FAIR VALUE MEASUREMENTS AND DERIVATIVE INSTRUMENTS

Fair Value Measurements

FASB guidance for fair value measurements clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the guidance establishes a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs other than the quoted prices in active markets that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require us to develop our own assumptions. This hierarchy requires us to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. On a recurring basis, we measure certain financial assets and liabilities at fair value, including our marketable securities and foreign currency contracts.

Our cash equivalents and investment instruments are classified within Level 1 or Level 2 of the fair value hierarchy because they are valued using quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. The types of instruments valued based on quoted market prices in active markets include money market securities. Such instruments are generally classified within Level 1 of the fair value hierarchy.

The types of instruments valued based on other observable inputs include U.S. government and agency securities, sovereign government obligations, investment-grade corporate bonds, mortgage-backed and asset-backed securities, term deposits and state, municipal and provincial obligations. Such instruments are generally classified within Level 2 of the fair value hierarchy.

We execute our foreign currency contracts primarily in the retail market in an over-the-counter environment with a relatively high level of price transparency. The market participants usually are large multi-national and regional banks. Our foreign currency contracts valuation inputs are based on quoted prices and quoted pricing intervals from public data sources and do not involve management judgment. These contracts are typically classified within Level 2 of the fair value hierarchy. There were no transfers between Level 1, Level 2 and Level 3 during the nine months ended August 31, 2013.

The fair value hierarchy of our cash equivalents, short-term investments and foreign currency contracts is as follows (in thousands):



			Fair Value Measurements at Reporting Date using
Description	Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant other Observable Inputs (Level 2)
As of August 31, 2013
Assets:
Money market funds	$	329,428	$	329,428	$	—
Corporate bonds and commercial paper	52,851		—		52,851
U.S. Government debt and agency securities	4,504		—		4,504
Term deposits	521		—		521
Mortgage-backed securities	331		—		331
Foreign currency forward contracts	388		—		388
Liabilities:
Foreign currency forward contracts	$	120	$	—	$	120
As of November 30, 2012
Assets:
Money market funds	$	376,480	$	376,480	$	—
Corporate bonds and commercial paper	24,558		—		24,558
U.S. Government debt and agency securities	9,645		—		9,645
Term deposits	595		—		595
Mortgage-backed securities	208		—		208
Foreign currency forward contracts	101		—		101
Liabilities:
Foreign currency forward contracts	$	130	$	—	$	130

Derivative Instruments

We conduct business in the Americas; Europe, the Middle East and Africa (“EMEA”); and Asia Pacific and Japan (“APJ”). As a result, our financial results could be affected by factors such as changes in foreign currency exchange rates or changes in economic conditions in foreign markets. The U.S. dollar is our major transaction currency; we also transact business in approximately 25 foreign currencies worldwide, of which the most significant to our operations are the Euro, British pound, Australian dollar, and Japanese yen. We enter into forward contracts with financial institutions to manage our currency exposure related to net assets and liabilities denominated in foreign currencies, and these forward contracts are generally settled monthly. Our forward contracts reduce, but do not eliminate, the impact of currency exchange rate movements. Gains and losses on forward contracts are included in Other Income (Expense) in our Condensed Consolidated Statements of Operations.

We had the following forward contracts outstanding as of August 31, 2013 (in thousands):



	Notional Value Local Currency	Notional Value USD		Fair Value Gain (Loss) USD
Forward contracts sold:
Australian dollar	10,400	$	9,254	$	55
Brazilian real	2,300	965		31
British pound	6,320	9,791		(8		)
Euro	27,100	35,813		231
Hong Kong dollar	4,100	529		—
Japanese yen	780,000	7,946		(14		)
Korean won	648,000	583		(9		)
Polish zloty	1,600	495		6
Singapore dollar	3,300	2,588		(1		)
South African rand	4,800	467		15
Swedish krona	8,000	1,207		19
New Taiwan dollar	31,000	1,035		1
Forward contracts bought:
Brazilian real	650	273		(9		)
Hong Kong dollar	8,500	1,096		—
South African rand	14,000	1,361		(47		)
Swedish krona	4,300	649		(9		)
				$	261



	Notional Value Local Currency	Notional Value EURO	Fair Value Gain (Loss) USD
Forward contracts bought:
United States dollar	1,300	984	7
			$	7



	Derivatives not Designated as Hedging Instruments
	August 31, 2013		November 30, 2012
Foreign currency forward contracts, fair value included in:
Other Current Assets	$	388	$	101
Accrued Liabilities	120		130



		Amount of Gain or (Loss) Recognized In Income on Derivative
		Three Months Ended August 31,				Nine Months Ended August 31,
Derivatives not Designated as Hedging Instruments	Location	2013		2012		2013		2012
Foreign Currency Contracts	Other income/(exp.)	$	166	$	628	$	80	$	(1,167	)