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Document And Entity Information - shares	6 Months Ended
Document And Entity Information - shares	Jun. 30, 2017	Jul. 25, 2017
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2017
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2017
Entity Registrant Name	NATIONAL INSTRUMENTS CORP /DE/
Entity Central Index Key	0000935494
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		130,493,232

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 263,150	$ 285,283
Short-term investments	105,284	73,117
Accounts receivable, net	230,958	228,686
Inventories, net	186,155	193,608
Prepaid expenses and other current assets	52,568	53,953
Total current assets	838,115	834,647
Property and equipment, net	256,761	260,456
Goodwill	261,411	253,197
Intangible assets, net	120,327	108,663
Other long-term assets	28,700	39,601
Total assets	1,505,314	1,496,564
Current liabilities:
Accounts payable	54,214	48,800
Accrued compensation	36,672	27,743
Deferred revenue - current	120,212	115,577
Accrued expenses and other liabilities	15,341	32,997
Other taxes payable	28,743	34,958
Total current liabilities	255,182	260,075
Long-term debt	25,000	25,000
Deferred income taxes	35,561	45,386
Liability for uncertain tax positions	12,438	11,719
Deferred revenue- long term	31,665	29,752
Other long-term liabilities	7,420	10,413
Total liabilities	367,266	382,345
Commitments and contingencies
Stockholders' equity:
Preferred stock: par value $0.01; 5,000,000 shares authorized; none issued and outstanding
Common stock: par value $0.01; 360,000,000 shares authorized; 130,493,232 shares and 129,202,979 shares issued and outstanding, respectively	1,305	1,292
Additional paid-in capital	800,774	771,346
Retained earnings	359,088	376,202
Accumulated other comprehensive loss	(23,119)	(34,621)
Total stockholders' equity	1,138,048	1,114,219
Total liabilities and stockholders' equity	$ 1,505,314	$ 1,496,564

Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2017	Dec. 31, 2016
Consolidated Balance Sheets [Abstract]
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	360,000,000	360,000,000
Common stock, shares issued	130,493,232	129,202,979
Common stock, shares outstanding	130,493,232	129,202,979

Consolidated Statements Of Income - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Net sales:
Product	$ 289,817	$ 278,530	$ 561,328	$ 537,963
Software maintenance	28,792	27,575	57,386	55,319
Total net sales	318,609	306,105	618,714	593,282
Cost of sales:
Product	79,153	75,194	154,349	149,404
Software maintenance	3,307	2,314	4,635	4,250
Total cost of sales	82,460	77,508	158,984	153,654
Gross profit	236,149	228,597	459,730	439,628
Operating expenses:
Sales and marketing	124,414	116,361	241,674	229,568
Research and development	56,913	59,839	115,175	119,179
General and administrative	26,191	25,130	51,933	49,770
Total operating expenses	207,518	201,330	408,782	398,517
Operating income	28,631	27,267	50,948	41,111
Other income:
Interest income	509	258	852	511
Net foreign exchange gain (loss)	447	(1,285)	529	(711)
Other gain(loss), net	(235)	53	197	(2,353)
Income before income taxes	29,352	26,293	52,526	38,558
Provision for income taxes	4,197	6,493	9,223	9,460
Net income	$ 25,155	$ 19,800	$ 43,303	$ 29,098
Basic earnings per share	$ 0.19	$ 0.15	$ 0.33	$ 0.23
Weighted average shares outstanding - basic	130,197	128,282	129,820	127,938
Diluted earnings per share	$ 0.19	$ 0.15	$ 0.33	$ 0.23
Weighted average shares outstanding - diluted	131,117	128,746	130,619	128,429
Dividends declared per share	$ 0.21	$ 0.20	$ 0.42	$ 0.40

Consolidated Statements Of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Consolidated Statements Of Comprehensive Income [Abstract]
Net income	$ 25,155	$ 19,800	$ 43,303	$ 29,098
Other comprehensive income, before tax and net of reclassification adjustments:
Foreign currency translation adjustment	11,702	(6,191)	15,664	8,166
Unrealized gain on securities available-for-sale	34	211	26	549
Unrealized (loss) gain on derivative instruments	(3,522)	138	(6,334)	3,565
Other comprehensive (loss) gain, before tax	8,214	(5,842)	9,356	12,280
Tax (benefit) expense related to items of other comprehensive income	(1,186)	(1,436)	(2,146)	3,275
Other comprehensive (loss) gain, net of tax	9,400	(4,406)	11,502	9,005
Comprehensive income	$ 34,555	$ 15,394	$ 54,805	$ 38,103

