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~~ March 31, 2022

☐ 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

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						78759
~~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~~April 25, 2022
Common Stock, $0.01 par value			~~132,980,932~~131,173,958

NATIONAL INSTRUMENTS CORPORATION

INDEX


PART I. FINANCIAL INFORMATION		Page No.

Item 1	Financial Statements:

	Consolidated Balance Sheets
	~~June 30, 2021~~March 31, 2022 (unaudited) and December 31, ~~2020~~2021	3

	Consolidated Statements of Income
	(unaudited) for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~	4

	Consolidated Statements of Comprehensive Income
	(unaudited) for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~	5

	Consolidated Statements of Cash Flows
	(unaudited) for the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~	6

	Consolidated Statements of Stockholders' Equity	7
	(unaudited) for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~	7

	Notes to Consolidated Financial Statements	98

Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	3332

Item 3	Quantitative and Qualitative Disclosures about Market Risk	4947

Item 4	Controls and Procedures	5048


PART II. OTHER INFORMATION

Item 1	Legal Proceedings	5049

Item 1A	Risk Factors	5049

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	5150

Item 3	Defaults Upon Senior Securities	5150

Item 4	Mine Safety Disclosures	5150

Item 5	Other Information	51

Item 6	Exhibits	52

	Signatures and Certifications	53

PART I - FINANCIAL INFORMATION

~~ITEM~~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 0 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 0 0
Stockholders' equity:
Preferred stock: par value $0.01; 5,000,000 shares authorized; NaN issued and outstanding 0 0
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


	March 31,		December 31,
	2022		2021
Assets	(unaudited)
Cash and cash equivalents	$	142,883	$	211,106

Accounts receivable, net	312,939		341,275
Inventories, net	307,892		289,243
Prepaid expenses and other current assets	109,764		89,925
Total current assets	873,478		931,549
Property and equipment, net	253,976		253,668
Goodwill	592,074		575,992
Intangible assets, net	216,292		220,418
Operating lease right-of-use assets	60,931		58,641
Other long-term assets	74,717		74,717
Total assets	$	2,071,468	$	2,114,985
Liabilities and stockholders' equity
Accounts payable and accrued expenses	$	81,824	$	83,218
Accrued compensation	51,461		111,261
Deferred revenue - current	134,640		137,818
Operating lease liabilities - current	13,265		13,137
Other taxes payable	57,600		59,109

Other current liabilities	51,154		40,671
Total current liabilities	389,944		445,214

Deferred income taxes	11,583		14,249

Income taxes payable - non-current	54,195		54,195
Deferred revenue - non-current	35,766		32,822
Operating lease liabilities - non-current	32,584		30,468
Debt, non-current	325,000		300,000
Other long-term liabilities	14,958		14,340
Total liabilities	864,030		891,288
Commitments and contingencies	0		0
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; 131,876,464 shares and 132,293,898 shares issued and outstanding, respectively	1,319		1,323
Additional paid-in capital	1,152,349		1,129,647
Retained earnings	76,264		112,858
Accumulated other comprehensive loss	(22,494)		(20,131)
Total stockholders’ equity	1,207,438		1,223,697
Total liabilities and stockholders' equity	$	2,071,468	$	2,114,985

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					Three Months Ended
		June 30,				June 30,					March 31,
		2021		2020		2021		2020			2022		2021

Net sales:	Net sales:									Net sales:
Product	Product	$	306,490	$	266,261	$	601,583	$	540,239	Product	$	343,685	$	295,092
Software maintenance	Software maintenance	40,206		35,068		80,295		70,470		Software maintenance	41,571		40,090
Total net sales	Total net sales	346,696		301,329		681,878		610,709		Total net sales	385,256		335,182

Cost of sales:	Cost of sales:									Cost of sales:
Product	Product	95,722		83,795		187,379		165,866		Product	115,024		91,657
Software maintenance	Software maintenance	3,516		2,106		7,273		3,796		Software maintenance	4,203		3,757
Total cost of sales	Total cost of sales	99,238		85,901		194,652		169,662		Total cost of sales	119,227		95,414

Gross profit	Gross profit	247,458		215,428		487,226		441,047		Gross profit	266,029		239,768

Operating expenses:	Operating expenses:									Operating expenses:
Sales and marketing	Sales and marketing	111,199		105,419		227,983		221,165		Sales and marketing	120,157		116,783
Research and development	Research and development	81,434		64,225		161,520		135,846		Research and development	82,161		80,086
General and administrative	General and administrative	30,277		29,369		63,636		55,549		General and administrative	33,179		33,358
Total operating expenses										Total operating expenses	235,497		230,227

Total operating expenses		222,910		199,013		453,139		412,560
Gain on sale of business/assets		0		0		0		159,753
Operating income	Operating income	24,548		16,415		34,087		188,240		Operating income	30,532		9,541
Other income (expense)										Other income (expense)	33		(5,070)

Other expense		(2,963)		(1,143)		(8,031)		(583)

Income before income taxes	Income before income taxes	21,585		15,272		26,056		187,657		Income before income taxes	30,565		4,471
Provision for income taxes		4,279		4,383		4,254		44,113

Provision (benefit) for income taxes										Provision (benefit) for income taxes	5,329		(24)
Net income	Net income	$	17,306	$	10,889	$	21,802	$	143,544	Net income	$	25,236	$	4,495

Basic earnings per share	Basic earnings per share	$	0.13	$	0.08	$	0.17	$	1.10	Basic earnings per share	$	0.19	0.03

Weighted average shares outstanding - basic	Weighted average shares outstanding - basic	132,498		131,014		131,996		130,813		Weighted average shares outstanding - basic	132,105		131,483

Diluted earnings per share	Diluted earnings per share	$	0.13	$	0.08	$	0.16	$	1.09	Diluted earnings per share	$	0.19	$	0.03

Weighted average shares outstanding - diluted	Weighted average shares outstanding - diluted	133,539		131,602		133,157		131,499		Weighted average shares outstanding - diluted	133,175		132,717

Dividends declared per share	Dividends declared per share	$	0.27	$	0.26	$	0.54	$	0.52	Dividends declared per share	$	0.28	$	0.27

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


	Three Months Ended
	March 31,
	2022		2021

Net income	$	25,236	$	4,495
Other comprehensive income, before tax and net of reclassification adjustments:
Foreign currency translation adjustment	(3,805)		(7,195)
Unrealized loss on securities available-for-sale	—		(88)
Unrealized gain on derivative instruments	1,867		11,981
Other comprehensive (loss) income, before tax	(1,938)		4,698
Tax expense related to items of other comprehensive income	425		2,760
Other comprehensive (loss) income, net of tax	(2,363)		1,938
Comprehensive income	$	22,873	$	6,433

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 0 (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) 0
Capital expenditures (17,411) (25,362)
Proceeds from sale of assets/business, net of cash divested 0 160,266
Capitalization of internally developed software (721) (3,108)
Additions to other intangibles (1,519) (630)
Payments to acquire equity-method investments (12,551) 0
Purchases of short-term investments 0 (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 0 70,000
Payments on term loan (98,750) 0
Debt issuance costs (1,993) (1,480)
Proceeds from issuance of common stock 17,239 17,252
Repurchase of common stock 0 (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


	Three Months Ended
	March 31,
	2022		2021
Cash flow from operating activities:
Net income	$	25,236	$	4,495
Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization	21,566		23,872
Stock-based compensation	20,128		17,189
(Gain) loss from equity-method investees	(602)		4,173
Deferred income taxes	(3,615)		(3,746)
Changes in operating assets and liabilities, net of acquisitions	(66,561)		(16,142)
Net cash (used in) provided by operating activities	(3,848)		29,841

Cash flow from investing activities:
Acquisitions, net of cash received	(17,510)		—
Capital expenditures	(10,182)		(8,488)

Capitalization of internally developed software	(187)		(226)
Additions to other intangibles	(1,274)		(1,018)

Payments to acquire equity-method investments	—		(11,539)

Sales and maturities of short-term investments	—		27,664
Net cash (used in) provided by investing activities	(29,153)		6,393

Cash flow from financing activities:
Proceeds from revolving line of credit	25,000		—
Payments on term loan	—		(1,250)
Proceeds from issuance of common stock	9,244		8,565
Repurchase of common stock	(31,455)		—
Dividends paid	(36,976)		(35,533)
Net cash used in financing activities	(34,187)		(28,218)

Effect of exchange rate changes on cash	(1,035)		(1,536)

Net change in cash and cash equivalents	(68,223)		6,480
Cash and cash equivalents at beginning of period	211,106		260,232
Cash and cash equivalents at end of period	$	142,883	$	266,712

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


	March 31, 2022
	Common Stock Shares	Common Stock Amount		Additional-Paid in Capital		Retained Earnings		Accumulated Other Comprehensive Income/(Loss)		Total Stockholders' Equity
Balance at December 31, 2021	132,293,898	$	1,323	$	1,129,647	$	112,858	$	(20,131)	$	1,223,697
Net income	—	—		—		25,236		—		25,236
Other comprehensive loss, net of tax	—	—		—		—		(2,363)		(2,363)
Issuance of common stock under employee plans	354,618	4		9,240		—		—		9,244
Stock-based compensation	—	—		20,055		—		—		20,055

Repurchase of common stock	(772,052)	(8)		(6,593)		(24,854)		—		(31,455)


Dividends paid (1)	—	—		—		(36,976)		—		(36,976)
Balance at March 31, 2022	131,876,464	$	1,319	$	1,152,349	$	76,264	$	(22,494)	$	1,207,438


	March 31, 2021
	Common Stock Shares	Common Stock Amount		Additional-Paid in Capital		Retained Earnings		Accumulated Other Comprehensive Income/(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	—	—		—		4,495		—		4,495
Other comprehensive income, net of tax	—	—		—		—		1,938		1,938
Issuance of common stock under employee plans	360,421	4		8,561		—		—		8,565
Stock-based compensation	—	—		17,173		—		—		17,173



Dividends paid (1)	—	—		—		(35,533)		—		(35,533)
Balance at March 31, 2021	131,607,036	$	1,316	$	1,059,018	$	180,063	$	(18,888)	$	1,221,509

(1) Cash dividends declared per share of common stock were $0.28 and $0.27 for the three months ended ~~June 30,~~March 31, 2022 and 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.~~respectively.

