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Note 7 - Derivative Instruments and Hedging Activities
 12 Months Ended
Dec. 31, 2018
Notes to Financial Statements  
Derivative Instruments and Hedging Activities Disclosure [Text Block]
7.
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, taxes, 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 ASC Topic 
815.
 For certain contracts, as the critical terms of the hedging instrument, and of 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
December 
31,
 
2018
and
2017,
is recorded as derivative instrument assets or liabilities. For certain contracts where the hedged transactions are
no
longer probable to occur, the loss on the associated forward contract is recognized in earnings.
  
As of
December 31, 2018,
the notional amount of forward contracts that the Company held to sell U.S. dollars in exchange for Canadian dollars was
$40.5
 million, of which
$36.5
 million met the requirements of ASC Topic
815
and 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
December 31, 2018,
we had the following outstanding forward 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
 
                         
January - March 2019
    
9,955
      
1.3131
      
355
  
April - June 2019
    
10,381
      
1.3154
      
332
  
July - September 2019
    
9,881
      
1.3136
      
310
  
October - December 2019
    
10,327
      
1.3174
      
279
  
    $
40,544
      
1.3149
     $
1,276
  
 
 
Fair value of derivative instruments and effect of derivative instruments on financial performance
 
The effect of these derivative instruments on our consolidated financial statements as of, and for the year ended
December 
31,
 
2018
and
2017,
were as follows (amounts presented do
not
include any income tax effects).
  
Fair value of derivative instruments in the consolidated balance
sheets (see
N
ote
6
)
 
Derivatives
(Dollar amounts in thousands of U.S. dollars)
Balance Sheet
Location
  
December 31,

2018

Liability
at
Fair Value
    
December 31,

2017

Liability
at
Fair Value
  
                   
Foreign currency forward contracts designated as cash flow hedges
Derivative instruments
   $
1,069
     $
—
  
                   
Foreign currency forward contracts not designated as cash flow hedges
Derivative instruments
   $
207
     $
—
  
                   
Total foreign currency forward contracts
Derivative instruments
   $
1,276
     $
—
  
 
Movement in AOCI balance for the year ended
December 31, 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
    
(1,350
)
    
328
      
(1,022
)
Amount reclassified from accumulated other comprehensive income
    
281
      
(69
)
    
212
  
Other comprehensive income (loss) for the year ended December 31, 2018
    
(1,069
)
    
259
      
(810
)
                         
Ending AOCI balance – December 31, 2018
   $
(1,069
)
   $
259
     $
(810
)
 
 
 
Movement in AOCI balance for the year ended
December 31, 2017
(Dollar amounts in thousands of U.S. dollars)
 
 
   
Gains and
losses on cash
flow hedges
    
Tax impact
    
Total AOCI
  
                         
Opening AOCI balance – December 31, 2016
   $
156
     $
(56
)
   $
100
  
                         
Other comprehensive income (loss) before reclassifications
    
863
      
(313
)
    
550
  
Amount reclassified from accumulated other comprehensive income
    
(1,019
)
    
369
      
(650
)
Other comprehensive income (loss) for the year ended December 31, 2017
    
(156
)
    
56
 
    
(100
)
                         
Ending AOCI balance – December 31, 2017
   $
—
     $
—
     $
—
  
 
 
Movement in AOCI balance for the year ended
December 31, 2016
(Dollar amounts in thousands of U.S. dollars)
 
   
Gains and
losses on cash
flow hedges
    
Tax impact
    
Total AOCI
  
                         
Opening AOCI balance – December 31, 2015
   $
(1,721
)
   $
612
     $
(1,109
)
                         
Other comprehensive income (loss) before reclassifications
    
872
      
(304
)
    
568
  
Amount reclassified from accumulated other comprehensive income
    
1,005
      
(364
)
    
641
  
Other comprehensive income (loss) for the year ended December 31, 2016
    
1,877
      
(668
)
    
1,209
  
                         
Ending AOCI balance – December 31, 2016
   $
156
     $
(56
)
   $
100
  
   
Effects of derivative
instruments on income and other comprehensive income (OCI)
(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
  
                             
Foreign currency forward contracts – year ended December 31, 2018
    
 
  
Operating expenses
   $
(245
)
 
    
 
  
    $
(810
)
Cost of revenues
   $
(36
)
Operating expenses
   $
—
  
                             
     
 
  
Operating expenses
   $
879
  
 
    
 
  
Foreign currency forward contracts – year ended December 31, 2017
   $
(100
)
Cost of revenues
   $
140
  
Operating expenses
   $
—
  
                             
     
 
  
Operating expenses
   $
(737
)
 
    
 
  
Foreign currency forward contracts – year ended December 31, 2016
   $
1,209
  
Cost of revenues
   $
(221
)
Operating expenses
   $
(47
)
 
In addition to the above, for those foreign currency forward contracts
not
designated as hedges, the Company has recorded a loss of less than
$0.1
 million upon settlement and a loss of
$0.2
million for the change in fair value of outstanding contracts for the year ended
December 31, 2018.
For the year ended
December 31, 2017,
the Company has recorded a gain of
$0.1
 million upon settlement in the consolidated statement of comprehensive income, with
no
contracts outstanding at
December 31, 2017.
The Company has recorded a loss of
$0.2
 million upon settlement and a gain of
$0.3
million for the change in fair value of outstanding contracts for the year ended
December 
31,
 
2016,
in the consolidated statement of comprehensive income.