Consolidated Statements Of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Cash flow from operating activities:
Net income	$ 43,303	$ 29,098
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	35,915	38,217
Stock-based compensation	13,726	13,497
Tax expense from deferred income taxes	(875)	(2,927)
Changes in operating assets and liabilities	(7,284)	2,659
Net cash provided by operating activities	84,785	80,544
Cash flow from investing activities:
Capital expenditures	(15,727)	(20,970)
Capitalization of internally developed software	(24,816)	(15,406)
Additions to other intangibles	(1,124)	(689)
Acquisitions, net of cash received		(549)
Purchases of short-term investments	(52,807)	(5,008)
Sales and maturities of short-term investments	21,017	31,734
Net cash used in investing activities	(73,457)	(10,888)
Cash flow from financing activities:
Proceeds from revolving line of credit		15,000
Principal payments on revolving line of credit		(12,000)
Proceeds from issuance of common stock	15,407	14,830
Repurchase of common stock		(5,635)
Dividends paid	(54,595)	(51,273)
Net cash used in financing activities	(39,188)	(39,078)
Effect of exchange rate changes on cash	5,727	3,554
Net change in cash and cash equivalents	(22,133)	34,132
Cash and cash equivalents at beginning of period	285,283	251,129
Cash and cash equivalents at end of period	$ 263,150	$ 285,261

Basis Of Presentation

6 Months Ended

Jun. 30, 2017

Basis Of Presentation [Abstract]

Basis Of Presentation

Note 1 – Basis of presentation

The accompanying unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2016, included in our annual report on Form 10-K, filed with the Securities and Exchange Commission. In our opinion, the accompanying consolidated financial statements reflect all adjustments (consisting only of normal recurring items) considered necessary to present fairly our financial position at June 30, 2017 and December 31, 2016, the results of our operations and comprehensive income for the three and six month periods ended June 30, 2017 and 2016, and the cash flows for the six month periods ended June 30, 2017 and 2016. Our operating results for the three and six month periods ended June 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States.

Starting January 1, 2017, we began separately presenting the effect of exchange rate changes on cash and cash equivalents in our condensed consolidated statements of cash flows due to growing operations in foreign currency environments. Amounts in the comparable prior period have been reclassified to conform to the current period presentation. The reclassifications resulted in the disaggregation of the amount attributable to the “Effect of exchange rate changes on cash” of $3.6 million, with a corresponding decrease to “Net cash provided by operating activities” for the six month period ended June 30, 2016. We believe the reclassification is immaterial to the consolidated financial statements.

Recently Adopted Accounting Pronouncements

In October 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-16, Income Taxes – Intra-Entity Transfers of Assets Other Than Inventory. The standard is intended to address diversity in practice and complexity in financial reporting, particularly for intra-entity transfers of intellectual property. We early adopted ASU 2016-16 effective January 1, 2017. Using the modified retrospective method, the impact of the adoption of the standard was to increase deferred tax assets by $0.4 million, decrease other assets, net by $6.2 million and decrease retained earnings by $5.8 million. The adoption of the amendments had the effect of increasing our diluted earnings per share by $0.01 and $0.02 for the three and six month periods ended June 30, 2017, respectively.

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes ASC840, Leases. The guidance requires lessees to recognize most lease liabilities on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. The update states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. The update is effective for interim and annual periods beginning after December 15, 2018, and early adoption is permitted. We are currently evaluating the effect that the updated standard will have on our Consolidated Financial Statements and related disclosures. We do not expect to adopt the new standard prior to the required effective date.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The update is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. As currently issued and amended, ASU 2014-09 is effective for annual reporting periods, and interim periods within that period, beginning after December 15, 2017 and early adoption is permitted for annual reporting periods, and interim periods within that period, beginning after December 31, 2016. We intend to adopt this standard as of January 1, 2018 by applying the modified retrospective transition method. Consequently, the cumulative effect of applying the new standard to existing contracts as of January 1, 2018 will be recognized as an adjustment to the opening balance of equity in the first quarter of 2018.

We anticipate ASU 2014-09, as amended, could have a material impact on our consolidated financial statements and disclosures. We have reached initial conclusions on our key accounting matters related to the new standard and believe adoption of the new standard will generally result in revenue recognition earlier or at the same time as existing US GAAP. The most significant impact of the standard relates to our accounting for certain software arrangements. We primarily license software on a perpetual basis. However, we also license software under enterprise agreements which includes an unlimited quantity of certain software licenses for a fixed-term bundled with software maintenance, technical support, and a specified amount of training and service credits. Currently, we defer revenue for software licensed under our enterprise agreements and certain perpetual arrangements due to a lack of vendor specific objective evidence (“VSOE”) for certain elements in the contract. Under the new standard, we are no longer required to establish VSOE to recognize software license revenue separately from the other elements, and we will be able to recognize software license revenue once the customer obtains control of the license, which will generally occur at the start of each license term. Due to the complexity of our enterprise agreement contracts, the actual revenue recognition treatment required under the new standard will be dependent on contract-specific terms, and may vary in some instances from recognition at the time of billing. Additionally, we expect the new standard will impact the way we allocate the transaction price for arrangements with separately-priced extended warranty offerings. We will continue to monitor and assess the impact of changes to the standard and interpretations as they become available.

