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Note 5 - Derivative Instruments and Hedging Activities
 6 Months Ended
Jun. 30, 2018
Notes to Financial Statements  
Derivative Instruments and Hedging Activities Disclosure [Text Block]
5.
Derivative instruments and hedging activities:
 
Foreign currency forward contracts
 
In
October 2012,
the Company entered into a hedging program with a Canadian chartered bank to limit the potential foreign exchange fluctuations incurred on its future cash flows related to a portion of payroll, rent, and payments to Canadian domain name registry suppliers that are denominated in Canadian dollars and are expected to be paid by its Canadian operating subsidiary. As part of its risk management strategy, the Company uses derivative instruments to hedge a portion of the foreign exchange risk associated with these costs. The Company does
not
use these forward contracts for trading or speculative purposes. These forward contracts typically mature between
one
and
eighteen
months.
 
The Company has designated certain of these transactions as cash flow hedges of forecasted transactions under Accounting Standards Codification (“ASC”) Topic 
815,
Derivatives and Hedging
. For certain contracts, as the critical terms of the hedging instrument and the entire hedged forecasted transaction are the same in accordance with ASC Topic
815,
the Company has been able to conclude that changes in fair value and cash flows attributable to the risk of being hedged are expected to completely offset at inception and on an ongoing basis. Accordingly, unrealized gains or losses on the effective portion of these contracts have been included within other comprehensive income. The fair value of the contracts, as of
June 30, 2018,
is recorded as derivative instrument liabilities. For certain contracts where the hedged transactions are
no
longer probable to occur, the loss on the associated forward contract is reclassified from AOCI to earnings.
 
As of
June 30, 2018,
the notional amount of forward contracts that the Company held to sell U.S. dollars in exchange for Canadian dollars was
$16.9
 million, of which
$14.9
 million were designated as hedges. As of
December 31, 2017
the Company held
no
contracts to trade U.S. dollars in exchange for Canadian dollars.
 
As of 
June 30, 2018,
we had the following outstanding forward exchange contracts to trade U.S. dollars in exchange for Canadian dollars: 
 
Maturity date (Dollar amounts in thousands of U.S. dollars)
  
Notional
amount of U.S.
dollars
    
Weighted
average
exchange rate of
U.S. dollars
   
Fair value
 
                         
July - September 2018
    
6,130
      
1.2851
      
(134
 )
October - December 2018
    
6,049
      
1.2802
      
(144
 )
January - March 2019
    
1,640
      
1.2852
      
(30
 )
April - June 2019
    
1,599
      
1.2831
      
(29
 )
July - September 2019
    
1,444
      
1.2809
      
(27
 )
    $
16,862
      
1.2828
     $
(364
 )
 
Fair value of derivative instruments and effect of derivative instruments on financial performance
 
 
The effect of these derivative instruments on our consolidated financial statements were as follows (amounts presented do
not
include any income tax effects).
 
Fair value of derivative instruments in the consolidated balance sheets
 
       
As of
June 30
,
2018
   
As of
December 31,
2017
  
Derivatives
(Dollar amounts in thousands of U.S. dollars)
  
Balance
Sheet
Location
  
Fair Value
Asset
(Liability)
    
Fair Value
Asset
(Liability)
  
                     
Foreign currency forward contracts designated as cash flow hedges (net)
  
Derivative instruments
   $
(321
 )   $
-
  
                     
Foreign currency forward contracts not designated as cash flow hedges (net)
  
Derivative instruments
   $
(43
 )   $
-
  
                     
Total foreign currency forward contracts (net)
  
Derivative instruments
   $
(364
 )   $
-
  
 
Movement in Accumulated Othe
r Comprehensive Income ("AOCI") balance for the
three
months ended
June 30, 2018
(Dollar amounts in thousands of U.S. dollars)
:
 
   
Gains and
losses on cash
flow hedges
    
Tax impact
    
Total AOCI
  
                         
Opening AOCI balance – March 31. 2018
   $
23
     $
(6
)
   $
17
  
                         
Other comprehensive income (loss) before reclassifications
    
(361
)
    
88
      
(273
)
Amount reclassified from accumulated other comprehensive income
    
17
      
(4
)
    
13
  
Other comprehensive income (loss) for the three months ended June 30, 2018
    
(344
)
    
84
      
(260
)
                         
Ending AOCI balance – June 30, 2018
   $
(321
)
   $
78
     $
(243
)
 
Movement in Accumulated Othe
r Comprehensive Income ("AOCI") balance for the
six
months ended
June 30, 2018
(Dollar amounts in thousands of U.S. dollars)
:
 
