DERIVATIVES AND HEDGING ACTIVITIES:

3 Months Ended

Mar. 31, 2015

DERIVATIVES AND HEDGING ACTIVITIES:

DERIVATIVES AND HEDGING ACTIVITIES:

NOTE 6 — DERIVATIVES AND HEDGING ACTIVITIES:

As of March 31, 2015, the Company had derivative contracts in place that hedged future operating expenses of approximately 347.3 million New Israeli Shekel (“NIS”), or approximately $87.3 million based upon the exchange rate as of March 31, 2015. The derivative contracts cover a substantial portion of future NIS denominated operating expenses that the Company expects to incur over the next twelve months.

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 March 31, 2015 and December 31, 2014 were as follows:

	Derivative Assets Reported in Other Current Assets				Derivative Liabilities Reported in Other Current Liabilities
	March 31, 2015		December 31,  2014		March 31, 2015		December 31, 2014
	(in thousands)
Foreign exchange contracts designated as cash flow hedges	$	—	$	—	$	3,272	$	3,562
Total derivatives designated as hedging instruments	$	—	$	—	$	3,272	$	3,562

Effect of designated derivative contracts on accumulated other comprehensive income

The following table presents the balance of designated derivative contracts as cash flow hedges as of March 31, 2015 and December 31, 2014, and their impact on OCI for the three months ended March 31, 2015 (in thousands):

December 31, 2014	$	(3,646	)
Amount of loss recognized in OCI (effective portion)	(1,899		)
Amount of loss reclassified from OCI to income (effective portion)	2,273
March 31, 2015	$	(3,272	)

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 reclassified 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 three months ended March 31, 2015 and 2014 was as follows:

	Three Months Ended  March 31,
	2015			2014
	(in thousands)
Gain (loss) on foreign exchange contracts designated as cash flow hedges	$	(2,273	)	$	700

The net gains or losses relating to the ineffective portion of derivative contracts were not material in the three months ended March 31, 2015 and 2014.