Other Updates

The FASB also issued the following ASUs which are not expected to have a material impact on our financial condition, results of operations or cash flows upon adoption:

ASU 2017-11—Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception

ASU 2017-10—Service Concession Arrangements (Topic 853): Determining the Customer of the Operation Services (a consensus of the FASB Emerging Issues Task Force)

ASU 2017-09—Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting

ASU 2017-08—Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities

ASU 2017-07 —Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost

ASU 2017-06—Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965): Employee Benefit Plan Master Trust Reporting (a consensus of the Emerging Issues Task Force)

ASU 2017-05—Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets

ASU 2016-18—Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force)

Earnings Per Share

6 Months Ended

Jun. 30, 2017

Earnings Per Share [Abstract]

Earnings Per Share

Note 2 – Earnings per share

Basic earnings per share (“EPS”) is computed by dividing net income by the weighted average number of common shares outstanding during each period. Diluted EPS is computed by dividing net income by the weighted average number of common shares and common share equivalents outstanding (if dilutive) during each period. The number of common share equivalents, which includes restricted stock units (“RSUs”), is computed using the treasury stock method.

The reconciliation of the denominators used to calculate basic EPS and diluted EPS for the three and six month periods ended June 30, 2017 and 2016, are as follows:



	Three Months Ended June 30,		Six Months Ended June 30,
	(In thousands)		(In thousands)
	(Unaudited)		(Unaudited)
	2017	2016	2017	2016
Weighted average shares outstanding-basic	130,197	128,282	129,820	127,938
Plus: Common share equivalents
RSUs	920	464	799	491
Weighted average shares outstanding-diluted	131,117	128,746	130,619	128,429

Stock awards to acquire 6,800 shares and 51,000 shares for the three months ended June 30, 2017 and 2016, respectively, and 13,500 shares and 333,000 shares for the six month periods ended June 30, 2017 and 2016, respectively, were excluded in the computations of diluted EPS because the effect of including the stock awards would have been anti-dilutive.

Short-Term Investments

6 Months Ended

Jun. 30, 2017

Short-Term Investments [Abstract]

Short-Term Investments

Note 3 – Short-term investments

The following tables summarize unrealized gains and losses related to our short-term investments designated as available-for-sale:



		As of June 30, 2017
(In thousands)		(Unaudited)
				Gross		Gross		Cumulative
		Adjusted Cost		Unrealized Gain		Unrealized Loss		Translation Adjustment		Fair Value
Corporate bonds		92,561		78		(145)		(1,466)		91,028
U.S. treasuries and agencies		12,496		-		-		-		12,496
Time deposits		1,760		-		-		-		1,760
Short-term investments	$	106,817	$	78	$	(145)	$	(1,466)	$	105,284



(In thousands)		December 31, 2016
				Gross		Gross		Cumulative
		Adjusted Cost		Unrealized Gain		Unrealized Loss		Translation Adjustment		Fair Value
Corporate bonds		72,986		89		(182)		(1,536)		71,357
Time deposits		1,760		-		-		-		1,760
Short-term investments	$	74,746	$	89	$	(182)	$	(1,536)	$	73,117

The following tables summarize the contractual maturities of our short-term investments designated as available-for-sale:



		As of June 30, 2017
(In thousands)		(Unaudited)
		Adjusted Cost		Fair Value
Due in less than 1 year	$	29,189	$	29,180
Due in 1 to 5 years		77,628		76,104
Total available-for-sale debt securities	$	106,817	$	105,284

Due in less than 1 year		Adjusted Cost		Fair Value
Corporate bonds	$	14,933	$	14,924
U.S. treasuries and agencies		12,496		12,496
Time deposits		1,760		1,760
Total available-for-sale debt securities	$	29,189	$	29,180

Due in 1 to 5 years		Adjusted Cost		Fair Value
Corporate bonds	$	77,628	$	76,104
Total available-for-sale debt securities	$	77,628	$	76,104

Fair Value Measurements

6 Months Ended

Jun. 30, 2017

Fair Value Measurements [Abstract]

Fair Value Measurements

Note 4 – Fair value measurements

We define fair value to be the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, we consider the principal or most advantageous market that market participants may use when pricing the asset or liability.

