DERIVATIVE INSTRUMENTS

Cash flow hedges

We use derivatives to partially offset our business exposure to foreign currency exchange risk in Canada and the Philippines. We enter into foreign currency forward and option contracts to hedge our anticipated operating commitments that are denominated in foreign currencies, including forward contracts and range forward contracts (a transaction where both a call option is purchased and a put option is sold). The contracts cover periods commensurate with expected exposure, generally three to twelve months, and are principally unsecured foreign exchange contracts. The market risk exposure is essentially limited to risk related to currency rate movements. In Canada and the Philippines where the functional currencies are the Canadian dollar, and the Philippine peso, respectively, these local currencies are used to pay labor and other operating costs in those countries. We provide funds for these operating costs as our client contracts generate revenues which are paid in U.S. dollars. We have elected to designate our derivatives as cash flow hedges in order to associate the results of the hedges with forecasted obligations.

From July 21, 2018 to December 31, 2018, we entered into Philippine peso non-deliverable forward and range forward contracts for a notional amount of 718,000,002 Philippine pesos.

The following table shows the notional amount of our foreign exchange cash flow hedging instruments as of December 31, 2018,



	As at December 31, 2018
	Local Currency Notional Amount	U.S. Dollar Notional Amount
Canadian dollar	2,500	$	1,951
Philippine peso	1,134,000	$	20,996
		$	22,948

The Canadian dollar and Philippine peso foreign exchange contracts are to be delivered periodically through December 2019 at a purchase price of approximately $1,951 and $20,996 respectively, and as such we expect unrealized gains and losses recorded in accumulated other comprehensive income will be reclassified to operations as the forecasted intercompany expenses are incurred, typically within twelve months.

Derivative assets and liabilities associated with our hedging activities are measured at gross fair value as described in Note 9, “Fair Value Measurements,” and are reflected as separate line items in our consolidated balance sheets.

The following table shows the effect of our derivative instruments designated as cash flow hedges for the nine months ended December 31, 2018:



	Gain (Loss) Recognized in AOCI, net of tax Year Ended December 31, 2018	Gain/ (Loss) Reclassified from AOCI into Income Year Ended December 31, 2018
Cash flow hedges:
Foreign exchange contracts	$53	$13

Non-designated hedges

We have also entered into foreign currency range forward contracts as required by our lenders. These hedges are not designated hedges under ASC 815, Derivatives and Hedging. These contracts generally do not exceed 3 years in duration.

Realized gains (losses) and changes in fair value of these derivatives are recognized as incurred in Interest and other expense, net in the Consolidated Statements of Comprehensive Income (Loss). The following table presents these amounts for the nine months ended December 31, 2018:



Derivatives not designated under ASC 815	For the Nine Months Ended December 31, 2018
Foreign currency range forward contracts	$	1,165
Interest rate swap	$	(221	)