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UNITED STATES  
SECURITIES AND EXCHANGE COMMISSION  
Washington, D.C. 20549  

FORM 10-Q  
    Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934  
  
For the quarterly period ended: September 30, 2020 or  
  
 Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934  
  
For the transition period from ________________ to ________________    
Commission file number:  0-25426  
    https://cdn.kscope.io/9e0955f6a2daf69f69a61c91932ed066-nati-20200930_g1.jpg
NATIONAL INSTRUMENTS CORPORATION  
(Exact name of registrant as specified in its charter)  
Delaware74-1871327
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
  
11500 North MoPac Expressway 
Austin,78759
Texas
(Address of principal executive offices) (Zip Code)
 
Registrant's telephone number, including area code:  (512) 683-0100  
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of exchange on which registered
Common Stock, $0.01 par valueNATINasdaq Stock Market
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No   
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No   
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.    
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No  
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.  
ClassOutstanding at October 29, 2020
Common Stock, $0.01 par value131,245,640
1


NATIONAL INSTRUMENTS CORPORATION
INDEX  
Page No.
  
 
  
 
September 30, 2020 (unaudited) and December 31, 2019
  
 
(unaudited) for the three and nine months ended September 30, 2020 and 2019
  
 
(unaudited) for the three and nine months ended September 30, 2020 and 2019
  
 
(unaudited) for the nine months ended September 30, 2020 and 2019
(unaudited) for the three and nine months ended September 30, 2020 and 2019
  

  
  
  
  
  
 
  
  
  
  
  

2


PART I - FINANCIAL INFORMATION  

ITEM 1. Financial Statements
NATIONAL INSTRUMENTS CORPORATION  
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
September 30,December 31,
20202019
Assets(unaudited) 
Current assets:  
Cash and cash equivalents$197,319 $194,616 
Short-term investments92,853 237,983 
Accounts receivable, net214,620 248,872 
Inventories, net209,558 200,410 
Prepaid expenses and other current assets72,956 65,477 
Total current assets787,306 947,358 
Property and equipment, net253,073 243,717 
Goodwill487,101 262,242 
Intangible assets, net183,067 84,083 
Operating lease right-of-use assets69,395 70,407 
Other long-term assets63,930 44,082 
Total assets$1,843,872 $1,651,889 
Liabilities and stockholders' equity  
Current liabilities:  
Accounts payable and accrued expenses$48,886 $52,192 
Accrued compensation53,496 47,732 
Deferred revenue - current116,871 131,445 
Operating lease liabilities - current16,177 13,431 
Other taxes payable41,604 40,607 
Debt, current3,500  
Other current liabilities50,259 20,716 
Total current liabilities330,793 306,123 
Deferred income taxes41,514 14,065 
Income tax payable - non-current61,628 69,151 
Liability for uncertain tax positions6,867 6,652 
Deferred revenue - non-current34,210 33,480 
Operating lease liabilities - non-current37,767 40,650 
Debt, non-current84,289  
Other long-term liabilities7,606 5,418 
Total liabilities604,674 475,539 
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; 131,245,640 shares and 130,504,535 shares issued and outstanding, respectively 
1,312 1,305 
Additional paid-in capital1,012,656 953,578 
Retained earnings247,970 242,537 
Accumulated other comprehensive loss(22,740)(21,070)
Total stockholders’ equity1,239,198 1,176,350 
Total liabilities and stockholders’ equity$1,843,872 $1,651,889 
The accompanying notes are an integral part of the financial statements. 

3


NATIONAL INSTRUMENTS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)  
  
Three Months EndedNine Months Ended
September 30,September 30,
2020201920202019
    
Net sales:    
Product$269,651 $305,247 $809,890 $882,747 
Software maintenance38,473 35,195 108,944 103,000 
Total net sales308,124 340,442 918,834 985,747 
    
Cost of sales:    
Product88,370 84,127 254,236 240,056 
Software maintenance3,893 1,788 7,689 5,700 
Total cost of sales92,263 85,915 261,925 245,756 
    
