DERIVATIVES

3 Months Ended

Mar. 31, 2014

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 considers, among other factors, the creditworthiness of these counterparties. Conversely, the fair value of derivative liabilities reflects the Company's creditworthiness. As of March 31, 2014, 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 months ended March 31, 2014 and 2013 (amounts in thousands and net of tax):

	Three Months Ended March 31,
	2014		2013
Aggregate unrealized net gain/(loss) at beginning of year	$	(8,352)	$	9,559
Add: Net gain/(loss) from change in fair value of cash flow hedges		(3,649)		4,099
Less: Net (gain)/loss reclassified to earnings from effective hedges		1,115		(1,919)
Aggregate unrealized net gain/(loss) at end of period	$	(10,886)	$	11,739

The Company's foreign exchange cash flow hedging instruments as of March 31, 2014 and December 31, 2013 are summarized as follows (amounts in thousands). All hedging instruments are forward contracts unless noted otherwise.

As of March 31, 2014	Local Currency Notional Amount	U.S. Dollar Notional Amount			% Maturing in the Next 12 Months			Contracts Maturing Through
Canadian Dollar	6,000	$	5,857			87.5	%	June 2015
Philippine Peso	16,416,000		382,668	(1)		37.7	%	December 2018
Mexican Peso	2,356,500		168,458			29.9	%	December 2018
British Pound Sterling	600		926			100.0	%	June 2014
		$	557,909

As of December 31, 2013	Local Currency Notional Amount	U.S. Dollar Notional Amount
Canadian Dollar	7,500	$	7,336
Philippine Peso	17,355,000		404,638	(1)
Mexican Peso	2,305,500		166,132
British Pound Sterling	1,200		1,853	(2)
New Zealand Dollar	150		117
		$	580,076

(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 March 31, 2014 and December 31, 2013.

(2)       Includes contracts to purchase British pound sterling in exchange for Euros, which are translated into equivalent U.S. dollars on December 31, 2013.

The Company's interest rate swap arrangements as of March 31, 2014 and December 31, 2013 were as follows:

	Notional Amount		Variable Rate Received	Fixed Rate Paid			Contract Commencement Date	Contract Maturity Date
As of March 31, 2014	$	25 million	1 - month LIBOR		2.55	%	April 2012	April 2016
and December 31, 2013		15 million	1 - month LIBOR		3.14	%	May 2012	May 2017
	$	40 million

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 March 31, 2014 and December 31, 2013 the total notional amount of the Company's forward contracts used as fair value hedges were $229.5million and $204.5 million, respectively.

Embedded Derivatives

In addition to hedging activities, the Company's foreign subsidiary in Argentina was 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 December 31, 2013, the fair value of the embedded derivative was $0.1 million and was included in Other current liabilities in the accompanying Consolidated Balance Sheets as shown in the table below. As of March 31, 2014, the lease had expired and thus the embedded derivative value was reduced to zero.

Derivative Valuation and Settlements

The Company's derivatives as of March 31, 2014 and December 31, 2013 were as follows (amounts in thousands):

		March 31, 2014
		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		$	2,368	$	-	$	142	$	-
Other long-term assets			2,529		-		-		-
Other current liabilities			(8,346)		(1,045)		(319)		-
Other long-term liabilities			(12,069)		(943)		-		-
	Total fair value of derivatives, net	$	(15,518)	$	(1,988)	$	(177)	$	-
		December 31, 2013
		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		$	3,379	$	-	$	97	$	-
Other long-term assets			1,439		-		-		-
Other current liabilities			(4,595)		(1,028)		(815)		(116)
Other long-term liabilities			(11,708)		(1,124)		-		-
	Total fair value of derivatives, net	$	(11,485)	$	(2,152)	$	(718)	$	(116)

The effects of derivative instruments on the Consolidated Statements of Comprehensive Income for the three months ended March 31, 2014 and 2013 were as follows (amounts in thousands):

		Three Months Ended March 31,
		2014				2013
		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 (loss) - effective portion, net of tax:	$	(3,592)	$	(57)	$	4,178	$	(79)
Amount and location of net gain or (loss) reclassified
	from accumulated OCI to income - effective portion:
Revenue		$	(1,570)	$	-	$	3,460	$	-
Interest Expense			-		(258)		-		(257)

		Three Months Ended March 31,
		2014						2013
		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		$	-	$	-	$	-	$	-	$	-	$	(69)
Other income (expense), net		$	-	$	619	$	-	$	-	$	1,438	$	-