We follow a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Fair value measurement is determined based on the lowest level input that is significant to the fair value measurement. The three values of the fair value hierarchy are the following:

Level 1 – Quoted prices in active markets for identical assets or liabilities

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

Level 3 – Inputs that are not based on observable market data

Assets and liabilities measured at fair value on a recurring basis are summarized below:



		Fair Value Measurements at Reporting Date Using
(In thousands)		(Unaudited)
Description		June 30, 2017		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Cash and cash equivalents available for sale:
Money Market Funds	$	15,951	$	15,951	$	-	$	-
U.S. treasuries and agencies		42,348		-		42,348
Short-term investments available for sale:
Corporate bonds		91,028		-		91,028		-
U.S. treasuries and agencies		12,496		-		12,496
Time deposits		1,760		1,760		-		-
Derivatives		5,665		-		5,665		-
Total Assets	$	169,248	$	17,711	$	151,537	$	-

Liabilities
Derivatives	$	(7,371)	$	-	$	(7,371)	$	-
Total Liabilities	$	(7,371)	$	-	$	(7,371)	$	-


(In thousands)		Fair Value Measurements at Reporting Date Using
Description		December 31, 2016		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Cash and cash equivalents available for sale:
Money Market Funds	$	68,577	$	68,577	$	-	$	-
Short-term investments available for sale:
Corporate bonds		71,357		-		71,357		-
Time deposits		1,760		1,760		-		-
Derivatives		15,113		-		15,113		-
Total Assets	$	156,807	$	70,337	$	86,470	$	-

Liabilities
Derivatives	$	(8,199)	$	-	$	(8,199)	$	-
Total Liabilities	$	(8,199)	$	-	$	(8,199)	$	-

We value our available-for-sale short-term investments based on pricing from third party pricing vendors, who may use quoted prices in active markets for identical assets (Level 1 inputs) or inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs) in determining fair value. We classify all of our fixed income available-for-sale securities as having Level 2 inputs. The valuation techniques used to measure the fair value of our financial instruments having Level 2 inputs were derived from non-binding market consensus prices that are corroborated by observable market data, quoted market prices for similar instruments, or pricing models, such as discounted cash flow techniques. We believe all of these sources reflect the credit risk associated with each of our available-for-sale short-term investments. Short-term investments available-for-sale consists of debt securities issued by states of the U.S. and political subdivisions of the U.S., corporate debt securities and debt securities issued by U.S. government organizations and agencies. All of our short-term investments available-for-sale have contractual maturities of less than 60 months.

Derivatives include foreign currency forward and option contracts. Our foreign currency forward contracts are valued using an income approach (Level 2) based on the spot rate less the contract rate multiplied by the notional amount. Our foreign currency option contracts are valued using a market approach based on the quoted market prices which are derived from observable inputs including current and future spot rates, interest rate spreads as well as quoted market prices of similar instruments. We consider counterparty credit risk in the valuation of our derivatives. However, counterparty credit risk did not impact the valuation of our derivatives during the six month period ended June 30, 2017. There were no transfers in or out of Level 1 or Level 2 during the six month period ended June 30, 2017.

As of June 30, 2017, our short-term investments did not include sovereign debt from any country other than the United States.

We did not have any items that were measured at fair value on a nonrecurring basis at June 30, 2017 and December 31, 2016. The carrying value of net accounts receivable, accounts payable, and long-term debt contained in the Consolidated Balance Sheets approximates fair value.

Derivative Instruments And Hedging Activities

6 Months Ended

Jun. 30, 2017

Derivative Instruments And Hedging Activities [Abstract]

Derivative Instruments And Hedging Activities

Note 5 – Derivative instruments and hedging activities

We recognize all of our derivative instruments as either assets or liabilities in our statement of financial position at fair value. The accounting for changes in the 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 relationship and further, on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, we 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.

We have operations in over 50 countries. Sales outside of the Americas accounted for approximately 62% and 63% of our net sales during the three month periods ended June 30, 2017 and 2016, respectively, and approximately 61% and 62% of our net sales during the six month periods ended June 30, 2017 and 2016, respectively. Our activities expose us to a variety of market risks, including the effects of changes in foreign currency exchange rates. These financial risks are monitored and managed by us as an integral part of our overall risk management program.

We maintain a foreign currency risk management strategy that uses derivative instruments (foreign currency forward and purchased option contracts) to help protect our earnings and cash flows from fluctuations caused by the volatility in currency exchange rates. Movements in foreign currency exchange rates pose a risk to our operations and competitive position, in that exchange rate changes may affect our profitability and cash flow, and the business or pricing strategies of our non-U.S. based competitors.

The vast majority of our foreign sales are denominated in the customers’ local currency. We purchase foreign currency forward and option contracts as hedges of forecasted sales that are denominated in foreign currencies and as hedges of foreign currency denominated financial assets or liabilities. These contracts are entered into to help protect against the risk that the eventual dollar-net-cash inflows resulting from such sales or firm commitments will be adversely affected by changes in exchange rates. We also purchase foreign currency forward contracts as hedges of forecasted expenses that are denominated in foreign currencies. These contracts are entered into to help protect against the risk that the eventual dollar-net-cash outflows resulting from foreign currency operating and cost of sales expenses will be adversely affected by changes in exchange rates.

