Document and Entity Information	3 Months Ended
Document and Entity Information	Mar. 31, 2011	Apr. 29, 2010
Document and Entity Information
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2011
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q1
Trading Symbol	ALGN
Entity Registrant Name	ALIGN TECHNOLOGY INC
Entity Central Index Key	0001097149
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		77,816,865

Condensed Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2011	Mar. 31, 2010
Net revenues:
Invisalign	$ 99,437	$ 85,422
Non-case	5,419	4,668
Total net revenues	104,856	90,090
Cost of revenues
Invisalign	20,993	18,607
Non-case	1,637	1,773
Total cost of revenues	22,630	20,380
Gross profit	82,226	69,710
Operating expenses:
Sales and marketing	32,821	27,946
General and administrative	18,992	14,951
Research and development	9,390	6,116
Total operating expenses	61,203	49,013
Profit from operations	21,023	20,697
Interest and other income (expense), net	89	(553)
Net profit before provision for income taxes	21,112	20,144
Provision for income taxes	5,271	5,214
Net profit	$ 15,841	$ 14,930
Net profit per share:
Basic	$ 0.21	$ 0.20
Diluted	$ 0.20	$ 0.19
Shares used in computing net profit per share:
Basic	76,844	75,166
Diluted	79,361	77,597

Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2011	Dec. 31, 2010
ASSETS
Cash and cash equivalents	$ 308,608	$ 294,664
Restricted cash	7,991
Marketable securities, short-term	8,328	8,615
Accounts receivable, net of allowance for doubtful accounts of $485 and $735, respectively	73,904	65,430
Inventories	2,867	2,544
Prepaid expenses and other current assets	16,243	17,358
Total current assets	417,941	388,611
Marketable securities, long-term	5,615	9,089
Property and equipment, net	30,722	30,684
Goodwill	478	478
Intangible assets, net	1,488	2,188
Deferred tax asset	38,024	42,439
Other assets	2,714	3,454
Total assets	496,982	476,943
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	6,594	7,768
Accrued liabilities	44,201	51,358
Deferred revenues	37,199	33,848
Total current liabilities	87,994	92,974
Other long-term liabilities	6,883	6,222
Total liabilities	94,877	99,196
Commitments and contingencies (Notes 5, 8 and 14)
Stockholders' equity:
Preferred stock, $0.0001 par value (5,000 shares authorized; none issued)
Common stock, $0.0001 par value (200,000 shares authorized; 77,189 and 74,568 issued and outstanding, respectively)	8	8
Additional paid-in capital	563,878	555,851
Accumulated other comprehensive income, net	624	134
Accumulated deficit	(162,405)	(178,246)
Total stockholders' equity	402,105	377,747
Total liabilities and stockholders' equity	$ 496,982	$ 476,943

Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Per Share data, unless otherwise specified	Mar. 31, 2011	Dec. 31, 2010
Condensed Consolidated Balance Sheets
Accounts receivable, allowance for doubtful accounts	$ 485	$ 735
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	5,000	5,000
Preferred stock, shares issued	0	0
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	200,000	200,000
Common stock, shares issued	77,189	74,568
Common stock, shares outstanding	77,189	74,568

Condensed Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2011	Mar. 31, 2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net profit	$ 15,841	$ 14,930
Adjustments to reconcile net profit to net cash provided by operating activities:
Deferred taxes	3,983	4,975
Depreciation and amortization	2,979	2,944
Stock-based compensation	4,279	3,473
Amortization of intangibles	700	700
Amortization of prepaid royalties		827
Benefit from doubtful accounts	(162)	(200)
Changes in assets and liabilities:
Accounts receivable	(7,317)	(4,857)
Inventories	(312)	(319)
Prepaid expenses and other assets	207	(738)
Accounts payable	(634)	(271)
Accrued and other long-term liabilities	(5,315)	(7,927)
Deferred revenues	2,999	5,108
Net cash provided by operating activities	17,248	18,645
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(2,825)	(4,530)
Restricted cash	(7,991)
Maturities of marketable securities	3,767	4,988
Other assets	(177)	(246)
Net cash provided by (used in) investing activities	(7,226)	212
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock	5,068	6,016
Employees' taxes paid upon the vesting of restricted stock units	(1,319)	(755)
Net cash provided by financing activities	3,749	5,261
Effect of foreign exchange rate changes on cash and cash equivalents	173	(198)
Net increase in cash and cash equivalents	13,944	23,920
Cash and cash equivalents, beginning of period	294,664	166,487
Cash and cash equivalents, end of period	$ 308,608	$ 190,407