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,~~2021, included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on February ~~23, 2021~~22, 2022 (the ~~"Form~~"2021 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~~March 31, 2022 and December 31, ~~2020,~~2021, the results of our operations and comprehensive income for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020, our~~the cash flows for the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021, and ~~2020 and our~~the statement of stockholders' equity for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020.~~2021. Our operating results for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2021.~~2022. 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.~~States ("GAAP").

Recently Adopted Accounting Pronouncements

~~Clarification of Equity Method Transition~~

In ~~January 2020,~~November 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") ~~2020-01, “Investments-Equity Securities (Topic 321)~~No. 2021-10 (“ASU 2021-10”), ~~Investments-Equity Method~~Government Assistance, to increase transparency of government assistance including the disclosure of (1) the types of assistance, (2) an entity’s accounting for the assistance, and ~~Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying~~(3) the ~~Interactions between Topic 321, Topic 323, and Topic 815,” which clarifies the interaction~~effect 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 standardassistance on an entity’s financial statements. ASU 2021-10 is effective for ~~public companies for fiscal years, and interim~~annual periods ~~within those fiscal years,~~ beginning after December 15, ~~2020.~~2021. Early adoption is permitted. We ~~adopted ASU 2020-01 on January 1, 2021, and~~are currently evaluating the ~~new~~impact of this accounting standard ~~did not have a material impact~~update on our consolidated financial statements and related disclosures.

~~Recently Issued Accounting Pronouncements~~

~~Although there are several other accounting pronouncements recently issued by~~In November 2021, the FASB ~~we do not expect~~issued ASU No. 2021-08—Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The new guidance requires contract assets and contract liabilities acquired in a business combination to be recognized in accordance with ASC Topic 606 as if the acquirer had originated the contracts. We early adopted the standard on January 1, 2022. The adoption of ~~any of these~~this accounting ~~pronouncements had or will~~standard update did not have a material ~~impact~~effect on our consolidated financial ~~statements.~~statements and related disclosures.

Summary of Significant Accounting Policies

There were no material changes into our significant accounting policies during the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 compared to the significant accounting policies described in our 2021 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,~~(expense) income, 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)


	Three Months Ended March 31,
	(Unaudited)
	2022		2021
Interest income	$	46	$	161
Interest expense	(1,292)		(704)
Gain (loss) from equity-method investments	602		(4,173)
Net foreign exchange loss	(1,166)		(559)
Other	1,843		205
Other (expense) income, net	$	33	$	(5,070)

Other Current Liabilities

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


	As of March 31, 2022		As of December 31,
	(unaudited)		2021
Income taxes payable - current	$	19,925	$	14,457
Hedge payable - current	7,759		7,091
Other	23,470		19,123
Total	$	51,154	$	40,671

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,~~March 31, 2022 and 2021 ~~and 2020~~ are as follows (in thousands):


							Three Months Ended March 31,
		Three Months Ended June 30,		Six Months Ended June 30,			(In thousands)
		(Unaudited)					(Unaudited)
		2021	2020	2021	2020		2022	2021
Weighted average shares outstanding-basic	Weighted average shares outstanding-basic	132,498	131,014	131,996	130,813	Weighted average shares outstanding-basic	132,105	131,483
Plus: Common share equivalents	Plus: Common share equivalents					Plus: Common share equivalents
RSUs	RSUs	1,041	588	1,161	686	RSUs	1,070	1,234
Weighted average shares outstanding-diluted	Weighted average shares outstanding-diluted	133,539	131,602	133,157	131,499	Weighted average shares outstanding-diluted	133,175	132,717

Shares issuable upon vesting of RSU awards ~~of 1,369,000 shares and 1,206,000 shares~~ for the three months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020, respectively, and 166,000~~of 442,000 shares and ~~249,000~~567,000 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~~RSU awards would have been anti-dilutive.

109

~~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 $ 0 $ 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~~customer, and ~~Africa region ("EMEA"); and Asia-Pacific region ("APAC").~~customer industry grouping.

Total net sales based on the ~~disaggregation criteria described above~~timing of transfer of goods or services to customers and geographic region 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.


			Three Months Ended March 31,
			(Unaudited)
	2022						2021
(In thousands)
Net sales:	Point-in-Time(1)		Over Time		Total		Point-in-Time(1)		Over Time		Total
Americas	$	132,988	$	26,222	$	159,210	$	104,586	$	22,147	$	126,733
EMEA	79,241		21,129		100,370		64,237		21,285		85,522
APAC	114,995		10,681		125,676		112,630		10,297		122,927
Total net sales(1)	$	327,224	$	58,032	$	385,256	$	281,453	$	53,729	$	335,182
(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

The industry grouping used to disaggregate net sales is determined at the customer account level. Accounts assigned to one of our three industry-specific groupings are either designated as Semiconductor and Electronics, Transportation, or Aerospace, Defense, and Government ("ADG"). We are able to leverage the investments in these areas to also serve a broad base of diverse customers in the other industries we serve, which are included in our Portfolio grouping.


	Three Months Ended March 31,
(In thousands)	(Unaudited)
Industry Grouping	2022		2021
Portfolio	$	126,582	$	112,352
Semiconductor & Electronics	103,012		98,930
Aerospace, Defense & Government	92,672		76,269
Transportation	62,990		47,631
Total net sales	$	385,256	$	335,182

1110

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~~three months ended ~~June 30, 2021~~March 31, 2022 were as follows:


	Amount
	(In thousands)
~~Balance as of~~Deferred Revenue at December 31, ~~2020~~2021	$	~~168,486~~170,640
Deferral of revenue billed in current period, net of recognition	~~78,324~~52,457
Recognition of revenue deferred in prior periods	~~(83,991)~~(50,515)

Foreign currency translation impact	~~(2,209)~~(2,175)
Balance as of ~~June 30, 2021~~March 31, 2022 (unaudited)	$	~~160,610~~170,407

For the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, 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~~"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~~three months ended ~~June 30,~~March 31, 2022 and December 31, 2021, ~~the~~ amounts ~~recorded that were~~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 contracts where revenue is recognized as invoiced, was approximately ~~$62~~$66.4 million as of ~~June 30, 2021. Since~~March 31, 2022. Because we typically invoice customers at contract inception, this amount is included in our current and non-current deferred revenue ~~balances.~~balances and primarily relates to multi-year payments for hardware service and software service offerings. As of ~~June 30, 2021,~~March 31, 2022, we expect to recognize approximately ~~27%~~38% of the revenue related to these unsatisfied performance obligations during the remainder of ~~2021, 40%~~2022, 36% during ~~2022,~~2023, and ~~33%~~26% 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~~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 $ 0 $ 14,110
Total short-term investments $ 14,089 $ 21 $ 0 $ 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~~$32 million and ~~$25~~$32 million as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. During the ~~first quarter of~~three months ended March 31, 2022 and 2021, ~~we determined there was an other than temporary impairment for one of~~net sales to our equity-method ~~investments, based on revised forecasts.~~ investees were approximately $1.5 million and $0.3 million, respectively and purchases from our equity-method investees were not material.

We recorded a $3.5 million impairment loss related to ~~this~~an equity-method investment during the three months ended March 31, 2021. Our proportionate share of the income/(loss) from equity-method investments isand related impairment charges are included within "Other ~~expense"~~(expense) income". 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~~March 31, 2022 and ~~2020.~~2021.

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 $ 133,432 $ 133,432 $ 0 $ 0
Short-term investments available for sale:
Corporate bonds 14,110 0 14,110 0
Derivatives 8,164 0 8,164 0
Total Assets
$ 155,706 $ 133,432 $ 22,274 $ 0

Liabilities
Derivatives $ (9,467) $ 0 $ (9,467) $ 0
Total Liabilities
$ (9,467) $ 0 $ (9,467) $ 0


											Fair Value Measurements at Reporting Date Using
(In thousands)	(In thousands)	Fair Value Measurements at Reporting Date Using								(In thousands)	(Unaudited)
Description	Description	December 31, 2020		Level 1		Level 2		Level 3		Description	March 31, 2022		Level 1		Level 2		Level 3
Assets	Assets									Assets
Cash and cash equivalents:
Money market funds		$	145,466	$	145,466	$	0	$	0
Cash and cash equivalents available for sale:										Cash and cash equivalents available for sale:
Money Market Funds										Money Market Funds	$	2,042	$	2,042	$	—	$	—

Short-term investments available for sale:
Corporate bonds		59,923		0		59,923		0

Other assets:										Other assets:
Derivatives	Derivatives	6,124��		0		6,124		0		Derivatives	14,852		—		14,852		0
Total Assets	Total Assets	$	211,513	$	145,466	$	66,047	$	0	Total Assets	$	16,894	$	2,042	$	14,852	$	—

Liabilities	Liabilities									Liabilities
Derivatives	Derivatives	$	(19,359)	$	0	$	(19,359)	$	0	Derivatives	$	(10,118)	$	—	$	(10,118)	$	—
Total Liabilities	Total Liabilities	$	(19,359)	$	0	$	(19,359)	$	0	Total Liabilities	$	(10,118)	$	—	$	(10,118)	$	—

1412


(In thousands)	Fair Value Measurements at Reporting Date Using
Description	December 31, 2021		Level 1		Level 2		Level 3
Assets
Cash and cash equivalents available for sale:
Money Market Funds	$	101,290	$	101,290	$	—	$	—





Other assets:
Derivatives	12,407		—		12,407		—
Total Assets	$	113,697	$	101,290	$	12,407	$	—

Liabilities
Derivatives	$	(9,468)	$	—	$	(9,468)	$	—
Total Liabilities	$	(9,468)	$	—	$	(9,468)	$	—

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 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. 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~~three months ended ~~June 30, 2021.~~March 31, 2022. There were no transfers in or out of Level 1 or Level 2 during the ~~six~~three months ended ~~June 30, 2021.~~

As of June 30, 2021, our short-term investments did not include sovereign debt from any country other than the United States. The majority of our short-term investments that are located outside of the U.S. are denominated in the U.S. dollar.March 31, 2022.

We did not have any items that were measured at fair value on a nonrecurring basis at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021. The carrying value of net accounts receivable, accounts payable, and long-term debt contained in the consolidated balance sheets approximates fair value.

