Derivative Instruments

6 Months Ended

Jun. 30, 2013

Derivative Instruments

3.   DERIVATIVE INSTRUMENTS

The Company uses foreign currency forward contracts (“forward contracts”) to manage its exposure to changes in foreign currency denominated accounts receivable, intercompany payables and cash primarily held by the U.S. operating company. The Company has been primarily exposed to the fluctuation in the British pound and Euro relative to the U.S. dollar. More recently, the Company has experienced increased levels of exposure to the Australian dollar and India rupee, for which it expects to use forward contracts in future periods.

The forward contracts utilized by the Company are not designated as hedging instruments and as a result, the Company records the fair value of these contracts at the end of each reporting period in its consolidated balance sheet as other current assets for unrealized gains and accrued expenses for unrealized losses, with any fluctuations in the value of these contracts recognized in other (expense) income, net, in its consolidated statement of operations. These forward contracts have 90 day terms or less.

As of June 30, 2013 and December 31, 2012, the Company did not have any forward contracts outstanding.

During the second quarter and first six months of 2013 and 2012, the Company entered into forward contracts with notional values as follows:

	Notional Amount
	Three Months Ended June 30,				Six Months Ended June 30,
Foreign currency (in thousands)	2013		2012		2013		2012
Euro	€	16,500	€	16,200	€	32,500	€	27,200
British pound	£	14,500	£	11,000	£	33,500	£	23,000

During the second quarter and first six months of 2013 and 2012, the total change in the fair value of the Company’s forward contracts recorded in other (expense) income, net, was as follows:

	Change in Fair Value in USD
	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2013		2012		2013		2012
(Loss) gain included in other (expense) income, net	$	(95)	$	244	$	743	$	(596)