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Note 5 - Derivative Instruments and Hedging Activities | 9 Months Ended
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Sep. 30, 2019
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 and foreign currency denominated liabilities under ASC Topic 815, Derivatives and Hedging (“ASC 815” ). For certain contracts, as the critical terms of the hedging instrument and the entire hedged forecasted transaction are the same in accordance with ASC 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. Unrealized gains or losses on these contracts have been included within other comprehensive income (“OCI”). The fair value of the contracts, as of September 30, 2019, is recorded as derivative instrument assets or liabilities. As a result of adopting the targeted improvements on January 1, 2019, for any existing contracts on the effective date of adoption and thereafter, the entire change in the fair value of the hedging instrument included in the assessment of hedge effectiveness will be recorded in OCI. As of September 30, 2019, the notional amount of forward contracts that the Company held to sell U.S. dollars in exchange for Canadian dollars was $10.3 million, of which $9.9 million were designated as hedges. 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 were designated as hedges.
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 |
October - December 2019 |  |  | 10,327 |  |  |  | 1.3174 |  |  |  | (41 | )
|  | $ | 10,327 |  |  | $ | 1.3174 |  |  | $ | (41 | )
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
Derivatives (Dollar amounts in thousands of U.S. dollars) | Balance Sheet Location |  | As of September 30, 2019 Fair Value Asset |  |  | As of December 31, 2018 Fair Value Liability |
Foreign Currency forward contracts designated as cash flow hedges (net) | Derivative instruments |  | $ | (39 | ) |  | $ | (1,069 | )
Foreign Currency forward contracts not designated as cash flow hedges (net) | Derivative instruments |  |  | (2 | ) |  |  | (207 | )
Total foreign currency forward contracts (net) | Derivative instruments |  | $ | (41 | ) |  | $ | (1,276 | )
Movement in accumulated other comprehensive income (“ AOCI ”) balance for the three months ended September 3 0 , 201 9 (Dollar amounts in thousands of U.S. dollars) :
|  | Gains and losses on cash flow hedges |  |  | Tax impact |  |  | Total AOCI |
Opening AOCI balance - June 30, 2019 |  | $ | 159 |  |  | $ | (39 | ) |  | $ | 120 |
Other comprehensive income (loss) before reclassifications |  |  | (231 | ) |  |  | 56 |  |  |  | (175 | )
Amount reclassified from AOCI |  |  | 35 |  |  |  | (9 | ) |  |  | 26 |
Other comprehensive income (loss) for the three months ended September 30, 2019 |  |  | (196 | ) |  |  | 47 |  |  |  | (149 | )
Ending AOCI Balance - September 30, 2019 |  | $ | (37 | ) |  | $ | 8 |  |  | $ | (29 | )
Movement in AOCI balance for the nine months ended September 30, 2019 (Dollar amounts in thousands of U.S. dollars) :
|  | Gains and losses on cash flow hedges |  |  | Tax impact |  |  | Total AOCI |
Opening AOCI balance - December 31, 2018 |  | $ | (1,069 | ) |  | $ | 259 |  |  | $ | (810 | )
Other comprehensive income (loss) before reclassifications |  |  | 812 |  |  |  | (198 | ) |  |  | 614 |
Amount reclassified from AOCI |  |  | 220 |  |  |  | (53 | ) |  |  | 167 |
Other comprehensive income (loss) for the nine months ended September 30, 2019 |  |  | 1,032 |  |  |  | (251 | ) |  |  | 781 |
Ending AOCI Balance - September 30, 2019 |  | $ | (37 | ) |  | $ | 8 |  |  | $ | (29 | )
Effects of derivative instruments on income and OCI for the three months ended September 3 0 , 201 9 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 |  | 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 |  | $ | (28 | ) |  | $ | - |  |  | $ | - |
Foreign currency forward contracts for the three months ended September 30, 2019 |  | $ | (149 | ) | Cost of revenues |  | $ | (7 | ) |  | $ | - |  |  | $ | - |
|  |  |  |  | Operating expenses |  | $ | (71 | ) |  | $ | - |  |  | $ | - |
Foreign currency forward contracts for the three months ended September 30, 2018 |  | $ | 207 |  | Cost of revenues |  | $ | (12 | ) |  | $ | - |  |  | $ | - |
Effects of derivative instruments on income and OCI for the nine months ended September 3 0 , 2019 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 |  | 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 |  | $ | (182 | ) |  | $ | - |  |  | $ | - |
Foreign currency forward contracts for the nine months ended September 30, 2019 |  | $ | 781 |  | Cost of revenues |  | $ | (38 | ) |  | $ | - |  |  | $ | - |
|  |  |  |  | Operating expenses |  | $ | (87 | ) |  | $ | - |  |  | $ | - |
Foreign currency forward contracts for the nine months ended September 30, 2018 |  | $ | (36 | ) | Cost of revenues |  | $ | (13 | ) |  | $ | - |  |  | $ | - |
In addition to the above, for those foreign currency forward contracts not designated as hedges, the Company recorded the following fair value adjustments on settled and outstanding contracts (Dollar amounts in thousands of U.S. dollars):
|  | September 30, 2019 |  | September 30, 2018 |
Forward currency contracts not designated as hedges: |  | Three months ended |  | Nine months ended |  | Three months ended |  | Nine months ended |
Gain (loss) on settlement |  | less than ($0.1) |  | $ | (0.1) |  | less than ($0.1) |  | less than ($0.1) |
Gain (loss) on change in fair value |  | less than $0.1 |  | $ | 0.2 |  | less than $0.1 |  | less than ($0.1) |

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
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