Derivative Instruments

9 Months Ended

Jun. 30, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

Derivative Instruments

All derivatives, whether designated in a hedging relationship or not, are recorded on the Consolidated Balance Sheets at fair value. The accounting for changes in fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, the Company must designate the hedging instrument, based on the exposure being hedged, as a fair value hedge, cash flow hedge or a hedge of a net investment in a foreign operation.

A cash flow hedge is a derivative instrument designated for the purpose of hedging the exposure to variability in future cash flows resulting from a particular risk. If the derivative is designated as a cash flow hedge, the effective portions of changes in the fair value of the derivative are recorded in accumulated other comprehensive income and are recognized in the results of operations when the hedged item affects earnings. Ineffective portions of changes in the fair value of cash flow hedges are recognized in the results of operations.

In June 2013, the Company entered into foreign exchange contracts to reduce its exposure to changes in foreign exchange rates associated with an order for multiple automated sample management systems. The Company concluded that these foreign currency contracts met the criteria to qualify as a cash flow hedge. Accordingly, the Company reflected changes in the fair value of the effective portion of these foreign currency contracts in accumulated other comprehensive income. In the third quarter of fiscal year 2014, the Company reclassified the realized gain of $0.1 million on these contracts into revenue. The Company did not recognize any amounts related to ineffectiveness in the results of operations for the nine months ended June 30, 2014.    

The Company did not have any notional amounts outstanding under foreign currency contracts that qualify for cash flow hedge accounting at June 30, 2014.

In addition, the Company has various transactions and balances denominated in currencies other than the U.S. dollar. Most of these transactions or balances are denominated in Euros, British Pounds and a variety of Asian currencies. These transactions and balances, including short-term advances between the Company and its subsidiaries, subject the Company's operations to exposure from exchange rate fluctuations. The impact of currency exchange rate movement can be positive or negative in any period. The Company mitigates the impact of potential currency translation gains and losses on short-term intercompany advances through timely settlement of each transaction, generally within 30 days.

The Company also enters into foreign exchange contracts to reduce its exposure to currency translation. Under forward contract arrangements, the Company typically agrees to purchase a fixed amount of U.S. dollars in exchange for a fixed amount of a foreign currency on specified dates with maturities of three months or less. These transactions do not qualify for hedge accounting. For derivative instruments not designated as hedging instruments, changes in fair value are recognized in the Consolidated Statements of Operations as gains and losses consistent with the classification of the underlying risk.

Net gains and losses recorded as a component of other income, net in the Consolidated Statements of Operations related to these contracts for the three and nine month periods ended June 30, 2014 and 2013 is as follows (in thousands):

	Three Months Ended June 30,				Nine Months Ended June 30,
	2014		2013		2014			2013
Realized gains (losses) on derivative instruments not designated as hedging instruments	$	86	$	227	$	(21	)	$	289

The Company had the following notional amounts outstanding under foreign currency contracts that do not qualify for hedge accounting at June 30, 2014 and September 30, 2013 (in thousands):

June 30, 2014:

Buy Currency	Notional Amount of Buy Currency		Sell Currency	Maturity	Notional Amount of Sell Currency in U.S. Dollars		Fair Value of Assets		Fair Value of Liabilities
U.S. Dollar	$	2,709	Japanese Yen	July to September 2014	$	2,707	$	2	$	—
British Pound	5,315		Euro	July 2014	5,305		10		—
U.S. Dollar	554		Taiwan Dollar	July 2014	553		1		—
Korean Won	559		U.S. Dollar	July 2014	560		—		(1		)
Euro	816		U.S. Dollar	July 2014	819		—		(3		)
U.S. Dollar	815		Israeli Shekel	July 2014	813		2		—
	$	10,768			$	10,757	$	15	$	(4	)

September 30, 2013:

Buy Currency	Notional Amount of Buy Currency in U.S. Dollars		Sell Currency	Maturity	Notional Amount of Sell Currency in U.S. Dollars		Fair Value of Assets		Fair Value of Liabilities
U.S. Dollar	$	2,770	Japanese Yen	October 2013 to December 2013	$	2,762	$	8	$	—
Korean Won	686		U.S. Dollar	October 2013	688		—		2
U.S. Dollar	301		Israeli Shekel	October 2013	304		—		3
U.S. Dollar	231		Singapore Dollar	October 2013	231		—		—
	$	3,988			$	3,985	$	8	$	5

The fair values of the forward contracts described above are recorded in the Company's Consolidated Balance Sheets as Prepaid Expenses and Other Current Assets and Accrued Expenses and Other Current Liabilities.