designated as Hedges	Location of Gain (Loss) Recognized in Income	2013			2012
Foreign currency contracts	Other expense, net	$	1,963		$	(104	)
Security price guarantees	Other expense, net	$	(4,150	)	$	(2,510	)

Other Financial Instruments

Financial instruments, including cash equivalents, marketable securities, accounts receivable, accounts payable, and derivative instruments, are carried in the consolidated financial statements at amounts that approximate their fair value.

The estimated fair value of our long-term debt approximated $2,431.5 million (face value $2,471.0 million) and $2,458.2 million (face value $2,472.2 million) at December 31, 2013 and September 30, 2013, respectively. These fair value amounts represent the value at which our lenders could trade our debt within the financial markets, and do not represent the settlement value of these long-term debt liabilities to us at each reporting date. The fair value of the long-term debt issues will continue to vary each period based on fluctuations in market interest rates, as well as changes to our credit ratings. The Senior Notes, the term loan portion of our Credit Facility, and the Convertible Debentures are traded and the fair values are based upon trading prices as of the reporting dates. The fair values of each borrowing was estimated using the averages of the bid and ask trading quotes at each respective date. We had no outstanding balance on the revolving credit line portion of our Credit Facility at December 31, 2013 and September 30, 2013.