DERIVATIVES AND HEDGING ACTIVITIES:

12 Months Ended

Dec. 31, 2013

DERIVATIVES AND HEDGING ACTIVITIES:

DERIVATIVES AND HEDGING ACTIVITIES:

NOTE 7 — DERIVATIVES AND HEDGING ACTIVITIES:

As of December 31, 2013, the Company had derivative contracts in place that hedged future operating expenses of approximately 108.8 million NIS, or approximately $31.3 million based upon the exchange rate as of December 31, 2013. The derivative contracts cover future NIS denominated operating expenses expected to occur over the next twelve months. As of December 31, 2012, the Company had derivative contracts in place that hedged future operating expenses of approximately 219.9 million NIS, or approximately $58.9 million based upon the exchange rate as of December 31, 2012.

The Company does not use derivative financial instruments for purposes other than cash flow hedges.

Fair Value of Derivative Contracts

The fair value of derivative contracts as of December 31, 2013 and December 31, 2012 was as follows:

	Derivative Assets Reported inOther Current Assets				Derivative Liabilities Reported inOther Current Liabilities
	December 31,				December 31,
	2013		2012		2013		2012
	(in thousands)
Foreign exchange contracts designated as cash flow hedges	$	1,396	$	2,942	$	—	$	—
Total derivatives designated as hedging instruments	$	1,396	$	2,942	$	—	$	—

Effect of Designated Derivative Contracts on Accumulated Other Comprehensive Income

The following table represents the balance of derivative contracts designated as cash flow hedges as of December 31, 2013 and 2012, and their impact on OCI for the year ended December 31, 2013 (in thousands):

December 31, 2012	$	2,942
Amount of gain recognized in OCI (effective portion)	4,481
Amount of gain reclassified from OCI to income (effective portion)	(6,027		)
December 31, 2013	$	1,396

Foreign exchange contracts designated as cash flow hedges relate primarily to operating expenses and the associated gains and losses are expected to be recorded in operating expenses when reclassed out of OCI. The Company expects to realize the accumulated OCI balance related to foreign exchange contracts within the next twelve months.

Effect of Derivative Contracts on the Condensed Consolidated Statement of Operations

The impact of derivative contracts on total operating expenses in the years ended December 31, 2013, 2012 and 2011 was:

	Year Ended December 31,
	2013		2012			2011
	(in thousands)
Gain (loss) on foreign exchange contracts designated as cash flow hedges	$	6,027	$	(893	)	$	1,223

The net gains or losses relating to the ineffective portion of derivative contracts were not material in the years ended December 31, 2013 and 2012.