Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2012

Fair Value of Financial Instruments [Abstract]

Fair Value of Financial Instruments

4. Fair Value of Financial Instruments

The Company evaluates assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level to classify them for each reporting period. There have been no transfers between fair value measurement levels during the nine months ended September 30, 2012.

The Company’s cash equivalents and short-term 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 mutual funds and money market securities, and are generally classified within Level 1 of the fair value hierarchy.

The types of instruments that are valued based on other observable inputs include investment-grade corporate bonds, commercial paper, bank deposits and United States government agency securities. Such instruments are generally classified within Level 2 of the fair value hierarchy.

The Company executes its 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. The Company’s 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.

The following table sets forth the Company’s assets and liabilities that were measured at fair value as of September 30, 2012 and December 31, 2011, by level within the fair value hierarchy (in thousands):

	As of September 30, 2012
	Level I		Level II		Level III		Fair Value
Financial Assets:
Cash and cash equivalents:
Bank deposits	$	—	$	12,519	$	—	$	12,519
Commercial paper		—		16,997		—		16,997
Money market funds		3,186		—		—		3,186
Short-term investments:
Corporate debt obligations		—		20,877		—		20,877
Bank deposits		—		10,063		—		10,063
Commercial paper		—		9,520		—		9,520
US agency securities		—		2,002		—		2,002
Mutual funds		2,750		—		—		2,750
Prepaid expenses and other current assets - Forward foreign exchange contracts		—		269		—		269
Total financial assets	$	5,936	$	72,247	$	—	$	78,183
Financial Liability -
Accrued and other current liabilities - Forward foreign exchange contracts	$	—	$	350	$	—	$	350

	As of December 31, 2011
	Level I		Level II		Level III		Fair Value
Financial Assets:
Cash and cash equivalents:
Bank deposits	$	—	$	20,000	$	—	$	20,000
Money market funds		50,002		—		—		50,002
Short-term investments - Mutual funds		1,587		—		—		1,587
Total financial assets	$	51,589	$	20,000	$	—	$	71,589
Financial Liability -
Accrued and other current liabilities - Forward foreign exchange contracts	$	—	$	631	$	—	$	631

In addition to the amounts disclosed in the above table, the fair value of the Company’s Israeli severance pay assets, which were comprised of Level II assets, was $2.8 million and $2.7 million as of September 30, 2012 and December 31, 2011, respectively.