DERIVATIVES

9 Months Ended

Sep. 30, 2012

DERIVATIVES [ABSTRACT]

DERIVATIVES

(6)       DERIVATIVES

Cash Flow Hedges

The Company enters into foreign exchange and interest rate related derivatives. Foreign exchange derivatives entered into consist of forward and option contracts to reduce the Company's exposure to foreign currency exchange rate fluctuations that are associated with forecasted revenue earned in foreign locations. Interest rate derivatives consist of interest rate swaps to reduce the Company's exposure to interest rate fluctuations associated with its variable rate debt. Upon proper qualification, these contracts are designated as cash flow hedges. It is the Company's policy to only enter into derivative contracts with investment grade counterparty financial institutions, and correspondingly, the fair value of derivative assets consider, among other factors, the creditworthiness of these counterparties. Conversely, the fair value of derivative liabilities reflects the Company's creditworthiness. As of September 30, 2012, the Company has not experienced, nor does it anticipate, any issues related to derivative counterparty defaults. The following table summarizes the aggregate unrealized net gain or loss in Accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2012 and 2011 (amounts in thousands and net of tax):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Aggregate unrealized net gain (loss) at beginning of period	$	2,964	$	511	$	(5,852)	$	7,091
Add: Net gain/(loss) from change in fair value of cash flow hedges		4,945		(2,504)		14,040		(4,935)
Less: Net (gain)/loss reclassified to earnings from effective hedges		(591)		(1,330)		(870)		(5,479)
Aggregate unrealized net gain (loss) at end of period	$	7,318	$	(3,323)	$	7,318	$	(3,323)

The Company's foreign exchange cash flow hedging instruments as of September 30, 2012 and December 31, 2011 are summarized as follows (amounts in thousands). All hedging instruments are forward contracts unless noted otherwise.

As of September 30, 2012	Local Currency Notional Amount	U.S. Dollar Notional Amount			% Maturing in the Next 12 Months			Contracts Maturing Through
Canadian Dollar	11,500	$	11,072			71.7	%	March 2014
Philippine Peso	9,290,000		210,767	(1)		47.7	%	December 2015
Mexican Peso (Forwards)	1,166,500		83,721			40.9	%	December 2015
Mexican Peso (Collars)	35,075		3,000	(3)		100.0	%	December 2012
British Pound Sterling	4,839		7,611	(2)		57.5	%	June 2014
New Zealand Dollars	595		450			100.0	%	June 2013
		$	316,621

As of December 31, 2011	Local Currency Notional Amount	U.S. Dollar Notional Amount
Canadian Dollar	25,750	$	25,137
Costa Rican Colon	2,000,000		3,874
Philippine Peso	13,304,000		301,361	(1)
Mexican Peso (Forwards)	1,081,000		80,735
Mexican Peso (Collars)	140,298		12,000	(4)
British Pound Sterling	8,808		13,822	(2)
		$	436,929

(1)Includes contracts to purchase Philippine pesos in exchange for New Zealand dollars and Australian dollars, which are translated into equivalent U.S. dollars on September 30, 2012 and December 31, 2011.

(2)Includes contracts to purchase British pound sterling in exchange for Euros, which are translated into equivalent U.S. dollars on September 30, 2012 and December 31, 2011.

(3)The Mexican peso collars include call options with a floor total of MXN 35.1 million and put options with a cap total of MXN (41.6 million) as of September 30, 2012.

(4)The Mexican peso collars include call options with a floor total of MXN 140.3 million and put options with a cap total of MXN (157.0 million) as of December 31, 2011.

The Company's interest rate swap arrangements as of September 30, 2012 and December 31, 2011 were as follows:

	Notional Amount (millions)		Variable Rate Received	Fixed Rate Paid			Contract Commencement Date	Contract Maturity Date
As of September 30, 2012	$	25.0	1 - month LIBOR		2.55	%	April 2012	April 2016
		15.0	1 - month LIBOR		3.14	%	May 2012	May 2017
	$	40.0
As of December 31, 2011	$	25.0	1 - month LIBOR		2.55	%	April 2012	April 2016
		15.0	1 - month LIBOR		3.14	%	May 2012	May 2017
	$	40.0

Fair Value Hedges

The Company enters into foreign exchange forward contracts to economically hedge against foreign currency exchange gains and losses on certain receivables and payables of the Company's foreign operations. Changes in the fair value of derivative instruments designated as fair value hedges are recognized in earnings in Other income (expense), net. As of September 30, 2012 and December 31, 2011 the total notional amount of the Company's forward contracts used as fair value hedges were $140.1million and $49.8 million, respectively.

