We enter into derivative transactions, specifically foreign currency forward contracts and options, to manage our exposure to foreign currency exchange risk in order to reduce earnings volatility. We do not enter into derivative transactions for trading or speculative purposes.

The following table shows our derivative instruments measured at gross fair value as reflected in the Consolidated Balance Sheets:

(in thousands)	Fair Value of Derivatives Designated As Hedging Instruments				Fair Value of Derivatives Not Designated As Hedging Instruments
	December 31, 2021		September 30, 2021		December 31, 2021		September 30, 2021
Derivative assets⁽¹⁾:
Forward Contracts	$	—	$	1,641	$	1,486	$	3,722
Options	$	—	$	—	$	2,021	$	—
Derivative liabilities⁽²⁾:
Forward Contracts	$	1,248	$	—	$	2,484	$	3,318

We hedge our net foreign currency monetary assets and liabilities primarily resulting from foreign currency denominated receivables and payables with foreign exchange forward contracts to reduce the risk that our earnings and cash flows will be adversely affected by changes in foreign currency exchange rates. These contracts have maturities of up to approximately three months. Generally, we do not designate these foreign currency forward contracts as hedges for accounting purposes and changes in the fair value of these instruments are recognized immediately in earnings. Because we enter into forward contracts only as an economic hedge, any gain or loss on the underlying foreign-denominated balance would be offset by the loss or gain on the forward contract. Gains and losses on forward contracts and foreign denominated receivables and payables are included in other income (expense), net.

We hedge our forecasted U.S. Dollar cash flows with foreign exchange options to reduce the risk that they will be adversely affected by changes in Euro or Japanese Yen exchange rates. These contracts have maturities of up to approximately ten months. We do not designate these foreign currency options as hedges for accounting purposes and changes in the fair value of these instruments are recognized immediately in earnings. Because we enter into options as an economic hedge, currency impacts on the Euro or Japanese Yen-denominated operations as compared to the forecasted plan rate may be partially offset by the gain on the put option. Gain on put options are included in other income (expense), net.

As of December 31, 2021 and September 30, 2021, we had outstanding forward contracts and options with notional amounts equivalent to the following:

Currency Hedged (in thousands)	December 31, 2021		September 30, 2021
Canadian / U.S. Dollar	$	5,256	$	4,894
Euro / U.S. Dollar⁽¹⁾		586,301		387,466
British Pound / U.S. Dollar		5,300		23,141
Israeli Shekel / U.S. Dollar		13,859		10,475
Japanese Yen / U.S. Dollar⁽²⁾		43,066		46,450
Swiss Franc / U.S. Dollar		7,621		18,039
Swedish Krona / U.S. Dollar		16,683		34,196
Singapore Dollar / U.S. Dollar		3,806		3,498
Chinese Renminbi / U.S. Dollar		19,496		23,297
New Taiwan Dollar / U.S. Dollar		2,669		3,369
Romanian Leu/ U.S. Dollar		3,971		778
Russian Ruble/ U.S. Dollar		—		2,614
All other		7,253		5,704
Total	$	715,281	$	563,921

The following table shows the effect of our non-designated hedges in the Consolidated Statements of Operations for the three months ended December 31, 2021 and December 31, 2020:

(in thousands)

Three months ended

Location of Loss

December 31,

2021

December 31,

2020

Net realized and unrealized loss, excluding the underlying foreign currency exposure being hedged

Other income (expense), net

(3,435

)

(1,587

)

In the three months ended December 31, 2021, foreign currency losses, net were $4.4 million. In the three months ended December 31, 2020, foreign currency losses, net were $1.8 million.

We translate balance sheet accounts of subsidiaries with foreign functional currencies into the U.S. Dollar using the exchange rate at each balance sheet date. Resulting translation adjustments are reported as a component of accumulated other comprehensive loss on the Consolidated Balance Sheets. We designate certain foreign exchange forward contracts as net investment hedges against exposure on translation of balance sheet accounts of Euro functional subsidiaries. Net investment hedges partially offset the impact of foreign currency translation adjustment recorded in accumulated other comprehensive loss on the Consolidated Balance Sheets. All foreign exchange forward contracts are carried at fair value on the Consolidated Balance Sheets and the maximum duration of net investment hedge foreign exchange forward contracts is approximately three months.

Net investment hedge relationships are designated at inception, and effectiveness is assessed retrospectively on a quarterly basis using the net equity position of Euro functional subsidiaries. As the forward contracts are highly effective in offsetting exchange rate exposure, we record changes in these net investment hedges in accumulated other comprehensive loss and subsequently reclassify them to foreign currency translation adjustment in accumulated other comprehensive loss at the time of forward contract maturity. Changes in the fair value of foreign exchange forward contracts due to changes in time value are excluded from the assessment of effectiveness. Our derivatives are not subject to any credit contingent features. We manage credit risk with counterparties by trading among several counterparties and we review our counterparties’ credit at least quarterly.

As of December 31, 2021 and September 30, 2021, we had outstanding forward contracts designated as net investment hedges with notional amounts equivalent to the following:

The following table shows the effect of our derivative instruments designated as net investment hedges in the Consolidated Statements of Operations for the three months ended December 31, 2021 and December 31, 2020:

(in thousands)		Three months ended
	Location of Gain (Loss)	December 31, 2021			December 31, 2020
Gain (loss) recognized in OCI	OCI	$	(3,156	)	$	580
Gain (loss) reclassified from OCI	OCI		(5,735	)		2,942
Gain recognized, excluded portion	Other income (expense), net		267			307

As of December 31, 2021, we estimate that all amounts reported in accumulated other comprehensive loss will be applied against exposed balance sheet accounts upon translation within the next three months.

We have entered into master netting arrangements for our forward contracts that allow net settlements under certain conditions. Although netting is permitted, it is currently our policy and practice to record all derivative assets and liabilities on a gross basis in the Consolidated Balance Sheets.

The following table sets forth the offsetting of derivative assets as of December 31, 2021:

(in thousands)

Gross Amounts Offset in the Consolidated Balance Sheets

Gross Amounts Not Offset in the Consolidated Balance Sheets

As of December 31, 2021

Gross

Amount of

Recognized

Assets

Gross Amounts Offset in the Consolidated Balance Sheets

Net Amounts of

Assets

Presented in

the

Consolidated

Balance Sheets

Financial

Instruments

Cash

Collateral

Received

Net

Amount

Forward Contracts

1,486

—

1,486

(1,486

)

—

The following table sets forth the offsetting of derivative liabilities as of December 31, 2021:

(in thousands)

Gross Amounts Offset in the Consolidated Balance Sheets

Gross Amounts Not Offset in the Consolidated Balance Sheets

As of December 31, 2021

Gross

Amount of

Recognized

Liabilities

Gross

Amounts

Offset in the

Consolidated

Balance

Sheets

Net Amounts of

Liabilities

Presented in

the

Consolidated

Balance Sheets

Financial

Instruments

Cash

Collateral

Pledged

Net

Amount

Forward Contracts

3,732

—

3,732

(1,486

)

—

2,246