DERIVATIVES AND HEDGING ACTIVITIES

6 Months Ended

Jun. 30, 2016

DERIVATIVES AND HEDGING ACTIVITIES [Abstract]

DERIVATIVES AND HEDGING ACTIVITIES

NOTE 7:- DERIVATIVES AND HEDGING ACTIVITIES

The Company follows FASB ASC No. 815, "Derivatives and Hedging", which requires companies to recognize all of their derivative instruments as either assets or liabilities in the statement of financial position at fair value. The accounting for changes in fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging transaction and further, on the type of hedging transaction. For those derivative instruments that are designated and qualify as hedging instruments, a company must designate the hedging instrument, based upon the exposure being hedged, as a fair value hedge, cash flow hedge, or a hedge of a net investment in a foreign operation. Due to the Company's global operations, it is exposed to foreign currency exchange rate fluctuations in the normal course of its business. The Company used derivative financial instruments, specifically foreign currency forward and option contracts ("Hedging Contracts"), to manage exposure to foreign currency risks, by hedging a portion of the Company's forecasted expenses denominated in NIS expected to occur within a year. The effect of exchange rate changes on foreign currency Hedging Contracts is expected to partially offset the effect of exchange rate changes on the underlying hedged item.

For derivative instruments that are designated and qualify as a cash flow hedge (i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains or losses from contracts that were not designated as hedging instruments are recognized in "financial expenses, net". Net income from hedging transactions recognized in financial expenses, net during the first six months of 2016 and 2015 was $3 and $82, respectively.  As of June 30, 2016 and December 31, 2015, the notional principal amount of the Hedging Contracts to sell U.S. dollars held by the Company was $6,422 and $6,471, respectively.

As of June 30, 2016, the fair value of the Company's outstanding Hedging Contracts that were designated as hedging instruments was recorded as asset of $17, included in the balance sheet within "Other accounts receivable and prepaid expenses".

As of December 31, 2015, the fair value of the Company's outstanding Hedging Contracts that were designated as hedging instruments was recorded as liability of $58, included in the balance sheet within "Accrued expenses and other current liabilities".

As of June 30, 2016 and December 31, 2015, the fair value of the Company's outstanding Hedging Contracts that were not designated as hedging instruments was recorded as liability of $3 and $4, respectively, included in the balance sheet within "Other accounts receivable and prepaid expenses".