Derivative financial instruments (Tables)

3 Months Ended

Mar. 31, 2016

Aggregate Notional Principal Amounts of Outstanding Derivative Financial Instruments with Related Balance Sheet Exposure

The following table presents the aggregate notional principal amounts of outstanding derivative financial instruments together with the related balance sheet exposure:


	Notional principal amounts (note a)				Balance sheet exposure asset (liability) (note b)
	As of December 31, 2015		As of March 31, 2016		As of December 31, 2015			As of March 31, 2016
Foreign exchange forward contracts denominated in:
United States Dollars (sell) Indian Rupees (buy)	$	1,139,400	$	1,122,400	$	(48,197	)	$	(31,954	)
United States Dollars (sell) Mexican Peso (buy)		8,520		6,570		(1,163	)		(824	)
United States Dollars (sell) Philippines Peso (buy)		58,500		53,075		(1,387	)		224
Euro (sell) United States Dollars (buy)		146,719		140,385		9,109			3,787
Euro (sell) Romanian Leu (buy)		39,027		31,516		567			1,036
Japanese Yen (sell) Chinese Renminbi (buy)		62,740		61,317		(1,379	)		(4,765	)
Pound Sterling (sell) United States Dollars (buy)		118,438		105,771		7,496			9,178
Australian Dollars (sell) United States Dollars (buy)		106,544		99,000		5,714			(399	)
Interest rate swaps (floating to fixed)		—		200,000		—			(1,926	)

						(29,240	)		(25,643	)

(a)

Notional amounts are key elements of derivative financial instrument agreements but do not represent the amount exchanged by counterparties and do not measure the Company’s exposure to credit or market risks. However, the amounts exchanged are based on the notional amounts and other provisions of the underlying derivative financial instrument agreements.

(b)	Balance sheet exposure is denominated in U.S. dollars and denotes the mark-to-market impact of the derivative financial instruments on the reporting date.

Fair Value of Derivative Instruments and Location in Financial Statements

The fair value of the Company’s derivative instruments and their location in the Company’s financial statements are summarized in the table below:


	Cash flow hedges				Non-designated
	As of December 31, 2015		As of March 31, 2016		As of December 31, 2015		As of March 31, 2016
Assets
Prepaid expenses and other current assets	$	17,400	$	18,164	$	884	$	1,872
Other assets	$	12,096	$	13,431	$	—	$	—
Liabilities
Accrued expenses and other current liabilities	$	34,576	$	28,510	$	34	$	208
Other liabilities	$	25,010	$	30,392	$	—	$	—

Cash Flow Hedges, Gains (Losses) Recorded as Component of Other Comprehensive Income (Loss) or Other Comprehensive Income

In connection with cash flow hedges, the gains (losses) recorded as a component of other comprehensive income (loss), or OCI, and the related tax effects are summarized below:


	Three months ended March 31,
	2015									2016
	Before- Tax amount			Tax (Expense) or Benefit			Net of tax Amount			Before- Tax amount			Tax (Expense) or Benefit			Net of tax Amount
Opening balance as of January 1	$	(66,786	)	$	23,646		$	(43,140	)	$	(30,090	)	$	9,830		$	(20,260	)

Net gains (losses) reclassified into statement of income on completion of hedged transactions		(9,254	)		3,251			(6,003	)		(2,902	)		702			(2,200	)

Changes in fair value of effective portion of outstanding derivatives, net		24,564			(8,734	)		15,830			(79	)		(151	)		(230	)

Gain (loss) on cash flow hedging derivatives, net		33,818			(11,985	)		21,833			2,823			(853	)		1,970

Closing balance as of March 31	$	(32,968	)	$	11,661		$	(21,307	)	$	(27,267	)	$	8,977		$	(18,290	)

Gains (Losses) Recorded as Component of Other Comprehensive Income (Loss) or Other Comprehensive Income

The gains or losses recognized in other comprehensive income (loss) and their effects on financial performance are summarized below:


Derivatives in Cash Flow Hedging Relationships	Amount of Gain (Loss) recognized in OCI on Derivatives (Effective Portion)					Location of Gain (Loss) reclassified from OCI into Statement of Income (Effective Portion)	Amount of Gain (Loss) reclassified from OCI into Statement of Income (Effective Portion)						Location of Gain (Loss) recognized in Income on Derivatives (Ineffective Portion and Amount excluded from Effectiveness Testing)	Amount of Gain (Loss) recognized in income on Derivatives (Ineffective Portion and Amount excluded from Effectiveness Testing)
	Three months ended March 31,						Three months ended March 31,							Three months ended March 31,
	2015		2016				2015			2016				2015		2016

Forward foreign exchange contracts	$	24,564	$	1,847		Revenue	$	2,495		$	3,871		Foreign exchange (gains) losses, net	$	—	$	—
Interest rate swaps		—		(1,926	)	Cost of revenue		(9,427	)		(5,312	)
						Selling, general and administrative expenses		(2,322	)		(1,461	)

	$	24,564	$	(79	)		$	(9,254	)	$	(2,902	)		$	—	$	—

Non-designated Hedges


Derivatives not designated as hedging instruments	Location of (Gain) Loss recognized in Statement of Income on Derivatives	Amount of (Gain) Loss recognized in Statement of Income on Derivatives
		Three months ended March 31,
		2015			2016
Forward foreign exchange contracts (Note a)	Foreign exchange (gains) losses, net	$	(2,244	)	$	(1,134	)

		$	(2,244	)	$	(1,134	)

(a)

These forward foreign exchange contracts were entered into to hedge fluctuations in foreign exchange rates for recognized balance sheet items such as receivables and intercompany borrowings, and were not originally designated as hedges under FASB guidance on derivatives and hedging. Realized (gains) losses and changes in the fair value of these derivatives are recorded in foreign exchange (gains) losses, net in the consolidated statements of income.