Fair value measurements

12 Months Ended

Dec. 31, 2016

Fair Value Disclosures [Abstract]

Fair value measurements

10. 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

The Company’s financial instruments include cash equivalents, restricted cash, foreign certificates of deposit, treasury securities, collective trust funds, trade accounts receivable, accounts payable, long-term secured debt, equity securities, available for sale debt securities, common stock warrants, derivative securities, and deferred compensation plan liabilities. The carrying value of restricted cash, trade 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 equity securities and common stock warrants are recorded at cost, as the fair value of these instruments is not readily available.  See Note 6 for further discussion.

The Company’s collective trust funds, treasury securities, foreign certificates of deposit, derivative securities, debt securities, and deferred compensation plan liabilities are the only financial instruments recorded at fair value on a recurring basis as follows:

(U.S. Dollars, in thousands)	Balance December 31, 2016			Level 1		Level 2			Level 3
Assets
Collective trust funds	$	1,584		$	—	$	1,584		$	—
Treasury securities		467			467		—			—
Certificates of deposit		468			468		—			—
Derivative securities		—			—		—			—
Debt securities		12,220			—		—			12,220
Total	$	14,739		$	935	$	1,584		$	12,220
Liabilities
Deferred compensation plan	$	(1,452	)	$	—	$	(1,452	)	$	—
Total	$	(1,452	)	$	—	$	(1,452	)	$	—

(U.S. Dollars, in thousands)	Balance December 31, 2015			Level 1		Level 2			Level 3
Assets
Collective trust funds	$	1,622		$	—	$	1,622		$	—
Treasury securities		495			495		—			—
Certificates of deposit		337			337		—			—
Derivative securities		2,485			—		2,485			—
Debt securities		12,658			—		—			12,658
Total	$	17,597		$	832	$	4,107		$	12,658
Liabilities
Deferred compensation plan	$	(1,503	)	$	—	$	(1,503	)	$	—
Total	$	(1,503	)	$	—	$	(1,503	)	$	—

The fair value of treasury securities and certificates of deposit are determined based on quoted prices in active markets for identical assets, therefore, the Company has categorized these instruments as Level 1 financial instruments. The certificates of deposit are held in foreign currencies and carry a contractual maturity of two years from the date of purchase.

The cross-currency derivative instrument consisted of an over-the-counter contract, which was not traded on a public exchange. The fair value of this derivative swap contract, the Company’s collective trust funds, and the Company’s deferred compensation plan liabilities are 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 these instruments as Level 2 financial instruments.

The fair value of the debt security, including accrued interest, is based upon significant unobservable inputs, including the use of a discounted cash flows model, requiring the Company to develop its own assumptions; therefore, the Company has categorized this asset as a Level 3 financial asset. One of the more significant unobservable inputs used in the fair value measurement of the debt security is the discount rate. Holding other inputs constant, changes in the discount rate could result in a significant change in the fair value of the debt security. As of December 31, 2016, the fair value of the debt security is $12.2 million, a decrease of $1.7 million during 2016, which the Company recorded in other comprehensive income as an unrealized loss on debt securities.

The Company evaluated the decline in fair value to determine if the impairment was other-than-temporary. Based upon the Company’s best estimate of the amount it expects to recover, the Company recorded an other-than-temporary impairment of $2.7 million in 2016. This other-than-temporary impairment was reclassified from accumulated other comprehensive loss and is included within other expense. The Company continues to classify the remainder of the accumulated impairment of $2.4 million, included in accumulated other comprehensive loss as temporary in nature as the Company does not intend to sell the debt security nor believe that recoverability of this portion of the investment will not occur.

The following table provides a reconciliation of the beginning and ending balances for debt securities measured at fair value using significant unobservable inputs (Level 3):

(U.S. Dollars, in thousands)	2016			2015
Balance at January 1	$	12,658		$	—
Additions to debt securities		—			15,000
Accrued interest income		1,306			1,006
Gains or losses recorded for the period
Recognized in net income		(2,727	)		—
Recognized in other comprehensive income		983			(3,348	)
Balance at December 31	$	12,220		$	12,658