Fair Value Measurement

At December 31, 2017, our financial instruments consisted of cash, accounts receivable, accounts payable, accrued liabilities and our revolving credit facility. The carrying value of these instruments approximates fair value as a result of the short duration of such instruments or due to the variability of the interest cost associated with such instruments.

Foreign Currency Forward Exchange Contracts. Our derivative assets and liabilities represent foreign exchange purchase and sales contracts that are measured at fair value using observable market inputs such as forward rates, interest rates, our own credit risk and counterparty credit risk. Based on the utilization of these inputs, the derivative assets and liabilities are classified as Level 2.

Interest Rate Swap Agreement. The Company’s policy is to manage its interest expense by using a mix of fixed and variable rate debt. To manage its exposure to variable interest rates in a cost-efficient manner, the Company enters into interest rate swaps in which the Company agrees to exchange, at specified intervals, the difference between fixed and variable interest amounts calculated by reference to an agreed-upon notional principal amount. These swaps are designed to mitigate changes in the interest rate of a portion of the outstanding borrowings. The Company entered into a series of interest rate swaps to initially cover $80 million of its outstanding debt under the senior secured term loan facility. The Company expects these derivatives to remain effective during the remaining term of the swaps and will record the impact in interest expense in the Consolidated Statements of Operations.

The fair values of our derivative assets and liabilities measured on a recurring basis as of December 31 are categorized as follows:



		2017								2016
		Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Derivative assets	Foreign exchange contract ¹	$	20	$	—	$	20	$	—	$	142	$	—	$	142	$	—
Derivative assets	Interest rate swap agreement ²	$	515	$	—	$	515	$	—	$	—	$	—	$	—	$	—
Derivative liabilities	Foreign exchange contract ³	$	627	$	—	$	627	$	—	$	1,234	$	—	$	1,234	$	—
Derivative liabilities	Interest rate swap agreement ⁴	$	246	$	—	$	246	$	—	$	—	$	—	$	—	$	—


¹	Presented in the Consolidated Balance Sheets in other current assets and based on observable market transactions of spot and forward rates.


²	Presented in Consolidated Balance Sheets in other assets and based on observable market transactions of forward rates.


³	Presented in the Consolidated Balance Sheets in accrued liabilities and other and based on observable market transactions of spot and forward rates.


⁴	Presented in Consolidated Balance Sheets in accrued liabilities and other, and based on observable market transactions of forward rates.

The following table summarizes the notional amount of our open foreign exchange contracts at December 31:



	2017				2016
	U.S. $ Equivalent		U.S. Equivalent Fair Value		U.S. $ Equivalent		U.S. Equivalent Fair Value
Commitments to buy or sell currencies	$	17,491	$	16,838	$	18,593	$	17,213

We consider the impact of our credit risk on the fair value of the contracts, as well as the ability to execute obligations under the contract.

The following table summarizes the effect of derivative instruments on the Consolidated Statements of Operations for derivatives not designated as hedging instruments at December 31:



		2017		2016
	Location of Gain (Loss) Recognized in Income on Derivatives	Amount of Gain (Loss) Recognized in Income on Derivatives
Foreign exchange contracts	Cost of Revenues	$	457	$	(603	)
Interest rate swap agreement	Interest Income	$	269	$	—

Long-term Debt. The fair value of long-term debt obligations is based on a fair value model utilizing observable inputs. Based on the use of these inputs, our long-term debt is classified as Level 2. The carrying amounts and fair values of our long-term debt at December 31 are as follows:



	2017				2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
7.875% senior secured notes due April 15, 2019	$	—	$	—	$	233,154	$	231,391
Term loan and security agreement ¹	$	166,949	$	169,972	$	—	$	—


¹	Presented in the Consolidated Balance Sheets as the current portion of long-term debt (net of current prepaid debt financing costs and current original issue discount) of $3.2 million and long-term debt (net of long-term prepaid debt financing costs and long-term original issue discount) of $163.8 million.

Long-lived Assets. There are no fair value measurements of our long-lived assets and definite-lived intangible assets measured on a non-recurring basis as of December 31, 2017 and December 31, 2016, except for an impairment of $0.6 million recognized in the first quarter of 2016 for an asset held for sale based on the estimated selling price less selling costs of $0.8 million . The asset was classified as held for sale at its estimated fair value of $0.8 millionas of December 31, 2016. The impairment was recorded in selling, general and administrative expense in the Consolidated Statements of Operations. The asset was classified as Level 2.