Derivative Instruments

12 Months Ended

Dec. 31, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

6. Derivative Instruments

The Company’s primary objective for holding derivative instruments is to reduce its exposure to foreign currency rate changes. The Company reduces its exposure by entering into forward foreign exchange contracts with respect to operating expenses that are forecast to be incurred in currencies other than U.S. dollars. Substantially all of the Company’s revenue and capital purchasing activities and a majority of its operating expenditures are transacted in U.S. dollars. However, certain operating expenditures are incurred in or exposed to other currencies, primarily the Israeli shekel and the Euro.

The Company has established forecasted transaction currency risk management programs to protect against fluctuations in fair value and the volatility of future cash flows caused by changes in exchange rates. The Company’s currency risk management program includes forward foreign exchange contracts designated as cash flow hedges. These forward foreign exchange contracts generally mature within 12 months. The Company does not enter into derivative financial instruments for trading purposes.

Derivative instruments measured at fair value and their classification on the consolidated balance sheets are presented in the following tables (in thousands):

	Liability as of December 31,
	2014					2013
	Notional Amount		Fair Value			Notional Amount		Fair Value
Foreign exchange forward contract derivatives in cash flow hedging relationships - included in accrued and other current liabilities	$	25,990	$	(1,002	)	$	—	$	—

Gains (losses) on derivative instruments accounted for as hedges and their classification on the consolidated statement of operations, are presented in the following tables (in thousands):

	Years Ended December 31,
	2014			2013			2012
Foreign Exchange Forward Contract Derivatives in cash flow hedging relationships:
Gains recognized in OCI (a)	$	191		$	730		$	1,304
Losses recognized in OCI (a)	$	(1,846	)	$	(18	)	$	(225	)
Gains recognized from accumulated OCI into net loss (b)	$	55		$	1,829		$	—
Losses recognized from accumulated OCI into net loss (b)	$	(708	)	$	—		$	(598	)
Losses recognized in net loss (c)	$	—		$	—		$	(5	)
Foreign Exchange Forward Contract Derivatives not designated as hedging relationships:
Gains recognized in net loss (d)	$	—		$	71		$	181
Losses recognized in net loss (d)	$	—		$	(60	)	$	(121	)

(a) Net change in the fair value of the effective portion classified in other comprehensive income (loss) (“OCI”).

(b) Effective portion of cash flow hedges reclassified from accumulated other income (loss), into net loss, of which $(72), $117 and $(45) were recognized within cost of sales for the years ended December 31, 2014, 2013 and 2012, respectively, and $(581), $1,712, and $(553) were recognized within operating expenses for the year ended December 31, 2014, 2013 and 2012, respectively. All amounts are reflected with the respective consolidated statement of operations.

(c) Ineffective portion and amount excluded from effectiveness testing classified in other income (expense), net.

(d) Classified in other income (expense), net.