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Fair value measurements | 12 Months Ended
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Dec. 31, 2016
Fair Value Disclosures [Abstract] |
Fair value measurements |
10. | Fair value measurements
Fair value is defined as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Non-financial assets and liabilities of the Company measured at fair value include any long-lived assets or equity method investments that are impaired in a currently reported period. The authoritative guidance also describes three levels of inputs that may be used to measure fair value:
Level 1: | quoted prices in active markets for identical assets and liabilities
Level 2: | observable inputs other than quoted prices in active markets for identical assets and liabilities
Level 3: | unobservable inputs in which there is little or no market data available, which require the reporting entity to develop its own assumptions
The Company’s financial instruments include cash equivalents, restricted cash, foreign certificates of deposit, treasury securities, collective trust funds, trade accounts receivable, accounts payable, long-term secured debt, equity securities, available for sale debt securities, common stock warrants, derivative securities, and deferred compensation plan liabilities. The carrying value of restricted cash, trade accounts receivable and accounts payable approximate fair value due to the short-term maturities of these instruments. The Company’s credit facilities carry a floating rate of interest, and therefore, the carrying value is considered to approximate the fair value. The Company’s equity securities and common stock warrants are recorded at cost, as the fair value of these instruments is not readily available. See Note 6 for further discussion. The Company’s collective trust funds, treasury securities, foreign certificates of deposit, derivative securities, debt securities, and deferred compensation plan liabilities are the only financial instruments recorded at fair value on a recurring basis as follows:
(U.S. Dollars, in thousands) |  | Balance December 31, 2016 |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Collective trust funds |  | $ | 1,584 |  |  | $ | — |  |  | $ | 1,584 |  |  | $ | — |
Treasury securities |  |  | 467 |  |  |  | 467 |  |  |  | — |  |  |  | — |
Certificates of deposit |  |  | 468 |  |  |  | 468 |  |  |  | — |  |  |  | — |
Derivative securities |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Debt securities |  |  | 12,220 |  |  |  | — |  |  |  | — |  |  |  | 12,220 |
Total |  | $ | 14,739 |  |  | $ | 935 |  |  | $ | 1,584 |  |  | $ | 12,220 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deferred compensation plan |  | $ | (1,452 | ) |  | $ | — |  |  | $ | (1,452 | ) |  | $ | — |
Total |  | $ | (1,452 | ) |  | $ | — |  |  | $ | (1,452 | ) |  | $ | — |
(U.S. Dollars, in thousands) |  | Balance December 31, 2015 |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Collective trust funds |  | $ | 1,622 |  |  | $ | — |  |  | $ | 1,622 |  |  | $ | — |
Treasury securities |  |  | 495 |  |  |  | 495 |  |  |  | — |  |  |  | — |
Certificates of deposit |  |  | 337 |  |  |  | 337 |  |  |  | — |  |  |  | — |
Derivative securities |  |  | 2,485 |  |  |  | — |  |  |  | 2,485 |  |  |  | — |
Debt securities |  |  | 12,658 |  |  |  | — |  |  |  | — |  |  |  | 12,658 |
Total |  | $ | 17,597 |  |  | $ | 832 |  |  | $ | 4,107 |  |  | $ | 12,658 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deferred compensation plan |  | $ | (1,503 | ) |  | $ | — |  |  | $ | (1,503 | ) |  | $ | — |
Total |  | $ | (1,503 | ) |  | $ | — |  |  | $ | (1,503 | ) |  | $ | — |
The fair value of treasury securities and certificates of deposit are determined based on quoted prices in active markets for identical assets, therefore, the Company has categorized these instruments as Level 1 financial instruments. The certificates of deposit are held in foreign currencies and carry a contractual maturity of two years from the date of purchase. The cross-currency derivative instrument consisted of an over-the-counter contract, which was not traded on a public exchange. The fair value of this derivative swap contract, the Company’s collective trust funds, and the Company’s deferred compensation plan liabilities are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets; therefore, the Company has categorized these instruments as Level 2 financial instruments. The fair value of the debt security, including accrued interest, is based upon significant unobservable inputs, including the use of a discounted cash flows model, requiring the Company to develop its own assumptions; therefore, the Company has categorized this asset as a Level 3 financial asset. One of the more significant unobservable inputs used in the fair value measurement of the debt security is the discount rate. Holding other inputs constant, changes in the discount rate could result in a significant change in the fair value of the debt security. As of December 31, 2016, the fair value of the debt security is $12.2 million, a decrease of $1.7 million during 2016, which the Company recorded in other comprehensive income as an unrealized loss on debt securities. The Company evaluated the decline in fair value to determine if the impairment was other-than-temporary. Based upon the Company’s best estimate of the amount it expects to recover, the Company recorded an other-than-temporary impairment of $2.7 million in 2016. This other-than-temporary impairment was reclassified from accumulated other comprehensive loss and is included within other expense. The Company continues to classify the remainder of the accumulated impairment of $2.4 million, included in accumulated other comprehensive loss as temporary in nature as the Company does not intend to sell the debt security nor believe that recoverability of this portion of the investment will not occur. The following table provides a reconciliation of the beginning and ending balances for debt securities measured at fair value using significant unobservable inputs (Level 3):
(U.S. Dollars, in thousands) |  | 2016 |  |  | 2015 |
Balance at January 1 |  | $ | 12,658 |  |  | $ | — |
Additions to debt securities |  |  | — |  |  |  | 15,000 |
Accrued interest income |  |  | 1,306 |  |  |  | 1,006 |
Gains or losses recorded for the period |  |  |  |  |  |  |  |
Recognized in net income |  |  | (2,727 | ) |  |  | — |
Recognized in other comprehensive income |  |  | 983 |  |  |  | (3,348 | )
Balance at December 31 |  | $ | 12,220 |  |  | $ | 12,658 |

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=66048111&loc=d3e19207-110258 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 28 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=73719730&loc=d3e13537-108611 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 16 -URI http://asc.fasb.org/extlink&oid=73719730&loc=d3e13504-108611 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=73719730&loc=d3e13433-108611 + Details
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