We designate foreign currency forward and purchased option contracts as cash flow hedges of forecasted net sales or forecasted expenses. In addition, we hedge our foreign currency denominated balance sheet exposures using foreign currency forward contracts that are not designated as hedging instruments. None of our derivative instruments contain a credit-risk-related contingent feature.

Cash flow hedges

To help protect against the reduction in value caused by a fluctuation in foreign currency exchange rates of forecasted foreign currency cash flows resulting from international sales over the next one to three years, we have instituted a foreign currency cash flow hedging program. We hedge portions of our forecasted net sales and forecasted expenses denominated in foreign currencies with forward and purchased option contracts. For forward contracts, when the dollar strengthens significantly against the foreign currencies, the change in the present value of future foreign currency cash flows may be offset by the change in the fair value of the forward contracts designated as hedges. For option contracts, when the dollar strengthens significantly against the foreign currencies, the change in the present value of future foreign currency cash flows may be offset by the change in the fair value of the option contracts net of the premium paid designated as hedges. Our foreign currency purchased option contracts are purchased “at-the-money” or “out-of-the-money.” We purchase foreign currency forward and option contracts for up to 100% of our forecasted exposures in selected currencies (primarily in Euro, Japanese yen, Hungarian forint, British pound, Malaysian ringgit and Chinese yuan) and limit the duration of these contracts to 40 months or less.

For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported as a component of accumulated other comprehensive income (“OCI”) and reclassified into earnings in the same line item (net sales, operating expenses, or cost of sales) associated with the forecasted transaction and in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings or expenses during the current period and are classified as a component of “net foreign exchange gain (loss).” Hedge effectiveness of foreign currency forwards and purchased option contracts designated as cash flow hedges are measured by comparing the hedging instrument’s cumulative change in fair value from inception to maturity to the forecasted transaction’s terminal value.

We held forward contracts with the following notional amounts:



(In thousands)		US Dollar Equivalent
		As of June 30, 2017		As of December 31,
		(Unaudited)		2016
Chinese yuan	$	41,860	$	27,414
Euro		137,059		123,522
Japanese yen		30,334		44,982
Hungarian forint		55,671		57,077
Malaysian ringgit		36,513		42,510
Total forward contracts notional amount	$	301,437	$	295,505

The contracts in the foregoing table had contractual maturities of 36 months or less at June 30, 2017 and December 31, 2016.

At June 30, 2017, we expect to reclassify $0.7 million of losses on derivative instruments from accumulated OCI to net sales during the next twelve months when the hedged international sales occur, $0.3 million of losses on derivative instruments from accumulated OCI to cost of sales during the next twelve months when the cost of sales are incurred and $0.3 million of losses on derivative instruments from accumulated OCI to operating expenses during the next twelve months when the hedged operating expenses occur. Expected amounts are based on derivative valuations at June 30, 2017. Actual results may vary materially as a result of changes in the corresponding exchange rates subsequent to this date.

The gains and losses recognized in earnings due to hedge ineffectiveness were not material for each of the six month periods ended June 30, 2017 and 2016 and are included as a component of net income under the line item “net foreign exchange gain (loss).”

Other Derivatives

Other derivatives not designated as hedging instruments consist primarily of foreign currency forward contracts that we use to hedge our foreign denominated net receivable or net payable positions to help protect against the change in value caused by a fluctuation in foreign currency exchange rates. We typically attempt to hedge up to 90% of our outstanding foreign denominated net receivables or net payables and typically limit the duration of these foreign currency forward contracts to approximately 120 days or less. The gain or loss on the derivatives as well as the offsetting gain or loss on the hedge item attributable to the hedged risk is recognized in current earnings under the line item “net foreign exchange gain (loss).” As of June 30, 2017 and December 31, 2016, we held foreign currency forward contracts with a notional amount of $46 million and $60 million, respectively.

The following tables present the fair value of derivative instruments on our Consolidated Balance Sheets at June 30, 2017 and December 31, 2016, respectively.



	Asset Derivatives
	June 30, 2017			December 31, 2016
(In thousands)	(Unaudited)

	Balance Sheet Location		Fair Value	Balance Sheet Location		Fair Value
Derivatives designated as hedging instruments
Foreign exchange contracts - ST forwards	Prepaid expenses and other current assets	$	3,014		$	9,378

Foreign exchange contracts - LT forwards	Other long-term assets		2,427			3,866
Total derivatives designated as hedging instruments		$	5,441		$	13,244

Derivatives not designated as hedging instruments

Foreign exchange contracts - ST forwards	Prepaid expenses and other current assets	$	224		$	1,869
Total derivatives not designated as hedging instruments		$	224		$	1,869

Total derivatives		$	5,665		$	15,113




	Liability Derivatives
	June 30, 2017			December 31, 2016
(In thousands)	(Unaudited)

	Balance Sheet Location		Fair Value	Balance Sheet Location		Fair Value
Derivatives designated as hedging instruments
Foreign exchange contracts - ST forwards	Accrued expenses and other liabilities	$	(4,343)		$	(4,672)

Foreign exchange contracts - LT forwards	Other long-term liabilities		(2,304)			(3,352)
Total derivatives designated as hedging instruments		$	(6,647)		$	(8,024)

Derivatives not designated as hedging instruments

Foreign exchange contracts - ST forwards	Accrued expenses and other liabilities	$	(724)		$	(175)
Total derivatives not designated as hedging instruments		$	(724)		$	(175)

Total derivatives		$	(7,371)		$	(8,199)

The following tables present the effect of derivative instruments on our Consolidated Statements of Income for three month periods ended June 30, 2017 and 2016, respectively:



June 30, 2017
(In thousands)
(Unaudited)
Derivatives in Cash Flow Hedging Relationship		Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)	Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)		Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion)		Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion)
Foreign exchange contracts - forwards and options	$	(9,488)	Net sales	$	669	Net foreign exchange gain/(loss)	$	-

Foreign exchange contracts - forwards and options		3,171	Cost of sales		(428)	Net foreign exchange gain/(loss)		-

Foreign exchange contracts - forwards and options		2,795	Operating expenses		(416)	Net foreign exchange gain/(loss)		-
Total	$	(3,522)		$	(175)		$	-



June 30, 2016
(In thousands)
(Unaudited)
Derivatives in Cash Flow Hedging Relationship		Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)	Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)		Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion)		Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion)
Foreign exchange contracts - forwards and options	$	2,764	Net sales	$	(904)	Net foreign exchange gain/(loss)	$	-

Foreign exchange contracts - forwards and options		(1,442)	Cost of sales		(382)	Net foreign exchange gain/(loss)		-

Foreign exchange contracts - forwards and options		(1,184)	Operating expenses		(360)	Net foreign exchange gain/(loss)		-
Total	$	138		$	(1,646)		$	-


(In thousands)
Derivatives not Designated as Hedging Instruments	Location of Gain (Loss) Recognized in Income		Amount of Gain (Loss) Recognized in Income		Amount of Gain (Loss) Recognized in Income
			June 30, 2017		June 30, 2016
			(Unaudited)		(Unaudited)
Foreign exchange contracts - forwards	Net foreign exchange gain/(loss)	$	(632)		2,063

Total		$	(632)	$	2,063

The following tables present the effect of derivative instruments on our Consolidated Statements of Income for the six month periods ended June 30, 2017 and 2016, respectively:



June 30, 2017
(In thousands)
(Unaudited)
Derivatives in Cash Flow Hedging Relationship			Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)	Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)		Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion)		Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion)
Foreign exchange contracts - forwards and options		$	(14,797)	Net sales	$	2,749	Net foreign exchange gain/(loss)	$	-

Foreign exchange contracts - forwards and options			4,480	Cost of sales		(978)	Net foreign exchange gain/(loss)		-

Foreign exchange contracts - forwards and options			3,983	Operating expenses		(979)	Net foreign exchange gain/(loss)		-
Total	$		(6,334)		$	792		$	-



June 30, 2016
(In thousands)
(Unaudited)
Derivatives in Cash Flow Hedging Relationship		Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)	Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)		Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion)		Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion)
Foreign exchange contracts - forwards and options	$	(276)	Net sales	$	(1,141)	Net foreign exchange gain/(loss)	$	-

Foreign exchange contracts - forwards and options		1,597	Cost of sales		(953)	Net foreign exchange gain/(loss)		-

Foreign exchange contracts - forwards and options		2,244	Operating expenses		(889)	Net foreign exchange gain/(loss)		-
Total	$	3,565		$	(2,983)		$	-


(In thousands)
Derivatives not Designated as Hedging Instruments	Location of Gain (Loss) Recognized in Income		Amount of Gain (Loss) Recognized in Income		Amount of Gain (Loss) Recognized in Income
			June 30, 2017		June 30, 2016
			(Unaudited)		(Unaudited)
Foreign exchange contracts - forwards	Net foreign exchange gain/(loss)	$	(3,178)		(191)

Total		$	(3,178)	$	(191)

- Definition

The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 30
-Section 45
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6441202&loc=d3e80720-113993

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4C
-URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5624171-113959

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=64837297&loc=d3e41620-113959

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4B
-URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5624163-113959

