11. Derivatives and Other Financial Instruments

12 Months Ended

Dec. 31, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives and Other Financial Instruments

The Company has exposure to certain risks relating to its ongoing business operations, including financial, market, political and economic risks. The following discussion provides information regarding our exposure to the risks of changing foreign currency exchange rates. The Company has not entered into these contracts for trading or speculative purposes in the past, nor do we currently anticipate entering into such contracts for trading or speculative purposes in the future. The foreign exchange contracts are used to mitigate uncertainty and volatility, and to cover underlying exposures.

Foreign Currency Forward Contracts

We manage the risk of changes in foreign currency exchange rates, primarily at our Malaysian operation, through the use of foreign currency contracts.  Foreign exchange contracts are used to protect the Company from the risk that the eventual cash flows resulting from transactions in foreign currencies, including sales and purchases transacted in a currency other than the functional currency, will be adversely affected by changes in exchange rates. We report the fair value of the derivatives on our consolidated balance sheets and changes in the fair value are recognized in earnings in the period of the change.

At December 31, 2017, we had foreign currency contracts not designated as hedges.  We marked these contracts to market, recording income of approximately $3,000 as a component of our 2017 net loss and $3,000 as a current asset on the consolidated balance sheet at December 31, 2017.

The following table summarizes the gross fair market value of all derivative instruments, in thousands, which are not designated as hedging instruments and their location in our consolidated balance sheets:

Asset Derivatives
Derivative Instrument	Location	December 31, 2017		December 31, 2016
Foreign Currency Exchange Contracts	Other Current Assets	$	3	$	–

Liability Derivatives
Derivative Instrument	Location	December 31, 2017		December 31, 2016
Foreign Currency Exchange Contracts	Accrued Expenses	$	–	$	2

The following table summarizes the impact of the Company’s derivatives, in thousands, on the consolidated financial statements of operations for the years ended December 31, 2017 and 2016:

Derivative	Location of (Gain) Loss on Derivative	Amount of Loss Recognized in Operations Year Ended December 31,
Instrument	Instrument	2017			2016
Foreign Currency Exchange Contracts	(Gain) Loss on foreign currency exchange rate	$	(3	)	$	3