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 direct operations in approximately 40 countries. Sales outside of the Americas accounted for approximately ~~61%~~59% and ~~60%~~62% of our net sales during the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020, respectively, and approximately 62% and 60% during the six months ended June 30, 2021 and 2020,~~ 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 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 use foreign currency forward 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 use 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 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 contracts. For forward contracts, when the value of the dollar ~~strengthens~~changes 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. We use foreign currency forward contracts for up to 100% of our forecasted exposures in selected currencies (primarily in Euro, Japanese yen, Hungarian forint, British pound, Malaysian ringgit, Korean won 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 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. Hedge effectiveness of foreign currency forwards designated as cash flow hedges is 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 designated as cash flow hedges with the following notional amounts:

(In thousands) US Dollar Equivalent
As of June 30, 2021 As of December 31,
(Unaudited) 2020
British pound $ 35,446 $ 25,133
Chinese yuan 86,142 45,553
Euro 205,346 219,115
Hungarian forint 69,193 82,429
Japanese yen 57,666 73,399
Korean won 22,889 22,301
Malaysian ringgit 35,257 36,249
Total forward contracts notional amount $ 511,939 $ 504,179


(In thousands)	US Dollar Equivalent
	As of March 31, 2022		As of December 31,
	(Unaudited)		2021
Chinese yuan	$	87,871	$	99,066
Euro	121,396		145,351
Japanese yen	33,460		43,128
Hungarian forint	46,749		54,939
British pound	23,981		25,947
Malaysian ringgit	24,161		29,624
Korean won	10,923		21,180
Total forward contracts notional amount	$	348,541	$	419,235

The contracts in the foregoing table had contractual maturities of 3021 months or less and 24 months or less at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020.~~ 2021, respectively.

At ~~June 30, 2021,~~March 31, 2022, we expect to reclassify ~~$1.4~~$8.1 million of ~~losses~~gains on derivative instruments from accumulated OCI to net sales during the next twelve months when the hedged international sales occur, ~~$0.1~~$1.9 million of losses on derivative instruments from accumulated OCI to cost of sales during the next twelve months when the ~~hedged~~ cost of sales are incurred and ~~less than $0.1~~$1.4 million of ~~gains~~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, 2021.~~March 31, 2022. Actual results may vary materially as a result of changes in the corresponding exchange rates subsequent to this date.

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~~monetary assets and liabilities 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 90 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 “Other ~~expense.~~(expense) income.” As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, we held foreign currency forward contracts that were not designated as hedging instruments with a notional amount of ~~$116~~$102 million and ~~$89~~$94 million, respectively.

The following tables present the fair value of derivative instruments on our Consolidated Balance Sheets at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively.

Asset Derivatives
June 30, 2021 December 31, 2020
(In thousands) (Unaudited)
Balance Sheet Location Fair Value Fair Value
Derivatives designated as hedging instruments
Foreign exchange contracts - ST forwards Prepaid expenses and other current assets $ 4,213 $ 1,564
Foreign exchange contracts - LT forwards Other long-term assets 3,222 3,117
Total derivatives designated as hedging instruments $ 7,435 $ 4,681
Derivatives not designated as hedging instruments
Foreign exchange contracts - ST forwards Prepaid expenses and other current assets $ 729 $ 1,443
Total derivatives not designated as hedging instruments $ 729 $ 1,443
Total derivatives $ 8,164 $ 6,124


								Asset Derivatives
									March 31, 2022			December 31, 2021
		Liability Derivatives							(Unaudited)
			June 30, 2021		December 31, 2020
(In thousands)	(In thousands)		(Unaudited)				(In thousands)	Balance Sheet Location	Fair Value			Fair Value
		Balance Sheet Location	Fair Value		Fair Value

Derivatives designated as hedging instruments	Derivatives designated as hedging instruments										Derivatives designated as hedging instruments
Foreign exchange contracts - ST forwards	Foreign exchange contracts - ST forwards	Other current liabilities	$	(5,506)	$	(12,549)	Foreign exchange contracts - ST forwards	Prepaid expenses and other current assets	$	11,386		$	8,993
Foreign exchange contracts - LT forwards	Foreign exchange contracts - LT forwards	Other long-term liabilities	(1,796)		(6,328)		Foreign exchange contracts - LT forwards	Other long-term assets	2,449			2,908
Total derivatives designated as hedging instruments	Total derivatives designated as hedging instruments		$	(7,302)	$	(18,877)	Total derivatives designated as hedging instruments		$	13,835		$	11,901

Derivatives not designated as hedging instruments	Derivatives not designated as hedging instruments						Derivatives not designated as hedging instruments
Foreign exchange contracts - ST forwards	Foreign exchange contracts - ST forwards	Other current liabilities	$	(2,165)	$	(482)	Foreign exchange contracts - ST forwards	Prepaid expenses and other current assets	$	1,017		$	506
Total derivatives not designated as hedging instruments	Total derivatives not designated as hedging instruments		$	(2,165)	$	(482)	Total derivatives not designated as hedging instruments		$	1,017		$	506

Total derivatives	Total derivatives		$	(9,467)	$	(19,359)	Total derivatives		$	14,852		$	12,407

1715


	Liability Derivatives
		March 31, 2022		December 31, 2021
		(Unaudited)
(In thousands)	Balance Sheet Location	Fair Value		Fair Value

Derivatives designated as hedging instruments
Foreign exchange contracts - ST forwards	Other current liabilities	$	(6,514)	$	(6,425)
Foreign exchange contracts - LT forwards	Other long-term liabilities	(2,354)		(2,377)
Total derivatives designated as hedging instruments		$	(8,868)	$	(8,802)

Derivatives not designated as hedging instruments
Foreign exchange contracts - ST forwards	Other current liabilities	$	(1,250)	$	(666)
Total derivatives not designated as hedging instruments		$	(1,250)	$	(666)

Total derivatives		$	(10,118)	$	(9,468)

The following tables present the effect of derivative instruments on our Consolidated Statements of Income for the ~~three months~~three-months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively:


June 30, 2021
March 31, 2022							March 31, 2022
(In thousands)	(In thousands)						(In thousands)
(Unaudited)	(Unaudited)						(Unaudited)
Derivatives in Cash Flow Hedging Relationship	Derivatives in Cash Flow Hedging Relationship	Gain or (Loss) Recognized in OCI on Derivative		Location of Gain or (Loss) Reclassified from Accumulated OCI into Income	Gain or (Loss) Reclassified from Accumulated OCI into Income		Derivatives in Cash Flow Hedging Relationship	Gain or (Loss) Recognized in OCI on Derivative		Location of Gain or (Loss) Reclassified from Accumulated OCI into Income	Gain or (Loss) Reclassified from Accumulated OCI into Income
Foreign exchange contracts - forwards	Foreign exchange contracts - forwards	$	(558)	Net sales	$	(2,408)	Foreign exchange contracts - forwards	$	1,884	Net sales	$	1,739

Foreign exchange contracts - forwards	Foreign exchange contracts - forwards	1,692		Cost of sales	20		Foreign exchange contracts - forwards	(21)		Cost of sales	(327)

Foreign exchange contracts - forwards	Foreign exchange contracts - forwards	1,247		Operating expenses	27		Foreign exchange contracts - forwards	4		Operating expenses	(239)
Total	Total	$	2,381		$	(2,361)	Total	$	1,867		$	1,173


March 31, 2021
(In thousands)
(Unaudited)
Derivatives in Cash Flow Hedging Relationship	Gain or (Loss) Recognized in OCI on Derivative		Location of Gain or (Loss) Reclassified from Accumulated OCI into Income	Gain or (Loss) Reclassified from Accumulated OCI into Income
Foreign exchange contracts - forwards	$	16,286	Net sales	$	(2,026)

Foreign exchange contracts - forwards	(2,529)		Cost of sales	(21)

Foreign exchange contracts - forwards	(1,776)		Operating expenses	(9)
Total	$	11,981		$	(2,056)

(In thousands)

��

Derivatives not Designated as Hedging Instruments

Location of Gain (Loss) Recognized in Income

Amount of Gain (Loss) Recognized in Income

March 31, 2022

March 31, 2021

(Unaudited)

Foreign exchange contracts - forwards

Other (expense) income

(803)

(1,601)

Total

(803)

(1,601)

June 30, 2020
(In thousands)
(Unaudited)
Derivatives in Cash Flow Hedging Relationship Gain or (Loss) Recognized in OCI on Derivative Location of Gain or (Loss) Reclassified from Accumulated OCI into Income Gain or (Loss) Reclassified from Accumulated OCI into Income
Foreign exchange contracts - forwards $ (5,132) Net sales $ 2,726

Foreign exchange contracts - forwards 2,962 Cost of sales (850)

Foreign exchange contracts - forwards 2,096 Operating expenses (637)
Total $ (74) $ 1,239

(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, 2021 June 30, 2020
(Unaudited) (Unaudited)
Foreign exchange contracts - forwards Other expense $ (662) (193)

Total $ (662) $ (193)

1817

~~The following tables present the effect of derivative instruments on our Consolidated Statements of Income for the six months ended June 30, 2021 and 2020, respectively:~~

June 30, 2021
(In thousands)
(Unaudited)
Derivatives in Cash Flow Hedging Relationship Gain or (Loss) Recognized in OCI on Derivative Location of Gain or (Loss) Reclassified from Accumulated OCI into Income Gain or (Loss) Reclassified from Accumulated OCI into Income
Foreign exchange contracts - forwards $ 15,728 Net sales $ (4,434)

Foreign exchange contracts - forwards (837) Cost of sales (1)

Foreign exchange contracts - forwards (529) Operating expenses 18
Total $ 14,362 $ (4,417)

June 30, 2020
(In thousands)
(Unaudited)
Derivatives in Cash Flow Hedging Relationship Gain or (Loss) Recognized in OCI on Derivative Location of Gain or (Loss) Reclassified from Accumulated OCI into Income Gain or (Loss) Reclassified from Accumulated OCI into Income
Foreign exchange contracts - forwards $ 5,724 Net sales $ 5,260

Foreign exchange contracts - forwards (3,798) Cost of sales (1,369)

Foreign exchange contracts - forwards (2,524) Operating expenses (1,082)
Total $ (598) $ 2,809

Note 6 – Inventories, net

Inventories, net consist of the following:

June 30, 2021 December 31,
(In thousands) (Unaudited) 2020

Raw materials $ 115,838 $ 99,942
Work-in-process 9,884 11,307
Finished goods 85,301 82,763
Total $ 211,023 $ 194,012


	March 31, 2022		December 31,
(In thousands)	(Unaudited)		2021

Raw materials	$	196,514	$	181,676
Work-in-process	16,247		14,573
Finished goods	95,131		92,994
Total	$	307,892	$	289,243

