Derivatives

The Company's use of derivative financial instruments is primarily limited to the utilization of interest rate swaps, interest rate caps and foreign exchange contracts. The principal objective of such financial instruments is to minimize the risks and/or costs associated with the Company's operating and financial structure and to manage its exposure to interest rates and foreign exchange rates. Derivatives not designated as hedges are not speculative and are used to manage the Company's exposure to interest rate movements, foreign exchange rate movements, and other identified risks, but may not meet the strict hedge accounting requirements.

The table below presents the fair value of the Company's derivative financial instruments as well as their classification on the Consolidated Balance Sheets as of March 31, 2014 and December 31, 2013 ($ in thousands):



	Derivative Assets as of						Derivative Liabilities as of
	March 31, 2014			December 31, 2013			March 31, 2014			December 31, 2013
Derivative	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Foreign exchange contracts	Other Assets	$	1,467	Other Assets	$	1,418	Other Liabilities	$	1,623	Other Liabilities	$	1,653
Interest rate swap	Other Assets	488		Other Assets	650		N/A	—		N/A	—
Interest rate cap	Other Assets	8,144		Other Assets	9,107		N/A	—		N/A	—
Total		$	10,099		$	11,175		$	1,623		$	1,653

The tables below present the effect of the Company's derivative financial instruments on the Consolidated Statements of Operations and the Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2014 and 2013 ($ in thousands):



Derivatives Designated in Hedging Relationships	Location of Gain (Loss) Recognized in Income	Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Effective Portion)			Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Earnings (Effective Portion)		Amount of Gain (Loss) Recognized in Earnings (Ineffective Portion)
For the three months ended March 31, 2014
Interest rate cap	Interest Expense	$	(962	)	$	—	N/A
Interest rate swap	Interest Expense	$	(348	)	$	135	N/A
Foreign exchange contracts	Other Expense	$	(452	)	$	—	N/A
For the three months ended March 31, 2013
Interest rate swap	Interest Expense	$	37		$	74	N/A

Foreign exchange contracts—The Company is exposed to fluctuations in foreign exchange rates on investments it holds in foreign entities. The Company uses foreign exchange contracts to hedge its exposure to changes in foreign exchange rates on its foreign investments. Foreign exchange contracts involve fixing the U.S. dollar ("USD") to the respective foreign currency exchange rate for delivery of a specified amount of foreign currency on a specified date. The foreign exchange contracts are typically cash settled in USD for their fair value at or close to their settlement date.

For derivatives designated as net investment hedges, the effective portion of changes in the fair value of the derivatives are reported in Accumulated Other Comprehensive Income as part of the cumulative translation adjustment. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. Amounts are reclassified out of Accumulated Other Comprehensive Income into earnings when the hedged net investment is either sold or substantially liquidated. During the three months ended March 31, 2014, the Company entered into a foreign exchange contract to hedge its exposure in a subsidiary whose functional currency is Indian rupee ("INR"). The foreign exchange contract replaced an existing contract which matured in January 2014.

As of March 31, 2014, the Company had the following outstanding foreign currency derivatives that were used to hedge its net investments in foreign operations that were designated ($ in thousands):



Derivative Type	Notional Amount		Notional (USD Equivalent)		Maturity
Sells INR/Buys USD Forward	₨	456,000	$	7,614	June 2015

For derivatives not designated as net investment hedges, the changes in the fair value of the derivatives are reported in the Consolidated Statements of Operations within other expense. As of March 31, 2014, the Company had the following outstanding foreign currency derivatives that were used to hedge its net investments in foreign operations that were not designated ($ in thousands):



Derivative Type	Notional Amount		Notional (USD Equivalent)		Maturity
Sells euro ("EUR")/Buys USD Forward	€	72,200	$	99,479	April 2014
Sells pound sterling ("GBP")/Buys USD Forward	£	3,800	$	6,335	April 2014
Sells Canadian dollar ("CAD")/Buys USD Forward	C$	41,500	$	37,564	April 2014



		Amount of Gain or (Loss) Recognized in Income
	Location of Gain or (Loss) Recognized in Income	For the Three Months Ended March 31,
Derivatives not Designated in Hedging Relationships	Location of Gain or (Loss) Recognized in Income	2014		2013
Foreign Exchange Contracts	Other Expense	$	1,498	$	10,156

The Company marks its foreign investments each quarter based on current exchange rates and records the gain or loss through “Other expense” on its Consolidated Statements of Operations for loan investments or “Accumulated other comprehensive income (loss),” on its Consolidated Balance Sheets for net investments in foreign subsidiaries. During the three months ended March 31, 2014 and 2013, the Company recorded net gains related to foreign investments of $0.3 million and $0.1 million, respectively, in its Consolidated Statements of Operations.

Qualifying cash flow hedges—In August 2013, the Company entered into an interest rate cap agreement to reduce exposure to expected increases in future interest rates and the resulting payments associated with variable interest rate debt. In October 2012, the Company entered into an interest rate swap to convert its variable rate debt to fixed rate on a $28.0 million secured term loan maturing in 2019. The following table presents the Company's qualifying cash flow hedges outstanding as of March 31, 2014 ($ in thousands).

Derivative Type

Notional

Amount

Variable Rate

Fixed Rate

Effective Date

Maturity

Interest Rate Cap

500,000

LIBOR

1.00%

July 2014

July 2017

Interest Rate Swap

27,831

LIBOR + 2.00%

3.47%

October 2012

November 2019

Over the next 12 months, the Company expects that $0.6 million will be reclassified to interest expense from cash flow hedges and $0.5 million will be reclassified to income related to terminated cash flow hedges from "Accumulated other comprehensive income (loss)" into earnings.

Credit risk-related contingent features—The Company has agreements with each of its derivative counterparties that contain a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations.

In connection with its foreign currency derivatives, as of March 31, 2014 and December 31, 2013, the Company has posted collateral of $7.2 million and $7.2 million, respectively, which is included in "Restricted cash" on the Company's Consolidated Balance Sheets.