Derivative Financial Instruments

9 Months Ended

Sep. 30, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

In the normal course of business, we use foreign exchange forward contracts to manage foreign currency exchange rate risk. The estimated fair value of the foreign exchange forward contracts considers the following items: discount rate, timing and amount of cash flow and counterparty credit risk. Derivatives may give rise to credit risks from the possible non-performance by counterparties. Credit risk is generally limited to the fair value of those contracts that are favorable to us. We have limited our credit risk by entering into derivative transactions only with highly-rated global financial institutions, limiting the amount of credit exposure with any one financial institution and conducting ongoing evaluation of the creditworthiness of the financial institutions with which we do business. In addition, all the assets and liabilities related to our foreign exchange forward contracts set forth in the below table are subject to International Swaps and Derivatives Association, or ISDA, master netting arrangements or other similar agreements with each individual counterparty. These master netting arrangements generally provide for net settlement of all outstanding contracts with the counterparty in the case of an event of default or a termination event. We have presented all the assets and liabilities related to our foreign exchange forward contracts on a gross basis, with no offsets, in our accompanying unaudited condensed consolidated statements of financial position. There is no financial collateral (including cash collateral) posted or received by us related to our foreign exchange forward contracts.

The following table provides information on the location and fair values of derivative financial instruments included in our unaudited condensed consolidated statement of financial position as of:

		September 30, 2014				December 31, 2013
Designation of Derivatives	Location on Statement of Financial Position	Assets		Liabilities		Assets		Liabilities
Cash Flow Hedges – Designated as hedging instruments
Foreign exchange forward contracts	Other current assets	$	1,286	$	—	$	—	$	—
	Other noncurrent assets	234		—		—		—
	Accrued expenses and other current liabilities	—		105,245		—		190,386
	Other noncurrent liabilities	—		33,330		—		164,490
	Total	1,520		138,575		—		354,876
Other Derivatives – Not designated as hedging instruments
Foreign exchange forward contracts	Other current assets	1,431		—		11,105		—
	Accrued expenses and other current liabilities	—		163		—		1,198
	Total	1,431		163		11,105		1,198
Total		$	2,951	$	138,738	$	11,105	$	356,074

Cash Flow Hedges

We have entered into a series of foreign exchange forward contracts that are designated as cash flow hedges of Indian rupee denominated payments in India. These contracts are intended to partially offset the impact of movement of exchange rates on future operating costs and are scheduled to mature each month during 2014, 2015, and 2016. Under these contracts, we purchase Indian rupees and sell U.S. dollars. The changes in fair value of these contracts are initially reported in the caption “Accumulated other comprehensive income (loss)” in our consolidated statements of financial position and are subsequently reclassified to earnings in the same period the hedge contract matures. As of September 30, 2014, we estimate that $87,880, net of tax, of the net losses related to derivatives designated as cash flow hedges recorded in accumulated other comprehensive income (loss) is expected to be reclassified into earnings within the next 12 months.

The notional value of our outstanding contracts by year of maturity and the net unrealized (loss) included in accumulated other comprehensive income (loss) for such contracts were as follows as of:

	September 30, 2014			December 31, 2013
2014	$	300,000		$	1,200,000
2015	1,200,000			900,000
2016	240,000			240,000
Total notional value of contracts outstanding	$	1,740,000		$	2,340,000
Net unrealized (loss) included in accumulated other comprehensive income (loss), net of taxes	$	(115,858	)	$	(299,993	)

Upon settlement or maturity of the cash flow hedge contracts, we record the related gain or loss, based on our designation at the commencement of the contract, with the hedged Indian rupee denominated expense reported within cost of revenues and selling, general and administrative expenses. Hedge ineffectiveness was immaterial for all periods presented.

The following table provides information on the location and amounts of pre-tax (losses) on our cash flow hedges for the three months ended September 30:

	(Increase) Decrease in Derivative Losses Recognized in Accumulated Other Comprehensive Income (Loss) (effective portion)						Location of Net Derivative (Losses) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (effective portion)	Net (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (effective portion)
	2014			2013				2014			2013
Cash Flow Hedges – Designated as hedging instruments
Foreign exchange forward contracts	$	(5,355	)	$	(149,916	)	Cost of revenues	$	(25,601	)	$	(48,755	)
							Selling, general and administrative expenses	(5,263		)	(9,995		)
							Total	$	(30,864	)	$	(58,750	)

The following table provides information on the location and amounts of pre-tax (losses) on our cash flow hedges for the nine months ended September 30:

	(Increase) Decrease in Derivative Losses Recognized in Accumulated Other Comprehensive Income (Loss) (effective portion)					Location of Net Derivative (Losses) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (effective portion)	Net (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (effective portion)
	2014		2013				2014			2013
Cash Flow Hedges – Designated as hedging instruments
Foreign exchange forward contracts	$	115,625	$	(278,285	)	Cost of revenues	$	(84,717	)	$	(91,848	)
						Selling, general and administrative expenses	(17,479		)	(19,357		)
						Total	$	(102,196	)	$	(111,205	)

The activity related to the change in net unrealized (losses) on our cash flow hedges included in accumulated other comprehensive income (loss) is presented in Note 8.

Other Derivatives

We use foreign exchange forward contracts, which have not been designated as hedges, to hedge balance sheet exposure to certain monetary assets and liabilities denominated in currencies other than the functional currency of our foreign subsidiaries. We entered into foreign exchange forward contracts to purchase U.S. dollars and sell Indian rupees, Euros and British pounds. Contracts outstanding as of September 30, 2014 are scheduled to mature in 2014 and 2015. Realized gains or losses and changes in the estimated fair value of these derivative financial instruments are recorded in the caption "Foreign currency exchange gains (losses), net" in our condensed consolidated statements of operations.

Additional information related to our outstanding contracts is as follows:

	September 30, 2014				December 31, 2013
	Notional		Market Value		Notional		Market Value
Contracts to purchase U.S. dollars and sell:
Indian rupees	$	160,008	$	780	$	171,802	$	11,105
Euros	14,800		266		55,500		(412		)
British pounds	27,000		222		52,000		(786		)
Total	$	201,808	$	1,268	$	279,302	$	9,907

The following table provides information on the location and amounts of realized and unrealized pre-tax gains and losses on our other derivative financial instruments for the three and nine months ended September 30, 2014 and 2013:

	Location of Net Gains  (Losses) on Derivative Instruments	Amount of Net Gains (Losses) on Derivative Instruments
		Three Months Ended September 30,				Nine Months Ended September 30,
		2014		2013		2014			2013
Other Derivatives – Not designated as hedging instruments	Foreign currency exchange gains (losses), net
Foreign exchange forward contracts:		$	5,856	$	7,126	$	(6,760	)	$	22,096

The related cash flow impacts of all of our derivative activities are reflected as cash flows from operating activities.