Fair value measurements

3 Months Ended

Mar. 31, 2014

Fair Value Disclosures [Abstract]

Fair value measurements

8. Fair value measurements

Fair value is defined as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Non-financial assets and liabilities of the Company measured at fair value include any long-lived assets or equity method investments that are impaired in a currently reported period. The authoritative guidance also describes three levels of inputs that may be used to measure fair value:

Level 1	—	quoted prices in active markets for identical assets and liabilities
Level 2	—	observable inputs other than quoted prices in active markets for identical assets and liabilities
Level 3	—	unobservable inputs in which there is little or no market data available, which require the reporting entity to develop its own assumptions

As of March 31, 2014, the Company’s financial instruments included cash equivalents, restricted cash, trade accounts receivable, accounts payable, long-term secured debt and a cross currency derivative contract. Cash equivalents consist of short-term, highly liquid, income-producing investments, all of which have original maturities of 90 days or less, including money market funds. The carrying value of restricted cash, accounts receivable and accounts payable approximate fair value due to the short-term maturities of these instruments. The Company’s credit facilities carry a floating rate of interest, and therefore, the carrying value is considered to approximate the fair value.

The Company’s cross-currency derivative instrument, and deferred compensation plan instruments are the only financial instruments recorded at fair value on a recurring basis. The cross-currency derivative instrument consists of an over-the-counter contract, which is not traded on a public exchange. The fair value of the swap contract is determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. Therefore, the Company has categorized the swap contract as a Level 2 derivative financial instrument. We classify deferred compensation assets as trading securities, and are intended to generate returns that offset changes in deferred compensation liabilities. We record changes in the fair value of these assets and related deferred compensation liabilities in Other income (expense). The Company also considers counterparty credit risk and its own credit risk in its determination of all estimated fair values. The Company has consistently applied these valuation techniques in all periods presented.

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

(U.S. Dollars in thousands)	Balance March 31, 2014			Level 1			Level 2			Level 3
Assets
Deferred compensation plan
Money market funds	$	281		$	281		$	—		$	—
Bonds		89			89			—			—
Treasury securities		661			661			—			—
Mutual funds		1,282			1,282			—			—
Total	$	2,313		$	2,313		$	—		$	—
Liabilities
Deferred compensation plan	$	(1,970	)	$	(1,970	)	$	—		$	—
Cash Flow Hedges
Cross-currency hedge		(1,035	)		—			(1,035	)		—
Total	$	(3,005	)	$	(1,970	)	$	(1,035	)	$	—

(U.S. Dollars in thousands)	Balance December 31, 2013			Level 1			Level 2			Level 3
Assets
Deferred compensation plan
Money market funds	$	451		$	451		$	—		$	—
Bonds		51			51			—			—
Treasury securities		660			660			—			—
Mutual funds		1,165			1,165			—			—
Total	$	2,327		$	2,327		$	—		$	—
Liabilities
Deferred compensation plan	$	(2,506	)	$	(2,506	)	$	—		$	—
Cash Flow Hedges
Cross-currency hedge		(1,036	)		—			(1,036	)		—
Total	$	(3,542	)	$	(2,506	)	$	(1,036	)	$	—