Embedded Derivatives

In addition to hedging activities, the Company's foreign subsidiary in Argentinawas party to U.S. dollar denominated lease contracts which the Company determined contain embedded derivatives. As such, the Company bifurcated the embedded derivative features of the lease contracts and valued these features as foreign currency derivatives.As of September 30, 2012, the fair value of the embedded derivatives was $0.3 million and was included in Other current liabilities and Other long-term liabilities in the accompanying Consolidated Balance Sheets as shown in the table below.

Derivative Valuation and Settlements

The Company's derivatives as of September 30, 2012 and December 31, 2011 were as follows (amounts in thousands):

		September 30, 2012
		Designated as Hedging Instruments				Not Designated as Hedging Instruments
Derivative contracts:		Foreign Exchange		Interest Rate		Foreign Exchange		Leases
Derivative classification:		Cash Flow		Cash Flow		Fair Value		Embedded Derivative
Fair value and location of derivative in the
	Consolidated Balance Sheet:
Prepaids and other current assets		$	8,933	$	-	$	272	$	-
Other long-term assets			6,975		-		-		-
Other current liabilities			(526)		(1,122)		(97)		(74)
Other long-term liabilities			(31)		(2,014)		-		(185)
	Total fair value of derivatives, net	$	15,351	$	(3,136)	$	175	$	(259)
		December 31, 2011
		Designated as Hedging Instruments				Not Designated as Hedging Instruments
Derivative contracts:		Foreign Exchange		Interest Rate		Foreign Exchange		Leases
Derivative classification:		Cash Flow		Cash Flow		Fair Value		Embedded Derivative
Fair value and location of derivative in
	the Consolidated Balance Sheet:
Prepaids and other current assets		$	2,325	$	-	$	12	$	-
Other long-term assets			1,119		-		-		-
Other current liabilities			(7,828)		-		(341)		-
Other long-term liabilities			(2,786)		(2,263)		-		-
	Total fair value of derivatives, net	$	(7,170)	$	(2,263)	$	(329)	$	-

The effects of derivative instruments on the Consolidated Statements of Comprehensive Income for the three months ended September 30, 2012 and 2011 were as follows (amounts in thousands):

		Three Months Ended September 30,
		2012				2011
		Designated as Hedging Instruments				Designated as Hedging Instruments
Derivative contracts:		Foreign Exchange		Interest Rate		Foreign Exchange		Interest Rate
Derivative classification:		Cash Flow		Cash Flow		Cash Flow		Cash Flow
Amount of gain or (loss) recognized in other
	comprehensive income - effective portion, net of tax:	$	5,331	$	(386)	$	(1,662)	$	(842)
Amount and location of net gain or (loss) reclassified
	from accumulated OCI to income - effective portion:
Revenue		$	1,367	$	-	$	2,216	$	-
Interest expense		$	-	$	(381)	$	-	$	-

		Three Months Ended September 30,
		2012						2011
		Not Designated as Hedging Instruments						Not Designated as Hedging Instruments
Derivative contracts:		Foreign Exchange				Leases		Foreign Exchange				Leases
Derivative classification:		Option and Forward Contracts		Fair Value		Embedded Derivative		Option and Forward Contracts		Fair Value		Embedded Derivative
Amount and location of net gain or (loss) recognized in the
	Consolidated Statement of Comprehensive Income:
Costs of services		$	-	$	-	$	7	$	-	$	-	$	10
Other income (expense), net		$	-	$	544	$	-	$	-	$	(1,189)	$	-

The effects of derivative instruments on the Consolidated Statements of Comprehensive Incomefor the nine months ended September 30, 2012 and 2011 were as follows (amounts in thousands):

		Nine Months Ended September 30,
		2012				2011
		Designated as Hedging Instruments				Designated as Hedging Instruments
Derivative contracts:		Foreign Exchange		Interest Rate		Foreign Exchange		Interest Rate
Derivative classification:		Cash Flow		Cash Flow		Cash Flow		Cash Flow
Amount of gain or (loss) recognized in other
	comprehensive income - effective portion, net of tax:	$	14,902	$	(862)	$	(3,765)	$	(1,170)
Amount and location of net gain or (loss) reclassified
	from accumulated OCI to income - effective portion:
Revenue		$	2,016	$	-	$	9,131	$	-
Interest expense		$	-	$	(564)	$	-	$	-

		Nine Months Ended September 30,
		2012						2011
		Not Designated as Hedging Instruments						Not Designated as Hedging Instruments
Derivative contracts:		Foreign Exchange				Leases		Foreign Exchange				Leases
Derivative classification:		Option and Forward Contracts		Fair Value		Embedded Derivative		Option and Forward Contracts		Fair Value		Embedded Derivative
Amount and location of net gain or (loss) recognized in the
	Consolidated Statement of Comprehensive Income:
Costs of services		$	-	$	-	$	259	$	-	$	-	$	132
Other income (expense), net		$	-	$	4,399	$	-	$	-	$	(686)	$	-