Summary of Significant Accounting Policies	3 Months Ended
Summary of Significant Accounting Policies	Mar. 31, 2011
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies	Note 1. Summary of Significant Accounting Policies *Basis of presentation* The accompanying unaudited Condensed Consolidated Financial Statements have been prepared by Align Technology, Inc. ("we", "our", or "Align") in accordance with the rules and regulations of the Securities and Exchange Commission (SEC) and contain all adjustments, including normal recurring adjustments, necessary to present fairly our financial position as of March 31, 2011, our results of operations for the three months ended March 31, 2011 and 2010, and our cash flows for the three months ended March 31, 2011 and 2010. The Condensed Consolidated Balance Sheet as of December 31, 2010 was derived from the December 31, 2010 audited financial statements. The results of operations for the three months ended March 31, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011 or any other future period, and we make no representations related thereto. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Quantitative and Qualitative Disclosures About Market Risk" and the Consolidated Financial Statements and notes thereto included in Items 7, 7A and 8, respectively, in our Annual Report on Form 10-K for the year ended December 31, 2010. The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in our Condensed Consolidated Financial Statements and accompanying notes. Actual results could differ materially from those estimates. *Revenue recognition* We recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred, the price is fixed or determinable, and collectability is reasonably assured. Revenues are recognized from product sales, net of discounts and rebates. Service revenues related to the training of dental professionals and staff on the Invisalign treatment process is recorded when the services are completed. We enter into arrangements ("treatment plans") that involve multiple future product deliverables. For example, included in the price of Invisalign Full, Invisalign Teen and Invisalign Assist, we offer optional case refinement, which is a finishing tool used to adjust a patient's teeth to the desired final position. Case refinement may be elected by the dental professional at any time during treatment however it is generally ordered in the last stages of orthodontic treatment. Invisalign Teen also includes six optional replacement aligners in the price of the product and may be ordered at any time throughout treatment. Beginning January 1, 2011, we adopted revenue recognition guidance under Accounting Standards Update ("ASU") 2009-13, "Revenue Recognition: Multiple-Deliverable Revenue Arrangements," on a prospective basis for new or materially modified arrangements. This update amends the guidance on revenue arrangements with multiple deliverables and eliminates the use of the residual method. We use vendor specific objective evidence ("VSOE") adjusted by estimated usage rates for case refinements and replacement aligners to determine the respective estimated selling price ("ESP"). In the absence of VSOE, we determine our best estimate of selling price, as if it is sold on a stand-alone basis, and take into consideration our pricing and discounting strategies, market conditions, as well as historical price. We regularly review our VSOE and ESP and maintain internal controls over the establishment and update of these estimates. A deliverable constitutes a separate unit of accounting when it has stand-alone value, even if the deliverable is not sold separately. We determined that our treatment plans are comprised of four possible deliverables that represent separate units of accounting: single-batched aligners, multiple-batched aligners, case refinement and replacement aligners. We allocate revenue for each treatment plan based on each unit's relative selling price and recognize the revenue upon the delivery of each unit in the treatment plan. The adoption of ASU 2009-13 did not have a material impact on our financial statements and is not expected to have a material impact in future periods. Although the financial statement impact was not material, the adoption of ASU 2009-13 did impact our accounting for Invisalign Assist with the progress tracking feature, in which aligners are shipped to the dental professional every nine stages ("a batch"). We determined that each batch has stand-alone value and therefore represents a separate unit of accounting. The estimated selling price for Invisalign Assist with progress tracking is allocated according to the estimated number of batches. Prior to January 1, 2011, we used VSOE as fair value to allocate revenue to the case refinement and replacement aligner deliverables. We deferred the fair value of case refinement and replacement aligner deliverables based on a breakage factor and recognized the residual revenue upon initial batch shipment. The deferred revenue was subsequently recognized as the refinement and replacement aligners were shipped. For Invisalign Assist with the progress tracking feature, we did not have independent evidence of fair value for the separate batches of aligners, so all batches of aligners were considered a single unit of accounting prior to January 1, 2011. For these treatment plans, revenue was deferred upon the first batched shipment and recognized upon the final batched shipment. We estimate and record a provision for amounts of estimated losses on sales, if any, in the period such sales occur. We have not recorded any estimated losses for the periods presented. Provisions for discounts and rebates to customers are provided for in the same period that the related product sales are recorded based upon historical discounts and rebates. *Recent Accounting Pronouncements* In January 2011, the Financial Accounting Standards Board (FASB) has issued ASU 2011-01, "Receivables (ASC 310): Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20." The amendments in ASU 2011-01 temporarily delays the effective date of the disclosures about troubled debt restructurings in ASU 2010-20, "Receivables (ASC 310): Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses," for public entities. The delay is intended to allow the FASB time to complete its deliberations on what constitutes a troubled debt restructuring. The effective date of the new disclosures about troubled debt restructurings for public entities and the guidance for determining what constitutes a troubled debt restructuring will then be coordinated. Currently, that guidance is anticipated to be effective for interim and annual periods ending after June 15, 2011. We are still assessing the impact of this guidance. However, we do not believe that the adoption will have a material impact on our consolidated financial statements.

