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Derivative Financial Instruments | 12 Months Ended
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Dec. 31, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Financial Instruments | Derivative Financial Instruments The Company’s earnings and cash flows are subject to market risks as a result of foreign currency exchange rate and interest rate fluctuations. The Company uses derivative financial instruments to manage its exposure to foreign currency exchange rate and interest rate fluctuations which is inherent to its ongoing business operations. The Company and its subsidiaries do not enter into derivative contracts for speculative purposes. Foreign Exchange Forward Contracts The Company enters into foreign exchange forward contracts in an attempt to reduce the impact of foreign currency exchange rate fluctuations and designates these contracts as cash flow hedges at inception. The objective is to reduce the volatility of forecasted cash flows and expenses caused by movements in foreign currency exchange rates, in particular the Indian rupee. The Company is currently using foreign exchange forward contracts to hedge the anticipated foreign currency expenses of its subsidiary in India. The Company recognizes in earnings amounts related to its designated cash flow hedges accumulated in other comprehensive income during the same period in which the corresponding underlying hedged transaction affects earnings. As of December 31, 2022, a net unrealized loss of approximately $2.1 million accumulated in other comprehensive income (loss) is expected to be reclassified into earnings within the next twelve months. The Company has forecasted the amount of its anticipated foreign currency expenses based on its historical performance and projected financial plan. As of December 31, 2022 and 2021, the remaining open foreign exchange contracts, carried at fair value, are hedging Indian rupee expenses and have a maturity of approximately twelve months or less. These foreign exchange contracts mature monthly as the foreign currency denominated expenses are paid and any gain or loss is offset against operating expense. Once the hedged item is recognized, the cash flow hedge is de-designated and subsequent changes in value are recognized in other income (expense), net, to offset changes in the value of the resulting non-functional currency monetary assets or liabilities. The notional amounts of these foreign exchange forward contracts in U.S. dollar equivalents were to buy $100.3 million and $83.9 million of Indian rupees as of December 31, 2022 and 2021, respectively. Interest Rate Swaps The Company may enter into interest rate swap agreements to offset the variability of cash flows associated with the floating rate interest payments related to the Term Loan Facilities. See Note 9. Borrowings in the Notes to Consolidated Financial Statements of this Report for further discussion of the credit facilities. These swaps are generally designated as cash flow hedges of floating rate interest payments. During the year ended December 31, 2022, the Company had two interest rate swaps with a total current notional amount of $1.3 billion, with fixed rate at 1.525%. All cash flows relating to swaps that are considered to have an other than insignificant financing component at the inception date are included in cash flows from financing activities in the consolidated statement of cash flows. The Company recorded the changes in the fair value of the cash flow designated interest rate swaps in other comprehensive income (loss), until the hedged cash flow occurred, at which point any gain (loss) was reclassified into earnings. Both interest rate swaps matured as of December 31, 2022. In March 2020, the Company restructured existing swap agreements by extending the hedging period to take advantage of lower interest rates and produce an immediate reduction in cash outflows. The restructured swaps were considered a hybrid instrument under ASC 815 due to the negative market value at designation: a borrowing and an embedded interest rate swap with a fair value of zero that had been designated as a cash flow hedge of interest expense on the Company’s outstanding LIBOR borrowings. The borrowing was amortized to interest expense over its remaining term and the fair value of the embedded interest rate swap was recorded in other comprehensive income until it was recognized as interest expense at each settlement date. One of the two interest rate swaps was de-designated in November 2020. The other comprehensive loss at de-designation was amortized to interest expense over the original hedge period and future gains and losses on the de-designated swap was recognized as interest expense. Balance Sheet Hedges Balance Sheet hedges consist of cash flow hedge contracts that have been de-designated and non-designated balance sheet hedges. These foreign exchange contracts are carried at fair value and either did not or no longer qualify for hedge accounting treatment and are not designated as hedging instruments. Changes in the value of the foreign exchange contracts are recognized in other income (expense), net and offset the foreign currency gain or loss on the underlying net monetary assets or liabilities. The notional amounts of foreign currency purchase contracts open in U.S. dollar equivalents were to buy $10.4 million and $9.4 million of Indian rupees at December 31, 2022 and 2021, respectively. There were no open foreign currency contracts to sell at December 31, 2022 and 2021, respectively. The following table reflects the fair value amounts for designated and non-designated hedging instruments at December 31, 2022 and 2021 (in thousands):