Gross profit215,861 254,527 656,909 739,991 
    
Operating expenses:    
Sales and marketing109,774 113,922 330,939 352,340 
Research and development70,802 66,558 206,648 200,981 
General and administrative37,431 35,711 92,980 92,639 
Total operating expenses218,007 216,191 630,567 645,960 
Gain on sale of business/asset 26,842 159,753 26,842 
Operating (loss) income(2,146)65,178 186,095 120,873 
    
Other (expense) income(2,001)2,249 (2,584)5,379 
Income before income taxes(4,147)67,427 183,511 126,252 
Provision for income taxes475 15,783 44,588 22,697 
    
Net (loss) income$(4,622)$51,644 $138,923 $103,555 
    
Basic (loss) earnings per share$(0.04)$0.39 $1.06 $0.79 
    
Weighted average shares outstanding - basic131,419 131,385 131,017 131,896 
    
Diluted (loss) earnings per share$(0.04)$0.39 $1.06 $0.78 
    
Weighted average shares outstanding - diluted131,419 131,889 131,671 132,890 
    
Dividends declared per share$0.26 $0.25 $0.78 $0.75 
The accompanying notes are an integral part of these financial statements. 
4


NATIONAL INSTRUMENTS CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)  
Three Months EndedNine Months Ended
September 30,September 30,
2020201920202019
    
Net (loss) income$(4,622)$51,644 $138,923 $103,555 
Other comprehensive income (loss), before tax and net of reclassification adjustments:    
Foreign currency translation adjustment8,483 (8,500)6,507 (9,303)
Unrealized (loss) gain on securities available-for-sale(163)(419)(317)1,494 
Unrealized (loss) gain on derivative instruments(9,530)1,627 (10,128)1,359 
Other comprehensive (loss) income, before tax(1,210)(7,292)(3,938)(6,450)
Tax (benefit) expense related to items of other comprehensive income(2,335)414 (2,268)355 
Other comprehensive income (loss), net of tax1,125 (7,706)(1,670)(6,805)
Comprehensive (loss) income$(3,497)$43,938 $137,253 $96,750 
The accompanying notes are an integral part of these financial statements.

5


NATIONAL INSTRUMENTS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)  
Nine Months Ended
September 30,
20202019
Cash flow from operating activities:  
Net income$138,923 $103,555 
Adjustments to reconcile net income to net cash provided by operating activities:  
Disposal gain on sale of business/asset(159,753)(26,842)
Depreciation and amortization61,228 54,546 
Stock-based compensation42,556 38,054 
Deferred income taxes(932)(1,461)
Changes in operating assets and liabilities26,762 (18,507)
Net cash provided by operating activities108,784 149,345 
  
Cash flow from investing activities:  
Acquisitions, net of cash acquired(334,981) 
Capital expenditures(36,573)(47,183)
Proceeds from sale of assets/business, net of cash divested160,266 32,492 
Capitalization of internally developed software(2,806)(7,179)
Additions to other intangibles(1,045)(1,132)
Acquisitions of equity-method investments(7,502)(13,670)
Purchases of short-term investments(206,330)(141,074)
Sales and maturities of short-term investments351,597 204,046 
Net cash (used in) provided by investing activities(77,374)26,300 
  
Cash flow from financing activities:  
Proceeds from revolving line of credit20,000  
Proceeds from term loan70,000  
Payments on term loan(875) 
Debt issuance costs(1,480) 
Proceeds from issuance of common stock24,971 25,823 
Repurchase of common stock(39,244)(137,171)
Dividends paid(102,396)(99,083)
Net cash used in financing activities(29,024)(210,431)
  
Effect of exchange rate changes on cash317 (1,827)
  
Net change in cash and cash equivalents2,703 (36,613)
Cash and cash equivalents at beginning of period194,616 259,386 
Cash and cash equivalents at end of period$197,319 $222,773 
 
The accompanying notes are an integral part of these financial statements.   