Marketable Securities and Fair Value Measurements

3 Months Ended

Mar. 31, 2011

Marketable Securities and Fair Value Measurements

Marketable Securities and Fair Value Measurements

Note 2. Marketable Securities and Fair Value Measurements

Our short-term and long-term marketable securities as of March 31, 2011 and December 31, 2010 are as follows (in thousands):

Short-term


March 31, 2011	Amortized Costs		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Corporate bonds	$	3,606	$	3	$	(1	)	$	3,608
Foreign bonds		703		—		—			703
Discount notes		3,000		—		—			3,000
Agency bonds		1,016		1		—			1,017

Total	$	8,325	$	4	$	(1	)	$	8,328

Long-term


March 31, 2011	Amortized Costs		Gross Unrealized Losses			Fair Value
Corporate bonds	$	3,309	$	(6	)	$	3,303
Foreign bonds		1,292		(2	)		1,290
Agency bonds		1,023		(1	)		1,022

Total	$	5,624	$	(9	)	$	5,615

Short-term


December 31, 2010	Amortized Costs		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. government notes and bonds	$	3,012	$	—	$	(1	)	$	3,011
Corporate bonds and certificate of deposit		705		—		—			705
Foreign bonds		1,900		—		—			1,900
Commercial paper		2,998		1		—			2,999

Total	$	8,615	$	1	$	(1	)	$	8,615

Long-term


December 31, 2010	Amortized Costs		Gross Unrealized Losses			Fair Value
Corporate bonds	$	5,748	$	(11	)	$	5,737
Foreign bonds		1,307		(1	)		1,306
Agency bonds		2,047		(1	)		2,046

Total	$	9,102	$	(13	)	$	9,089

For the three months ended March 31, 2011 and 2010, no significant gains or losses were realized on the sale of marketable securities.

Fair Value Measurements

We measure the fair value of our cash equivalents and marketable securities as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We use the GAAP fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value:

Level 1—Quoted (unadjusted) prices in active markets for identical assets or liabilities.

Our Level 1 assets consist of money market funds. We did not hold any Level 1 liabilities as of March 31, 2011.

Level 2—Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities 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 asset or liability.

Our Level 2 assets consist of corporate bonds, foreign bonds, agency bonds, and discount notes. We did not hold any Level 2 liabilities as of March 31, 2011.

Level 3—Unobservable inputs to the valuation methodology that are supported by little or no market activity and that are significant to the measurement of the fair value of the assets or liabilities. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques, as well as significant management judgment or estimation.

We did not hold any Level 3 assets or liabilities as of March 31, 2011.

