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nati-20210630

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: June 30, 2021 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: 000-25426

https://cdn.kscope.io/e4452c4f48ed63449b9638df229a96d1-nati-20210630_g1.jpg

NATIONAL INSTRUMENTS CORPORATION

(Exact name of registrant as specified in its charter)


Delaware						74-1871327
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

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 class	Trading symbol(s)	Name of exchange on which registered
Common Stock, $0.01 par value	NATI	Nasdaq 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.


Class			Outstanding at July 29, 2021
Common Stock, $0.01 par value			132,980,932

NATIONAL INSTRUMENTS CORPORATION

INDEX


PART I. FINANCIAL INFORMATION		Page No.

Item 1	Financial Statements:

	Consolidated Balance Sheets
	June 30, 2021 (unaudited) and December 31, 2020	3

	Consolidated Statements of Income
	(unaudited) for the three and six months ended June 30, 2021 and 2020	4

	Consolidated Statements of Comprehensive Income
	(unaudited) for the three and six months ended June 30, 2021 and 2020	5

	Consolidated Statements of Cash Flows
	(unaudited) for the six months ended June 30, 2021 and 2020	6

	Consolidated Statements of Stockholders' Equity
	(unaudited) for the three and six months ended June 30, 2021 and 2020	7

	Notes to Consolidated Financial Statements	9

Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	33

Item 3	Quantitative and Qualitative Disclosures about Market Risk	49

Item 4	Controls and Procedures	50


PART II. OTHER INFORMATION

Item 1	Legal Proceedings	50

Item 1A	Risk Factors	50

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	51

Item 3	Defaults Upon Senior Securities	51

Item 4	Mine Safety Disclosures	51

Item 5	Other Information	51

Item 6	Exhibits	52

	Signatures and Certifications	53

PART I - FINANCIAL INFORMATION

ITEM 1. Financial Statements

NATIONAL INSTRUMENTS CORPORATION

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)


	June 30,		December 31,
	2021		2020
Assets	(unaudited)
Cash and cash equivalents	$	250,421	$	260,232
Short-term investments	14,110		59,923
Accounts receivable, net	258,641		266,869
Inventories, net	211,023		194,012
Prepaid expenses and other current assets	80,121		68,470
Total current assets	814,316		849,506
Property and equipment, net	250,761		254,399
Goodwill	483,136		467,547
Intangible assets, net	149,126		172,719
Operating lease right-of-use assets	57,812		67,674

Other long-term assets	76,878		72,643
Total assets	$	1,832,029	$	1,884,488
Liabilities and stockholders' equity
Accounts payable and accrued expenses	$	56,477	$	51,124
Accrued compensation	68,932		87,068
Deferred revenue - current	125,986		132,151
Operating lease liabilities - current	13,389		15,801
Other taxes payable	39,339		48,129
Debt, current	—		5,000
Other current liabilities	26,854		42,578
Total current liabilities	330,977		381,851

Deferred income taxes	28,359		25,288
Income tax payable - non-current	54,195		61,623
Deferred revenue - non-current	34,624		36,335
Operating lease liabilities - non-current	29,512		35,854
Debt, non-current	100,000		92,036
Other long-term liabilities	18,710		26,630
Total liabilities	596,377		659,617
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; 132,980,932 shares and 131,246,615 shares issued and outstanding, respectively	1,330		1,312
Additional paid-in capital	1,087,622		1,033,284
Retained earnings	161,475		211,101
Accumulated other comprehensive loss	(14,775)		(20,826)
Total stockholders’ equity	1,235,652		1,224,871
Total liabilities and stockholders’ equity	$	1,832,029	$	1,884,488

The accompanying notes are an integral part of the financial statements.

NATIONAL INSTRUMENTS CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

(unaudited)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020

Net sales:
Product	$	306,490	$	266,261	$	601,583	$	540,239
Software maintenance	40,206		35,068		80,295		70,470
Total net sales	346,696		301,329		681,878		610,709

Cost of sales:
Product	95,722		83,795		187,379		165,866
Software maintenance	3,516		2,106		7,273		3,796
Total cost of sales	99,238		85,901		194,652		169,662

Gross profit	247,458		215,428		487,226		441,047

Operating expenses:
Sales and marketing	111,199		105,419		227,983		221,165
Research and development	81,434		64,225		161,520		135,846
General and administrative	30,277		29,369		63,636		55,549

Total operating expenses	222,910		199,013		453,139		412,560
Gain on sale of business/assets	—		—		—		159,753
Operating income	24,548		16,415		34,087		188,240

Other expense	(2,963)		(1,143)		(8,031)		(583)
Income before income taxes	21,585		15,272		26,056		187,657
Provision for income taxes	4,279		4,383		4,254		44,113

