Derivative Financial Instruments

9 Months Ended

Jun. 30, 2016

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

3. Derivative Financial Instruments

At June 30, 2016 and September 30, 2015, the Company’s Canadian subsidiary had $27.5 million and $28.1 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 $3.3 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 the consolidated statement of operations.  The Company considers the remaining $24.2 million Canadian dollar denominated intercompany accounts payable to be of a long-term nature and whereby settlement is not planned or anticipated in the foreseeable future; therefore, any resulting foreign 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 2016, the Company entered into a $3.0 million 90-day hedge contract with a United States bank to hedge a portion of 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, 2016, the fair value of this contract was a liability of $11,000.

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, 2016		September 30, 2015
Foreign Currency Forward Contracts	Accrued Expenses and Other Current Liabilities	$	11	$	18

The following table summarizes the Company’s gains on derivative instruments in the consolidated statements of operations for the three and nine month periods ended June 30, 2016 and 2015 (in thousands):

		Three Months Ended						Nine Months Ended
Derivative Instrument	Location of Gain (Loss) on Derivative Instrument	June 30, 2016			June 30, 2015			June 30, 2016		June 30, 2015
Foreign Currency Forward Contracts	Other Income (Expense)	$	(14	)	$	(393	)	$	14	$	2,555

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