Note 7 – Intangible assets ~~net~~ and goodwill, net

Intangible assets at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 are as follows:

June 30, 2021
(In thousands) (Unaudited) December 31, 2020
Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount
Capitalized software development costs $ 85,064 $ (65,991) $ 19,073 $ 115,251 $ (83,706) $ 31,545
Acquired technology 109,345 (25,454) 83,891 105,486 (17,913) 87,573
Customer relationships 39,984 (13,588) 26,396 40,273 (10,026) 30,247
Patents 35,625 (28,042) 7,583 35,803 (25,578) 10,225
Other 27,270 (15,087) 12,183 27,440 (14,311) 13,129
Total $ 297,288 $ (148,162) $ 149,126 $ 324,253 $ (151,534) $ 172,719


	March 31, 2022
(In thousands)	(Unaudited)						December 31, 2021
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Capitalized software development costs	$	44,554	$	(37,262)	$	7,292	$	45,671	$	(36,457)	$	9,214
Acquired technology	151,531		(39,788)		111,743		148,155		(34,264)		113,891
Customer relationships	96,966		(21,606)		75,360		93,931		(19,717)		74,214
Patents	36,498		(29,879)		6,619		36,217		(29,316)		6,901
Other	33,986		(18,708)		15,278		32,962		(16,764)		16,198
Total	$	363,535	$	(147,243)	$	216,292	$	356,936	$	(136,518)	$	220,418

Software development costs capitalized for the three months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ were ~~$0.5~~$0.2 million and ~~$1.3~~$0.3 million, respectively, and related amortization expense was $6.3 million and $7.4 million, respectively. For the six months ended June 30, 2021 and 2020, capitalized software development costs were $0.8 million and $3.3 million, respectively, and related amortization expense was $13.3 million and $14.7 million, respectively. Capitalized software development costsexpenses for the three months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020 included costs related to stock-based compensation of less than $0.1~~were $2.0 million and ~~$0.1~~$7 million, respectively. For the six months ended June 30, 2021 and 2020, capitalized software development costs included costs related to stock-based compensation of $0.1 million and $0.2 million, 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, which generally range from three to six years. Acquired technology, customer relationships and other intangible assets are amortized over their useful lives, which ~~generally~~ range from five to ten years. Patents are amortized using the straight-line method over their estimated period of benefit, ~~which~~ generally ~~range from~~ ten to seventeen years. Total intangible assets amortization expenses were ~~$15.9~~$12.4 million and ~~$9.3~~$14.0 million for the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020, respectively, and $29.9 million and $18.7 million for the six months ended June 30, 2021 and 2020,~~ respectively.

Goodwill

The carrying amount of goodwill as of ~~June 30, 2021,~~March 31, 2022 was as follows:


	Amount
	(In thousands)
Balance as of December 31, ~~2020~~2021	$	~~467,547~~575,992
Acquisitions	~~16,893~~13,516
Measurement period ~~adjustments~~adjustment	~~1,973~~5,085
Foreign currency translation impact	~~(3,277)~~(2,519)

Balance as of ~~June 30, 2021~~March 31, 2022 (unaudited)	$	~~483,136~~592,074

The excess purchase price over the fair value of assets acquired is recorded as goodwill. As businesses are acquired, we assign assets acquired (including goodwill) and liabilities assumed to either our existing reporting unit or a newly identified reporting unit as of the date of the acquisition. In the event a disposal group meets the definition of a business, goodwill is allocated to the disposal group based on the relative fair value of the disposal group to the related reporting unit. As we have 1 operating segment comprised of components with similar economic characteristics, we allocate goodwill to 1 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 is performed in the fourth quarter of each year.

~~NaN~~ No impairment of goodwill was identified during the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 or the twelve months ended December 31, ~~2020.~~2021.

Note 8 – Leases

We have operating leases for corporate offices, automobiles, and certain equipment. Our leases have remaining terms of 1 year to 9392 years, some of which may include options to extend the leases for up to 9 years, and some of which may include options to terminate the leases within 1 year. Leases with an initial term of 12 months or less are not recorded on the balance sheet. We recognize lease expense for these leases on a straight-line basis over the lease term.

Amounts related to finance lease activities and income from leasing activities were not material for the periods presented.

The components of operating lease expense were as follows (unaudited):


		Three Months Ended				Six Months Ended
(In thousands)	(In thousands)	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020		(In thousands)	March 31, 2022		March 31, 2021
Operating Lease Cost (1)	Operating Lease Cost (1)	$	5,208	$	5,389	$	10,538	$	11,071	Operating Lease Cost (1)	$	5,417	$	5,330
(1) Includes variable and short-term lease costs
(1) includes variable and short-term lease costs										(1) includes variable and short-term lease costs

Maturities of lease liabilities as of ~~June 30, 2021~~March 31, 2022 were as follows (unaudited):


(In thousands)
Years ending December 31,	Operating Leases
2022 (Excluding the three months ended March 31, 2022)	$	11,496
2023	11,776
2024	9,973
2025	7,069
2026	6,193
Thereafter	2,921
Total future minimum lease payments	49,428
Less imputed interest	(3,579)
Total lease liabilities	$	45,849

(In thousands)
Years ending December 31, Operating Leases
2021 (Excluding the six months ended June 30, 2021) $ 8,506
2022 11,611
2023 7,946
2024 6,978
2025 4,958
Thereafter 7,095
Total future minimum lease payments 47,094
Less imputed interest (4,193)
Total lease liabilities $ 42,901

As of ~~June 30, 2021,~~March 31, 2022, we have additional operating leases that have not commenced during the ~~six months ended June 30, 2021,~~period, which were not material.

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 ~~$94 million and $93~~$84 million at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020, respectively.~~2021. A majority of the valuation allowance is related to the deferred tax assets of National Instruments Hungary Kft. (“NI Hungary”).

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 ~~$10.7~~$10.1 million and ~~$10.5~~$9.4 million of gross unrecognized tax benefits at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively, all of which would affect our effective income tax rate if recognized. We recorded a gross increase in unrecognized tax benefits of ~~$0.2 million~~$779,000 for the three months ended ~~June 30, 2021,~~March 31, 2022, as a result of the tax positions taken during ~~prior periods.~~this period. As of ~~June 30, 2021,~~March 31, 2022, it is reasonably possible that we will recognize gross tax benefits in the amount of ~~$1.4~~$1.5 million in the next twelve months due to the closing of open tax years. The nature of the uncertainty is related to ~~deductions~~positions 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. During the three months ended ~~June 30, 2021,~~March 31, 2022, we recognized interest expense related to uncertain tax positions of approximately ~~less than $0.1 million.~~$26,000. As of ~~June 30, 2021,~~March 31, 2022, we had approximately ~~$0.5~~$0.3 million accrued for interest related to uncertain tax positions. The tax years ~~2014~~2015 through ~~2021~~2022 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 ~~20%~~17% and ~~29%~~(1)% for the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020, respectively, and 16% and 24% for the six months ended June 30, 2021 and 2020,~~ respectively. For the three months ended ~~June 30, 2021,~~March 31, 2022, our effective tax rate was lower than the U.S. federal statutory rate of 21% primarily as a result of ~~the research and development tax credit,~~deduction for foreign-derived intangible income, an enhanced deduction for certain research and development expenses and the ~~deduction for foreign-derived intangible income,~~research and development tax credit, offset by the ~~U.S.~~change in unrecognized tax ~~on global intangible low-taxed income, foreign taxes greater than the statutory rate,~~benefits, nondeductible officer compensation, state income taxes net of federal benefit and ~~nondeductible officer compensation.~~U.S. tax on global intangible low-taxed income. For the ~~six~~three months ended ~~June 30,~~March 31, 2021, our effective tax rate was lower than the U.S. federal statutory rate of 21% primarily as a result of excess tax benefits from share-based compensation and other discrete items, ~~the research and development tax credit,~~ an enhanced deduction for certain research and development expenses, the research and development tax credit, and the deduction for foreign-derived intangible income, offset by the U.S. tax on global intangible low-taxed income, ~~foreign taxes greater than the statutory rate,~~ state income taxes net of federal benefit and nondeductible officer compensation. For the three and six months ended June 30, 2020, our effective tax rate was higher than the U.S. federal statutory rate of 21% primarily as a result of the gain on the sale of our AWR business, foreign taxes greater than the statutory rate, nondeductible officer compensation, and state income taxes net of the federal benefit, offset by the research and development tax credit, the deduction for foreign-derived intangible income, and an enhanced deduction for certain research and development expenses.

Our earnings ~~from our operations~~ 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 ~~$0.2~~$2.0 million and ~~$0.3~~$0.2 million for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022, and March 31, 2021, ~~respectively, and income tax expense of $0.3 million and $0.1 million for the three and six months ended June 30, 2020,~~ respectively.

Earnings from our operations in Malaysia are free of tax under a tax holiday effective January 1, 2013. This tax holiday expires in 2037. 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~~ months ended ~~June 30,~~March 31, 2022, and March 31, 2021 were approximately ~~$0.2~~$0.6 million and ~~$0.3 million, respectively. The income tax benefits of the tax holiday for the three and six months ended June 30, 2020 were approximately~~ $0.1 ~~million and $0.3~~ million, respectively. The impact of the tax holiday on a per share basis for each of the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and March 31, 2021 ~~and June 30, 2020~~ was ~~less than~~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 Internal Revenue Service ("IRS") with regard to any foreign jurisdictions.

