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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, 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/22bf910867308936c3d01a20aa833303-nati-20210930_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 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 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 28, 2021
Common Stock, $0.01 par value131,881,802
1


NATIONAL INSTRUMENTS CORPORATION
INDEX  
Page No.
  
 
  
 
September 30, 2021 (unaudited) and December 31, 2020
  
 
(unaudited) for the three and nine months ended September 30, 2021 and 2020
  
 
(unaudited) for the three and nine months ended September 30, 2021 and 2020
  
 
(unaudited) for the nine months ended September 30, 2021 and 2020
(unaudited) for the three and nine months ended September 30, 2021 and 2020
  
  
  
  
  
  
 
  
  
  
  
  
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,
20212020
Assets(unaudited) 
Cash and cash equivalents$230,697 $260,232 
Short-term investments 59,923 
Accounts receivable, net279,196 266,869 
Inventories, net236,733 194,012 
Prepaid expenses and other current assets89,152 68,470 
Total current assets835,778 849,506 
Property and equipment, net248,712 254,399 
Goodwill480,489 467,547 
Intangible assets, net136,938 172,719 
Operating lease right-of-use assets56,644 67,674 
Other long-term assets79,850 72,643 
Total assets$1,838,411 $1,884,488 
Liabilities and stockholders' equity  
Accounts payable and accrued expenses$63,568 $51,124 
Accrued compensation87,802 87,068 
Deferred revenue - current120,762 132,151 
Operating lease liabilities - current12,360 15,801 
Other taxes payable43,673 48,129 
Debt, current 5,000 
Other current liabilities25,162 42,578 
Total current liabilities353,327 381,851 
Deferred income taxes26,023 25,288 
Income tax payable - non-current54,195 61,623 
Deferred revenue - non-current32,278 36,335 
Operating lease liabilities - non-current29,206 35,854 
Debt, non-current100,000 92,036 
Other long-term liabilities16,910 26,630 
Total liabilities611,939 659,617 
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; 132,622,234 shares and 131,246,615 shares issued and outstanding, respectively 
1,326 1,312 
Additional paid-in capital1,109,918 1,033,284 
Retained earnings132,404 211,101 
Accumulated other comprehensive loss(17,176)(20,826)
Total stockholders’ equity1,226,472 1,224,871 
Total liabilities and stockholders’ equity$1,838,411 $1,884,488 
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,
2021202020212020
    
Net sales:    
Product$325,724 $269,651 $927,307 $809,890 
Software maintenance41,438 38,473 121,733 108,944 
Total net sales367,162 308,124 1,049,040 918,834 
    
Cost of sales:    
Product99,072 88,370 286,485 254,236 
Software maintenance3,643 3,893 10,882 7,689 
Total cost of sales102,715 92,263 297,367 261,925 
    
Gross profit264,447 215,861 751,673 656,909 
    
Operating expenses:    
Sales and marketing117,065 109,774 345,048 330,939 
Research and development82,165 70,802 243,685 206,648 
General and administrative31,037 37,431 94,672 92,980 
Total operating expenses230,267 218,007 683,405 630,567 
Gain on sale of business/assets   159,753 
Operating income34,180 (2,146)68,268 186,095 
    
Other expense(1,820)(2,001)(9,851)(2,584)
Income before income taxes32,360 (4,147)58,417 183,511 
Provision for income taxes5,183 475 9,438 44,588 
    
Net income (loss)$27,177 $(4,622)$48,979 $138,923 
    
Basic earnings per share$0.20 $(0.04)$0.37 $1.06 
    
Weighted average shares outstanding - basic133,031 131,419 132,657 131,017 
    
Diluted earnings per share$0.20 $(0.04)$0.37 $1.06 
    
Weighted average shares outstanding - diluted133,686 131,419 133,829 131,671 
    
Dividends declared per share$0.27 $0.26 $0.81 $0.78 
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,
2021202020212020
    
Net income (loss)$27,177 $(4,622)$48,979 $138,923 
Other comprehensive (loss) income, before tax and net of reclassification adjustments:    
Foreign currency translation adjustment(5,675)8,483 (10,585)6,507 
Unrealized loss on securities available-for-sale(21)(163)(162)(317)
Unrealized gain (loss) on derivative instruments4,243 (9,530)18,605 (10,128)
Other comprehensive income (loss), before tax(1,453)(1,210)7,858 (3,938)
Tax expense (benefit) related to items of other comprehensive income948 (2,335)4,208 (2,268)
Other comprehensive (loss) income, net of tax(2,401)1,125 3,650 (1,670)
Comprehensive income (loss)$24,776 $(3,497)$52,629 $137,253 
The accompanying notes are an integral part of these financial statements.

