DERIVATIVE INSTRUMENTS

3 Months Ended

Mar. 31, 2014

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 Indian rupee, for which it began to use forward contracts in the third quarter of 2013.

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 March 31, 2014 and December 31, 2013, the Company did not have any forward contracts outstanding.

During the first three months of 2014 and 2013, the Company entered into forward contracts with notional values as follows:

	Notional Amount
	Three Months Ended March 31,
Foreign currency (in thousands)	2014		2013
Euro	€	21,900	€	16,000
British pound	£	26,500	£	19,000
Australian dollar	A$	12,900	A$	—
Indian rupee	Rs	204,000	Rs	—

During the first three months of 2014 and 2013, the total change in the fair value of the Company’s forward contracts recorded in other expense, net, was as follows:

	Change in Fair Value in USD
	Three Months Ended March 31,
(in thousands)	2014		2013
(Loss) gain included in other (expense) income, net	$	(532)	$	837