Note 10 – Comprehensive income

Our OCI is comprised of net income, foreign currency translation adjustments, and unrealized gains and losses on forward contracts and securities classified as available-for-sale. The accumulated OCI, net of tax, for the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ consisted of the following:

June 30, 2021
(Unaudited)
(In thousands) Currency translation adjustment Investments Derivative instruments Accumulated other comprehensive income/(loss)
Balance as of December 31, 2020 $ (10,066) $ (426) (10,334) $ (20,826)
Current-period other comprehensive income (loss) (4,911) (141) 9,945 4,893
Reclassified from accumulated OCI into income 0 0 4,417 4,417
Income tax (benefit) expense 0 (3) 3,262 3,259
Balance as of June 30, 2021 $ (14,977) $ (564) $ 766 $ (14,775)


		June 30, 2020									March 31, 2022
		(Unaudited)									(Unaudited)
(In thousands)	(In thousands)	Currency translation adjustment		Investments		Derivative instruments		Accumulated other comprehensive income/(loss)		(In thousands)	Currency translation adjustment		Investments		Derivative instruments		Accumulated other comprehensive income/(loss)
Balance as of December 31, 2019		$	(25,831)	$	(85)	4,846		$	(21,070)
Balance as of December 31, 2021										Balance as of December 31, 2021	$	(23,179)	$	—	3,048		$	(20,131)
Current-period other comprehensive (loss) income	Current-period other comprehensive (loss) income	(1,975)		(154)		2,211		82		Current-period other comprehensive (loss) income	(3,805)		—		3,040		(765)
Reclassified from accumulated OCI into income	Reclassified from accumulated OCI into income	0		0		(2,809)		(2,809)		Reclassified from accumulated OCI into income	—		—		(1,173)		(1,173)
Income tax (benefit) expense	Income tax (benefit) expense	0		(56)		124		68		Income tax (benefit) expense	—		—		425		425
Balance as of June 30, 2020		$	(27,806)	$	(183)	$	4,124	$	(23,865)
Balance as of March 31, 2022										Balance as of March 31, 2022	$	(26,984)	$	—	$	4,490	$	(22,494)


	March 31, 2021
	(Unaudited)
(In thousands)	Currency translation adjustment		Investments		Derivative instruments		Accumulated other comprehensive income/(loss)
Balance as of December 31, 2020	$	(10,066)	$	(426)	(10,334)		$	(20,826)
Current-period other comprehensive (loss) income	(7,195)		(88)		9,925		2,642
Reclassified from accumulated OCI into income	—		—		2,056		2,056
Income tax (benefit) expense	—		(2)		2,762		2,760
Balance as of March 31, 2021	$	(17,261)	$	(512)	$	(1,115)	$	(18,888)

Note 11 – Authorized shares of common and preferred stock and stock-based compensation plans

Authorized shares of common and preferred stock

The total number of shares which we are authorized to issue is 365,000,000 shares, consisting of (i) 5,000,000 shares of preferred stock, par value $0.01 per share, and (ii) 360,000,000 shares of common stock, par value $0.01 per share.

Stock-Based Compensation Plan

Our stockholders approved our 2005 Incentive Plan (the “2005 Plan”) on May 10, 2005. At the time of approval, 4,050,000 shares of our common stock were reserved for issuance under the 2005 Plan, as well as the number of shares which had been reserved but not issued under our 1994 Incentive Stock Options Plan (the “1994 Plan”), which terminated in May 2005, and any shares that returned to the 1994 Plan as a result of termination of options or repurchase of shares issued under such plan. The 2005 Plan provided for the granting of incentive awards in the form of restricted stock and RSUs to directors, executive officers and employees of the Company and its subsidiaries. Awards vest over a three, five or ten-year period, beginning on the date of grant. Vesting of ten-year awards may accelerate based on our previous year’s earnings and growth but ten-year awards cannot accelerate to vest over a period of less than five years. The 2005 Plan terminated on May 11, 2010, except with respect to outstanding awards previously granted thereunder. There were 3,362,304 shares of common stock that were reserved but not issued under the 2005 Plan as of May 11, 2010.

Our stockholders approved our 2010 Incentive Plan (the “2010 Plan”) on May 11, 2010. At the time of approval, 3,000,000 shares of our common stock were reserved for issuance under the 2010 Plan, as well as the 3,362,304 shares of common stock that were reserved but not issued under the 1994 Plan and the 2005 Plan as of May 11, 2010, and any shares that are returned to the 1994 Plan and the 2005 Plan as a result of the forfeiture or termination of options or RSUs or repurchase of shares issued under those plans. The 2010 Plan provided for the granting of incentive awards in the form of restricted stock and RSUs to employees, directors and consultants of the Company and employees and consultants of any parent or subsidiary of the Company. Awards vest over a three, five or ten-year period, beginning on the date of grant. Vesting of ten-year awards may accelerate based on our previous year’s earnings and growth but ten-year awards cannot accelerate to vest over a period of less than five years. The 2010 Plan terminated on May 12, 2015, except with respect to the outstanding awards previously granted thereunder. There were 2,518,416 shares of common stock that were reserved but not issued under the 2010 Plan as of May 12, 2015.

Our stockholders approved our 2015 Equity Incentive Plan (the “2015 Plan”) on May 12, 2015. At the time of approval, 3,000,000 shares of our common stock were reserved for issuance under the 2015 Plan, as well as the 2,518,416 shares of common stock that were reserved but not issued under the 2010 Plan as of May 12, 2015, and any shares that were returned to the 1994 Plan, 2005 Plan, and the 2010 Plan as a result of the forfeiture or termination of options or RSUs or repurchase of shares issued under those plans. The 2015 Plan provides for the granting of incentive awards in the form of restricted stock and RSUs, to employees, directors and consultants of the Company and employees and consultants of any parent or subsidiary of the Company and such awards may be subject to performance-based vesting conditions. Awards generally vest over a three, four, five or ten-year period, beginning on the date of grant. Vesting of ten-year awards may accelerate based on our previous year’s earnings and growth but ten-year awards cannot accelerate to vest over a period of less than five years. The 2015 Plan terminated on May 5, 2020, except with respect to the outstanding awards previously granted thereunder. There were 567,142 shares of common stock that were reserved but not issued under the 2015 Plan as of May 5, 2020.

Our stockholders approved our 2020 Equity Incentive Plan (the “2020 Plan”) on May 5, 2020. At the time of approval, 4,500,000 shares of our common stock were reserved for issuance under the 2020 Plan, as well as the 567,142 shares of common stock that were reserved but not issued under the 2015 Plan as of May 5, 2020, and any shares that were returned to the 1994 Plan, 2005 Plan, 2010 Plan, and 2015 Plan as a result of the forfeiture or termination of options or RSUs or repurchase of shares issued under those plans. The 2020 Plan provides for the granting of incentive awards in the form of restricted stock and RSUs to employees, directors and consultants of the Company and employees and consultants of any parent or subsidiary of the Company. Awards generally vest over a one, two, three or four-year period, beginning on the date of the grant and awards may be subject to performance-based vesting conditions. There were ~~3,292,288~~1,637,992 shares available for grant under the 2020 Plan at ~~June 30, 2021.~~March 31, 2022.

Performance-based stock units

During the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ we granted ~~130,006~~164,843 and ~~144,647~~130,006 performance-based restricted stock units ~~(“PRSUs”~~("PRSUs"), respectively, to executive officers pursuant to the 2020 Plan and 2015 Plan. The PRSUs may be earned based on our total shareholder return ("TSR") compared to the TSR of the Russell 2000 Index (the “Index”) over a three-year performance period. For the PRSUs granted during the ~~six~~three months ended ~~June 30,~~March 31, 2022, the three-year performance period commenced on January 1, 2022, and will end on December 31, 2024, and for the PRSUs granted during the three months ended March 31, 2021, the three-year performance ~~period~~ commenced on January 1, 2021 and will end on December 31, 2023, ~~and for the PRSUs granted during the six months ended June 30, 2020, the three year performance commenced on January 1, 2020 and will end on December 31, 2022,~~ using the average daily closing price over a 30-day lookback in each case. The number of awards earned could range from 0zero to two times the target number of shares granted.

The fair values of PRSUs are estimated using a Monte Carlo simulation. The determination of fair value of the PRSUs is based on our stock price and a number of assumptions including the expected volatility, expected dividend yield and the risk-free interest rate. The expected volatility at the date of grant was based on the historical volatilities of our stock and the companies included in the Index over the performance period. The Monte Carlo model is based on random projections of stock-price paths and must be repeated numerous times to achieve a probabilistic assessment. The key assumptions used in valuing these market-based awards are as follows:

Six Months Ended

Three Months Ended

(unaudited)

June 30, 2021

June 30, 2020

March 31, 2022

March 31, 2021

Number of simulations

100,000

Number of simulations

100,000

Expected volatility

40.60%

27.41%

Expected volatility

37.81%

40.60%

Expected life in years

2.95 years

2.92 years

Expected life in years

2.95 years

Risk-free interest rate

0.21%

1.38%

Risk-free interest rate

1.33%

0.21%

Dividend yield

2.66%

2.32%

Dividend yield

2.52%

2.66%

The weighted average grant date fair value of the market-based awards, as determined by the Monte Carlo valuation model, was $59.65 per share and $66.97 per share in 2022 and ~~$61.00 per share in~~ 2021, ~~and 2020,~~ respectively.

Employee stock purchase plan

Our employee stock purchase plan ~~(“ESPP”~~("ESPP") permits substantially all domestic employees and employees of designated subsidiaries to acquire our common stock at a purchase price of 85% of the lower of the market price at the beginning or the end of the purchase period. The plan has quarterly purchase periods generally beginning on February 1, May 1, August 1 and November 1 of each year. Employees may designate up to 15% of their compensation for the purchase of common stock under the ESPP. On May 14, 2019, our stockholders approved an additional 3,000,000 shares for issuance under our ESPP. At ~~June 30, 2021,~~March 31, 2022, we had ~~2,490,594~~1,797,679 shares of common stock reserved for future issuance under the ESPP. We issued ~~568,598~~263,842 shares under this plan in the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 and the weighted average purchase price of the shares issued was ~~$30.32~~$35.04 per share. During the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, we did not make any changes in accounting principles or methods of estimates with respect to our ESPP.

Authorized Preferred Stock and Preferred Stock Purchase Rights Plan

We have 5,000,000 authorized shares of preferred stock. On January 21, 2004, our Board of Directors designated 750,000 of these shares as Series A Participating Preferred Stock in conjunction with the adoption of a Preferred Stock Rights Agreement which expired on May 10, 2014. There were 0no shares of preferred stock issued and outstanding at ~~June 30, 2021.~~March 31, 2022.

Stock repurchases and retirements

On April 21, 2010, our Board of Directors authorized a program to repurchase of shares of our common stock from time to time, depending on market conditions and other ~~factors.~~factors(the “2019 Program”). The Board has amended ~~such program~~the 2019 Program several times over the years to increase the number of shares that may be purchased under the program. ~~Most recently, on~~On October 23, 2019, our Board amended the ~~program~~2019 Program to increase the number of shares that may be repurchased by 3,000,000 shares.