The following table summarizes our financial assets measured at fair value on a recurring basis as of March 31, 2011 (in thousands):


Description	Balance as of March 31, 2011		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
Cash equivalents:
Money market funds	$	187,238	$	187,238	$	—
Short-term investments:
Corporate bonds		3,608				3,608
Foreign bonds		703				703
Discount notes		3,000				3,000
Agency bonds		1,017				1,017
Long-term investments:
Corporate bonds		3,303				3,303
Foreign bonds		1,290				1,290
Agency bonds		1,022				1,022

	$	201,181	$	187,238	$	13,943

- Definition

This element represents the disclosure related to the fair value measurement of assets and liabilities which includes [financial] instruments measured at fair value that are classified in stockholders' equity. Such assets and liabilities may be measured on a recurring or nonrecurring basis. The disclosures which may be required or desired include: (1) for assets and liabilities measured on a recurring basis, disclosure may include: (a) the fair value measurements at the reporting date; (b) the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets or liabilities (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3); (c) for fair value measurements using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (i) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (ii) purchases, sales, issuances, and settlements (net); (iii) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs); (d) the amount of the total gains or losses for the period in subparagraph (c) (i) above included in earnings (or changes in net assets) that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date and a description of where those unrealized gains or losses are reported in the statement of income (or activities); (e) the valuation technique(s) used to measure fair value and a discussion of changes in valuation techniques, if any, during the period and (2) for assets and liabilities that are measured at fair value on a nonrecurring basis (for example, impaired assets) disclosure may include, in addition to (a) above: (a) the reasons for the fair value measurements recorded; (b) the same as (b) above; (c) for fair value measurements using significant unobservable inputs (Level 3), a description of the inputs and the information used to develop the inputs; and (d) the valuation technique(s) used to measure fair value and a discussion of changes, if any, in the valuation technique(s) used to measure similar assets and/or liabilities in prior periods.

+ References+ Details

Balance Sheet Components

3 Months Ended

Mar. 31, 2011

Balance Sheet Components

Balance Sheet Components

Note 3. Balance Sheet Components

Restricted cash

In January 2011, we funded approximately $8.0 million into a third party escrow account for certain class members who may elect the cash remedy as part of the proposed terms related to the Leiszler class action suit. Payments to these class members are expected to be finalized by the second quarter of 2011.

Inventories

Inventories are comprised of (in thousands):


	March 31, 2011		December 31, 2010
Raw materials	$	1,541	$	1,272
Work in process		1,107		1,030
Finished goods		219		242

	$	2,867	$	2,544

Work in process includes costs to produce the Invisalign product. Finished goods primarily represent ancillary products that support the Invisalign system.

Accrued liabilities

Accrued liabilities consist of the following (in thousands):


	March 31, 2011		December 31, 2010
Accrued payroll and benefits	$	19,225	$	26,551
Accrued litigation settlement		4,517		4,549
Accrued income taxes		347		1,936
Accrued sales rebate		4,865		3,826
Accrued sales tax and value added tax		2,642		2,940
Accrued warranty		2,766		2,607
Accrued sales and marketing expenses		3,297		2,955
Other		6,542		5,994

	$	44,201	$	51,358

Intangible Assets	3 Months Ended
Intangible Assets	Mar. 31, 2011
Intangible Assets
Intangible Assets	Note 4. Intangible Assets The intangible assets represent non-compete agreements received in conjunction with the October 2006 OrthoClear Agreement at gross value of $14.0 million. These assets are amortized on a straight-line basis over the expected useful life of five years. As of March 31, 2011 and December 31, 2010, the net carrying value of these non-compete agreements was $1.5 million (net of $12.5 million of accumulated amortization) and $2.2 million (net of $11.8 million of accumulated amortization), respectively. We perform an impairment test whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Examples of such events or circumstances include significant underperformance relative to historical or projected future operating results, significant changes in the manner of use of acquired assets or the strategy for its business, significant negative industry or economic trends, and/or a significant decline in our stock price for a sustained period. Impairments are recognized based on the difference between the fair value of the asset and its carrying value, and fair value is generally measured based on discounted cash flow analyses. There were no impairments of intangible assets during the periods presented. The total estimated annual future amortization expense for these intangible assets as of March 31, 2011 is $1.5 million.