6



NATIONAL INSTRUMENTS CORPORATION  
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, except share data and per share data)
(unaudited)
September 30, 2020
(Unaudited)
Common Stock SharesCommon Stock AmountAdditional-Paid in CapitalRetained EarningsAccumulated Other Comprehensive Income/(Loss)Total Stockholders' Equity
Balance at June 30, 2020131,436,108 $1,314 $993,058 $299,132 $(23,865)$1,269,639 
Net loss— — — (4,622)— (4,622)
Other comprehensive income, net of tax— — — — 1,125 1,125 
Issuance of common stock under employee plans, including tax benefits256,034 2 7,715 — — 7,717 
Stock-based compensation— — 15,142 — — 15,142 
Repurchase of common stock(446,502)(4)(3,259)(12,300)— (15,563)
Dividends paid (1)— — — (34,240)— (34,240)
Balance at September 30, 2020131,245,640 1,312 1,012,656 247,970 (22,740)1,239,198 
Common Stock SharesCommon Stock AmountAdditional-Paid in CapitalRetained EarningsAccumulated Other Comprehensive LossTotal Stockholders' Equity
Balance at December 31, 2019130,504,535 1,305 953,578 242,537 (21,070)1,176,350 
Net income— — — 138,923 — 138,923 
Other comprehensive loss, net of tax— — — — (1,670)(1,670)
Issuance of common stock under employee plans, including tax benefits1,855,806 18 24,953 — — 24,971 
Stock-based compensation— — 42,264 — — 42,264 
Repurchase of common stock(1,114,701)(11)(8,139)(31,094)— (39,244)
Dividends paid (1)— — — (102,396)— (102,396)
Balance at September 30, 2020131,245,640 $1,312 $1,012,656 $247,970 $(22,740)$1,239,198 
(1) Cash dividends declared per share of common stock were $0.26 for the three months ended September 30, 2020, and $0.78 for the nine months ended September 30, 2020.
 
The accompanying notes are an integral part of these financial statements. 
7



September 30, 2019
(Unaudited)
Common Stock SharesCommon Stock AmountAdditional-Paid in CapitalRetained EarningsAccumulated Other Comprehensive Income/(Loss)Total Stockholders' Equity
Balance at June 30, 2019131,884,775 $1,319 $924,801 $264,484 $(16,030)$1,174,574 
Net income— — — 51,644 — 51,644 
Other comprehensive loss, net of tax— — — — (7,706)(7,706)
Issuance of common stock under employee plans, including tax benefits230,400 3 8,175 — — 8,178 
Stock-based compensation— — 13,284 — — 13,284 
Repurchase of common stock(1,056,078)(11)(7,139)(37,647)— (44,797)
Dividends paid (1)— — — (33,016)— (33,016)
Balance at September 30, 2019131,059,097 1,311 939,121 245,465 (23,736)1,162,161 
Common Stock SharesCommon Stock AmountAdditional-Paid in CapitalRetained EarningsAccumulated Other Comprehensive Income/(Loss)Total Stockholders' Equity
Balance at December 31, 2018132,655,941 1,327 897,544 356,418 (16,931)1,238,358 
Net income— — — 103,555 — 103,555 
Other comprehensive loss, net of tax— — — — (6,805)(6,805)
Issuance of common stock under employee plans, including tax benefits1,608,832 16 25,807 — — 25,823 
Stock-based compensation— — 37,484 — — 37,484 
Repurchase of common stock(3,205,676)(32)(21,714)(115,425)— (137,171)
Dividends paid (1)— — — (99,083)— (99,083)
Balance at September 30, 2019131,059,097 $1,311 $939,121 $245,465 $(23,736)$1,162,161 
(1) Cash dividends declared per share of common stock were $0.25 for the three months ended September 30, 2019, and $0.75 for the nine months ended September 30, 2019.

The accompanying notes are an integral part of these financial statements.
8





NATIONAL INSTRUMENTS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
  
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 fiscal year ended December 31, 2019, included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on February 20, 2020 (the "Form 10-K"). 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 September 30, 2020 and December 31, 2019, the results of our operations and comprehensive income for three and nine months ended September 30, 2020 and 2019, our cash flows for the nine months ended September 30, 2020 and 2019 and our statement of stockholders' equity for the three and nine months ended September 30, 2020 and 2019. Our operating results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States.

