Financial Instruments

9 Months Ended

Sep. 30, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Financial Instruments

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. 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 outside of the U.S. 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 some of the aforementioned foreign currencies by entering into hedging contracts with several financial institutions to acquire a total of PHP 35,940.0 at a fixed price of $718.1 at various dates through June 2020, INR 11,925.0 at a fixed price of $164.6 at various dates through June 2020, CAD 46.4 at a fixed price of $35.1 at various dates through December 2019 and COP 47,700.0 at a fixed price of $15.0 at various dates through June 2019, and to sell a total of AUD 34.7 at a fixed price of $26.9 at various dates through October 2018. These instruments mature within the next 33 months and had a notional value of $947.5 at September 30, 2017 and $959.0 at December 31, 2016. The derivative instruments discussed above are designated and are effective as cash flow hedges. The following table reflects the fair values of these derivative instruments:

	September 30, 2017		December 31, 2016
Forward exchange contracts and options designated as hedging instruments:
Included within other current assets		$9.7		$3.0
Included within other non-current assets	4.9		2.3
Included within other current liabilities	18.7		31.3
Included within other long-term liabilities	8.5		15.4

The Company recorded a deferred tax benefit of $4.8 and $15.9 related to these derivatives at September 30, 2017 and December 31, 2016, respectively. A total of $7.7 and $25.5 of deferred losses, net of tax, related to these cash flow hedges at September 30, 2017 and December 31, 2016, respectively, were included in accumulated other comprehensive loss (OCL). As of September 30, 2017, deferred losses of $9.0 ($5.5 net of tax) on derivative instruments included in accumulated OCL are expected to be reclassified into earnings during the next 12 months. The following tables provide the effect of these derivative instruments on the Company’s Consolidated Financial Statements during the three and nine months endedSeptember 30, 2017 and 2016, respectively:

Derivatives in Cash Flow Hedging Relationships	Gain (Loss) Recognized in OCL on Derivative (Effective Portion)			Gain (Loss) Reclassified from Accumulated OCL into Income (Effective Portion)			Location of Gain (Loss) Reclassified from Accumulated OCL into Income (Effective Portion)
Three Months Ended September 30, 2017
Foreign exchange contracts		($2.0	)		($5.3	)	Cost of providing services and products sold and Selling, general and administrative
Nine Months Ended September 30, 2017
Foreign exchange contracts		$10.8			($18.1	)	Cost of providing services and products sold and Selling, general and administrative
Three Months Ended September 30, 2016
Foreign exchange contracts		($13.2	)		($4.6	)	Cost of providing services and products sold and Selling, general and administrative
Nine Months Ended September 30, 2016
Foreign exchange contracts		($2.1	)		($18.0	)	Cost of providing services and products sold and Selling, general and administrative

The gain or loss recognized related to the ineffective portion of the derivative instruments was immaterial for the three months ended September 30, 2017 and 2016.

The Company also enters into derivative instruments (forwards) to economically hedge the foreign currency impact of assets and liabilities denominated in nonfunctional currencies. During the three and nine months endedSeptember 30, 2017, losses of $5.3 and $17.3, respectively, were recognized related to changes in fair value of these derivative instruments not designated as hedges, compared to losses of $5.5 and $3.7 in the same periods in 2016. 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, net in the accompanying Consolidated Statements of Income. The fair value of these derivative instruments not designated as hedges at September 30, 2017 was a $6.3 payable.

Short-term Investments

As of September 30, 2017 and December 31, 2016, the Company held investment securities with a fair value of $13.0 and $12.4, respectively, that are held in a grantor trust for the benefit of participants in the EDCP and reflect the hypothetical investment balances of EDCP participants. The securities are classified as trading securities and included within short-term investments in the Consolidated Balance Sheets. The investment securities include exchange-traded mutual funds and money market accounts. These securities are carried at fair value, with gains and losses, both realized and unrealized, reported in other income (expense), 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 (expense) income, net.