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 June 30, 2016 and December 31, 2015 ($ in thousands):



	Derivative Assets as of						Derivative Liabilities as of
	June 30, 2016			December 31, 2015			June 30, 2016			December 31, 2015
	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	N/A	$	—	Other Assets	$	39	Other Liabilities	$	10	N/A	$	—
Interest rate swaps	N/A	—		N/A	—		Other Liabilities	687		Other Liabilities	131
Total		$	—		$	39		$	697		$	131

Derivatives not Designated in Hedging Relationships
Foreign exchange contracts	Other Assets	$	441	Other Assets	$	378	Other Liabilities	$	3	N/A	$	—
Interest rate cap	Other Assets	49		Other Assets	1,105		N/A	—		N/A	—
Total		$	490		$	1,483		$	3		$	—

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 six months ended June 30, 2016 and 2015 ($ 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 June 30, 2016
Interest rate swaps	Interest Expense	(192	)	(23	)	N/A
Interest rate swap	Earnings from equity method investments	(165	)	(95	)	N/A
Foreign exchange contracts	Earnings from equity method investments	38		—		N/A
For the Three Months Ended June 30, 2015
Interest rate cap	Interest Expense	—		(125	)	N/A
Interest rate cap	Earnings from equity method investments	(3	)	—		N/A
Interest rate swaps	Interest Expense	92		42		N/A
Interest rate swap	Earnings from equity method investments	41		(117	)	N/A
Foreign exchange contracts	Earnings from equity method investments	14		—		N/A
For the Six Months Ended June 30, 2016
Interest rate cap	Interest Expense	—		(185	)	N/A
Interest rate cap	Earnings from equity method investments	(1	)	—		N/A
Interest rate swaps	Interest Expense	(694	)	2		N/A
Interest rate swap	Earnings from equity method investments	(624	)	(192	)	N/A
Foreign exchange contracts	Earnings from equity method investments	(49	)	—		N/A
For the Six Months Ended June 30, 2015
Interest rate cap	Interest Expense	—		(202	)	N/A
Interest rate cap	Earnings from equity method investments	(10	)	—		N/A
Interest rate swaps	Interest Expense	284		84		N/A
Interest rate swap	Earnings from equity method investments	(323	)	(232	)	N/A
Foreign exchange contracts	Earnings from equity method investments	(184	)	—		N/A



		Amount of Gain (Loss) Recognized in Income
	Location of Gain (Loss) Recognized in Income	For the Three Months Ended June 30,						For the Six Months Ended June 30,
Derivatives not Designated in Hedging Relationships	Location of Gain (Loss) Recognized in Income	2016			2015			2016			2015
Interest rate cap	Other Expense	$	(252	)	$	(534	)	$	(1,055	)	$	(2,571	)
Foreign exchange contracts	Other Expense	523			(702		)	341			1,587

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 June 30, 2016, 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 June 30, 2016, 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 £ in thousands):



Derivative Type	Notional Amount		Notional (USD Equivalent)		Maturity
Sells euro ("EUR")/Buys USD Forward	€	6,100	$	6,951	July 2016
Sells pound sterling ("GBP")/Buys USD Forward	£	3,300	$	4,663	July 2016
Sells euro ("EUR")/Buys USD Forward	€	6,300	$	7,018	October 2016
Sells pound sterling ("GBP")/Buys USD Forward	£	3,400	$	4,504	October 2016

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 during the three months ended June 30, 2016 and $(0.1) million for the three and six months ended June 30, 2015 in its consolidated statements of operations.

Interest Rate Hedges—For derivatives designated as cash flow 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 June 30, 2016, the Company had the following outstanding interest rate swap that was used to hedge its variable rate debt that was designated as a cash flow hedge ($ in thousands):

Derivative Type

Notional

Amount

Variable Rate

Fixed Rate

Effective Date

Maturity

Interest rate swap

26,668

LIBOR + 2.00%

3.47%

October 2012

November 2019

For derivatives not designated as cash flow 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 June 30, 2016, the Company had the following outstanding interest rate cap that was used to hedge its variable rate debt that was not designated as a cash flow hedge ($ 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 $(0.6) 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 in the consolidated financial statements. In connection with its foreign currency derivatives which were in a liability position as of June 30, 2016 and December 31, 2015, the Company has posted collateral of $1.0 million as of both dates and 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 June 30, 2016.