Derivative Financial Instruments

6 Months Ended

Mar. 31, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

We use derivative instruments to manage risks caused by fluctuations in foreign exchange rates. The primary objective of our derivative instruments is to protect the value of foreign-currency-denominated receivable and cash balances from the effects of volatility in foreign exchange rates that might occur prior to conversion to their respective functional currencies. We principally utilize foreign currency forward contracts, which enable us to buy and sell foreign currencies in the future at fixed exchange rates and economically offset changes in foreign exchange rates. We routinely enter into contracts to offset exposures denominated in the British pound, Euro, and Singapore dollar.

Foreign-currency-denominated receivable and cash balances are remeasured at foreign exchange rates in effect on the balance sheet date with the effects of changes in foreign exchange rates reported in other income (expense), net. The forward contracts are not designated as hedges and are marked to market through other income (expense), net. Fair value changes in the forward contracts help mitigate the changes in the value of the remeasured receivable and cash balances attributable to changes in foreign exchange rates. The forward contracts are short-term in nature and typically have average maturities at inception of less than three months.

The following tables summarize our outstanding foreign currency forward contracts, by currency, at March 31, 2020 and September 30, 2019:



	March 31, 2020
	Contract Amount				Fair Value
	Foreign Currency		USD		USD
	(In thousands)
Sell foreign currency:
Euro (EUR)	EUR	10,000	$	11,004	$	—
Buy foreign currency:
British pound (GBP)	GBP	21,781	$	27,000	$	—
Singapore dollar (SGD)	SGD	10,274	$	7,200	$	—



	September 30, 2019
	Contract Amount				Fair Value
	Foreign Currency		USD		USD
	(In thousands)
Sell foreign currency:
Euro (EUR)	EUR	10,800	$	11,723	$	—
Buy foreign currency:
British pound (GBP)	GBP	5,200	$	6,400	$	—
Singapore dollar (SGD)	SGD	5,798	$	4,200	$	—

The foreign currency forward contracts were entered into on March 31, 2020 and September 30, 2019, respectively; therefore, their fair value was $0 on each of these dates.

Gain (losses) on derivative financial instruments are recorded in our condensed consolidated statements of income and comprehensive income as a component of other income (expense), net, and consisted of the following:



	Quarter Ended March 31,					Six Months Ended March 31,
	2020			2019		2020			2019
	(In thousands)
Gains (losses) on foreign currency forward contracts	$	(2,194	)	$	720	$	(1,049	)	$	316