DERIVATIVE INSTRUMENTS

3 Months Ended

Mar. 31, 2016

DERIVATIVE INSTRUMENTS

4. DERIVATIVE INSTRUMENTS

The Company uses foreign currency forward contracts (“forward contracts”) to hedge its exposure to fluctuations in foreign currency exchange rates associated with its foreign currency denominated cash, accounts receivable, and intercompany receivables and payables held by its U.S. operating company and United Kingdom subsidiary.

The Company is primarily exposed to foreign currency exchange rate fluctuations in the U.S. dollar, the Euro, and the Australian dollar relative to the British pound and the Euro, the British pound, and the Indian rupee relative to the U.S. dollar.

The forward contracts are not designated as hedging instruments. As a result, the Company records the fair value of these contracts at the end of each reporting period in the accompanying unaudited condensed consolidated balance sheets 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, net, in the accompanying unaudited condensed consolidated statements of operations. The cash flows related to these forward contracts are classified as operating activities in the accompanying unaudited condensed consolidated statements of cash flows. The Company does not enter into any forward contracts for trading or speculative purposes.

As of March 31, 2016 and December 31, 2015, the total notional amount of the Company’s outstanding forward contracts was $59.3 million and $32.3 million, respectively.

The fair value of the Company’s outstanding forward contracts was as follows:

	March 31, 2016			December 31, 2015
(in thousands)	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Asset Derivatives
Foreign currency forward contracts	Other current assets	$	722	Other current assets	$	48
Liability Derivatives
Foreign currency forward contracts	Accrued expenses	$	447	Accrued expenses	$	1,052

The Company entered into forward contracts with notional values as follows:

	Notional Amount
	Three Months Ended March 31,
Currency (in thousands)	2016		2015
Euro	€	34,435	€	—
British pound	£	9,105	£	—
Australian dollar	A$	36,275	A$	—
Indian rupee	Rs	968,500	Rs	—
United States dollar	$	48,820	$	—

	Three Months Ended March 31,
(in thousands)	2016			2015
Loss from the change in the fair value of forward contracts included in other expense, net	$	(2,297	)	$	—
Foreign currency transaction gains (losses) from the remeasurement of foreign currency assets and liabilities	$	1,376		$	(2,962	)