Legal Proceedings	3 Months Ended
Legal Proceedings	Mar. 31, 2011
Legal Proceedings
Legal Proceedings	Note 5. Legal Proceedings *Weber* On May 18, 2007, Debra A. Weber filed a consumer class action lawsuit against us, OrthoClear, Inc. and OrthoClear Holdings, Inc. (d/b/a OrthoClear, Inc.) in Syracuse, New York, U.S. District Court. The complaint alleges two causes of action against the OrthoClear defendants and one cause of action against us for breach of contract. The cause of action against us titled "Breach of Third Party Benefit Contract" references our agreement to make Invisalign treatment available to OrthoClear patients, alleging that we failed "to provide the promised treatment to Plaintiff or any of the class members." On June 2, 2010, the Court granted our motion for summary judgment and dismissed us from the action. On June 29, 2010, Weber requested that the Court enter final judgment as to Align pursuant to Federal Rule of Civil Procedure 54(b) in order to certify Align's dismissal for immediate appeal. We filed an opposition to Weber's request on July 19, 2010, on the grounds that Weber failed to show that exceptional circumstances warranted the entry of a final judgment where fewer than all claims or parties had been dismissed. On August 20, 2010, the Court denied Weber's motion. On October 29, 2010, the Court dismissed the action against OrthoClear and OrthoClear Holdings Inc. with prejudice at the request of the remaining parties pursuant to a settlement. The Stipulation and Order of Dismissal with Prejudice entered by the Court provides that the settlement and dismissal does not affect any rights Weber may have to appeal dismissal of the action as against us. We believe there is no evidence to indicate that a reasonable possibility exists that a loss had been incurred as of March 31, 2011. *Securities Litigation* In August 2009, Plaintiff Charles Wozniak filed a lawsuit against us and our Chief Executive Officer and President, Thomas M. Prescott ("Mr. Prescott"), in District Court for the Northern District of California on behalf of a claimed class consisting of all persons or entities who purchased our common stock between January 30, 2007 and October 24, 2007. The complaint alleges that Align and Mr. Prescott violated Section 10(b) of the Securities Exchange Act of 1934 and that Mr. Prescott violated Section 20(a) of the Securities Exchange Act of 1934. Specifically, the complaint alleges that during the class period we failed to disclose that we had shifted the focus of our sales force to clearing backlog, causing a significant decrease in the number of new case starts. On November 13, 2009, the Court appointed Plumbers and Pipefitters National Pension Fund as lead plaintiff. The lead plaintiff filed an amended complaint on January 29, 2010. The amended complaint alleges that we and Mr. Prescott issued a number of purportedly false and misleading statements throughout the class period concerning the Patients First program, our production capacity, a purported backlog, and the focus of our sales force. On March 26, 2010, we and Mr. Prescott filed a motion to dismiss the amended complaint. The motion was heard by the Court on July 9, 2010 and the Court has not yet released a ruling on the motion. We believe the lawsuit to be without merit and intend to vigorously defend ourselves. We believe there is no evidence to indicate that a reasonable possibility exists that a loss had been incurred as of March 31, 2011.

Legal Settlements	3 Months Ended
Legal Settlements	Mar. 31, 2011
Legal Settlements
Legal Settlements	Note 6. Legal Settlements *Ormco* On August 16, 2009 we entered into a Settlement Agreement with Ormco Corporation, an affiliate of Danaher Corporation that ended all pending litigation between the parties and included a payment of $7.0 million for prepaid royalties. We amortized $6.2 million of the prepaid royalties to cost of sales in fiscal year 2009 and the remaining $0.8 million in the first quarter of 2010. *Leiszler* On May 10, 2010, Christopher J. Leiszler filed a complaint against us in the United States District Court for the Northern District of California. The complaint alleges that we implemented unfair and fraudulent requirements for the prescription of Invisalign through the Invisalign Proficiency Requirements for minimum case submission and continuing education credits requirements. In January 2010 Dr. Leiszler's Invisalign provider status was suspended for failing to meet the Proficiency Requirements. Dr. Leiszler sued on behalf of himself and all others similarly situated. The complaint seeks a refund of the price paid to us for Invisalign training. On October 19, 2010, we entered into a memorandum of understanding to resolve this litigation, and on November 30, 2010, we executed a formal Stipulation of Settlement. On December 23, 2010, the Court granted preliminary approval of the proposed settlement and on April 8, 2011, granted final approval of the settlement. Pursuant to its terms, the settlement will become effective in mid-May 2011. Under terms of the settlement, class members who did not elect to receive the cash remedy prior to the Court-ordered deadline will be reinstated to prescribe Invisalign treatment after the effective date under certain circumstances (the "Reinstatement Benefit"). In January 2011, we deposited approximately $8.0 million into an escrow account to pay eligible class members who elect the cash remedy, as well as legal fees and other costs. We recorded a total litigation settlement charge of $4.5 million during 2010 for our estimated liability related to this settlement. We will continue to assess and evaluate the matter with our legal counsel and update the estimated settlement charge as appropriate as new information becomes available.

