Derivatives and Hedge Accounting

6 Months Ended

Jun. 30, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives and Hedge Accounting

7. Derivatives and Hedge Accounting

The Company uses derivative instruments and hedging transactions to mitigate exposure to foreign currency fluctuation risks associated with forecasted transactions denominated in certain foreign currencies and to minimize earnings and cash flow volatility associated with changes in foreign currency exchange rates. The Company’s derivative financial instruments are largely forward foreign exchange contracts that are designated effective and that qualify as cash flow hedges under ASC topic 815, “Derivatives and hedging” (ASC No. 815). The Company also uses derivatives consisting of foreign currency exchange contracts not designated as hedging instruments under ASC No. 815 to hedge intercompany balances and other monetary assets or liabilities denominated in currencies other than the Company’s functional currency (“fair value hedges”). The Company’s primary exchange rate exposure is with the Indian Rupee, the U.K. pound sterling and the Philippine peso. The Company also has exposure in Czech Koruna and other local currencies in which it operates.

The Company had outstanding foreign exchange contracts totaling $295,684 and GBP 14,883 as of June 30, 2015 and totaling $276,018 and GBP 10,889 as of December 31, 2014. The Company estimates that approximately $1,100 of net derivative gains included in accumulated other comprehensive loss (“AOCI”) could be reclassified into earnings within the next twelve months based on exchange rates prevailing as of June 30, 2015. As of June 30, 2015, the maximum outstanding term of derivative instruments that hedge forecasted transactions was forty-five months.

The Company evaluates the hedge effectiveness at the time a contract is entered into as well as on an ongoing basis. If during this time a contract is deemed ineffective, the change in the fair value is recorded in the unaudited consolidated statements of income and is included in foreign exchange loss. For hedging positions that are discontinued because the forecasted transaction is not expected to occur by the end of the originally specified period, any related derivative amounts recorded in equity are reclassified to earnings. No significant amounts of gains or losses were reclassified from AOCI into earnings during the three and six months ended June 30, 2015 and 2014.

The following tables set forth the fair value of the foreign currency exchange contracts and their location on the unaudited consolidated financial statements:

Derivatives designated as hedging instruments

	June 30, 2015		December 31, 2014
Other current assets:
Foreign currency exchange contracts	$	2,372	$	1,243
Other assets:
Foreign currency exchange contracts	$	2,478	$	3,193
Accrued expenses and other current liabilities:
Foreign currency exchange contracts	$	1,272	$	2,385
Other non current liabilities:
Foreign currency exchange contracts	$	784	$	576

Derivatives not designated as hedging instruments:

	June 30, 2015		December 31, 2014
Other current assets:
Foreign currency exchange contracts	$	124	$	143
Accrued expenses and other current liabilities:
Foreign currency exchange contracts	$	9	$	—

The following tables set forth the effect of foreign currency exchange contracts on the unaudited consolidated statements of income for the three months ended June 30, 2015 and 2014:

Derivatives in Cash Flow Hedging Relationships	Amount of Gain/(Loss) Recognized in AOCI on Derivative (Effective Portion)					Location of Gain/ (Loss) Reclassified from AOCI into Income (Effective Portion)	Amount of Gain/(Loss) Reclassified from AOCI into Income (Effective Portion)						Location of Gain/ (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Gain/(Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded  from Effectiveness Testing)
	2015			2014			2015			2014				2015		2014
Foreign exchange contracts	$	(1,474	)	$	2,542	Foreign exchange loss	$	(224	)	$	(2,205	)	Foreign exchange loss	$	—	$	—

		Amount of Gain/(Loss) Recognized in Income on Derivatives
Derivatives not designated as Hedging Instruments	Location of Gain/(Loss)
	Recognized in Income on Derivatives	2015			2014
Foreign exchange contracts	Foreign exchange loss	$	(1,297	)	$	732

The following tables set forth the effect of foreign currency exchange contracts on the unaudited consolidated statements of income for the six months ended June 30, 2015 and 2014:

Derivatives in Cash Flow Hedging Relationships	Amount of Gain/(Loss) Recognized in AOCI on Derivative (Effective Portion)				Location of Gain/ (Loss) Reclassified from AOCI into Income (Effective Portion)	Amount of Gain/(Loss) Reclassified from AOCI into Income (Effective Portion)						Location of Gain/ (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Gain/(Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded  from Effectiveness Testing)
	2015		2014			2015			2014				2015		2014
Foreign exchange contracts	$	785	$	9,552	Foreign exchange loss	$	(533	)	$	(4,458	)	Foreign exchange loss	$	—	$	—

		Amount of Gain/(Loss) Recognized in Income on Derivatives
Derivatives not designated as Hedging Instruments	Location of Gain or (Loss)
	Recognized in Income on Derivatives	2015		2014
Foreign exchange contracts	Foreign exchange loss	$	799	$	3,451