Derivatives

12 Months Ended

Dec. 31, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

13.   Derivatives

The Company has a large portion of its operations in international markets that subject it to foreign currency fluctuations. The most significant foreign currency exposures occur when revenue and associated accounts receivable are collected in one currency and expenses incurred in order to generate that revenue are accounted for in another currency. The Company’s primary exchange rate exposure relates to payroll, other payroll costs and operating expenses in the Philippines, India, Sri Lanka and Israel.

To manage its exposure to fluctuations in foreign currency exchange rates, the Company has entered into foreign currency forward contracts, authorized under Company policies, with counterparties that were highly rated financial institutions. The Company utilized non-deliverable forward contracts expiring within twelve months to reduce its foreign currency risk.

The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking hedge transactions. The Company does not hold or issue derivatives for trading purposes. All derivatives are recognized at their fair value and are classified based on the instrument’s maturity date. The notional amount for outstanding derivatives as of December 31, 2013 and 2012 was $15.2 million and $32.3 million, respectively, which is comprised of cash flow hedges denominated in U.S. dollars.

The following table presents the fair value of derivative instruments included within the consolidated balance sheets as of December 31, 2013 and 2012 (in thousands):

	Balance Sheet Location	Fair Value
		2013		2012
Derivatives designated as hedging instruments:
Foreign currency forward contracts	Accrued expenses	$	577	$	-
	Prepaid expenses and other current assets	$	-	$	125

The effect of foreign currency forward contracts designated as cash flow hedges on the consolidated statements of operations for the years ended December 31, 2013, 2012 and 2011 were as follows (in thousands):

	2013		2012		2011
Net gain (loss) recognized in OCI (1)	$	743	$	966	$	(1,883)
Net gain (loss) reclassified from accumulated OCI into income (2)	$	(1,445)	$	(941)	$	1,203
Net gain recognized in income (3)	$	—	$	—	$	—

⁽¹⁾ Net change in the fair value of the effective portion classified in other comprehensive income (loss) (OCI).

⁽²⁾ Effective portion classified within direct operating costs.

⁽³⁾ There were no ineffective portions for the periods presented.