On January 19, 2022, our Board of Directors approved a new stock repurchase plan for up to $250 million of our common stock, effective immediately (the "2022 Program"). This new repurchase program is in addition to the existing 2019 Program. Under the 2022 Program, shares may be repurchased from time to time in open market transactions, in privately negotiated transactions or otherwise. The timing and the other terms of the repurchase will depend on a variety of factors, including legal requirements, economic and market conditions, and other investment opportunities. The 2022 Program may be changed, suspended or discontinued at any time and does not have a specified expiration date.

At ~~June 30, 2021,~~March 31, 2022, there ~~was 1,609,943~~were 0 shares remaining available for repurchase under the ~~stock~~2019 Program and there was $230 million available for repurchase ~~program. We did not repurchase any shares of our common stock during the three and six months ended June 30, 2021~~ under the ~~program. During the three months ended June 30, 2020, we~~2022 Program. We repurchased ~~503,326~~772,052 shares of our common stock at a weighted average price per share of ~~$34.08 and~~$40.74 during the ~~six months~~three-months ended ~~June 30, 2020, we repurchased 668,199~~March 31, 2022 under the 2019 Program and 2022 Program. We did not repurchase any shares of our common stock ~~at a weighted average price per share of $35.44. The stock repurchase program does not have an expiration date.~~

during the three-months ended March 31, 2021 under the 2019 Program.

Note 12 – Segment and geographic information

We operate as 1 operating segment. Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the chief operating decision maker, who is our chief executive officer, in deciding how to allocate resources and in assessing performance. Our chief operating decision maker evaluates our financial information and resources and assesses the performance of these resources on a consolidated basis. Since we operate as 1 operating segment, all required financial segment information can be found in the condensed consolidated financial statements and the notes thereto.

We sell our products in 3 geographic regions which consist ~~of Americas, EMEA~~of: the Americas; Europe, Middle East and ~~APAC.~~Africa region ("EMEA"); and Asia-Pacific region ("APAC"). Our sales to these regions share similar economic characteristics including the nature of products and services we sell, the type and class of customers, and the methods used to distribute our products and services. Revenue from the sale of our products, which are similar in nature, and software maintenance is reflected as total net sales in our Consolidated Statements of Income. (See Note 2 ~~- Revenue~~–Revenue of Notes to Consolidated Financial Statements for total net sales by the major geographic areas in which we operate).

The following ~~tables~~table present summarized information for net sales by country. Revenues from external customers are generally attributed to countries based upon the customer's location. Net sales attributable to each individual foreign country outside the U.S. and China were not material.

United States
China(1)
Rest of the World Total
(in millions)
Net sales:
Three months ended June 30, 2021 $ 127 $ 59 $ 161 $ 347
Three months ended June 30, 2020 $ 116 $ 52 $ 133 $ 301
Six months ended June 30, 2021 $ 247 $ 113 $ 322 $ 682
Six months ended June 30, 2020 $ 234 $ 87 $ 290 $ 611
(1): Includes Mainland China and the Hong Kong Special Administrative Region


(in millions)	United States		China(1)	Rest of the World	Total
Net sales:
Three months ended March 31, 2022	$	152	55	178	$	385
Three months ended March 31, 2021	$	120	54	161	$	335
(1): Includes Mainland China and the Hong Kong Special Administrative Region

The following ~~tables present~~table presents summarized information for long-lived assets by country. Long-lived assets attributable to each individual country outside the U.S., Hungary and Malaysia were not material. Long-lived assets consist of property, plant, and equipment and operating lease right-of-use assets and ~~other long-term assets excluding~~excludes intangible assets.

United States Hungary Malaysia Rest of the World Total
(in millions)
Long-lived Assets:
June 30, 2021 $ 127 $ 51 $ 75 $ 56 $ 309
December 31, 2020 $ 127 $ 52 $ 75 $ 68 $ 322


(in millions)	United States		Hungary	Malaysia	Rest of the World	Total
Long-lived Assets:
March 31, 2022	$	126	52	77	60	$	315
December 31, 2021	$	125	51	76	60	$	312

Note 13 –- Debt

On June 18, 2021, we entered into athe Second Amended and Restated Credit Agreement (the "Credit Agreement") with Wells Fargo Bank, National Association, as the administrative agent, swingline lender and issuing lender (the “Administrative Agent”), Wells Fargo Securities, LLC, as sole lead arranger and bookrunner, and the lenders party thereto. The Credit Agreement ~~amends~~amended and ~~restates in its entirety~~restated and ~~refinances~~refinanced our ~~existing~~prior Amended and Restated Credit Agreement, dated as of June 12, 2020 (as further amended on October 30, 2020, the "Prior Credit Agreement"), by and among us, the lenders from time-to-time party thereto and Administrative ~~Agent, as amended on October 30, 2020.~~Agent. All outstanding loans under the Prior Credit Agreement were repaid in full in connection with the entry into the Credit Agreement.

The Credit Agreement provides for a secured revolving loan facility in an aggregate principal amount of up to $500 million at any time outstanding with a sublimit of $25 millionfor the issuance of letters of credit. Subject to the terms ~~and conditions~~ of the Credit Agreement, including obtaining commitments from existing lenders or new lenders, we may request term loans or additional revolving commitments. Pursuant the Credit Agreement, the revolving line of credit terminates, and all revolving loans under the Credit Agreement will be due and payable, on June 18, 2026.

The revolving loans and term loans accrue interest, at our option, atat: (i) a base rate equal to the highest of (a) the prime rate (b) the federal funds rate plus 0.50%, and (c) ~~a LIBOR loan interest rate of~~ LIBOR for an interest period of one month plus 1.00%, in each case, plus a margin of 0.25% to 0.75%,; or (ii) LIBOR plus a margin of 1.25% to 1.75%, with the margin being determined based upon our consolidated total net leverage ratio. The Credit Agreement contains financial covenants requiring us to maintain a maximum total ~~net~~ leverage ratio of less than or equal to 3.50 to 1.00 which increases to 4.00 to 1.00 for a specified period following material acquisitions, and a minimum interest coverage ratio of greater than or equal to 3.00 to 1.00, in each case determined in accordance with the Credit Agreement.

The Credit Agreement provides for a commitment fee of 0.150% to 0.250% per annum, determined based upon our consolidated total net leverage ratio, on the average daily unused amount of the revolving committed amount, payable quarterly in arrears.

Under the circumstances described in the Credit Agreement, certain of our ~~wholly-owned~~wholly owned domestic subsidiaries (the "Subsidiary Guarantors") are required to enter into a guaranty agreement ("Guaranty") in favor of the Administrative Agent guarantying the obligations of the Company under the Credit Agreement, among other things. ~~There is~~As of December 31, 2021, there were no Subsidiary ~~Guarantor,~~Guarantors, and no Guaranty ~~has~~had been executed in connection with the Credit ~~Agreement, at this time.~~Agreement. In connection with the Credit Agreement, we have entered (and our future Subsidiary Guarantors ~~from time-to-time party thereto and the Administrative Agent have entered (or~~ will enter ~~in the case of the future Subsidiary Guarantors)~~ into an Amended and Restated Collateral Agreement ~~("Collateral Agreement")~~ pursuant to which we and ~~each of~~ our Subsidiary ~~Guarantor~~Guarantors from time-to-time have granted (or will grant) a lien on substantially all of our and their assets to secure our and their obligations under the Credit Agreement and the Guaranty.

The Credit Agreement contains customary affirmative and negative covenants. The affirmative covenants include, among other things, delivery of financial statements, compliance certificates and notices, payment of taxes and other obligations, maintenance of existence, maintenance of properties and insurance, maintenance of books and records, and compliance with applicable laws and regulations.The negative covenants include, among other things, limitations on indebtedness, liens, mergers, consolidations, acquisitions and sales of assets, investments, changes in the nature of the business, affiliate transactions and certain restricted payments. The Credit Agreement contains customary events of default including, among other things, payment defaults, breaches of covenants or representations and warranties, cross-defaults with certain other indebtedness, bankruptcy and insolvency events, judgment defaults and change in control events, subject to grace periods in certain instances. Upon an event of default, the Administrative Agent and the ~~lenders~~Lenders may declare all or a portion of the outstanding obligations payable by us to be immediately due and payable and exercise other rights and remedies provided for under the Credit Agreement. Under certain circumstances, a default interest rate will apply on all obligations during the existence of an event of default under the Credit Agreement at a per annum rate of interest equal to 2.00% above the otherwise applicable interest rate.

Proceeds of revolving loans of the Credit Agreement may be used for working capital and other general corporate purposes. We may prepay the loans under the Credit Agreement in whole or in part at any time without premium or penalty.

The following table presents the amounts outstanding related to our borrowing arrangements discussed above as of ~~June 30, 2021 (unaudited)~~March 31, 2022, and December 31, ~~2020,~~2021, respectively (in thousands):

June 30, December 31,
2021 2020
Secured
2020 Term loan (effective interest rate of 1.7%) $ 0 $ 98,750
2021 Revolving line of credit (effective interest rate of 1.3%) 100,000 0
Total Debt 100,000 98,750
Less: Unamortized debt issuance costs 0 (1,714)
Less: Current portion of total debt 0 (5,000)
Total Debt, non-current $ 100,000 $ 92,036


	March 31,		December 31,
	2022		2021
Secured

2021 revolving loan facility (effective interest rate of 1.4%)	325,000		300,000




Total Debt, non-current	$	325,000	$	300,000

As of ~~June 30, 2021,~~March 31, 2022, debt issuance costs of approximately ~~$2.7~~$2.4 million attributable to ~~the~~our revolving ~~line of~~ credit facility are presented within "Other long-term assets" in our Consolidated Balance Sheet. These amounts are amortized to interest expense ratably over the life of the revolving line of credit.

