5)	Fair Value Measurements

In accordance with the provisions of fair value accounting, a fair value measurement assumes that the transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability and defines fair value based upon an exit price model.

The fair value measurement guidance establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The guidance describes three levels of inputs that may be used to measure fair value:


Level 1		Quoted prices in active markets for identical assets or liabilities assessed as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2		Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets and liabilities include debt securities with quoted prices that are traded less frequently than exchange-traded instruments or securities or derivative contracts that are valued using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data.

Level 3		Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the Company categorizes such assets and liabilities based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

Assets and liabilities of the Company are measured at fair value on a recurring basis as of June 30, 2016 and are summarized as follows:


			Fair Value Measurements at Reporting Date Using
Description	June 30, 2016		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents:
Money market funds	$	6,919	$	6,919	$	—	$	—
Bankers’ acceptance drafts		497		—		497		—
Restricted cash		5,559		—		5,559		—
Available-for-sale investments:
Time deposits and certificates of deposit		17,358		—		17,358		—
Bankers’ acceptance drafts		3,056		—		3,056		—
Asset-backed securities		14,173		—		14,173		—
Corporate obligations		19,468		—		19,468		—
Municipal bonds		595		—		595		—
U.S. treasury obligations		1,154		—		1,154		—
U.S. agency obligations		15,569		—		15,569		—
Group insurance contracts		5,930		—		5,930		—
Derivatives – currency forward contracts		655		—		655		—
Derivatives – option contracts		105		—		105		—
Funds in investments and other assets:
Israeli pension assets		13,611		—		13,611		—

Total assets	$	104,649	$	6,919	$	97,730	$	—

Liabilities:
Derivatives – currency forward contracts	$	2,989	$	—	$	2,989	$	—
Derivatives – option contracts		97		—		97		—

Total liabilities	$	3,086	$	—	$	3,086	$	—

Reported as follows:
Assets:
Cash and cash equivalents⁽¹⁾	$	7,416	$	6,919	$	497	$	—
Restricted cash		5,559		—		5,559		—
Short-term investments		71,373		—		71,373		—
Other current assets		14,371		—		14,371		—

Total current assets	$	98,719	$	6,919	$	91,800	$	—

Long-term investments	$	5,930	$	—	$	5,930	$	—

Liabilities:
Other current liabilities	$	3,086	$	—	$	3,086	$	—

⁽¹⁾	The cash and cash equivalents amounts presented in the table above do not include cash of $344,727 and non-negotiable time deposits of $2,132 as of June 30, 2016.

Assets and liabilities of the Company are measured at fair value on a recurring basis as of December 31, 2015 and are summarized as follows:


			Fair Value Measurements at Reporting Date Using
Description	December 31, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents:
Money market funds	$	106,099	$	106,099	$	—	$	—
Bankers’ acceptance drafts		11		—		11		—
Corporate obligations		330		—		330		—
Available-for-sale investments:
Time deposits and certificates of deposit		11,892		—		11,892		—
Bankers’ acceptance drafts		728		—		728		—
Asset-backed securities		124,997		—		124,997		—
Corporate obligations		165,109		—		165,109		—
Municipal bonds		8,355		—		8,355		—
U.S. agency obligations		119,582		—		119,582		—
Derivatives – currency forward contracts		1,486		—		1,486		—

Total assets	$	538,589	$	106,099	$	432,490	$	—

Liabilities:
Derivatives – currency forward contracts	$	263	$	—	$	263	$	—

Reported as follows:
Assets:
Cash and cash equivalents⁽¹⁾	$	106,440	$	106,099	$	341	$	—
Short-term investments		430,663		—		430,663		—
Other current assets		1,486		—		1,486		—

Total current assets	$	538,589	$	106,099	$	432,490	$	—

Liabilities:
Other current liabilities	$	263	$	—	$	263	$	—

⁽¹⁾	The cash and cash equivalents amounts presented in the table above do not include cash of $110,118 and non-negotiable time deposits of $11,016 as of December 31, 2015.

Money Market Funds

Money market funds are recorded as cash and cash equivalents and are classified within Level 1 of the fair value hierarchy.

Restricted Cash

The Company has letters of credit, which require it to maintain specified cash deposit balances as collateral. Such amounts have been classified as restricted cash.

Available-For-Sale Investments

As of June 30, 2016, available-for-sale investments consisted of time deposits and drafts denominated in the Euro currency, certificates of deposit, bankers’ acceptance drafts, asset-backed securities (which include auto loans, credit card receivables and equipment trust receivables), corporate obligations, municipal bonds, U.S. treasury obligations, U.S. agency obligations and group insurance contracts.

The Company measures its debt and equity investments at fair value. The Company’s available-for-sale investments are classified within Level 1 and Level 2 of the fair value hierarchy.

Israeli Pension Assets

Israeli pension assets represent investments in mutual funds, government securities and other time deposits. These investments are set aside for the retirement benefit of the employees at the Company’s Israeli subsidiaries. These funds are classified within Level 2 of the fair value hierarchy.

Derivatives

As a result of the Company’s global operating activities, the Company is exposed to market risks from changes in foreign currency exchange rates, which may adversely affect its operating results and financial position. When deemed appropriate, the Company minimizes its risks from foreign currency exchange rate fluctuations through the use of derivative financial instruments. The principal market in which the Company executes its foreign currency contracts is the institutional market in an over-the-counter environment with a relatively high level of price transparency. The market participants are usually large commercial banks. The forward foreign currency exchange and option contracts are valued using broker quotations, or market transactions and are classified within Level 2 of the fair value hierarchy.