Net income	$	17,306	$	10,889	$	21,802	$	143,544

Basic earnings per share	$	0.13	$	0.08	$	0.17	$	1.10

Weighted average shares outstanding - basic	132,498		131,014		131,996		130,813

Diluted earnings per share	$	0.13	$	0.08	$	0.16	$	1.09

Weighted average shares outstanding - diluted	133,539		131,602		133,157		131,499

Dividends declared per share	$	0.27	$	0.26	$	0.54	$	0.52

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

NATIONAL INSTRUMENTS CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020

Net income	$	17,306	$	10,889	$	21,802	$	143,544
Other comprehensive income (loss), before tax and net of reclassification adjustments:
Foreign currency translation adjustment	2,284		3,938		(4,911)		(1,975)
Unrealized (loss) gain on securities available-for-sale	(54)		2,634		(141)		(154)
Unrealized gain (loss) on derivative instruments	2,381		(74)		14,362		(598)
Other comprehensive income (loss), before tax	4,611		6,498		9,310		(2,727)
Tax expense (benefit) related to items of other comprehensive income	498		(56)		3,259		68
Other comprehensive income (loss), net of tax	4,113		6,554		6,051		(2,795)
Comprehensive income	$	21,419	$	17,443	$	27,853	$	140,749

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

NATIONAL INSTRUMENTS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	Six Months Ended
	June 30,
	2021		2020
Cash flow from operating activities:
Net income	$	21,802	$	143,544
Adjustments to reconcile net income to net cash provided by operating activities:
Disposal gain on sale of business/assets	—		(159,753)
Depreciation and amortization	50,024		38,341
Stock-based compensation	37,208		27,335
Loss from equity-method investees	5,360		1,932

Deferred income taxes	1,301		2,711
Changes in operating assets and liabilities	(63,372)		47,388
Net cash provided by operating activities	52,323		101,498

Cash flow from investing activities:
Acquisitions, net of cash received	(19,784)		—
Capital expenditures	(17,411)		(25,362)
Proceeds from sale of assets/business, net of cash divested	—		160,266

Capitalization of internally developed software	(721)		(3,108)
Additions to other intangibles	(1,519)		(630)

Payments to acquire equity-method investments	(12,551)		—
Purchases of short-term investments	—		(206,330)
Sales and maturities of short-term investments	45,671		306,955
Net cash (used in) provided by investing activities	(6,315)		231,791

Cash flow from financing activities:
Proceeds from revolving line of credit	100,000		20,000


Proceeds from term loan	—		70,000
Payments on term loan	(98,750)		—
Debt issuance costs	(1,993)		(1,480)
Proceeds from issuance of common stock	17,239		17,252
Repurchase of common stock	—		(23,680)
Dividends paid	(71,428)		(68,156)
Net cash (used in) provided by financing activities	(54,932)		13,936

Effect of exchange rate changes on cash	(887)		(636)

Net change in cash and cash equivalents	(9,811)		346,589
Cash and cash equivalents at beginning of period	260,232		194,616
Cash and cash equivalents at end of period	$	250,421	$	541,205

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

NATIONAL INSTRUMENTS CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share data and per share data)

(unaudited)


	June 30, 2021
	(Unaudited)
	Common Stock Shares	Common Stock Amount		Additional-Paid in Capital		Retained Earnings		Accumulated Other Comprehensive Income/(Loss)		Total Stockholders' Equity
Balance at March 31, 2021	131,607,036	$	1,316	$	1,059,018	$	180,063	$	(18,888)	$	1,221,509
Net income	—	—		—		17,306		—		17,306
Other comprehensive income, net of tax	—	—		—		—		4,113		4,113
Issuance of common stock under employee plans	1,373,896	14		8,660		—		—		8,674
Stock-based compensation	—	—		19,944		—		—		19,944




Dividends paid (1)	—	—		—		(35,894)		—		(35,894)
Balance at June 30, 2021	132,980,932	1,330		1,087,622		161,475		(14,775)		1,235,652

	Common Stock Shares	Common Stock Amount		Additional-Paid in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
Balance at December 31, 2020	131,246,615	1,312		1,033,284		211,101		(20,826)		1,224,871
Net income	—	—		—		21,802		—		21,802
Other comprehensive loss, net of tax	—	—		—		—		6,051		6,051
Issuance of common stock under employee plans	1,734,317	18		17,221		—		—		17,239
Stock-based compensation	—	—		37,117		—		—		37,117




Dividends paid (1)	—	—		—		(71,428)		—		(71,428)
Balance at June 30, 2021	132,980,932	$	1,330	$	1,087,622	$	161,475	$	(14,775)	$	1,235,652

(1) Cash dividends declared per share of common stock were $0.27 for the three months ended June 30, 2021, and $0.54 for the six months ended June 30, 2021.