Note 14 – Commitments and contingencies

We offer a one-year limited warranty on most hardware products which is included in the terms of sale of such products. We also offer optional extended warranties on our hardware products for which the related revenue is recognized ratably over the warranty period. Provision is made for estimated future warranty costs at the time of the sale for the estimated costs that may be incurred under the standard warranty. Our estimate is based on historical experience and product sales during the period. The warranty reserve for the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ was as follows:


		Six Months Ended June 30,					Three Months Ended March 31,
(In thousands)	(In thousands)	(Unaudited)				(In thousands)	(Unaudited)
		2021		2020			2022		2021
Balance at the beginning of the period	Balance at the beginning of the period	$	2,872	$	2,561	Balance at the beginning of the period	$	3,210	$	2,872
Accruals for warranties issued during the period	Accruals for warranties issued during the period	1,375		1,165		Accruals for warranties issued during the period	641		681
Accruals related to pre-existing warranties	Accruals related to pre-existing warranties	95		298		Accruals related to pre-existing warranties	83		130
Settlements made (in cash or in kind) during the period	Settlements made (in cash or in kind) during the period	(1,456)		(1,322)		Settlements made (in cash or in kind) during the period	(584)		(803)
Balance at the end of the period	Balance at the end of the period	$	2,886	$	2,702	Balance at the end of the period	$	3,350	$	2,880

AsIn the ordinary course of ~~June 30, 2021,~~business, we ~~had certain off-balance sheet commitments that require~~enter into purchase orders with suppliers for the ~~future~~ purchase of goods orand services, including non-cancelable agreements for customized inventory and inventory components ("unconditional purchase obligations"). The majority of our unconditional purchase obligations relate to amounts due within the next 12 months. As of March 31, 2022, our future payments under noncancellable unconditional purchase obligations with a remaining term in excess of one year were approximately $17.7 million. Our unconditional purchase obligations primarily consist of payments to various suppliers for customized inventory ~~and inventory~~ components. As of ~~June 30, 2021,~~March 31, 2022, our ~~total future payments under noncancellable unconditional purchase obligations having a remaining term in excess~~outstanding guarantees for payment of ~~one year~~customs and foreign grants were ~~approximately $3.5 million..~~not material.

Note 15 – Restructuring

On October ~~29, 2020,~~26, 2021, we ~~announced~~initiated a ~~workforce reduction~~restructuring plan (the ~~“Plan”~~“2021 Plan”) that will result in the site closure of our facilities in Aachen, Germany. This targeted restructuring effort is intended to ~~accelerate our growth strategy and~~ further optimize our research and development operations and ~~cost structure. The~~accelerate investment in strategic growth opportunities. In connection with the 2021 Plan, the majority of these charges ~~related to this plan~~ were recognized during the ~~three months ended December 31, 2020. We implemented a majority~~fourth quarter of ~~the actions under this Plan as of June 30,~~ 2021.

A summary of the charges in our consolidated statement of operations resulting from our restructuring activities is shown below:

Three Months Ended June 30, Six Months Ended June 30,
(In thousands) (Unaudited) (Unaudited)
2021 2020 2021 2020
Cost of sales $ (118) 0 $ (43) 20
Research and development 223 79 379 4,679
Sales and marketing 61 1,227 4,147 7,542
General and administrative 147 247 2,105 562
Total restructuring and other related costs $ 313 1,553 $ 6,588 12,803


	Three Months Ended March 31,
(In thousands)	(Unaudited)
	2022		2021
Cost of sales	$	—	$	75
Research and development	400		155
Sales and marketing	—		4,086
General and administrative	—		1,959
Total restructuring and other related costs	$	400	$	6,275

Total restructuring and other charges incurred during the three months ended March 31, 2022 related to the2021 Plan were $0.4 million primarily related to employee severance costs. A summary of balance sheet activity during 2022 related to ~~our~~the restructuring activity is shown below:


	Restructuring Liability
	(in thousands)
Balance as of December 31, ~~2020~~2021	$	~~28,993~~11,520
Income statement expense	~~6,588~~400
Cash payments	~~(27,578)~~(2,107)
Balance as of ~~June 30, 2021~~March 31, 2022	$	~~8,003~~9,813

The restructuring liability of ~~$8.0~~$9.8 million at ~~June 30, 2021~~March 31, 2022 relating primarily to severance payments associated with the restructuring activity, is recorded in the “accrued compensation” line item of our consolidated balance sheet.

Note 16 – Litigation

We are not currently a party to any material litigation. However, in the ordinary course of our business, we have in the past, are currently and ~~will~~may likely become involved in various legal proceedings, claims, and regulatory, tax or government inquiries and investigations, and could incur uninsured liability in any one or more of them. We also periodically receive notifications from various third parties related to alleged infringement of patents or intellectual property rights, commercial disputes or other matters. No assurances can be given with respect to the extent or outcome of any investigation, litigation or dispute.

Note 17 – Acquisitions

Acquisition of ~~OptimalPlus~~Electronic Vehicle (“EV”) Business From Heinzinger Electronic GmbH ("Heinzinger")

On ~~July 2, 2020,~~February 28, 2022, we completed the acquisition of ~~OptimalPlus Ltd. (“OptimalPlus”), a global leader~~the systems business of Heinzinger for $22.5 million in data analytics software for the semiconductor, automotive and electronics industries that is based in Israel. As a result of acquiring 100% of the outstanding share capital of OptimalPlus, OptimalPlus became our wholly-owned subsidiary.total cash consideration, subject to certain post-closing adjustments. This transaction ~~is being~~was accounted for as a business combination using the acquisition method of accounting. All of the acquired assets and liabilities of ~~OptimalPlus~~Heinzinger have been recorded at their respective fair values as of the acquisition date. We recognized approximately $14 million of goodwill and $7 million of other intangible assets as part of our preliminary purchase price allocation. Transaction costs have been expensed as ~~incurred.~~

incurred and were not material to the periods presented. The acquisition was funded ~~primarily~~ by cash on ~~hand in addition to $70 million drawn under our prior term loan facility on June 30, 2020. See Note 13~~ – Debt of Notes to Consolidated Financial Statements for further information on our outstanding borrowings. During the twelve months ended December 31, 2020, we expensed $7 million of transaction costs in connection with the acquisition of OptimalPlus, which are included in selling, general and administrative expenses.hand.

AtThe preliminary purchase price allocation related to the acquisition ~~date, total consideration transferred~~ was ~~approximately $353 million, inclusive~~not finalized as of $18 million in cash acquired. Additionally, unvested in-the-money share options of certain OptimalPlus employees were exchanged into the right to receive deferred cash consideration in accordance with the terms of the share purchase agreement. Approximately $12 million of deferred cash consideration was allocated to post-combination expenseMarch 31, 2022, and is ~~not included in the total consideration transferred. The deferred cash consideration~~based upon a preliminary valuation which is subject to change as we obtain additional information with respect to certain intangible assets and income taxes. Pro-forma results of operations have not been presented as the ~~original vesting schedule~~impact of the ~~corresponding unvested options that were replaced and the amounts will be recognized as compensation expense over the remaining service period.~~

acquired operations was not material.

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The excess of the purchase price over the net assets acquired was recorded as goodwill. Goodwill generated from the acquisition is primarily attributable to expected growth in the scope of and market opportunities for our ~~software-defined automated~~existing offerings related to vehicle electrification and other related applications. Goodwill is not deductible for tax purposes.

Acquisition of N H Research, LLC ("NHR")

On October 19, 2021, we completed the acquisition of NHR, a manufacturer of test and measurement ~~platform.~~solutions for high power applications including EV and batteries. As a result of acquiring 100% of the outstanding share capital of NHR, NHR became our wholly owned subsidiary. This transaction is being accounted for as a business combination using the acquisition method of accounting. All of the acquired assets and liabilities of NHR have been recorded at their respective fair values as of the acquisition date. Transaction costs have been expensed as incurred.

The acquisition was funded primarily by cash on hand in addition to $200 million drawn under our existing credit facility in October 2021. See Note 13 – Debt of Notes to Consolidated Financial Statements for further information on our outstanding borrowings. During the year ended December 31, 2021, we expensed $6 million of transaction costs in connection with the acquisition of NHR, which are included in selling, general and administrative expenses.

At the acquisition date, total consideration transferred was approximately $206 million, inclusive of $3 million in cash acquired. The excess of the purchase price over the net assets acquired was recorded as goodwill. Goodwill generated from the acquisition is primarily attributable to expected growth in the scope of and market opportunities for our existing offerings related to vehicle electrification and other related applications. As a result of the structure of the transaction, the balance of goodwill is deductible in the U.S. over 15 years for income tax purposes.

During the first quarter of 2022, we recorded a measurement period adjustment to our preliminary estimate of the fair value of liabilities assumed related to amounts owed for certain pre-acquisition activities. The increase to the fair value of acquired liabilities was $5.1 million, with a corresponding increase to goodwill. The change to this provisional amount had no impact to the current period income statement.

Fair value of net assets acquired and liabilities assumed

The information below represents the preliminary purchase price allocation of ~~OptimalPlus~~NHR (in thousands):


	~~July 2, 2020~~October 19, 2021
Consideration Transferred	$	~~352,642~~206,238

Cash	~~17,661~~
~~Intangible assets~~	~~129,000~~
~~Goodwill~~	~~205,038~~
~~Contract assets~~	~~15,454~~
~~Deferred revenue~~	~~(7,341)~~2,935
Accounts receivable, net	~~4,927~~3,902
Inventories, net	4,764
Property and equipment, net	287
Other assets and liabilities	~~(4,516)~~(4,621)
Intangible assets	98,510
Goodwill	102,932
Accounts payable and accrued expenses	(2,186)
Deferred ~~tax liabilities~~revenue	~~(7,581)~~(285)
Net assets acquired	$	~~352,642~~206,238

~~We finalized~~Our preliminary estimates of the ~~purchase price allocation for~~fair value of the assets acquired and the liabilities assumed are based on the information currently available, and we are continuing to evaluate the underlying inputs and assumptions used in our ~~acquisition of OptimalPlus~~valuations. Accordingly, these preliminary estimates are subject to change during the ~~second quarter~~measurement period, which is up to one year from the date of 2021. Since the preliminary estimates reported in the third quarter of 2020, we updated certain amounts related to current and deferred income taxes, reflected in the final purchase price allocation, as summarizedacquisition. A decrease in the fair ~~values~~value of assets acquired ~~and~~or an increase in the fair value of liabilities assumed in the ~~table above. Measurement period adjustments were recognized~~acquisition would result in a corresponding increase in the ~~reporting period in which~~amount of goodwill acquired. The primary areas of the ~~adjustments were determined~~purchase price that are not yet finalized relate to income taxes, certain liabilities related to preacquisition activities, and ~~calculated as if the accounting had been completed at the acquisition date.~~residual goodwill.

