FINANCIAL INSTRUMENTS

Derivative Instruments

The Company is exposed to a variety of market risks, including the effects of changes in foreign currency exchange rates and interest rates. Market risk is the potential loss arising from adverse changes in market rates and prices. The Company’s risk management strategy includes the use of derivative instruments to reduce the effects on its operating results and cash flows from fluctuations caused by volatility in currency exchange rates.

The Company serves many of its U.S.-based clients using contact center capacity in various countries such as the Philippines, India, Canada, China, Malaysia, Egypt, Costa Rica, Colombia, Dominican Republic, El Salvador, Nicaragua and Honduras. Although the contracts with these clients are typically priced in U.S. dollars, a substantial portion of the costs incurred to deliver services under these contracts are denominated in the local currency of the country where services are provided, which represents a foreign exchange exposure. The Company has hedged a portion of its exposure related to the anticipated cash flow requirements denominated in these foreign currencies by entering into forward exchange contracts with several financial institutions to acquire a total of PHP 38,544.0 at a fixed price of $866.3 at various dates through June 2018, INR 9,920.0 at a fixed price of $146.8 at various dates through March 2018 and CAD 43.9 at a fixed price of $35.9 at various dates through April 2018. These instruments mature within the next 36 months and had a notional value of $1,049.0 at June 30, 2015 and $1,131.7 at December 31, 2014. The derivative instruments discussed above are designated and effective as cash flow hedges. The following table reflects the fair values of these derivative instruments:



	June 30, 2015		December 31, 2014
Forward exchange contracts and options designated as hedging instruments:
Included within other current assets	$	1.8	$	1.7
Included within other non-current assets	0.8		1.3
Included within other current liabilities	17.7		21.4
Included within other long-term liabilities	9.8		11.3

The Company recorded a net deferred tax benefit of $9.6 and $11.3 related to these derivatives at June 30, 2015 and December 31, 2014, respectively. A total of $15.4 and $18.3 of deferred losses, net of tax, related to these cash flow hedges at June 30, 2015 and December 31, 2014, respectively, were included in accumulated other comprehensive income (loss) (OCI). As of June 30, 2015, deferred losses of $15.9 ($9.8 net of tax), on derivative instruments included in accumulated OCI are expected to be reclassified into earnings during the next twelve months. The following table provides the effect of these derivative instruments on the Company’s Consolidated Financial Statements for the three and six months ended June 30, 2015 and 2014:



	Gain (Loss) Recognized in OCI on Derivative (Effective Portion)			(Loss) Gain Reclassified from Accumulated OCI into Income (Effective Portion)			Location of (Loss) Gain Reclassified from Accumulated OCI into Income (Effective Portion)
Three Months Ended June 30, 2015
Foreign exchange contracts	$	(7.1	)	$	(4.2	)	- Cost of providing services and products sold and Selling, general and administrative
Six Months Ended June 30, 2015
Foreign exchange contracts	$	(3.1	)	$	(7.9	)	- Cost of providing services and products sold and Selling, general and administrative
Three Months Ended June 30, 2014
Foreign exchange contracts	$	30.8		$	(2.8	)	- Cost of providing services and products sold and Selling, general and administrative
Six Months Ended June 30, 2014
Foreign exchange contracts	$	24.9		$	(8.6	)	- Cost of providing services and products sold and Selling, general and administrative

The amount recognized related to the ineffective portion of the derivative instruments was not material for the six months ended June 30, 2015 and 2014.

The Company also enters into derivative instruments (forwards) to economically hedge the foreign currency impact of assets and liabilities denominated in nonfunctional currencies. The Company recorded a net gain of $1.8 and $1.4 during the six months ended June 30, 2015 and 2014, respectively, related to changes in fair value of these derivative instruments not designated as hedges. The gains and losses largely offset the currency gains and losses that resulted from changes in the assets and liabilities denominated in nonfunctional currencies. These gains and losses are classified within other income (expense), net in the accompanying Consolidated Statements of Income. The fair value of these derivative instruments not designated as hedges at June 30, 2015 was a $0.2 payable.

Short-Term Investments

In December 2011, the Company made investments in certain securities, included within Short-term investments in the Consolidated Balance Sheets, which are held in a grantor trust for the benefit of participants of the executive deferred compensation plan. This investment reflects the hypothetical investment balances of plan participants. As of June 30, 2015, the Company maintained investment securities with a fair value of $12.7 classified as trading securities. The investment securities include exchange-traded mutual funds, common stock of the Company and money market accounts. These securities are carried at fair value, with gains and losses, both realized and unrealized, reported in other income, net in the Consolidated Statements of Income. The cost of securities sold is based upon the specific identification method. Interest and dividends on securities classified as trading are included in other income, net.