Credit Facilities	3 Months Ended
Credit Facilities	Mar. 31, 2011
Credit Facilities
Credit Facilities	Note 7. Credit Facilities On December 14, 2010, we renegotiated and amended our existing credit facility with Comerica Bank. Under this revolving line of credit, we have $30.0 million of available borrowings with a maturity date of December 31, 2012. The interest rate on borrowings will range from Libor plus 1.5% to 2.0% depending upon the amount of cash we maintain at Comerica Bank. This credit facility requires a quick ratio covenant and also requires us to maintain a minimum unrestricted cash balance of $10.0 million. Additionally, in the event our unrestricted cash deposited is less than $55.0 million, the unused facility fee will increase from 0.050% per quarter to 0.125% per quarter. As of March 31, 2011, we had no outstanding borrowings under this credit facility and are in compliance with the financial covenants.

Commitments and Contingencies

3 Months Ended

Mar. 31, 2011

Commitments and Contingencies

Commitments and Contingencies

Note 8. Commitments and Contingencies

Operating Leases

As of March 31, 2011, minimum future lease payments for non-cancelable leases are as follows (in thousands):


Fiscal Year
2011 (remaining 9 months)	$	4,850
2012		5,485
2013		4,512
2014		3,506
2015		3,206
2016 and thereafter		4,979

Total	$	26,538

Warranty

We warrant our products against material defects until the Invisalign case is complete. We accrue for warranty costs in cost of revenues upon shipment of products. The amount of accrued estimated warranty costs is primarily based on historical experience as to product failures as well as current information on replacement costs. We regularly review the accrued balances and update these balances based on historical warranty trends. Actual warranty costs incurred have not materially differed from those accrued. However, future actual warranty costs could differ from the estimated amounts.

The following table reflects the change in our warranty accrual during the three months ended March 31, 2011 and 2010, respectively (in thousands):


	Three Months Ended March 31,
	2011			2010
Balance at beginning of period	$	2,607		$	2,376
Charged to cost of revenues		895			788
Actual warranty expenses		(736	)		(701	)

Balance at end of period	$	2,766		$	2,463

Stock-based Compensation

3 Months Ended

Mar. 31, 2011

Stock-based Compensation

Stock-based Compensation

Note 9. Stock-based Compensation

Summary of stock-based compensation expense

Stock-based compensation expense is based on the estimated fair value of awards, net of estimated forfeitures and recognized over the requisite service period. Estimated forfeitures are based on historical experience at the time of grant and may be revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The stock-based compensation expense related to all of our stock-based awards and employee stock purchases for the three months ended March 31, 2011 and 2010 are as follows (in thousands):


	Three Months Ended March 31,
	2011		2010
Cost of revenues	$	517	$	435
Sales and marketing		1,098		847
General and administrative		2,101		1,813
Research and development		563		378

Total stock-based compensation expense	$	4,279	$	3,473

Options

Activity for the period ended March 31, 2011 under the stock option plans are set forth below (in thousands, except years and per share amounts):


	Stock Options
	Number of Shares Underlying Stock Options			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at of December 31, 2010		7,815		$	12.99
Granted		263			20.80
Exercised		(218	)		12.27
Cancelled or expired		(18	)		14.08

Outstanding as of March 31, 2011		7,842		$	13.27		5.51	$	56,962

Vested and expected to vest at March 31, 2011		7,635		$	13.19		5.48	$	56,100

Exercisable at March 31, 2011		5,724		$	12.48		5.08	$	46,146

The fair value of stock options granted was estimated at the grant date using the Black-Scholes option pricing model with the following weighted average assumptions:


	Three Months Ended
	March 31,
	2011			2010
Stock Options:
Expected term (in years)		4.4			4.4
Expected volatility		61.0	%		63.3	%
Risk-free interest rate		1.8	%		2.0	%
Expected dividend		—			—
Weighted average fair value per share at grant date	$	10.37		$	9.26

As of March 31, 2011, we expect to recognize $13.9 million of total unamortized compensation cost, net of estimated forfeitures, related to stock options over a weighted average period of 2.5 years.

