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Fair value measurements
 3 Months Ended
Mar. 31, 2017
Fair Value Disclosures [Abstract]  
Fair value measurements

5. Fair value measurements

The fair value of the Company’s financial assets and liabilities measured on a recurring basis were as follows:

 

 

 

March 31,

2017

 

 

December 31,

2016

 

(U.S. Dollars, in thousands)

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

 

Total

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Collective trust funds

 

$

—

 

 

$

1,583

 

 

$

—

 

 

$

1,583

 

 

$

1,584

 

Treasury securities

 

 

466

 

 

 

—

 

 

 

—

 

 

 

466

 

 

 

467

 

Certificates of deposit

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

468

 

Debt securities

 

 

—

 

 

 

—

 

 

 

9,000

 

 

 

9,000

 

 

 

12,220

 

Total

 

$

466

 

 

$

1,583

 

 

$

9,000

 

 

$

11,049

 

 

$

14,739

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred compensation plan

 

$

—

 

 

$

(1,207

)

 

$

—

 

 

$

(1,207

)

 

$

(1,452

)

Total

 

$

—

 

 

$

(1,207

)

 

$

—

 

 

$

(1,207

)

 

$

(1,452

)

 

The fair value of the debt security, which is recorded within other long-term assets, is based upon significant unobservable inputs, including the use of a discounted cash flow model, requiring the Company to develop its own assumptions; therefore, the Company has categorized this asset as a Level 3 financial asset. As of March 31, 2017, the Company revised its estimate of fair value based on current financial information and other assumptions, resulting in a fair value of $9.0 million, a decrease of $3.2 million during the first quarter of 2017.

The Company evaluated the decline in fair value to determine if the impairment was other-than-temporary. Based on this evaluation, the Company recorded an other-than-temporary impairment charge of $5.6 million before income taxes, which is recorded in other expense. In addition to the decrease in fair value, the other-than-temporary impairment includes a reclassification of the amount that was previously considered temporary and included in accumulated other comprehensive loss.

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)

 

2017

 

 

2016

 

Balance at January 1

 

$

12,220

 

 

$

12,658

 

Accrued interest income

 

 

—

 

 

 

316

 

Gains or losses recorded for the period

 

 

 

 

 

 

 

 

Recognized in net income

 

 

(5,585

)

 

 

—

 

Recognized in other comprehensive income

 

 

2,365

 

 

 

(824

)

Balance at March 31

 

$

9,000

 

 

$

12,150