Derivative Instruments and Hedging Activities

3 Months Ended

Dec. 31, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

NOTE 14: DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Derivative Instruments Discontinued as Cash Flow Hedging Instruments

During the quarter ended June 30, 2013, Grupo Finmart completed a $30.0 million cross-border debt offering for which it has to pay interest on a semiannual basis at a fixed rate. Grupo Finmart uses derivative instruments (the "foreign currency forwards") to manage its exposure related to changes in the foreign currency exchange rate on this instrument through its maturity on November 16, 2015. Grupo Finmart does not enter into derivative instruments for any purpose other than cash flow hedging.

At the beginning of the quarter ended December 31, 2014, we discontinued hedge accounting for our foreign currency forwards due to a determination that repayment of the $30.0 million cross-border debt was to occur prior to maturity. As such, not all of the forecasted interest payments are expected to occur, resulting in the discontinuance of hedge accounting. Further, Grupo Finmart repaid $17.5 million of the outstanding cross-border debt and received proceeds of $2.3 million from settlement of the portion of the foreign currency forwards attributable to the repaid cross-border debt during the quarter ended December 31, 2014.

Whenever hedge accounting is discontinued and the derivative remains outstanding, we continue to carry the derivative at its fair value on our condensed consolidated balance sheets and recognize any gains and losses currently in accumulated other comprehensive income attributable to any repaid portion of the hedged item in addition to any subsequent changes in the fair value of the derivative under "Other expense (income)" in our condensed consolidated statements of operations. We amortize the gains and losses currently in accumulated other comprehensive income attributable to any remaining outstanding portion of the hedged item to earnings under "Other expense (income)" in our condensed consolidated statements of operations over the remaining term of the outstanding hedged item.

Prior to the discontinuance of hedge accounting, changes in the fair value of the foreign currency forwards designated as hedging instruments that effectively offset the variability of cash flows associated with the exchange rate were reported in accumulated other comprehensive income. These amounts subsequently were reclassified into earnings in the same period or periods during which the hedged transaction affected earnings.

The following tables set forth certain information regarding our derivative instruments discontinued as cash flow hedging instruments:

		Fair Value of Derivative Instruments
Derivative Instrument	Balance Sheet Location	December 31, 2014		December 31, 2013		September 30, 2014
		(in thousands)
Foreign currency forwards — assets	Receivables, prepaid expenses and other current assets	$	2,173	$	1,952	$	2,420

	Amount of Loss Recognized in Other Comprehensive Income on Derivatives
	Three Months Ended December 31,
Derivative Instrument	2014		2013
	(in thousands)
Foreign currency forwards	$	—	$	346

		Amount of Loss on Derivatives Reclassified into Income from Accumulated Other Comprehensive Income
		Three Months Ended December 31,
Derivative Instrument	Location of Gain	2014		2013
		(in thousands)
Foreign currency forwards	Other expense	$	352	$	245

Derivative Instruments Not Designated as Hedging Instruments

As described in Note 6, in June 2014 we issued and settled $200.0 million aggregate principal amount of Convertible Notes. We granted the initial purchasers the option to purchase up to an additional $30.0 million aggregate principal amount of Convertible Notes. On June 27, 2014, such option was exercised in full. On July 2, 2014, the purchase of the additional $30.0 million of Convertible Notes was settled. The conversion feature of the Convertible Notes can only be settled in cash and is required to be bifurcated from the Convertible Notes and treated as a separate derivative instrument. In order to offset the cash flow risk associated with the Convertible Notes Embedded Derivative, we purchased Convertible Notes Hedges, which are accounted for as derivative instruments. The Convertible Notes Embedded Derivative and the Convertible Notes Hedges are adjusted to fair value each reporting period and unrealized gains and losses are reflected in the condensed consolidated statements of operations. We expect that the realized gain or loss from the Convertible Notes Hedges will substantially offset the realized loss or gain of the Convertible Notes Embedded Derivative upon maturity of the Convertible Notes. See Note 13 for additional information regarding the fair values of the Convertible Notes Embedded Derivative and the Convertible Notes Hedges.

During the quarter ended December 31, 2014 and the fiscal year ended September 30, 2014, Grupo Finmart entered into cross-currency forwards as part of the sale of certain long-term consumer loans made on March 31, June 30 and September 30, 2014. As part of that loan sale, Grupo Finmart also entered into agreements that transferred the rights and obligations of the cross-currency forwards to the trust. These agreements collectively met the definition of a foreign currency derivative which is accounted for separately. The cross-currency forward and the derivative with the trust are adjusted to fair value each reporting period through earnings.

The following tables set forth certain information regarding our derivative instruments not designated as hedging instruments:

		Fair Value Asset (Liability) of Derivative Instruments
Derivative Instrument	Balance Sheet Location	December 31, 2014			December 31, 2013		September 30, 2014
		(in thousands)
Foreign currency forwards — assets	Receivables, prepaid expenses and other current assets	$	7,814		$	—	$	1,152
Convertible notes hedges	Other assets, net	45,163			—		36,994
Foreign currency forwards — liabilities	Other current liabilities	(4,653		)	—		1,308
Convertible notes embedded derivative	Long-term debt, less current maturities	(45,163		)	—		(36,994		)

		Amount of Unrealized Gain on Derivatives
		Three Months Ended December 31,
Derivative Instrument	Location of Gain	2014		2013
		(in thousands)
Foreign currency forwards	Other income	$	701	$	—