Derivative Instruments and Hedging Strategies

12 Months Ended

Sep. 30, 2011

Derivative Instruments and Hedging Strategies [Abstract]

Derivative Instruments and Hedging Strategies

J.    Derivative Instruments and Hedging Strategies

We operate in various countries and have operations in the United Kingdom and Canada. These international operations expose us to market risk associated with foreign currency exchange rate fluctuations. We have entered into certain forward contracts to hedge the risk of certain foreign currency rate fluctuations. To the extent we choose to manage volatility associated with the net exposures, we enter into various financial transactions which we account for using the applicable accounting guidance for derivative instruments and hedging activities. Our objective is to hedge the variability in forecasted cash flow due to the foreign currency risk associated with certain long-term sales. As of September 30, 2011, we held no derivatives.

In order for a derivative to qualify for hedge accounting, the derivative must be formally designated as a hedge by documenting the relationship between the derivative and the hedged item. The documentation includes a description of the hedging instrument, the hedge item, the risk being hedged, our risk management objective and strategy for undertaking the hedge, the method for assessing the effectiveness of the hedge and the method for measuring hedge ineffectiveness. Additionally, the hedge relationship must be expected to be highly effective at offsetting changes in either the fair value or cash flows of the hedged item at both inception of the hedge and on an ongoing basis. We assess the ongoing effectiveness of our hedges in accordance with the Cumulative Dollar-Offset Approach, and measure and record hedge ineffectiveness at the end of each fiscal quarter, as necessary.

All derivatives are recognized on the Consolidated Balance Sheets at their fair value and classified based on the instrument’s maturity date. There were no outstanding derivatives as of September 30, 2011.

The following table presents the fair value of derivative instruments included with the Consolidated Balance Sheets as of September 30, 2010:

	Asset Derivatives			Liability Derivatives
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
	(in thousands)
Derivatives designated as hedging instruments:
Foreign exchange forwards	Prepaid expenses and other current assets	$	—	Other accrued expenses	$	47
Total derivatives		$	—		$	47

The following table presents the amounts affecting the Consolidated Statements of Operations for the year ended September 30, 2011:

						Amount of Gain (Loss)
	Amount of Gain (Loss)					Reclassified from
	Recognized in Other					Accumulated Other
	Comprehensive Income			Location of Gain (Loss)		Comprehensive Income
	on Derivatives(¹)			Reclassified from Accumulated		into Income(¹)
	Year Ended			Other Comprehensive		Year Ended
Derivatives Designated	September 30, 2011			Income into Income		September 30, 2011
Derivatives designated as cash flow hedges:
Foreign exchange forwards	$	(290	)		Revenues	$	40
Total designated cash flow hedges	$	(290	)			$	40

⁽¹⁾  For the year ended September 30, 2011, we recorded in other (income) expense an immaterial amount of ineffectiveness from cash flow hedges.

Refer to Note C for a description of how the above financial instruments are valued in accordance with the fair value measurement accounting guidance for the year ended September 30, 2011.

The following table presents the amounts affecting the Consolidated Statements of Operations for the year ended September 30, 2010:

					Amount of Gain (Loss)
	Amount of Gain (Loss)				Reclassified from
	Recognized in Other				Accumulated Other
	Comprehensive Income		Location of Gain (Loss)		Comprehensive Income
	on Derivatives(¹)		Reclassified from Accumulated		into Income(¹)
	Year Ended		Other Comprehensive		Year Ended
Derivatives Designated	September 30, 2010		Income into Income		September 30, 2010
Derivatives designated as cash flow hedges:
Foreign exchange forwards	$	757		Revenues	$	(89	)
Total designated cash flow hedges	$	757			$	(89	)

^{( 1)}  For the year ended September 30, 2010, we recorded in other (income) expense an immaterial amount of ineffectiveness from cash flow hedges.

Refer to Note C for a description of how the above financial instruments are valued in accordance with the fair value measurement accounting guidance for the year ended September 30, 2010.