Derivative instruments

12 Months Ended

Dec. 31, 2016

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative instruments

9. Derivative instruments

The Company manages its exposure to fluctuating cash flows resulting from changes in interest rates and foreign exchange rates within the consolidated financial statements according to its hedging policy. The policy requires the Company to formally document the relationship between the hedging instrument and hedged item, as well as its risk-management objective and strategy for undertaking the hedge transaction. For instruments designated as a cash flow hedge, the Company formally assesses (both at the hedge’s inception and on an ongoing basis) whether the derivative used in the hedging transaction has been effective in offsetting changes in the cash flows of the hedged item and whether such derivative may be expected to remain effective in future periods. If it is determined that a derivative is not (or has ceased to be) effective as a hedge, the Company discontinues the related hedge accounting prospectively.

The Company records all derivatives as either assets or liabilities on the balance sheet at their respective fair values. For a cash flow hedge, the effective portion of the derivative’s change in fair value (i.e., gains or losses) is initially reported as a component of other comprehensive income, net of related taxes, and subsequently reclassified into net earnings in the period the hedged transaction affects earnings.

On September 30, 2010, the Company entered into a cross-currency swap agreement with JPMorgan Chase Bank and Royal Bank of Scotland PLC to manage its cash flows related to foreign currency exposure for a portion of the Company’s intercompany note receivable of a U.S. dollar functional currency subsidiary that is denominated in Euro. Under the terms of the swap agreement, the Company paid Euros based on an original €40.7 million notional value and a fixed rate of 5.00% and received U.S. dollars based on an original notional value of $55.2 million and a fixed rate of 4.635%. Both the cross-currency swap and the related Euro denominated intercompany note matured and were settled on December 30, 2016.

The tables below disclose the types of derivative instruments the Company owns, the classifications and fair values of these instruments within the balance sheet, and the amount of gain (loss) recognized in other comprehensive income (loss) (“OCI”) or net income (loss).

	December 31,
(U.S. Dollars, in thousands)	2016		2015		Balance sheet location
Cross-currency swap	$	—	$	2,485	Prepaid expenses and other current assets
Warrants (Note 6)		321		321	Other long-term assets

	For the year ended December 31,
(U.S. Dollars, in thousands)	2016			2015		2014
Cross-currency swap unrealized gain (loss), net of taxes	$	(228	)	$	128	$	251
Warrants unrealized loss, net of taxes	$	—		$	—	$	(3	)