Reclassifications

As further discussed below, certain prior period amounts have been reclassified to conform to the current period presentation. The reclassifications had no impact on our previously reported net income or cash flows:

Before the second quarter of 2020, we included net sales attributable to our operations in India within the EMEIA region in Note 2 - Revenue of Notes to Consolidated Financial Statements. In the second quarter of 2020, we began including these amounts within the APAC (Australia, India, New Zealand, Southeast Asia, China, South Korea and Japan) geographic region, to reflect recent changes within our organizational structure. We have recast historical comparative information to conform to the September 30, 2020 presentation. Refer to Note 2 - Revenue of Notes to Consolidated Financial Statements for our revenue disaggregated by geographic region which now include the Americas (United States, Canada and Latin America), EMEA (Europe, Middle East, and Africa) and APAC.

Before the second quarter of 2020, we presented “Interest income”, "Net foreign exchange gain (loss)", and "Other income (loss)" separately on the consolidated statements of income. In the second quarter of 2020, we began presenting these amounts within “Other (expense) income” in the consolidated statements of income for all periods presented. Refer to "Other (expense) income" in Note 1 - Basis of Presentation of Notes to Consolidated Financial Statements for additional information on the amounts that comprise "Other (expense) income".


Recently Adopted Accounting Pronouncements

Current Expected Credit Losses ("CECL")

In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU No. 2016-13, "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments." The ASU replaces the incurred-loss impairment methodology and requires immediate recognition of estimated credit losses expected to occur for most financial assets, including trade receivables. Credit losses on available-for-sale debt securities with unrealized losses will be recognized as allowances for credit losses limited to the amount by which fair value is below amortized cost. We adopted the new standard on January 1, 2020 and the impact of the adoption was not material to our consolidated financial statements as credit losses are not expected to be significant based on historical collection trends, the financial condition of payment partners, and external market factors. We will continue to actively monitor the impact of the recent coronavirus (COVID-19) pandemic on expected credit losses.


9


Implementation Costs Incurred in a Cloud Computing Arrangement

In August 2018, the FASB issued ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract,” which clarifies the accounting for implementation costs in cloud computing arrangements. The new standard aligns the treatment of implementation costs incurred by customers in cloud computing arrangements that are service contracts with the treatment of similar costs incurred to develop or obtain internal-use software. Under the new standard, implementation costs are deferred and presented in the same financial statement caption on the condensed consolidated balance sheet as a prepayment of related arrangement fees. The deferred costs are recognized over the term of the arrangement in the same financial statement caption in the condensed consolidated income statement as the related fees of the arrangement. We adopted the new standard on January 1, 2020. The new standard did not have a material impact on our consolidated financial statements and related disclosures.

Fair Value Measurements

In August 2018, the FASB issued ASU 2018-13, “Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement,” which modifies the disclosure requirements on fair value measurements. We adopted the new standard on January 1, 2020. The new standard did not have a material impact on our consolidated financial statements and related disclosures.

Income Taxes

In December 2019, the FASB issued ASU 2019-12, “Income Taxes — Simplifying the Accounting for Income Taxes (Topic 740),” which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments in this ASU also improve consistency and simplify other areas of Topic 740 by clarifying and amending existing guidance. The amendments in this ASU will be applied using different approaches depending on what the specific amendment relates to and, for public entities, are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. An entity is permitted to early adopt the guidance, and we early adopted ASU 2019-12 as of January 1, 2020. The adoption did not have a material impact on our consolidated financial statements and related disclosures.

Disclosures about Acquired and Disposed Businesses

In May 2020, the SEC adopted Release No. 33-10786 "Amendments to Financial Disclosures about Acquired and Disposed Businesses" ("Release No. 33-10786") which includes amendments to certain of its rules and forms related to the disclosure of financial information regarding acquired or disposed businesses. Among other changes, the amendments impact SEC rules relating to (1) the definition of “significant” subsidiaries, (2) requirements to provide financial statements for “significant” acquisitions, and (3) revisions to the formulation and usage of pro forma financial information. Release No. 33-10786 is effective on January 1, 2021, however, voluntary early adoption is permitted as long as all amendments are adopted in their entirety. We elected to early adopt all provisions of Release No. 33-10786 during the second quarter of 2020.