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NATIONAL INSTRUMENTS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)  
Nine Months Ended
September 30,
20212020
Cash flow from operating activities:  
Net income$48,979 $138,923 
Adjustments to reconcile net income to net cash provided by operating activities:  
Disposal gain on sale of business/assets (159,753)
Depreciation and amortization73,418 61,228 
Stock-based compensation56,064 42,556 
Loss from equity-method investees5,082 2,559 
Deferred income taxes(2,030)(932)
Changes in operating assets and liabilities(95,477)24,203 
Net cash provided by operating activities86,036 108,784 
  
Cash flow from investing activities:  
Acquisitions, net of cash received(19,784)(334,981)
Capital expenditures(26,147)(36,573)
Proceeds from sale of assets/business, net of cash divested 160,266 
Capitalization of internally developed software(1,246)(2,806)
Additions to other intangibles(2,317)(1,045)
Payments to acquire equity-method investments(15,753)(7,502)
Purchases of short-term investments (206,330)
Sales and maturities of short-term investments59,714 351,597 
Net cash used in investing activities(5,533)(77,374)
 
Cash flow from financing activities:  
Proceeds from revolving line of credit100,000 20,000 
Proceeds from term loan 70,000 
Payments on term loan(98,750)(875)
Debt issuance costs(1,993)(1,480)
Proceeds from issuance of common stock25,438 24,971 
Repurchase of common stock(25,000)(39,244)
Dividends paid(107,397)(102,396)
Net cash used in financing activities(107,702)(29,024)
  
Effect of exchange rate changes on cash(2,336)317 
  
Net change in cash and cash equivalents(29,535)2,703 
Cash and cash equivalents at beginning of period260,232 194,616 
Cash and cash equivalents at end of period$230,697 $197,319 
 
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, 2021
(Unaudited)
Common Stock SharesCommon Stock AmountAdditional-Paid in CapitalRetained EarningsAccumulated Other Comprehensive Income/(Loss)Total Stockholders' Equity
Balance at June 30, 2021132,980,932 $1,330 $1,087,622 $161,475 $(14,775)$1,235,652 
Net income— — — 27,177 — 27,177 
Other comprehensive loss, net of tax— — — — (2,401)(2,401)
Issuance of common stock under employee plans240,368 2 8,197 — — 8,199 
Stock-based compensation— — 18,814 — — 18,814 
Repurchase of common stock(599,066)(6)(4,715)(20,279)— (25,000)
Dividends paid (1)— — — (35,969)— (35,969)
Balance at September 30, 2021132,622,234 1,326 1,109,918 132,404 (17,176)1,226,472 
Common Stock SharesCommon Stock AmountAdditional-Paid in CapitalRetained EarningsAccumulated Other Comprehensive LossTotal Stockholders' Equity
Balance at December 31, 2020131,246,615 1,312 1,033,284 211,101 (20,826)1,224,871 
Net income— — — 48,979 — 48,979 
Other comprehensive gain, net of tax— — — — 3,650 3,650 
Issuance of common stock under employee plans1,974,685 20 25,418 — — 25,438 
Stock-based compensation— — 55,931 — — 55,931 
Repurchase of common stock(599,066)(6)(4,715)(20,279)— (25,000)
Dividends paid (1)— — — (107,397)— (107,397)
Balance at September 30, 2021132,622,234 $1,326 $1,109,918 $132,404 $(17,176)$1,226,472 
(1) Cash dividends declared per share of common stock were $0.27 for the three months ended September 30, 2021, and $0.81 for the nine months ended September 30, 2021.
 