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


	June 30, 2020
	(Unaudited)
	Common Stock Shares	Common Stock Amount		Additional-Paid in Capital		Retained Earnings		Accumulated Other Comprehensive Income/(Loss)		Total Stockholders' Equity
Balance at March 31, 2020	130,595,203	$	1,306	$	973,354	$	335,876	$	(30,419)	$	1,280,117
Net income	—	—		—		10,889		—		10,889
Other comprehensive gain, net of tax	—	—		—		—		6,554		6,554
Issuance of common stock under employee plans	1,344,231	13		8,248		—		—		8,261
Stock-based compensation	—	—		15,130		—		—		15,130

Repurchase of common stock	(503,326)	(5)		(3,674)		(13,474)		—		(17,153)

Dividends paid (1)	—	—		—		(34,159)		—		(34,159)
Balance at June 30, 2020	131,436,108	1,314		993,058		299,132		(23,865)		1,269,639

	Common Stock Shares	Common Stock Amount		Additional-Paid in Capital		Retained Earnings		Accumulated Other Comprehensive Income/(Loss)		Total Stockholders' Equity
Balance at December 31, 2019	130,504,535	1,305		953,578		242,537		(21,070)		1,176,350
Net income	—	—		—		143,544		—		143,544
Other comprehensive loss, net of tax	—	—		—		—		(2,795)		(2,795)
Issuance of common stock under employee plans	1,599,772	16		17,236		—		—		17,252
Stock-based compensation	—	—		27,124		—		—		27,124

Repurchase of common stock	(668,199)	(7)		(4,880)		(18,793)		—		(23,680)

Dividends paid (1)	—	—		—		(68,156)		—		(68,156)
Balance at June 30, 2020	131,436,108	$	1,314	$	993,058	$	299,132	$	(23,865)	$	1,269,639

(1) Cash dividends declared per share of common stock were $0.26 for the three months ended June 30, 2020, and $0.52 for the six months ended June 30, 2020.

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

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, 2020, included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on February 23, 2021 (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 June 30, 2021 and December 31, 2020, the results of our operations and comprehensive income for three and six months ended June 30, 2021 and 2020, our cash flows for the six months ended June 30, 2021 and 2020 and our statement of stockholders' equity for the three and six months ended June 30, 2021 and 2020. Our operating results for the three and six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States.

Reclassifications

Certain reclassifications have been made to prior period amounts to conform to the current period presentation.

Recently Adopted Accounting Pronouncements

Clarification of Equity Method Transition

In January 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-01, “Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815,” which clarifies the interaction of the accounting for equity investments under Topic 321 and investments accounted for under the equity method of accounting in Topic 323 and the accounting for certain forward contracts and purchased options accounted for under Topic 815. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. We adopted ASU 2020-01 on January 1, 2021, and the new standard did not have a material impact on our consolidated financial statements and related disclosures.

Recently Issued Accounting Pronouncements

Although there are several other accounting pronouncements recently issued by the FASB, we do not expect the adoption of any of these accounting pronouncements had or will have a material impact on our consolidated financial statements.

Summary of Significant Accounting Policies

There were no changes in our significant accounting policies during the three and six months ended June 30, 2021 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/assets" in the consolidated statements of income, which also included approximately $1 million of transaction costs.

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


Cash	$	1,027
Accounts receivable, net	7,233
Prepaid and other current assets	283
Goodwill	7,221
Other non-current assets	556
Total Assets	16,320

Deferred revenue	15,296
Other current liabilities	940
Cumulative translation adjustment	(660)
Total liabilities and stockholders' equity	15,576

Total assets divested, net (including cash)	$	744

Other (Expense) Income

Other expense, net consisted of the following amounts (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	(Unaudited)				(Unaudited)
	2021		2020		2021		2020
Interest income	$	113	$	1,011	$	274	$	3,310
Interest expense	(1,224)		(66)		(1,927)		(142)
Loss from equity-method investments	(867)		(907)		(5,360)		(1,932)
Net foreign exchange loss	(896)		(838)		(1,455)		(1,343)
Other	(89)		(343)		437		(476)
Other expense, net	$	(2,963)	$	(1,143)	$	(8,031)	$	(583)

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 months ended June 30, 2021 and 2020 are as follows (in thousands):


	Three Months Ended June 30,		Six Months Ended June 30,
	(Unaudited)		(Unaudited)
	2021	2020	2021	2020
Weighted average shares outstanding-basic	132,498	131,014	131,996	130,813
Plus: Common share equivalents
RSUs	1,041	588	1,161	686
Weighted average shares outstanding-diluted	133,539	131,602	133,157	131,499

Shares issuable upon vesting of RSU awards of 1,369,000 shares and 1,206,000 shares for the three months ended June 30, 2021 and 2020, respectively, and 166,000 shares and 249,000 shares for the six months ended June 30, 2021 and 2020, respectively, were excluded in the computations of diluted EPS because the effect of including the stock awards would have been anti-dilutive.

