2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Accounting policies are consistent for each operating segment.

Interim Financial Statements

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. In the opinion of the Company's management, the financial statements reflect all adjustments necessary to present fairly the Company's financial position at June 30, 2011, the results of its operations for the three and six months ended June 30, 2011 and 2010, and its cash flows for the six months ended June 30, 2011 and 2010. These adjustments are of a normal recurring nature.

Certain notes and other information have been condensed or omitted from the interim financial statements presented in this Quarterly Report on Form 10-Q. Therefore, these financial statements should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2010.

The results of operations for the three and six months ended June 30, 2011 are not necessarily indicative of future financial results.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Reclassifications

Certain previously reported amounts in the Condensed Consolidated Balance Sheets have been reclassified to conform to the Company's current presentation.

Foreign Currency Translation

The Company's functional currency in its foreign locations is the local currency. Assets and liabilities are translated into U.S. dollars as of the balance sheet dates. Revenues, expenses, gains and losses are translated at the average exchange rates in effect during each period. Gains and losses resulting from translation are included in accumulated other comprehensive income (loss). Net gains or losses resulting from foreign currency exchange transactions are included in the condensed consolidated statements of operations. There were no material gains or losses from foreign currency exchange transactions for the three and six months ended June 30, 2011 and 2010.

Comprehensive Income

The components of total comprehensive income were as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
Net income	$	2,637		$	3,251		$	7,169		$	6,140
Foreign currency translation adjustment		(4	)		(48	)		1,048			(1,878	)
Net change in unrealized loss on investments, net of tax		(27	)		(47	)		(54	)		(33	)
Total comprehensive income	$	2,606		$	3,156		$	8,163		$	4,229

The components of accumulated other comprehensive loss were as follows (in thousands):

	June 30, 2011			December 31, 2010
Foreign currency translation adjustment	$	(4,867	)	$	(5,915	)
Accumulated net unrealized loss on investments, net of tax		(2,845	)		(2,791	)
Total accumulated other comprehensive loss	$	(7,712	)	$	(8,706	)

Net Income Per Share

Net income per share is computed by dividing net income by the weighted average number of common shares outstanding during the period on a basic and diluted basis. The Company's potentially dilutive securities include stock options and restricted stock. Diluted net income per share considers the impact of potentially dilutive securities except in periods in which there is a net loss, as the inclusion of the potentially dilutive common shares would have an anti-dilutive effect.

The following table sets forth the calculation of basic and diluted net income per share (in thousands, except per share data):

	Three Months Ended June 30,				Six Months Ended June 30,
Numerator:	2011		2010		2011		2010
Numerator:
Net income	$	2,637	$	3,251	$	7,169	$	6,140
Denominator:
Denominator for basic net income per share ¾ weighted-average outstanding shares		22,011		20,278		21,271		20,275
Effect of dilutive securities:
Stock options and restricted stock		415		346		424		360
Denominator for diluted net income per share ¾ weighted-average outstanding shares		22,426		20,624		21,695		20,635

Net income per share ¾ basic	$	0.12	$	0.16	$	0.34	$	0.30
Net income per share ¾ diluted	$	0.12	$	0.16	$	0.33	$	0.30

Employee stock options with exercise prices greater than the average market price of the Company's common stock for the period were excluded from the calculation of diluted net income per share as their inclusion would have been anti-dilutive. The following table summarizes the potential common shares excluded from the diluted calculation (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010
Employee stock options		¾		251		¾		374

Stock-Based Compensation

Equity instruments issued in exchange for employee services are accounted for using a fair-value based method and the fair value of such equity instruments is recognized as expense in the condensed consolidated statements of operations.

Stock-based compensation cost is measured at the grant date of the share-based awards based on their fair values, and is recognized on a straight line basis as expense over the vesting periods of the awards, net of an estimated forfeiture rate.

Cash flows resulting from excess tax benefits are classified as part of cash flows from operating and financing activities. Excess tax benefits represent tax benefits related to stock-based compensation in excess of the associated deferred tax asset for such equity compensation. Net cash proceeds from the exercise of stock options and the purchase of shares under the Employee Stock Purchase Plan (“ESPP”) were approximately $3.4 million and $400,000 for the three months ended June 30, 2011 and 2010, respectively. Net cash proceeds from the exercise of stock options and the purchase of shares under the ESPP were approximately $4.5 million and $1.2 million for the six months ended June 30, 2011 and 2010, respectively. There were approximately $700,000 and $0 of excess tax benefits realized from stock option exercises for the three months ended June 30, 2011 and 2010, respectively. There were approximately $1.2 million and $300,000 of excess tax benefits realized from stock option exercises for the six months ended June 30, 2011 and 2010, respectively.

Stock-based compensation expense for stock options and restricted stock issued under equity incentive plans and stock purchases under the ESPP included in the Company's results of operations for the three and six months ended June 30, 2011 and 2010, was as follows (in thousands):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
Cost of revenues		$	483		$	356		$	875		$	673
Selling and marketing			400			361			530			589
Software development			323			207			607			407
General and administrative			995			1,015			2,253			2,277
Total stock-based compensation		$	2,201		$	1,939		$	4,265		$	3,946

Options to purchase 90,975 and 13,700 shares were exercised during the three months ended June 30, 2011 and 2010, respectively. Options to purchase 122,473 and 38,657 shares were exercised during the six months ended June 30, 2011 and 2010, respectively.

Capitalized Product Development Costs

Product development costs are expensed as incurred until technological feasibility has been established, at which time such costs are capitalized to the extent that the capitalizable costs do not exceed the realizable value of such costs, until the product is available for general release to customers. The Company defines the establishment of technological feasibility as the completion of all planning, designing, coding and testing activities that are necessary to establish products that meet design specifications including functions, features and technical performance requirements. As of June 30, 2011 and December 31, 2010, the Company had unamortized software development costs of approximately $600,000 and $0, respectively. These unamortized software development costs are included in intangible and other assets in the Company's condensed consolidated balance sheets. Amortization is computed using a straight-line method over the remaining estimated economic life of the product, typically three to five years after the software is ready for its intended use. No amortization expense was recognized for the three or six months ended June 30, 2011 and 2010, respectively.

Recent Accounting Pronouncements

There have been no developments to the Recent Accounting Pronouncements discussion included in the Company's Annual Report on Form 10-K for the year ended December 31, 2010, including the expected dates of adoption and estimated effects on the Company's consolidated financial statements, except for the following:

In May 2011, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance to develop common requirements for measuring fair value and for disclosing information about fair value measurements in accordance with GAAP and International Financial Reporting Standards (“IFRS”). This guidance clarifies the intent of the existing fair value measurement and disclosure requirements and modifies principles and requirements for measuring fair value and for disclosing information about fair value measurement. This guidance is effective on a prospective basis for financial statements issued for interim and annual periods beginning after December 15, 2011. This guidance is not expected to materially impact the Company's results of operations or financial position, but will require changes to the disclosures in its interim and annual financial statements.

In June 2011, the FASB issued authoritative guidance to improve the comparability, consistency and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income. This guidance requires all nonowner changes in stockholders' equity to be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. Under the two-statement approach, the first statement should present total net income and its components followed consecutively by a second statement that should present total other comprehensive income, the components of other comprehensive income and the total of comprehensive income. This guidance is effective on a retrospective basis for financial statements issued for interim and annual periods beginning after December 15, 2011. This guidance is not expected to materially impact the Company's results of operations or financial position, but will require changes to the consolidated statement of stockholders' equity and the addition of the consolidated statement of comprehensive income.