Note 7 - Derivative Instruments

9 Months Ended

Sep. 30, 2021

Notes to Financial Statements

Derivative Instruments and Hedging Activities Disclosure [Text Block]

Cash flow hedges

Our locations in Canada and the Philippines primarily serve US-based clients. The revenues from these clients are billed and collected in US Dollars, but the expenses related to these revenues are paid in Canadian Dollars and Philippine Pesos. We enter into derivative contracts, in the form of forward contracts and range forward contracts (a transaction where both a call option is purchased and a put option is sold) to mitigate this foreign currency exchange risk. The contracts cover periods commensurate with expected exposure, generally three to twelve months. We have elected to designate our derivatives as cash flow hedges to associate the hedges' results with forecasted expenses.

The Company had terminated all cash flow hedges contracts early in April 2020 due to a change in counterparty relationship, hence balance as of September 30, 2021 is nil.

	Gain (Loss) Recognized in AOCI, net of tax		Gain (Loss) Recognized in AOCI, net of tax			Gain/ (Loss) Reclassified from AOCI into Income		Gain/ (Loss) Reclassified from AOCI into Income
	Nine Months Ended September 30, 2021		Nine Months Ended September 30, 2020			Nine Months Ended September 30, 2021		Nine Months Ended September 30, 2020
Cash flow hedges:
Foreign exchange contracts	$	-	$	(434	)	$	-	$	(143	)

Non-designated hedges

We have also entered into foreign currency range forward contracts and interest swap contracts 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 the fair value of these derivatives are recognized as incurred in exchange gain (loss), net in the consolidated statement of income (loss). The following table presents these amounts for the three and nine months ended  September 30, 2021 and 2020:

Derivatives not designated under ASC 815	For the Three Months Ended September 30, 2021		For the Three Months Ended September 30, 2020			For the Nine months ended September 30, 2021		For the Nine Months Ended September 30, 2020
Foreign currency forward contracts	$	-	$	(578	)	$	-	$	(110	)
Interest rate swap	$	-	$	(2	)	$	-	$	(424	)

The Company had terminated all derivative (non-designated hedge) contracts in November 2020 and realized and accounted for gain and loss on settlement of contracts in the consolidated statement of income (loss).