Summary of Significant Accounting Policies

As discussed above, we adopted the new expected credit loss standard as of January 1, 2020. There were no other significant changes in our accounting policies during the three and nine months ended September 30, 2020 compared to the significant accounting policies described in our Form 10-K.

Divestitures

AWR

On January 15, 2020, we completed the sale of our AWR Corporation subsidiary ("AWR") for approximately $161 million. We recognized a gain of approximately $160 million on the sale. The gain is included within "Gain on sale of business/asset" in the consolidated statements of income, which also included approximately $1 million of transaction costs.


10


The divestiture of AWR resulted in the derecognition of the following assets and liabilities (in thousands):

Cash$1,027 
Accounts receivable, net7,233 
Prepaid and other current assets283 
Goodwill7,221 
Other non-current assets556 
Total Assets16,320 
Deferred revenue15,296 
Other current liabilities940 
Cumulative translation adjustment(660)
Total liabilities and stockholders' equity15,576 
Total assets divested, net (including cash)$744 

Other (Expense) Income

Other (expense) income, net consisted of the following amounts (in thousands):
Three Months Ended September 30, Nine Months Ended September 30,
(Unaudited)(Unaudited)
2020201920202019
Interest income$414 $1,930 $3,724 $6,187 
Interest expense(973) (1,115) 
Loss from equity-method investments(627)(239)(2,559)(406)
Net foreign exchange loss(676)(378)(2,019)(1,623)
Other(139)936 (615)1,221 
Other (expense) income, net$(2,001)$2,249 $(2,584)$5,379 

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 nine months ended September 30, 2020 and 2019, are as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
(Unaudited)(Unaudited)
2020201920202019
Weighted average shares outstanding-basic131,419 131,385 131,017 131,896 
Plus: Common share equivalents    
RSUs 504 654 994 
Weighted average shares outstanding-diluted131,419 131,889 131,671 132,890 
Stock awards to acquire 3,490,700 shares and 1,611,000 shares for the three months ended September 30, 2020 and 2019, respectively, and 276,000 shares and 568,000 shares for the nine months ended September 30, 2020 and 2019, respectively, were excluded in the computations of diluted EPS because the effect of including the stock awards would have been anti-dilutive.
11



Other Current Liabilities

Other current liabilities on our consolidated balance sheet includes the following amounts (in thousands):
As of September 30, 2020As of December 31,
(unaudited)2019
Income taxes payable - current$23,487 $6,791 
Other26,772 13,925 
Total$50,259 $20,716 


Note 2 - Revenue

Revenue Recognition

Revenue is recognized upon transfer of control of the promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. We enter into contracts that can include various combinations of our products or services, which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized net of allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities.

Disaggregation of Revenues

We disaggregate revenue from contracts with customers based on the timing of transfer of goods or services to customers (point-in-time or over time) and geographic region based on the billing location of the customer. Before the second quarter of 2020, we included net sales attributable to our operations in India within the EMEIA region. In the second quarter of 2020, we began including these amounts within the APAC geographic region, to reflect recent changes within our organizational structure. We have recast historical comparative information to conform to the September 30, 2020 presentation. The geographic regions are now presented as the Americas, EMEA and APAC to reflect this change.

Total net sales based on the disaggregation criteria described above are as follows:
Three Months Ended September 30,
(In thousands)(Unaudited)
20202019
Net sales:
Point-in-Time(1)
Over TimeTotal
Point-in-Time(1)
Over TimeTotal
Americas$107,808 $19,241 $127,049 $119,895 $23,222 $143,117 
EMEA57,988 20,551 78,539 70,076 19,662 89,738 
APAC92,050 10,486 102,536 98,161 9,426 107,587 
Total net sales(1)
$257,846 $50,278 $308,124 $288,132 $52,310 $340,442 
(1) Net sales contains hedging gains and losses, which do not represent revenues recognized from customers.
See Note - 5 Derivatives instruments and hedging activities of Notes to Consolidated Financial Statements for more information on the impact of our hedging activities on our results of operations.
12



Nine Months Ended September 30,
(In thousands)(Unaudited)
20202019
Net sales:
Point-in-Time(1)
Over TimeTotal
Point-in-Time(1)
Over TimeTotal
Americas$316,220 $57,554 $373,774 $325,349 $69,337 $394,686 
EMEA181,330 58,594 239,924 216,644 57,411 274,055 
APAC274,341 30,795 305,136 290,140 26,866 317,006 
Total net sales(1)
$771,891 $146,943 $918,834 $832,133 $153,614 $985,747 
(1) Net sales contains hedging gains and losses, which do not represent revenues recognized from customers.
See Note - 5 Derivatives instruments and hedging activities of Notes to Consolidated Financial Statements for more information on the impact of our hedging activities on our results of operations.

