Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market risk is the potential loss arising from adverse changes in market rates and prices, such as foreign currency exchange rates, interest rates and other relevant market rate or price changes. In the ordinary course of business, we are exposed to various market risks, including changes in foreign currency exchange rates and interest rates, and we regularly evaluate our exposure to such changes. Our overall risk management strategy seeks to balance the magnitude of the exposure and the cost and availability of appropriate financial instruments. From time to time, we have utilized forward exchange contracts to manage our foreign currency exchange rate risk. The following analyses present the sensitivity of our financial instruments to hypothetical changes in rates that are reasonably possible over a one-year period.

Foreign Currency Exchange Rates

Approximately 32% and 38% of our service revenues for the years ended December 31, 2015 and 2014, respectively, were denominated in currencies other than the United States dollar. Our financial statements are reported in United States dollars and, accordingly, fluctuations in exchange rates will affect the translation of our revenues and expenses denominated in foreign currencies into United States dollars for purposes of reporting our consolidated financial results. In 2015 and 2014, the most significant currency exchange rate exposures were the Euro, British pound, Singapore dollar, Indian rupee and Japanese Yen. Excluding the impacts from any outstanding or future hedging transactions, a hypothetical change of 10% in average exchange rates used to translate all foreign currencies to United States dollars would have impacted income before income taxes for 2015 by approximately $45.4 million. Accumulated currency translation adjustments recorded as a separate component of shareholders’ deficit were ($116.8) million and ($55.7) million at December 31, 2015 and 2014, respectively. We do not have significant operations in countries in which the economy is considered to be highly-inflationary.

We are subject to foreign currency transaction risk for fluctuations in exchange rates during the period of time between the consummation and cash settlement of a transaction. We earn revenue from our service contracts over a period of several months and, in some cases, over a period of several years. Accordingly, exchange rate fluctuations during this period may affect our profitability with respect to such contracts. We limit our foreign currency transaction risk through exchange rate fluctuation provisions stated in our contracts with customers, or we may hedge our transaction risk with foreign currency exchange contracts. At December 31, 2015, we had 15 open foreign exchange forward contracts relating to service contracts with various amounts maturing monthly through September 2016 with a notional value totaling approximately $117.5 million. At December 31, 2014, we had 13 open foreign exchange forward contracts relating to service contracts with various amounts maturing monthly through September 2015 with a notional value totaling approximately $76.0 million.

Interest Rates

Because we have variable rate debt, fluctuations in interest rates affect our business. We attempt to minimize interest rate risk and lower our overall borrowing costs through the utilization of derivative financial instruments, primarily interest rate swaps. We have entered into interest rate swaps with financial institutions that have reset dates and critical terms that match those of our senior secured term loan credit facility. Accordingly, any change in market value associated with the interest rate swaps is offset by the opposite market impact on the related debt. As of December 31, 2015, we had approximately $1.7 billion of variable rate indebtedness. In June 2015, we entered into seven forward starting interest rate swaps with a notional value of $440.0 million which will be effective June 30, 2016 at which time we will have approximately $1.2 billion of variable rate indebtedness. The interest rate swaps expire between March 31, 2017 and March 31, 2020. Because we do not attempt to hedge all of our variable rate debt, we may incur higher interest costs for the portion of our variable rate debt which is not hedged. Once the interest rate swaps are effective, each quarter-point increase or decrease in the variable interest rate would result in our interest expense changing by approximately $3.1 million per year under our unhedged variable rate debt.