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 September 30, 2015 and December 31, 2014 ($ in thousands):



	Derivative Assets as of						Derivative Liabilities as of
	September 30, 2015			December 31, 2014			September 30, 2015			December 31, 2014
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives Designated in Hedging Relationships
Foreign exchange contracts	Other Assets	$	98	N/A	$	—	N/A	$	—	Other Liabilities	$	478
Interest rate swaps	N/A	—		Other Assets	52		Other Liabilities	426		N/A	—
Total		$	98		$	52		$	426		$	478

Derivatives not Designated in Hedging Relationships
Foreign exchange contracts	Other Assets	$	633	Other Assets	$	1,534	Other Liabilities	$	36	N/A	$	—
Interest rate cap	Other Assets	1,024		Other Assets	4,775		N/A	—		N/A	—
Total		$	1,657		$	6,309		$	36		$	—

The tables below present the effect of the Company's derivative financial instruments in the consolidated statements of operations and the consolidated statements of comprehensive income (loss) for the three and nine months ended September 30, 2015 and 2014 ($ 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) Reclassified from Accumulated Other Comprehensive Income into Earnings (Ineffective Portion)
For the Three Months Ended September 30, 2015
Interest rate cap	Interest Expense	$	—		$	(176	)	N/A
Interest rate cap	Earnings from equity method investments	(2		)	—			N/A
Interest rate swaps	Interest Expense	(461		)	43			N/A
Interest rate swap	Earnings from equity method investments	(421		)	(117		)	N/A
Foreign exchange contracts	Earnings from equity method investments	119			—			N/A
For the Three Months Ended September 30, 2014
Interest rate cap	Interest Expense	—			15			N/A
Interest rate swap	Interest Expense	322			(47		)	N/A
Foreign exchange contracts	Other Expense	89			—			N/A
For the Nine Months Ended September 30, 2015
Interest rate cap	Interest Expense	—			(378		)	N/A
Interest rate cap	Earnings from equity method investments	(12		)	—			N/A
Interest rate swaps	Interest Expense	(745		)	127			N/A
Interest rate swaps	Earnings from equity method investments	(744		)	(349		)	N/A
Foreign exchange contracts	Earnings from equity method investments	(65		)	—			N/A
For the Nine Months Ended September 30, 2014
Interest rate cap	Interest Expense	—			15			N/A
Interest rate cap	Other Expense	(2,984		)	—			(3,634	)
Interest rate swap	Interest Expense	(719		)	49			N/A
Foreign exchange contracts	Other Expense	(490		)	—			N/A



		Amount of Gain (Loss) Recognized in Income
	Location of Gain (Loss) Recognized in Income	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
Derivatives not Designated in Hedging Relationships	Location of Gain (Loss) Recognized in Income	2015			2014		2015			2014
Interest rate cap	Other Expense	$	(1,180	)	$	728	$	(3,751	)	$	224
Foreign exchange contracts	Other Expense	691			5,141		2,278			5,888

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 foreign entity is either sold or substantially liquidated. As of September 30, 2015, the Company had the following outstanding foreign currency derivatives that were used to hedge its net investments in foreign operations that were designated ($ and Rs in thousands):



Derivative Type	Notional Amount		Notional (USD Equivalent)		Maturity
Sells Indian rupee ("INR")/Buys USD Forward	₨	456,000	$	6,553	December 2016

For derivatives not designated as net investment hedges, the changes in the fair value of the derivatives are reported in the Company's consolidated statements of operations within "Other Expense." As of September 30, 2015, the Company had the following outstanding foreign currency derivatives that were used to hedge its net investments in foreign operations that were not designated ($, €, £ and C$ in thousands):



Derivative Type	Notional Amount		Notional (USD Equivalent)		Maturity
Sells euro ("EUR")/Buys USD Forward	€	5,700	$	6,333	October 2015
Sells pound sterling ("GBP")/Buys USD Forward	£	3,000	$	4,685	October 2015
Sells Canadian dollar ("CAD")/Buys USD Forward	C$	10,500	$	8,353	October 2015

The Company marks its foreign investments each quarter based on current exchange rates and records the gain or loss through "Other expense" in 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. The Company recorded net gains (losses) related to foreign investments of $(0.1) million and $(0.1) million during the three and nine months ended September 30, 2015, respectively, and $0.1 million and $0.4 million during the three and nine months ended September 30, 2014, respectively, in its consolidated statements of operations.

Interest Rate Hedges—For derivatives designated as interest rate hedges, the effective portion of changes in the fair value of the derivatives are reported in Accumulated Other Comprehensive Income (Loss). The ineffective portion of the change in fair value of the derivatives is recognized directly in the Company's consolidated statements of operations. As of September 30, 2015, the Company had the following outstanding interest rate swap that was used to hedge its variable rate debt that was designated ($ in thousands):

Derivative Type

Notional

Amount

Variable Rate

Fixed Rate

Effective Date

Maturity

Interest rate swap

27,068

LIBOR + 2.00%

3.47%

October 2012

November 2019

For derivatives not designated as interest rate hedges, the changes in the fair value of the derivatives are reported in the Company's consolidated statements of operations within "Other Expense." As of September 30, 2015, the Company had the following outstanding interest rate cap that was used to hedge its variable rate debt that was not designated ($ 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

Over the next 12 months, the Company expects that $0.1 million related to terminated cash flow hedges will be reclassified from "Accumulated other comprehensive income (loss)" into interest expense and $0.7 million relating to other cash flow hedges will be reclassified 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.

The Company reports derivative instruments on a gross basis on the consolidated financial statements. In connection with its foreign currency derivatives which were in a liability position as of September 30, 2015, the Company has posted collateral of $1.4 million and $3.0 million, respectively, as of September 30, 2015 and December 31, 2014, which is included in "Deferred expenses and other assets, net" on the Company's consolidated balance sheets. The Company's net exposure under these contracts was zero as of September 30, 2015.