   
Gains and
losses on cash
flow hedges
    
Tax impact
    
Total AOCI
  
                         
Opening AOCI balance – December 31, 2017
   $
—
     $
—
     $
—
  
                         
Other comprehensive income (loss) before reclassifications
    
(338
)
    
82
      
(256
)
Amount reclassified from accumulated other comprehensive income
    
17
      
(4
)
    
13
  
Other comprehensive income (loss) for the six months ended June 30, 2018
    
(321
)
    
78
      
(243
)
                         
Ending AOCI balance – June 30, 2018
   $
(321
)
   $
78
     $
(243
)
 
Effects of derivative instruments on income and other comprehensive income (OCI) for the
three
months ended
June 30, 2018
and
June 30, 2017
are as follows (Dollar amounts in thousands of U.S. dollars):
 
Derivatives in Cash Flow Hedging Relationship
  
Amount of
Gain or
(Loss)
Recognized
in OCI, net of
tax, on
Derivative
(Effective
Portion)
  
Location of
Gain or
(Loss)
Reclassified
from
AOCI into
Income
(Effective
Portion)
  
Amount of
Gain or
(Loss)
Reclassified
from
AOCI into
Income,
(Effective
Portion)
  
Location of
Gain or (Loss)
Recognized in
Income on
Derivative
(ineffective
Portion and
Amount
Excluded from
Effectiveness
Testing)
  
Amount of
Gain or
(Loss)
Recognized
in Income on
Derivative
(ineffective
Portion and
Amount
Excluded
from
Effectiveness
Testing)
  
                             
     
 
  
Operating expenses
   $
(1
 )
Operating expenses
   $
—
  
Foreign currency forward contracts for the three months ended June 30, 2018
   $
(260
 )
Cost of revenues
   $
(16
 )
Cost of revenues
    
—
  
                             
     
 
  
Operating expenses
   $
24
  
Operating expenses
   $
—
  
Foreign currency forward contracts for the three months ended June 30, 2017
   $
126
  
Cost of revenues
   $
4
  
Cost of revenues
    
—
  
  
Effects of derivative instruments on income and other comprehensive income (OCI) for the
six
months ended
June 30, 2018
and
June 30, 2017
are as follows
(Dollar amounts in thousands of U.S. dollars)
:
 
Derivatives in Cash Flow Hedging Relationship
  
Amount of
Gain or
(Loss)
Recognized
in OCI, net of
tax, on
Derivative
(Effective
Portion)
  
Location of
Gain or
(Loss)
Reclassified
from
Accumulated
OCI into
Income
(Effective
Portion)
  
Amount of
Gain or
(Loss)
Reclassified
from
Accumulated
OCI into
Income,
(Effective
Portion)
  
Location of
Gain or (Loss)
Recognized in
Income on
Derivative
(ineffective
Portion and
Amount
Excluded from
Effectiveness
Testing)
  
Amount of
Gain or
(Loss)
Recognized
in Income on
Derivative
(ineffective
Portion and
Amount
Excluded
from
Effectiveness
Testing)
  
                             
     
 
  
Operating expenses
   $
(1
 )
Operating expenses
   $
—
  
Foreign currency forward contracts for the six months ended June 30, 2018
   $
(243
 )
Cost of revenues
   $
(16
 )
Cost of revenues
    
—
  
                             
                             
     
 
  
Operating expenses
   $
129
  
Operating expenses
   $
—
  
Foreign currency forward contracts for the six months ended June 30, 2017
   $
231
  
Cost of revenues
   $
25
  
Cost of revenues
    
—
  
  
In addition to the above, for those foreign currency forward contracts
not
designated as hedges, the Company recorded a loss on settlement of less than
$0.1
million and a loss of less than
$0.1
million for the change in fair value of outstanding contracts for the
three
months ended
June 30, 2018,
in the consolidated statement of operations and comprehensive income. The Company recorded a total gain of less than
$0.1
million for the change in fair value of outstanding contracts and the settlement of contracts
not
designated as hedges for the
three
months ended
June 30, 2017,
in the consolidated statement of operations and comprehensive income. 
 
The Company has recorded a loss of less than
$0.1
million upon settlement and a loss of less than
$0.1
million for the change in fair value of outstanding contracts for the
six
months ended
June 30, 2018,
in the consolidated statement of operations and comprehensive income. The Company recorded a gain of less than
$0.1
million upon settlement and a gain of less than
$0.1
million for the change in fair value of the foreign currency forward contracts
not
designated as hedges for the
six
months ended
June 30, 2017,
in the consolidated statement of operations and comprehensive income.