Restricted Stock Units

A summary of the nonvested shares for the three months ended March 31, 2011 is as follows:


	Number of Shares Underlying RSUs (in thousands)			Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Nonvested as of December 31, 2010		905
Granted		540
Vested and released		(325	)
Forfeited		(7	)

Nonvested as of March 31, 2011		1,113			1.86	$	22,796

As of March 31, 2011 the total unamortized compensation cost related to restricted stock units, net of estimated forfeitures, was $15.3 million, which we expect to recognize over a weighted average period of 2.9 years.

On February 18, 2011, we granted market-performance based restricted stock units ("MSU") to our named executive officers. Each MSU represents the right to one share of Align's common stock and will be issued through our amended 2005 Incentive Plan. The actual number of MSUs which will be eligible to vest will be based on the performance of Align's stock price relative to the performance of the NASDAQ Composite Index over the vesting period, generally two to three years, up to 150% of the MSUs initially granted.

The following table summarizes the MSU performance as of March 31, 2011:


	Number of Shares Underlying MSUs (in thousands)		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Nonvested as of December 31, 2010*		—
Granted		138
Vested and released		—
Forfeited		—

Nonvested as of March 31, 2011		138		2.39	$	2,830

There were no MSU grants outstanding as of December 31, 2010.

The fair value of the MSUs is estimated at the grant date using a Monte Carlo simulation to that includes a factor for market conditions. The following weighted-average assumptions used in the Monte Carlo simulation were as follows:


	Three Months Ended March 31,
	2011			2010
Expected term (in years)		3.0			N/A
Expected volatility		58.4	%		N/A
Risk-free interest rate		1.3	%		N/A
Expected dividend		—			N/A
Weighted average fair value per share at grant date	$	22.12			N/A

As of March 31, 2011, we expect to recognize $2.4 million of total unamortized compensation cost, net of estimated forfeitures, related to MSU over a weighted average period of 2.4 years.

Employee Stock Purchase Plan

In May 2010, our shareholders approved the 2010 Employee Stock Purchase Plan (the "2010 Purchase Plan") to replace the 2001 Purchase Plan which expired on January 31, 2011. The terms and features of the 2010 Purchase Plan are substantially the same as the 2001 Purchase Plan and will continue until terminated by either the Board or its administrator. The maximum number of shares available for issuance under the 2010 Purchase Plan is 2,400,000 shares.

The fair value of the option component of the Purchase Plan shares was estimated at the grant date using the Black-Scholes option pricing model with the following weighted average assumptions:


	Three Months Ended March 31,
	2011			2010
Employee Stock Purchase Plan:
Expected term (in years)		1.2			1.3
Expected volatility		43.0	%		58.3	%
Risk-free interest rate		0.4	%		0.5	%
Expected dividend		—			—
Weighted average fair value at grant date	$	7.26		$	7.57

As of March 31, 2011, we expect to recognize $3.3 million of the total unamortized compensation cost related to employee purchases over a weighted average period of 0.7 years.

Accounting for Income Taxes	3 Months Ended
Accounting for Income Taxes	Mar. 31, 2011
Accounting for Income Taxes
Accounting for Income Taxes	Note 10. Accounting for Income Taxes The financial statement recognition of the benefit for an uncertain tax position is dependent upon the benefit being more-likely-than-not to be sustainable upon audit by the applicable taxing authority. If this threshold is met, the tax benefit is then measured and recognized at the largest amount that is greater than fifty percent likely of being realized upon ultimate settlement. During the first quarter of fiscal 2011, the amount of unrecognized tax benefits was increased by approximately $1.1 million. The total amount of unrecognized tax benefits was $12.1 million as of March 31, 2011, which would impact our effective tax rate if recognized. We are subject to taxation in the U.S. and various states and foreign jurisdictions. All of our tax years will be open to examination by the U.S. federal and most state tax authorities due to our net operating loss and overall credit carryforward position. With few exceptions, we are no longer subject to examination by foreign tax authorities for years before 2005.

