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Note 5 - Derivative Instruments and Hedging Activities
 3 Months Ended
Mar. 31, 2020
Notes to Financial Statements  
Derivative Instruments and Hedging Activities Disclosure [Text Block]
5.
Derivative instruments and hedging activities:
 
Foreign currency forward contracts
 
Since
October 2012,
the Company has employed 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, taxes, 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 under ASU
2017
-
12,
Derivatives and Hedging
(Topic
815
) (“ASC Topic 
815”
). For certain contracts, as the critical terms of the hedging instrument, and of the entire hedged forecasted transaction, are the same, in accordance with ASC Topic
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. Accordingly, unrealized gains or losses on the effective portion of these contracts have been included within other comprehensive income. The fair value of the contracts, as of
March 31, 2020
 and
December 31,
2019
, is recorded as derivative instrument assets or liabilities. For certain contracts where the hedged transactions are
no
longer probable to occur, the loss on the associated forward contract is recognized in earnings.
 
As of
March 31, 2020
, the notional amount of forward contracts that the Company held to sell U.S. dollars in exchange for Canadian dollars was
$61.8
 million, of which
$51.0
 million met the requirements of ASC Topic
815
and were designated as hedges.
 
As of
December 31, 
2019
 the notional amount of forward contracts that the Company held to sell U.S. dollars in exchange for Canadian dollars wa
s
$30.5
 million, of which
$26.1
 m
illion met the requirements of ASC Topic
815
and were designated as hedges.
 
As of
March 31, 2020
, we had the following outstanding forward contracts to trade U.S. dollars in exchange for Canadian dollars:
 
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
  
                         
April - June 2020    
9,653
      
1.3296
      
(526
 )
July - September 2020    
10,656
      
1.3227
      
(627
 )
October - December 2020    
9,658
      
1.3227
      
(565
 )
January - March 2021    
11,124
      
1.4283
      
172
  
April - June 2021    
9,878
      
1.4283
      
150
  
July - September 2021    
10,782
      
1.4362
      
220
  
    $
61,751
      
1.3795
     $
(1,176
 )
 
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 March 31, 2020 Fair Value Liability
    
As of December 31, 2019 Fair Value Asset
  
Foreign Currency forward contracts designated as cash flow hedges (net)  
Derivative instruments
   $
(932
 )   $
626
  
Foreign Currency forward contracts not designated as cash flow hedges (net)  
Derivative instruments
    
(244
 )    
105
  
Total foreign currency forward contracts (net)  
Derivative instruments
   $
(1,176
 )   $
731
  
 
Movement in accumulated other comprehensive income (AOCI) balance for the
three
months ended
March 31, 2020
 
(Dollar amounts in thousands of U.S. dollars)
 
   
Gains and losses on cash flow hedges
    
Tax impact
    
Total AOCI
  
Opening AOCI balance - December 31, 2019   $
625
     $
(152
 )   $
473
  
Other comprehensive income (loss) before reclassifications    
(1,615
 )    
381
      
(1,234
 )
Amount reclassified from AOCI    
58
      
(15
 )    
43
  
Other comprehensive income (loss) for the three months ended March 31, 2020    
(1,557
 )    
366
      
(1,191
 )
                         
Ending AOCI Balance - March 31, 2020   $
(932
 )   $
214
     $
(718
 )
 
Effects of derivative instruments on income and other comprehensive income (OCI) for the
three
months ended
March 31, 2020
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
  
Amount of Gain or (Loss) Reclassified from AOCI into Income
  
     
 
  
Operating expenses
   $
(45
 )
Foreign currency forward contracts for the three months ended March 31, 2020   $
(1,191
 )
Cost of revenues
   $
(13
 )
                   
     
 
  
Operating expenses
   $
(64
 )
Foreign currency forward contracts for the three months ended March 31, 2019   $
610
  
Cost of revenues
   $
(15
 )
 
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):
 
   
March 31, 2020
    
March 31, 2019
  
Forward currency contracts not designated as hedges:
  
Three months ended
    
Three months ended
  
                 
Gain (loss) on settlement
   $
(93
 )   $
(39
 )
                 
Gain (loss) on change in fair value
   $
(348
 )   $
118