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5579240-113959

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4D
-URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5624177-113959

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 30
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=35736893&loc=d3e80784-113994

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=64837297&loc=d3e41641-113959

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 1A
-URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5579245-113959

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4H
-URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5624258-113959

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 30
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=35736893&loc=d3e80748-113994

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4K
-URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5708775-113959

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4J
-URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5708773-113959

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4A
-URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5618551-113959

Reference 15: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 1B
-URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5580258-113959

Reference 16: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4E
-URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5624181-113959

Reference 17: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 25
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6886632&loc=d3e76258-113986

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=64837297&loc=d3e41638-113959

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(n))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

+ Details

Inventories, Net

6 Months Ended

Jun. 30, 2017

Inventories, Net [Abstract]

Inventories, Net

Note 6 – Inventories, net

Inventories, net consist of the following:


		June 30, 2017		December 31,
(In thousands)		(Unaudited)		2016

Raw materials	$	93,345	$	92,906
Work-in-process		7,805		9,125
Finished goods		85,005		91,577
	$	186,155	$	193,608

Intangible Assets, Net

6 Months Ended

Jun. 30, 2017

Intangible Assets, Net [Abstract]

Intangible Assets, Net

Note 7 – Intangible assets, net

Intangible assets at June 30, 2017 and December 31, 2016 are as follows:



		June 30, 2017
(In thousands)		(Unaudited)						December 31, 2016
		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Capitalized software development costs	$	110,565	$	(30,911)	$	79,654	$	103,887	$	(39,180)	$	64,707
Acquired technology		95,443		(83,578)		11,865		94,124		(79,485)		14,639
Patents		32,497		(18,872)		13,625		31,513		(17,573)		13,940
Other		44,484		(29,301)		15,183		42,848		(27,471)		15,377
	$	282,989	$	(162,662)	$	120,327	$	272,372	$	(163,709)	$	108,663

Software development costs capitalized for the three month periods ended June 30, 2017 and 2016 were $13.7 million and $7.6 million, respectively, and related amortization expense was $5.5 million and $4.3 million, respectively. For the six month periods ended June 30, 2017 and 2016, capitalized software development costs were $26 million and $16 million, respectively, and related amortization expense was $10.8 million and $8.6 million, respectively. Capitalized software development costs for the three month periods ended June 30, 2017 and 2016 included costs related to stock based compensation of $528,000 and $200,000, respectively. For the six month periods ended June 30, 2017 and 2016, capitalized software development costs included costs related to stock based compensation of $954,000 and $525,000 respectively. The related amounts in the table above are net of fully amortized assets.

Amortization of capitalized software development costs is computed on an individual product basis for those products available for market and is recognized based on the product’s estimated economic life, generally three to six years. Acquired technology and other intangible assets are amortized over their useful lives, which range from three to eight years. Patents are amortized using the straight-line method over their estimated period of benefit, generally 10 to 17 years. Total intangible assets amortization expenses were $8.6 million and $9.2 million for the three months ended June 30, 2017 and 2016, respectively, and $17.0 million and $18.5 million for the six month periods ended June 30, 2017 and 2016, respectively.

Goodwill

6 Months Ended

Jun. 30, 2017

Goodwill [Abstract]

Goodwill

Note 8 – Goodwill

The carrying amount of goodwill as of June 30, 2017, was as follows:



		Amount
		(In thousands)
Balance as of December 31, 2016	$	253,197
Acquisitions		-
Foreign currency translation impact		8,214
Balance as of June 30, 2017 (unaudited)	$	261,411

The excess purchase price over the fair value of assets acquired is recorded as goodwill. As we have one operating segment comprised of components with similar economic characteristics, we allocate goodwill to one reporting unit for goodwill impairment testing. Goodwill is tested for impairment on an annual basis, and between annual tests if indicators of potential impairment exist, using a fair-value-based approach based on the market capitalization of the reporting unit. Our annual impairment test was performed as of February 28, 2017. No impairment of goodwill was identified during 2017 or 2016.

