Note 8 - Derivative Instruments

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Derivative Instruments and Hedging Activities Disclosure [Text Block]

8. DERIVATIVE INSTRUMENTS

Cash flow hedges

We use derivatives to partially offset our business exposure to foreign currency exchange risk in Canada and the Philippines. 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. In Canada and the Philippines where the functional currencies are the Canadian dollar, and the Philippine peso, respectively, these local currencies 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. We have elected to designate our derivatives as cash flow hedges in order to associate the results of the hedges with forecasted obligations.

From January 1, 2019 to December 31, 2019, we entered into Philippine peso non-deliverable forward and range forward contracts for a notional amount of 1,702,000,008 Philippine pesos and 2,299,993 in Canadian Dollars.

The following table shows the notional amount of our foreign exchange cash flow hedging instruments as of December 31, 2019 and 2018:

	December 31, 2019				December 31, 2018
	Local Currency Notional Amount		U.S. Dollar Notional Amount		Local Currency Notional Amount		U.S. Dollar Notional Amount
Philippine Peso		769,000		14,361		1,134,000	$	20,996
Canadian Dollar		1,400		1,047		2,500	$	1,951
				15,408				22,947

The Canadian dollar and Philippine peso foreign exchange contracts are to be delivered periodically through September 2020 at a purchase price of approximately $1,047 and $14,361 respectively, and as such we expect unrealized gains and losses recorded in accumulated other comprehensive income will be reclassified to operations as the forecasted inter-company 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 9, "Fair Value Measurements," and are included in prepaid expense and other current assets and accrued expenses and other current liabilities in our condensed consolidated balance sheets, respectively.

The following table shows the effect of our derivative instruments designated as cash flow hedges for the year ended December 31, 2019 and nine months ended December 31, 2018:

	Gain (Loss) Recognized in AOCI, net of tax				Gain/ (Loss) Reclassified from AOCI into Income
	Year ended December 31, 2019		Nine months ended December 31, 2018		Year ended December 31, 2019		Nine months ended December 31, 2018
Cash flow hedges:
Foreign exchange contracts	$	923	$	53	$	433	$	13

Non-designated hedges

We have also entered into foreign currency range forward contracts and interest swap contract as required by our lenders. These hedges are not designated hedges under ASC 815, Derivatives and Hedging. These contracts generally do not exceed 3 years in duration.

Unrealized gains and losses and changes in fair value of these derivatives are recognized as incurred in Exchange gains (losses), net in the Consolidated Statements of Comprehensive Income (Loss). The following table presents these amounts for year ended December 31, 2019 and nine months ended December 31, 2018

	Year Ended December 31, 2019			Nine months ended December 31, 2018
Derivatives not designated under ASC 815
Foreign currency forward contracts		201			1,165
Interest rate swap		(616	)		(221	)