- Definition

The disclosure required for tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

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Net Profit Per Share

3 Months Ended

Mar. 31, 2011

Net Profit Per Share

Net Profit Per Share

Note 11. Net Profit Per Share

Basic net profit per share is computed using the weighted average number of shares of common stock outstanding during the period. Diluted net profit per share is computed using the weighted average number of shares of common stock, adjusted for the dilutive effect of potential common stock. Potential common stock, computed using the treasury stock method, include options, restricted stock units, and the dilutive component of Purchase Plan shares.

The following table sets forth the computation of basic and diluted net profit per share attributable to common stock (in thousands, except per share amounts):


	Three Months Ended March 31,
	2011		2010
Net profit	$	15,841	$	14,930

Weighted-average common shares outstanding, basic		76,844		75,166
Effect of potential dilutive common shares		2,517		2,431

Total shares, diluted		79,361		77,597

Basic net profit per share	$	0.21	$	0.20

Diluted net profit per share	$	0.20	$	0.19

For the three months ended March, 2011 and 2010, stock options and restricted stock units totaling 1.5 million and 2.1 million, respectively, were excluded from diluted net profit per share because of their anti-dilutive effect.

Comprehensive Income

3 Months Ended

Mar. 31, 2011

Comprehensive Income

Comprehensive Income

Note 12. Comprehensive Income

Comprehensive income includes net profit, foreign currency translation adjustments and unrealized gains on available-for-sale securities. The components of comprehensive income are as follows (in thousands):


	Three Months Ended March 31,
	2011		2010
Net profit	$	15,841	$	14,930
Foreign currency translation adjustments		483		(347	)
Change in unrealized gains on available-for-sale securities		7		1

Comprehensive income	$	16,331	$	14,584

- Definition

This label may include the following: 1) the amount of income tax expense or benefit allocated to each component of other comprehensive income, including reclassification adjustments, 2) the reclassification adjustments for each classification of other comprehensive income and 3) the ending accumulated balances for each component of comprehensive income. Components of comprehensive income include: (1) foreign currency translation adjustments; (2) gains and losses on foreign currency transactions that are designated as, and are effective as, economic hedges of a net investment in a foreign entity; (3) gains and losses on intercompany foreign currency transactions that are of a long-term-investment nature, when the entities to the transaction are consolidated, combined, or accounted for by the equity method in the reporting enterprise's financial statements; (4) change in the market value of a futures contract that qualifies as a hedge of an asset reported at fair value; (5) unrealized holding gains and losses on available-for-sale securities and that resulting from transfers of debt securities from the held-to-maturity category to the available-for-sale category; (6) a net loss recognized as an additional pension liability not yet recognized as net periodic pension cost; and (7) the net gain or loss and net prior service cost or credit for pension plans and other postretirement benefit plans.

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Segments and Geographical Information

3 Months Ended

Mar. 31, 2011

Segments and Geographical Information

Segments and Geographical Information

Note 13. Segments and Geographical Information

Segment

We report segment data based on the internal reporting that is used by management for making operating decisions and assessing performance. During all periods presented, we operated as a single business segment.

Geographical Information

Net revenues and long-lived assets are presented below by geographic area (in thousands):


	Three Months Ended March 31,
	2011		2010
Net revenues:
North America	$	79,135	$	68,854
Europe		24,537		20,378
Other international		1,184		858

Total net revenues	$	104,856	$	90,090


	As of March 31, 2011		As of December 31, 2010
Long-lived assets:
North America	$	76,148	$	85,576
Europe		972		837
Other international		1,921		1,919

Total long-lived assets	$	79,041	$	88,332

Subsequent Event	3 Months Ended
Subsequent Event	Mar. 31, 2011
Subsequent Event
Subsequent Event	Note 14. Subsequent Event On March 29, 2011, we entered into an Agreement and Plan of Merger (the "Merger Agreement") to acquire Cadent Holdings, Inc. ("Cadent"), for approximately $190 million in cash, less certain adjustments. Cadent is a leading provider of 3D digital scanning solutions for the orthodontic and dental industry. On April 29, 2011, we completed our acquisition of Cadent. In accordance with the terms of the Merger Agreement, we acquired all outstanding capital stock and Cadent became a wholly owned subsidiary. We are in the process of determining the preliminary allocation of purchase price to Cadent's tangible and intangible assets and liabilities assumed.