Income Taxes	6 Months Ended
Income Taxes	Jun. 30, 2017
Income Taxes [Abstract]
Income Taxes	Note 9 – Income taxes We account for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts. Valuation allowances are established when necessary to reduce deferred tax assets to amounts which are more likely than not to be realized. We had a valuation allowance of $62 million at June 30, 2017 and December 31, 2016, and $102 million at December 31, 2015. A majority of the valuation allowance is related to the deferred tax assets of National Instruments Hungary Kft. (“NI Hungary”). The decrease in the valuation allowance from 2015 to 2016 was primarily due to the revaluation of NI Hungary’s gross deferred tax assets following the reduction in the Hungarian corporate income tax rate from 19% to 9%. We account for uncertainty in income taxes recognized in our financial statements using prescribed recognition thresholds and measurement attributes for financial statement disclosure of tax positions taken or expected to be taken on our tax returns. We had $12.4 million and $11.7 million unrecognized tax benefits at June 30, 2017 and December 31, 2016, respectively, all of which would affect our effective income tax rate if recognized. We recorded a gross increase in unrecognized tax benefits of $0.3 million and $0.5 million for the three and six month periods ended June 30, 2017, respectively, as a result of the tax positions taken during these periods. As of June 30, 2017, it is reasonably possible that we will recognize tax benefits in the amount of $3.7 million in the next twelve months due to the closing of open tax years. The nature of the uncertainty is related to deductions taken on returns that have not been examined by the applicable tax authority. Our continuing policy is to recognize interest and penalties related to income tax matters in income tax expense. As of June 30, 2017, we had approximately $1.4 million accrued for interest related to uncertain tax positions. The tax years 2008 through 2017 remain open to examination by the major taxing jurisdictions to which we are subject. Our provision for income taxes reflected an effective tax rate of 14% and 25% for the three month periods ended June 30, 2017 and 2016, respectively, and 18% and 25% for the six month periods ended June 30, 2017 and 2016, respectively. For the three and six month periods ended June 30, 2017, our effective tax rate was lower than the U.S. federal statutory rate of 35% as a result of an enhanced deduction for certain research and development expenses, profits in foreign jurisdictions with reduced income tax rates, the research and development tax credit, a tax benefit from disqualifying dispositions of equity awards that do not ordinarily result in a tax benefit, and excess tax benefits from share-based compensation. For the three and six month periods ended June 30, 2016, our effective tax rate was lower than the U.S. federal statutory rate of 35% as a result of an enhanced deduction for certain research and development expenses, profits in foreign jurisdictions with reduced income tax rates, the research and development tax credit, and a tax benefit from disqualifying dispositions of equity awards that do not ordinarily result in a tax benefit. Our earnings in Hungary are subject to a statutory tax rate of 9%. In addition, our research and development activities in Hungary benefit from a tax law in Hungary that provides for an enhanced deduction for qualified research and development expenses. The tax position of our Hungarian operations resulted in income tax benefits of $4.4 million and $3.9 million for the three month periods ended June 30, 2017 and 2016, respectively, and $7.3 million and $5.8 million for the six month periods ended June 30, 2017 and 2016, respectively. Earnings from our operations in Malaysia are free of tax under a tax holiday effective January 1, 2013. This tax holiday expires in 2027. If we fail to satisfy the conditions of the tax holiday, this tax benefit may be terminated early. The income tax benefits of the tax holiday for the three and six month periods ended June 30, 2017 were approximately $0.6 and $1.1 million, respectively. The impact of the tax holiday on a per share basis for each of the three and six months ended June 30, 2017 was a benefit of $0.01 per share. The income tax benefits of the tax holiday for the three and six month periods ended June 30, 2016 were approximately $0.7 million and $1.1 million, respectively. The impact of the tax holiday on a per share basis for each of the three and six months ended June 30, 2016 was a benefit of $0.01 per share. No other taxing jurisdictions had a significant impact on our effective tax rate. We have not entered into any advanced pricing or other agreements with the IRS with regard to any foreign jurisdictions.

Comprehensive Income

6 Months Ended

Jun. 30, 2017

Comprehensive Income [Abstract]

Comprehensive Income

Note 10 – Comprehensive income

Our comprehensive income is comprised of net income, foreign currency translation, unrealized gains and losses on forward and option contracts and securities classified as available-for-sale. The accumulated OCI, net of tax, for the six month periods ended June 30, 2017 and 2016, consisted of the following:


		June 30, 2017
		(Unaudited)
(In thousands)		Currency translation adjustment		Investments		Derivative instruments		Accumulated other comprehensive income/(loss)
Balance as of December 31, 2016	$	(37,174)	$	(669)		3,222	$	(34,621)
Current-period other comprehensive income		15,664		26		(5,542)		10,148
Reclassified from accumulated OCI into income		-		-		(792)		(792)
Income tax (benefit) expense		120		(17)		(2,249)		(2,146)
Balance as of June 30, 2017	$	(21,630)	$	(626)	$	(863)	$	(23,119)


		June 30, 2016
		(Unaudited)
(In thousands)		Currency translation adjustment		Investments	Derivative instruments		Accumulated other comprehensive income/(loss)
Balance as of December 31, 2015	$	(31,871)	$	(857)	(5,362)	$	(38,090)
Current-period other comprehensive (loss) income		8,166		549	582		9,297
Reclassified from accumulated OCI into income		-		-	2,983		2,983
Income tax (benefit) expense		1,944		134	1,197		3,275
Balance as of June 30, 2016	$