DERIVATIVES

3 Months Ended

Mar. 31, 2015

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 March 31, 2015, the Company had 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, 2015 and 2014 (in thousands and net of tax):

	Three Months Ended March 31,
	2015		2014
Aggregate unrealized net gain/(loss) at beginning of year	$	(18,345)	$	(8,352)
Add: Net gain/(loss) from change in fair value of cash flow hedges		(1,291)		(3,649)
Less: Net (gain)/loss reclassified to earnings from effective hedges		1,139		1,115
Aggregate unrealized net gain/(loss) at end of period	$	(18,497)	$	(10,886)

The Company's foreign exchange cash flow hedging instruments as of March 31, 2015 and December 31, 2014 are summarized as follows (in thousands). All hedging instruments are forward contracts.

As of March 31, 2015	Local Currency Notional Amount	U.S. Dollar Notional Amount			% Maturing in the Next 12 Months			Contracts Maturing Through
Canadian Dollar	750	$	719			100.0	%	June 2015
Philippine Peso	17,063,000		386,570	(1)		36.8	%	February 2020
Mexican Peso	2,528,000		176,073			28.5	%	February 2020
		$	563,362

As of December 31, 2014	Local Currency Notional Amount	U.S. Dollar Notional Amount
Canadian Dollar	1,500	$	1,441
Philippine Peso	17,428,000		398,046	(1)
Mexican Peso	2,532,000		179,089
New Zealand Dollar	490		381
		$	578,957

(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, 2015 and December 31, 2014.

The Company's interest rate swap arrangements as of March 31, 2015 and December 31, 2014 were as follows:

	Notional Amount		Variable Rate Received	Fixed Rate Paid			Contract Commencement Date	Contract Maturity Date
As of March 31, 2015	$	25 million	1 - month LIBOR		2.55	%	April 2012	April 2016
and December 31, 2014		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, 2015 and December 31, 2014 the total notional amount of the Company's forward contracts used as fair value hedges were $262.6million and $242.5 million, respectively.

Derivative Valuation and Settlements

The Company's derivatives as of March 31, 2015 and December 31, 2014were as follows (in thousands):

		March 31, 2015
Designation:		Designated as Hedging Instruments				Not Designated as Hedging Instruments
Derivative contract type:		Foreign Exchange		Interest Rate		Foreign Exchange
Derivative classification:		Cash Flow		Cash Flow		Fair Value
Fair value and location of derivative in the
	Consolidated Balance Sheet:
Prepaids and other current assets		$	1,758	$	-	$	904
Other long-term assets			228		-		-
Other current liabilities			(13,394)		(971)		(197)
Other long-term liabilities			(19,534)		(339)		-
	Total fair value of derivatives, net	$	(30,942)	$	(1,310)	$	707
		December 31, 2014
Designation:		Designated as Hedging Instruments				Not Designated as Hedging Instruments
Derivative contract type:		Foreign Exchange		Interest Rate		Foreign Exchange
Derivative classification:		Cash Flow		Cash Flow		Fair Value
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

The effects of derivative instruments on the Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2015 and 2014were as follows (in thousands):

		Three Months Ended March 31,
		2015				2014
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:	$	1,220	$	(71)	$	(3,592)	$	(57)
Amount and location of net gain or (loss) reclassified
	from accumulated OCI to income - effective portion:
Revenue		$	(1,708)	$	-	$	(1,570)	$	-
Interest Expense			-		(257)		-		(258)

		Three Months Ended March 31,
		2015				2014
Designation:		Not Designated as Hedging Instruments				Not Designated as Hedging Instruments
Derivative contract type:		Foreign Exchange				Foreign Exchange
Derivative classification:		Forward Contracts		Fair Value		Forward Contracts		Fair Value
Amount and location of net gain or (loss) recognized in the
	Consolidated Statement of Comprehensive Income:
Costs of services		$	-	$	-	$	-	$	-
Other income (expense), net		$	-	$	80	$	-	$	619