The accompanying notes are an integral part of these financial statements. 
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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 gain, net of tax— — — — 1,125 1,125 
Issuance of common stock under employee plans256,034 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 Income/(Loss)Total 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 plans1,855,806 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.
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, 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 September 30, 2021 and December 31, 2020, the results of our operations and comprehensive income for three and nine months ended September 30, 2021 and 2020, our cash flows for the nine months ended September 30, 2021 and 2020 and our statement of stockholders' equity for the three and nine months ended September 30, 2021 and 2020. Our operating results for the three and nine months ended September 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 nine months ended September 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.


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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, net consisted of the following amounts:
Three Months Ended September 30, Nine Months Ended September 30,
(In thousands)(Unaudited)(Unaudited)
2021202020212020
Interest income$56 $414 $330 $3,724 
Interest expense(657)(973)(2,584)(1,115)
Gain (loss) from equity-method investments278 (627)(5,082)(2,559)
Net foreign exchange loss(1,226)(676)(2,681)(2,019)
Other(271)(139)166 (615)
Other expense, net$(1,820)$(2,001)$(9,851)$(2,584)

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, 2021 and 2020 are as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
(Unaudited)(Unaudited)
2021202020212020
Weighted average shares outstanding-basic133,031 131,419 132,657 131,017 
Plus: Common share equivalents    
RSUs655  1,172 654 
Weighted average shares outstanding-diluted133,686 131,419 133,829 131,671 

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Shares issuable upon vesting of RSU awards of 143,000 shares and 3,490,700 shares for the three months ended September 30, 2021 and 2020, respectively, and 123,000 shares and 276,000 shares for the nine months ended September 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:
As of September 30, 2021As of December 31,
(In thousands)(unaudited)2020
Income taxes payable - current$2,590 $13,720 
Hedge payable - current6,058 13,031 
Other16,514 15,827 
Total$25,162 $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 September 30,
(In thousands)(Unaudited)
20212020
Net sales:
Point-in-Time(1)
Over TimeTotal
Point-in-Time(1)
Over TimeTotal
Americas$125,069 $23,835 $148,904 $107,808 $19,241 $127,049 
EMEA72,430 22,433 94,863 57,988 20,551 78,539 
APAC112,931 10,464 123,395 92,050 10,486 102,536 
Total net sales(1)
$310,430 $56,732 $367,162 $257,846 $50,278 $308,124 
(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.
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Nine Months Ended September 30,
(In thousands)(Unaudited)
20212020
Net sales:
Point-in-Time(1)
Over TimeTotal
Point-in-Time(1)
Over TimeTotal
Americas$341,870 $68,436 $410,306 $316,220 $57,554 $373,774 
EMEA204,786 64,769 269,555 181,330 58,594 239,924 
APAC337,455 31,724 369,179 274,341 30,795 305,136 
Total net sales(1)
$884,111 $164,929 $1,049,040 $771,891 $146,943 $918,834 
(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 nine months ended September 30, 2021 were as follows:
(In thousands)Amount
Balance as of December 31, 2020$168,486 
Deferral of revenue billed in current period, net of recognition104,092 
Recognition of revenue deferred in prior periods(115,999)
Foreign currency translation impact(3,539)
Balance as of September 30, 2021 (unaudited)$153,040 

For the nine months ended September 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 nine months ended September 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 $61 million as of September 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 September 30, 2021, we expect to recognize approximately 14% of the revenue related to these unsatisfied performance obligations during the remainder of 2021, 45% during 2022, and 41% thereafter.



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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 – 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, 2021
(In thousands)(Unaudited)
 GrossGross 
Adjusted CostUnrealized GainUnrealized LossFair Value
Corporate bonds$ $ $ $ 
Total short-term investments$ $ $ $ 
(In thousands)As of December 31, 2020
 GrossGross 
Adjusted CostUnrealized GainUnrealized LossFair 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 September 30, 2021
(In thousands)(Unaudited)
Due in less than 1 yearAdjusted CostFair Value
Corporate bonds$ $ 
Total available-for-sale debt securities$ $ 

Equity-Method Investments

The carrying value of our equity method investments was $33 million and $25 million as of September 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 nine months ended September 30, 2021 and 2020.

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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)
DescriptionSeptember 30, 2021Level 1Level 2Level 3
Assets    
Cash and cash equivalents: