DERIVATIVES

12 Months Ended

Dec. 31, 2014

DERIVATIVES [ABSTRACT]

DERIVATIVES

(9)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 December 31, 2014, the Company had not experienced, nor did 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 years ended December 31, 2014, 2013 and 2012 (in thousands and net of tax):

	Year Ended December 31,
	2014		2013		2012
Aggregate unrealized net gain/(loss) at beginning of year	$	(8,352)	$	9,559	$	(5,852)
Add: Net gain/(loss) from change in fair value of cash flow hedges		(12,121)		(13,721)		17,748
Less: Net (gain)/loss reclassified to earnings from effective hedges		2,128		(4,190)		(2,337)
Aggregate unrealized net gain/(loss) at end of year	$	(18,345)	$	(8,352)	$	9,559

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

As of December 31, 2014	Local Currency Notional Amount	U.S. Dollar Notional Amount			% Maturing in 2015	Contracts Maturing Through
Canadian Dollar	1,500	$	1,441		100.0%	June 2015
Philippine Peso	17,428,000		398,046	(1)	40.0%	August 2019
Mexican Peso	2,532,000		179,089		29.7%	September 2019
New Zealand Dollar	490		381		100.0%	July 2015
		$	578,957

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 Dollars	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 December 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 December 31, 2014and 2013 were as follows:

		Notional Amount		Variable Rate Received	Fixed Rate Paid			Contract Commencement Date	Contract Maturity Date
As of December 31, 2014		$	25 million	1 - month LIBOR		2.55	%	April 2012	April 2016
	and 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 December 31, 2014 and 2013, the total notional amount of the Company's forward contracts used as fair value hedges was $242.5 million and $204.5 million, respectively.

Derivative Valuation and Settlements

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

		December 31, 2014
Designation:		Designated as Hedging Instruments				Not Designated as Hedging Instruments
Derivative contract type:		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		$	192	$	-	$	797	$	-
Other long-term assets			389		-		-		-
Other current liabilities			(12,680)		(988)		(5)		-
Other long-term liabilities			(17,070)		(452)		-		-
	Total fair value of derivatives, net	$	(29,169)	$	(1,440)	$	792	$	-

		December 31, 2013
Designation:		Designated as Hedging Instruments				Not Designated as Hedging Instruments
Derivative contract type:		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 effect of derivative instruments on the Consolidated Statements of Comprehensive Income (Loss) for the year ended December 31, 2014 and 2013 were as follows (in thousands):

		Year Ended December 31,
		2014				2013
Designation:		Designated as Hedging Instruments				Designated as Hedging Instruments
Derivative contract type:		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	$	(11,926)	$	(195)	$	(13,530)	$	(191)
Amount and location of net gain or (loss) reclassified
	from accumulated OCI to income - effective portion:
Revenue		$	(2,429)	$	-	$	7,973	$	-
Interest expense			-		(1,060)		-		(1,047)

		Year Ended December 31,
		2014						2013
Designation:		Not Designated as Hedging Instruments						Not Designated as Hedging Instruments
Derivative contract type:		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 (Loss):
Cost of services		$	-	$	-	$	(116)	$	-	$	-	$	162
Other income (expense), net			-		(386)		-		-		(6,360)		-