DERIVATIVE INSTRUMENTS

12 Months Ended

Dec. 31, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE INSTRUMENTS

DERIVATIVE INSTRUMENTS

We use derivatives to partially offset our business exposure to foreign currency exchange risk. We enter into foreign currency forward and option contracts to hedge our anticipated operating commitments that are denominated in foreign currencies, including forward contracts and range forward contracts (a transaction where both a call option is purchased and a put option is sold).  The contracts cover periods commensurate with expected exposure, generally three to twelve months, and are principally unsecured foreign exchange contracts.  The market risk exposure is essentially limited to risk related to currency rate movements. We operate in Canada, Jamaica, and the Philippines where the functional currencies are the Canadian dollar, the Jamaican dollar, and the Philippine peso, respectively, which are used to pay labor and other operating costs in those countries. We provide funds for these operating costs as our client contracts generate revenues which are paid in U.S. dollars. In Honduras, our functional currency is the U.S. dollar and the majority of our costs are denominated in U.S. dollars. We have elected to designate our derivatives as cash flow hedges in order to associate the results of the hedges with forecasted expenses.

During the years ended December 31, 2016, 2015, and 2014, we entered into Canadian dollar forward and dollar range forward contracts for a notional amount of 19,555, 8,580, and 14,630 Canadian dollars, respectively, and during the years ended December 31, 2016, 2015 and 2014, we entered into Philippine peso non-deliverable forward and range forward contracts for a notional amount of 1,433,800, 1,029,100, and 2,685,550 Philippine pesos, respectively. As of December 31, 2016, we have not entered into any arrangements to hedge our exposure to fluctuations in Honduran lempira or Jamaican dollar relative to the U.S. dollar.

The following table shows the notional amount of our foreign exchange cash flow hedging instruments as of December 31, 2016, 2015, and 2014:

	December 31, 2016			December 31, 2015			December 31, 2014
	Local Currency Notional Amount	U.S. Dollar Notional Amount		Local Currency Notional Amount	U.S. Dollar Notional Amount		Local Currency Notional Amount	U.S. Dollar Notional Amount
Canadian dollar	17,080	$	12,723	2,470	$	1,997	9,670	$	8,736
Philippine peso	1,178,800	25,231		329,000	7,263		1,627,920	36,989
		$	37,954		$	9,260		$	45,725

The Canadian dollar and Philippine peso foreign exchange contracts are to be delivered periodically through December 2017 at a purchase price of approximately $12,723 and $25,231, respectively, and as such we expect unrealized gains and losses recorded in accumulated other comprehensive income will be reclassified to operations as the forecasted intercompany expenses are incurred, typically within twelve months. 

Derivative assets and liabilities associated with our hedging activities are measured at gross fair value as described in Note 8, “Fair Value Measurements,” and are reflected as separate line items in our consolidated balance sheets.

The following table shows the effect of our derivative instruments designated as cash flow hedges for the years ended December 31, 2016, 2015, and 2014: 

	Gain (Loss) Recognized in AOCI, net of tax Years Ended December 31,								Gain (Loss) Reclassified from AOCI into Income Years Ended December 31,
	2016		2015			2014			2016		2015			2014
Cash flow hedges:
Foreign exchange contracts	(832	)	$	(1,906	)	$	(2,232	)	(431	)	$	(2,587	)	$	(3,186	)