DERIVATIVE INSTRUMENTS

6 Months Ended

Jun. 30, 2014

DERIVATIVE INSTRUMENTS

6. DERIVATIVE INSTRUMENTS

The Company enters into foreign exchange forward contracts to mitigate the risk of changes in foreign currency exchange rates. The contracts are adjusted to fair value at each reporting period. Gains and losses on forward contracts are generally recorded in other income (loss) unless they are designated as an effective hedge. The counterparty to these contracts is a bank.

During the three months ended June 30, 2014, the Company entered into foreign exchange forward contracts with a notional amount of $60 million and with maturity dates of three to six months. During the three months ended June 30, 2014, contracts amounting to $100 million expired. At June 30, 2014, foreign exchange forward contracts amounting to $60 million in notional value were outstanding. The fair value of the foreign exchange forward contracts of $0.13 million is reflected in other current assets in the balance sheet of the Company as at June 30, 2014. During the three months ended June 30, 2014, gains on these forward contracts of $1.98 million were included in the income statement as other income. During the six months ended June 30, 2014, gains on forward contract of $3.46 million were included in the income statement as other income.

Summary information about the forward contracts to sell U.S. Dollars and buy Indian Rupees as of June 30, 2014 and December 31, 2013 is as follows:

	June 30, 2014		December 31, 2013
Notional amounts (in thousands)	$	60,000	$	—
Weighted exchange rate	INR	59.65		n/a
Weighted average maturity		3 months		n/a
Fair values reported in:
Other current assets (in thousands)	$	131	$	—
Other liabilities (in thousands)	$	—	$	—

The following table presents the net gains recorded in other income, net relating to the foreign exchange contracts not designated as hedges for the periods ending June 30, 2014 and 2013.

Gains (losses) recognized in other income:

	THREE MONTHS ENDED					SIX MONTHS ENDED
	JUNE 30,					JUNE 30,
	2014		2013			2014		2013
	(In thousands)					(In thousands)
Gains (losses) recognized in other income (loss), net	$	1,976	$	(7,975	)	$	3,456		(7,399	)

The following table presents the net gains (losses) recorded in accumulated other comprehensive income (loss) relating to the foreign exchange contracts designated as net investment hedges for the periods ending June 30, 2014.

Gains and (losses) on derivatives:

	THREE MONTHS ENDED					SIX MONTHS ENDED
	JUNE 30,					JUNE 30,
	2014		2013			2014		2013
	(In thousands)					(In thousands)
Gains (losses) recognized in other comprehensive income (loss)	$	—	$	(4,808	)	$	724	$	(4,718	)