Information about Contract Balances

Amounts collected in advance of services being provided are accounted for as deferred revenue. Nearly all of our deferred revenue balance is related to extended hardware and software maintenance contracts. Payment terms and conditions vary by contract type, although payment is typically due within 30 to 90 days of contract inception. In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined our contracts generally do not include a significant financing component. The primary purpose of our invoicing terms is to provide customers with simplified and predictable ways of purchasing our products and services, not to receive financing from our customers, such as invoicing at the beginning of a subscription term with a portion of the revenue recognized ratably over the contract period, or to provide customers with financing, such as multi-year on-premises licenses that are invoiced annually with revenue recognized upfront.

Changes in deferred revenue, current and non-current, during the nine months ended September 30, 2020 were as follows:
Amount
(In thousands)
Balance as of December 31, 2019$164,925 
Deferral of revenue billed in current period, net of recognition95,934 
Recognition of revenue deferred in prior periods(103,274)
Acquisitions/Divestitures(7,955)
Foreign currency translation impact1,451 
Balance as of September 30, 2020 (unaudited)$151,081 

For the nine months ended September 30, 2020, revenue recognized from performance obligations satisfied in prior periods (for example, due to changes in transaction price) was not material. Amounts recognized as revenue in excess of amounts billed are recorded as unbilled receivables. Unbilled receivables which are anticipated to be invoiced in the next twelve months are included in "Other current assets" and "Other long-term assets" on the consolidated balance sheet. Based on the nature of our contracts with customers, we do not typically recognize unbilled receivables related to revenues recognized in excess of amounts billed. For the nine months ended September 30, 2020, amounts recognized related to unbilled receivables were not material.

Unsatisfied Performance Obligations

Revenue expected to be recognized in any future period related to remaining performance obligations, excluding revenue pertaining to contracts that have an original expected duration of one year or less, and excluding contracts where revenue is recognized as invoiced, was approximately $84 million as of September 30, 2020. Since we typically invoice customers at contract inception, this amount is included in our current and non-current deferred revenue balances. As of September 30, 2020, we expect to recognize approximately 15% of the revenue related to these unsatisfied performance obligations during the remainder of 2020, 43% during 2021, and 42% thereafter.



13




Assets Recognized from the Costs to Obtain a Contract with a Customer

We recognize an asset for the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year. We have determined that certain sales incentive programs meet the requirements to be capitalized. Capitalized incremental costs related to initial contracts and renewals are amortized over the same period because the commissions paid on both the initial contract and renewals are commensurate with one another. Total capitalized costs to obtain a contract were not material during the periods presented and are included in other long-term assets on our consolidated balance sheets.

Note 3 – Short-term investments  
  
The following tables summarize unrealized gains and losses related to our short-term investments designated as available-for-sale debt securities:
As of September 30, 2020
(In thousands)(Unaudited)
 GrossGross 
Adjusted CostUnrealized GainUnrealized LossFair Value
Corporate bonds$92,610 $245 $(2)$92,853 
Total Short-term investments$92,610 $245 $(2)$92,853 
(In thousands)As of December 31, 2019
 GrossGross 
Adjusted CostUnrealized GainUnrealized LossFair Value
Corporate bonds$237,423 $628 $(68)$237,983 
Total Short-term investments$237,423 $628 $(68)$237,983 

The following tables summarize the contractual maturities of our short-term investments designated as available-for-sale debt securities:
As of September 30, 2020
(In thousands)(Unaudited)
Adjusted CostFair Value
Due in less than 1 year$88,194 $88,438 
Due in 1 to 5 years4,416 4,415 
Total available-for-sale debt securities$92,610 $92,853