| December 31, 2022 |  | December 31, 2021
| Fair Value Derivative Assets(i) |  | Fair Value Derivative Liabilities(ii) |  | Fair Value Derivative Assets(i) |  | Fair Value Derivative Liabilities(ii)
Designated hedging instruments |  |  |  |  |  |  |
Foreign currency forward contracts | $ | 88 |  |  | $ | 2,827 |  |  | $ | 1,405 |  |  | $ | 52 |
Interest Rate Swaps | — |  |  | — |  |  | — |  |  | 1,992 |
Non-designated hedging instruments |  |  |  |  |  |  |
Foreign currency forward contracts | — |  |  | 516 |  |  | 204 |  |  | — |
Interest Rate Swaps | — |  |  | — |  |  | — |  |  | 5,733 |
Total fair value of hedging instruments | $ | 88 |  |  | $ | 3,343 |  |  | $ | 1,609 |  |  | $ | 7,777 |
(i)Included in prepaid expenses and other current assets, and other assets on the consolidated balance sheets. (ii)Included in accrued liabilities on the consolidated balance sheets. The Company presents its derivative assets and derivative liabilities at gross fair values in the consolidated balance sheets. However, under the master netting agreements with the respective counterparties of the foreign exchange contracts, subject to applicable requirements, the Company is allowed to net settle transactions of the same currency with a single net amount payable by one party to the other. The derivatives held by the Company are not subject to any credit contingent features negotiated with its counterparties. The Company is not required to pledge nor is entitled to receive cash collateral related to the above contracts. As of December 31, 2022 and 2021, there were no derivative assets or liabilities that were net settled under the master netting agreements. The Company evaluates prospectively as well as retrospectively the effectiveness of its hedge programs using statistical analysis. Prospective testing is performed at the inception of the hedge relationship and quarterly thereafter. Retrospective testing is performed on a quarterly basis. The before-tax effects of derivative instruments designated as cash flow hedges on the accumulated other comprehensive income and consolidated statements of operations for the periods indicated below are as follows (in thousands):
| Year Ended December 31,
| 2022 |  | 2021 |  | 2020
Amount of gain (loss) recognized in other comprehensive income (loss)(i) | $ | 4,492 |  |  | $ | 4,938 |  |  | $ | (31,184) |
Amount of gain (loss) related to foreign exchange forward contracts reclassified from accumulated other comprehensive income (loss) into income(ii) | $ | (1,421) |  |  | $ | 3,307 |  |  | $ | (687) |
Amount of gain (loss) related to interest rate swaps reclassified from accumulated other comprehensive loss into income as interest expense | $ | 4,558 |  |  | $ | (21,323) |  |  | $ | (20,564) |
(i)The before-tax gain (loss) of $(5,513), $2,482 and $1,183 related to foreign exchange forward contracts were recognized in other comprehensive income (loss) during the years ended December 31, 2022, 2021 and 2020, respectively. The before-tax gain (loss) of $10,005, $2,456 and $(32,367) related to interest rate swaps were recognized in other comprehensive income (loss) during the years ended December 31, 2022, 2021 and 2020 respectively. (ii)The before-tax gain (loss) of $(316), $629 and $(147) were included in cost of service revenues on the consolidated statements of operations for the years ended December 31, 2022, 2021 and 2020, respectively. The before tax gain (loss) of $(1,105), $2,678 and $(540) were included in operating expenses, primarily research and development expense on the consolidated statements of operations for the years ended December 31, 2022, 2021 and 2020, respectively. The before-tax gain (loss) recognized in other income (expense), net for non-designated foreign currency forward contracts and interest rate swaps for the periods indicated below are as follows (in thousands):
| Year Ended December 31,
| 2022 |  | 2021 |  | 2020
Gain (loss) recognized in other income (expense), net(i) | $ | 5,493 |  |  | $ | (183) |  |  | $ | (206) |
_____________ (i)Gain (loss) recognized in other income (expense), net includes the debt component of restructured interest rate swap treated as a hybrid instrument. Both of the restructured and non-designated interest rate swaps matured in December 2022. See Note 5. Fair Value Measurements, Note 15. Accumulated Other Comprehensive Income, and Note 19. Commitments and Contingencies in the Notes to Consolidated Financial Statements of this Report for a further discussion.

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- Definition The entire disclosure for financial instruments. This disclosure includes, but is not limited to, fair value measurements of short and long term marketable securities, international currencies forward contracts, and auction rate securities. Financial instruments may include hedging and non-hedging currency exchange instruments, derivatives, securitizations and securities available for sale at fair value. Also included are investment results, realized and unrealized gains and losses as well as impairments and risk management disclosures. + References No definition available. + Details
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