Marketable Securities and Fair Value Measurements

Our short-term and long-term marketable securities as of September 30, 2013 and December 31, 2012 are as follows (in thousands):

Short-term



September 30, 2013	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Corporate bonds	$	32,439	$	16	$	(6	)	$	32,449
U.S. dollar dominated foreign corporate bonds	15,728		5		(3		)	15,730
Commercial paper	57,906		16		(1		)	57,921
Municipal securities	1,150		—		(1		)	1,149
U.S. government agency bonds	37,474		13		—			37,487
Asset-backed securities	3,005		—		(1		)	3,004
Total Marketable Securities, Short-Term	$	147,702	$	50	$	(12	)	$	147,740

Long-term



September 30, 2013	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Corporate bonds	$	19,836	$	6	$	(20	)	$	19,822
U.S. government agency bonds	6,148		5		—			6,153
U.S. dollar dominated foreign corporate bonds	16,169		12		(2		)	16,179
U.S. government treasury bonds	11,274		4		—			11,278
Municipal securities	14,252		17		(12		)	14,257
Asset-backed securities	9,150		1		(4		)	9,147
Total Marketable Securities, Long-Term	$	76,829	$	45	$	(38	)	$	76,836

Short-term



December 31, 2012	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Corporate bonds	$	18,767	$	7	$	(4	)	$	18,770
Commercial paper	4,646		1		—			4,647
U.S. dollar dominated foreign corporate bonds	5,060		9		(1		)	5,068
Total Marketable Securities, Short-Term	$	28,473	$	17	$	(5	)	$	28,485

Long-term



December 31, 2012	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Corporate bonds	$	16,132	$	16	$	(7	)	$	16,141
U.S. government agency bonds	2,069		1		—			2,070
U.S. dollar dominated foreign corporate bonds	3,038		4		(1		)	3,041
Total Marketable Securities, Long-Term	$	21,239	$	21	$	(8	)	$	21,252

For the three and nine months ended September 30, 2013 and 2012, realized losses were immaterial. Unrealized gains and losses for our available for sale securities as of September 30, 2013 and December 31, 2012 were also immaterial. Cash and cash equivalents are not included in the table above as the gross unrealized gains and losses are not material. We have no material short-term or long-term investments that have been in a continuous unrealized loss position for greater than twelve months as of September 30, 2013 and December 31, 2012. Amounts reclassified to earnings from accumulated other comprehensive income related to unrealized gain or losses were immaterial for the three and nine months ended September 30, 2013 and 2012.

Our fixed-income securities investment portfolio consists of corporate bonds, U.S. dollar dominated foreign corporate bonds, commercial paper, municipal securities, U.S. government agency bonds and asset-backed securities that have a maximum maturity of two years. The securities that we invest in are generally deemed to be low risk based on their credit ratings from the major rating agencies. The longer the duration of these securities, the more susceptible they are to changes in market interest rates and bond yields. As interest rates increase, those securities purchased at a lower yield show a mark-to-market unrealized loss. The unrealized losses are due primarily to changes in credit spreads and interest rates. We expect to realize the full value of all these investments upon maturity or sale. The weighted average remaining duration of these securities was approximately 8 months and 10 months as of September 30, 2013 and December 31, 2012, respectively.

As the carrying value approximates the fair value for our short-term and long-term marketable securities shown in the tables above, the following table summarizes the fair value of our short-term and long-term marketable securities classified by maturity as of September 30, 2013 and December 31, 2012 (in thousands):



	September 30,		December 31,
	2013		2012
Due in one year or less	$	147,740	$	28,485
Due in one to two years	76,836		21,252
Total available for sale short-term and long-term securities	$	224,576	$	49,737

Fair Value Measurements

We measure the fair value of our cash equivalents and marketable securities as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We use the GAAP fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value:

Level 1 — Quoted (unadjusted) prices in active markets for identical assets or liabilities.

Our Level 1 assets consist of money market funds, commercial paper and U.S. government treasury bonds. We did not hold any Level 1 liabilities as of September 30, 2013 or December 31, 2012.

Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.

Our Level 2 assets consist of commercial paper, corporate bonds, U.S. dollar dominated foreign corporate bonds, U.S. government agency bonds, municipal securities, asset-backed securities and our Israeli severance funds that are mainly invested in insurance policies. We obtain fair values for level 2 investments from our asset manager for each of our portfolios. Our custody bank and asset managers independently use professional pricing services to gather pricing data which may include quoted market prices for identical or comparable financial instruments, or inputs other than quoted prices that are observable either directly or indirectly, and we are ultimately responsible for these underlying estimates.

We did not hold any Level 2 liabilities as of September 30, 2013 or December 31, 2012.

Level 3 — Unobservable inputs to the valuation methodology that are supported by little or no market activity and that are significant to the measurement of the fair value of the assets or liabilities. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques, as well as significant management judgment or estimation.

We did not hold any Level 3 assets or liabilities as of September 30, 2013 or December 31, 2012.

Non-Recurring Fair Value Measurements

During the three months ended March 31, 2013, we recorded an impairment charge to our long-lived assets and goodwill of $26.3 million and $40.7 million, respectively, related to our Scanner and CAD/CAM Services ("SCCS") reporting unit as an event occurred and circumstances changed that led us to perform an impairment analysis prior to our annual test which required us to determine the fair value of the SCCS reporting unit (Refer to Note 5). These fair value measurements were calculated using unobservable inputs, using the income approach which is classified as Level 3 within the fair value hierarchy. Inputs for the income approach includes the amount and timing of future cash flows based on our most recent operational budgets, strategic plans, terminal growth rates assumptions and other estimates.

Recurring Fair Value Measurements

The following table summarizes our financial assets measured at fair value on a recurring basis as of September 30, 2013 (in thousands):



Description	Balance as of September 30, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
Cash equivalents:
Money market funds	$	77,484	$	77,484	$	—
Commercial paper	13,247		—		13,247
Short-term investments:
Commercial paper	57,921		—		57,921
Corporate bonds	32,449		—		32,449
U.S. dollar dominated foreign corporate bonds	15,730		—		15,730
Municipal securities	1,149		—		1,149
U.S. government agency bonds	37,487		—		37,487
Asset-backed securities	3,004		—		3,004
Long-term investments:
Corporate bonds	19,822		—		19,822
U.S. government agency bonds	6,153		—		6,153
U.S. dollar dominated foreign corporate bonds	16,179		—		16,179
U.S. government treasury bonds	11,278		11,278		—
Municipal securities	14,257		—		14,257
Asset-backed securities	9,147		—		9,147
Other assets:
Israeli severance funds	2,422		—		2,422
	$	317,729	$	88,762	$	228,967

The following table summarizes our financial assets measured at fair value on a recurring basis as of December 31, 2012 (in thousands):



Description	Balance as of December 31, 2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
Cash equivalents:
Money market funds	$	86,166	$	86,166	$	—
Commercial paper	950		—		950
Short-term investments:
Commercial paper	4,647		—		4,647
Corporate bonds	18,770		—		18,770
U.S. government agency bonds	5,068		—		5,068
Long-term investments:
U.S. government agency bonds	2,070		—		2,070
Corporate bonds	16,141		—		16,141
U.S. dollar denominated foreign corporate bonds	3,041		—		3,041
Other assets:
Israeli severance funds	2,218		—		2,218
	$	139,071	$	86,166	$	52,905