Other Current Liabilities

Other current liabilities on our consolidated balance sheet includes the following amounts (in thousands):


	As of June 30, 2021		As of December 31,
	(unaudited)		2020
Income taxes payable - current	$	—	$	13,720
Hedge payable - current	7,671		13,031
Other	19,183		15,827
Total	$	26,854	$	42,578

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. We sell our products in the following three geographic regions: the Americas; Europe, Middle East and Africa region ("EMEA"); and Asia-Pacific region ("APAC").

Total net sales based on the disaggregation criteria described above are as follows:


			Three Months Ended June 30,
(In thousands)			(Unaudited)
	2021						2020

Net sales:	Point-in-Time(1)		Over Time		Total		Point-in-Time(1)		Over Time		Total
Americas	$	112,215	$	22,455	$	134,670	$	103,113	$	18,595	$	121,708
EMEA	67,252		21,917		89,169		56,203		18,453		74,656
APAC	111,894		10,963		122,857		94,419		10,546		104,965
Total net sales(1)	$	291,361	$	55,335	$	346,696	$	253,735	$	47,594	$	301,329
(1) Net sales contains hedging gains and losses, which do not represent revenues recognized from customers. See Note - 5 Derivative 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.


			Six Months Ended June 30,
(In thousands)			(Unaudited)
	2021						2020

Net sales:	Point-in-Time(1)		Over Time		Total		Point-in-Time(1)		Over Time		Total
Americas	$	216,801	$	44,602	$	261,403	$	208,412	$	38,313	$	246,725
EMEA	132,355		42,336		174,691		123,896		37,489		161,385
APAC	224,524		21,260		245,784		181,607		20,992		202,599
Total net sales(1)	$	573,680	$	108,198	$	681,878	$	513,915	$	96,794	$	610,709
(1) Net sales contains hedging gains and losses, which do not represent revenues recognized from customers. See Note - 5 Derivative 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 six months ended June 30, 2021 were as follows:


	Amount
	(In thousands)
Balance as of December 31, 2020	$	168,486
Deferral of revenue billed in current period, net of recognition	78,324
Recognition of revenue deferred in prior periods	(83,991)

Foreign currency translation impact	(2,209)
Balance as of June 30, 2021 (unaudited)	$	160,610

For the six months ended June 30, 2021, 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" 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 six months ended June 30, 2021, the amounts recorded that were 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 contracts where revenue is recognized as invoiced, was approximately $62 million as of June 30, 2021. Since we typically invoice customers at contract inception, this amount is included in our current and non-current deferred revenue balances. As of June 30, 2021, we expect to recognize approximately 27% of the revenue related to these unsatisfied performance obligations during the remainder of 2021, 40% during 2022, and 33% thereafter.

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 June 30, 2021
(In thousands)	(Unaudited)
			Gross		Gross
	Adjusted Cost		Unrealized Gain		Unrealized Loss		Fair Value
Corporate bonds	$	14,089	$	21	$	—	$	14,110


Total short-term investments	$	14,089	$	21	$	—	$	14,110


(In thousands)	As of December 31, 2020
			Gross		Gross
	Adjusted Cost		Unrealized Gain		Unrealized Loss		Fair Value
Corporate bonds	$	59,761	$	163	$	(1)	$	59,923

Total short-term investments	$	59,761	$	163	$	(1)	$	59,923

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


	As of June 30, 2021
(In thousands)	(Unaudited)





Due in less than 1 year	Adjusted Cost		Fair Value
Corporate bonds	$	14,089	$	14,110


Total available-for-sale debt securities	$	14,089	$	14,110

Equity-Method Investments

The carrying value of our equity method investments was $33 million and $25 million as of June 30, 2021 and December 31, 2020, respectively. During the first quarter of 2021, we determined there was an other than temporary impairment for one of our equity-method investments, based on revised forecasts. We recorded a $3.5 million impairment loss related to this investment during the three months ended March 31, 2021. Our proportionate share of the income/(loss) from equity-method investments is included within "Other expense". Refer to Note 1 - Basis of Presentation of Notes to Consolidated Financial Statements for additional information on these amounts for the three and six months ended June 30, 2021 and 2020.

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, 2021

Level 1

Level 2

Level 3

Assets

Cash and cash equivalents:

Money market funds