Acquired intangible assets will be amortized over their estimated useful lives on a straight-line basis. The following table summarizes the preliminary purchase price allocation, and the preliminary average remaining useful lives, for identifiable intangible assets acquired (dollars in thousands):

Estimated Fair Value Estimated Useful Lives (in years)
Customer relationships $ 30,100 5
Developed technology 82,400 6
In-process research and development (IPR&D) 10,400 6
Other intangibles 6,100 3-5
Total $ 129,000

Developed technology and IPR&D relate to software platforms for data analytics in the semiconductor, automotive, and electronic industries that combine machine-learning with a global data infrastructure to provide real-time product analytics and extract insights from data across the entire supply chain. We valued the developed technology and IPR&D using the multi-period excess earnings method under the income approach. This method reflects the present value of the projected cash flows that are expected to be generated by the technology less charges representing the contribution of other assets to those cash flows. The economic useful life was determined based on the technology cycle related to each technology, as well as the cash flows over the forecast period. IPR&D is initially capitalized at fair value as an intangible asset with an indefinite life and assessed for impairment thereafter. When a project underlying reported IPR&D is completed, the corresponding amount of IPR&D is amortized over the asset’s estimated useful life.


	Estimated Fair Value		Estimated Useful Lives (in years)
Customer relationships	$	54,350	7
Developed software	6,010		2-7
Existing product configurations	28,300		9
In-process research and development (IPR&D)	4,030		Indefinite
Trade name	5,820		6
Total	$	98,510

Customer relationships represent the fair value of future projected revenue that will be derived from sales of products to existing customers. Customer relationships were valued using the ~~with-and-without-method under~~multi-period excess earnings method of the income approach. ~~In the with-and-without~~This method ~~the fair value was measured by the difference between~~reflects the present ~~values~~value of the projected cash flows ~~with and without~~that are expected to be generated by customer relationships less charges representing the ~~existing customers in place over the period~~contribution of ~~time necessary~~other assets to ~~reacquire the customers.~~those cash flows. The economic useful life was determined by ~~evaluating many factors, including~~examining the period of time over which a target cumulative present value of discounted cash flows could be achieved.

Existing product configurations represent the existing hardware configurations of products sold by NHR. These products are created from component parts and assembled based on their intended purpose and application. Existing product configurations were valued using the avoided costs / lost profits method. The fair value represents the total costs that would be avoided by having this asset in place. The economic useful life ~~of other intangible assets, the length of time remaining~~was determined based on the ~~acquired contracts and~~number of years since launch for each product compared to the ~~historical customer turnover rates.~~expected total life of each product.

Unaudited Pro Forma Information

~~The results of OptimalPlus have been included in our consolidated statements of income for the period subsequent to the acquisition date.~~ The following unaudited pro forma financial information presents combined results of operations for the periods presented, as if the ~~OptimalPlus~~NHR acquisition had occurred on January 1, ~~2019,~~2020, with adjustments to give effect to pro forma events that are directly attributable to the acquisition. These pro forma adjustments include additional amortization expense for the identifiable intangible assets ~~a reduction in revenue related to deferred revenue purchase accounting adjustments,~~and an increase in interest expense related to the ~~term loan~~additional borrowings entered into in connection with the acquisition, ~~and adjustments to compensation expense for the replacement of unvested share options discussed above,~~ net of tax effects. For the pro forma presentation, given the assumed acquisition date of January 1, ~~2019,~~2020, transaction and integration costs that were incurred at or subsequent to the actual acquisition date have been included in the calculation of pro forma net income for the three ~~and six~~ months ended ~~June 30, 2020,~~March 31, 2021, whereas transaction and integration costs that were incurred prior to the acquisition date have been excluded from the calculation of pro forma net income. The unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what actual results of operations would have been if the acquisition had occurred as the beginning of the period presented, nor are they indicative of future results of operations. The unaudited pro forma results do not include the impact of synergies, nor any potential impacts on current or future market conditions which could alter the unaudited pro forma results.

Three Months Ended June 30, Six Months Ended June 30,
2020
(in thousands)
Net sales $ 305,069 $ 620,239
Net (loss) income $ (2,222) $ 118,769


	Three Months Ended March 31,
(in thousands)	2021

Net sales	$	342,935
Net income	$	3,884

Other Acquisitions

During the second quarter of 2021, we also completed the acquisition of MonoDrive, a software company that specializes in signal processing and hi-fi simulation software for validation of autonomous vehicles and advanced driver assistance systems (ADAS), for approximately $20 million in total cash consideration, subject to certain post-closing adjustments. This transaction ~~is being~~was accounted for as a business combination using the acquisition method of accounting. All of the acquired assets and liabilities of the software company have been recorded at their respective fair values as of the acquisition date. We recognized approximately $17 million of goodwill and $4 million of other intangible assets as part of our ~~preliminary~~ purchase price allocation. Transaction costs have been expensed as incurred and were not material to the periods presented.

The preliminary purchase price allocation related to the acquisition was not finalized as of June 30, 2021, and is based upon a preliminary valuation which is subject to change as we obtain additional information with respect to certain intangible assets and income taxes. Pro-forma results of operations have not been presented because the effects of the acquired operations were not material.

The excess of the purchase price over the net assets acquired was recorded as goodwill. Goodwill generated from the acquisition is primarily attributable to expected growth in the scope of and market opportunities for our software-defined automated test and measurement platform. Goodwill is not deductible for tax purposes.

Note 18 – Subsequent events

~~Dividends~~

On ~~July 21, 2021,~~April 20, 2022, our Board of Directors declared a quarterly cash dividend of ~~$0.27~~$0.28 per common share, payable on ~~August 30, 2021,~~May 31, 2022, to stockholders of record on ~~August~~May 9, ~~2021.~~2022.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

National Instruments Corporation and its subsidiaries (referred to as the “Company,” “we,” “us,” “our,” “National Instruments” or “NI”) has made forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are subject to risks and uncertainties. Any statements contained herein regarding our future financial performance, operations, plans, investments, expected effects of investments, or other matters (including, without limitation, statements to the effect that we “believe,” “expect,” “plan,” “intend to,” “may,” “could,” “can,” “will,” “project,” “predict,” “anticipate,” “continue,” “strive to,” “endeavor to,” “seek to,” “are committed to,” "remaining committed to," “are encouraged by,” "remain cautious," "remain optimistic," “estimate”, "focus on"; statements of “goals,”~~“commitments,~~ “commitments,” "strategy" or “visions”; or other variations thereof or comparable terminology or the negative thereof) should be considered forward-looking statements. All forward-looking statements are based on current expectations and projections of future events. We claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 for all forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, forward-looking statements are not guarantees of performance and actual results could differ materially from those projected in the forward-looking statements as a result of a number of important factors, including those set forth under the heading “Risk Factors” below and in "Part 1, Item 1A. Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020~~2021 (the ~~"Form~~"2021 Form 10-K"). Actual results could differ materially from those stated or implied by our forward-looking statements, due to risks and uncertainties associated with our business or under different assumptions or conditions. You should not place undue reliance on any of these forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and we disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

The following discussion should be read in conjunction with the 2021 Form 10-K filed with the U.S. Securities and Exchange Commission (the "SEC") and the condensed consolidated financial statements and accompanying notes included in Part 1, Item 1 of this Form 10-Q.

Overview and Current Business Outlook

For more than 40 years, we have enabled engineers and scientists around the world to accelerate productivity, innovation and discovery. Our software-centric platform provides an advanced approach through integration of software and modular hardware to create automated test and automated measurement systems. We believe our long-term track record of innovation and our differentiated platform help support the success of our customers, employees, suppliers, community and stockholders. We have been profitable in every year since 1990. We sell to a large number of customers in a wide variety of industries.

The key strategies that we focus on in running our business are the following:

•Expanding our available market opportunity

We strive to increase our available market by identifying new opportunities in existing customers, attracting and serving new customers, and expanding our business to market adjacencies. Our large network of existing customers provides a broad base from which to expand.

•Maintaining a high level of customer satisfaction

To maintain a high level of customer satisfaction we strive to offer innovative, modular and integrated products through a global sales and support network. We strive to maintain a high degree of backward compatibility across different platforms to preserve the customer’s investment in our products. In this time of intense global competition, we believe it is crucial that we continue to offer products with high quality and reliability, and that our products provide cost-effective solutions for our customers.

•Leveraging external and internal technology

Our product strategy is to provide superior products by leveraging generally available technology, supporting open architectures on multiple platforms and by leveraging our core technologies across multiple products.

We sell into test and measurement and industrial/embedded applications in a broad range of industries and are subject to the economic and industry forces that drive those markets. Examples of these types of customers include semiconductor and electronics, transportation, and aerospace, defense and ~~government ("ADG").~~government.

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•Leveraging a worldwide sales, distribution and manufacturing network

We distribute and sell our software and hardware products primarily through a direct sales organization. We also use independent distributors, original equipment manufacturers, value added resellers, system integrators and consultants to market and sell our products. We have sales offices in the U.S. and sales offices and distributors in key international markets. Sales outside of the Americas accounted for approximately ~~61%~~59% and ~~60%~~62% of our net sales during the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020, respectively, and approximately 62% and 60% of our net sales during the six months ended June 30, 2021 and 2020,~~ respectively. The vast majority of our foreign sales are denominated in the customers’ local currency, which exposes us to the effects of changes in foreign currency exchange rates. We expect that a significant portion of our total revenues will continue to be derived from international sales. (See Note 2 - Revenue and Note 12 - Segment and geographic information of Notes to Consolidated Financial Statements for details concerning the geographic breakdown of our net sales and long-lived assets, respectively).

We manufacture substantially all of our product volume at our facilities in Debrecen, Hungary and Penang, Malaysia.

•Delivering high quality, reliable products

We believe that our long-term growth and success depend on delivering high quality software and hardware products on a timely basis. Accordingly, we focus significant efforts on research and development. We focus our research and development efforts on enhancing existing products and developing new products that incorporate appropriate features and functionality to be competitive with respect to technology, price and performance. Our success also depends on our ability to obtain and maintain patents and other proprietary rights related to technologies used in our products. We have engaged in litigation when necessary, and will likely engage in future litigation to protect our intellectual property rights.

Our operating results fluctuate from period to period due to changes in global economic conditions and a number of other factors such as the impact of the COVID-19 pandemic. As a result, we believe our historical results of operations should not be relied upon as indications of future performance. There can be no assurance that our net sales will grow, or not decline, or that we will remain profitable in future periods.

~~Current Business Outlook~~Backlog

~~During~~Backlog is a measure of firm orders that are received but have not yet shipped to customers. Our measure of backlog excludes amounts related to shipments where the ~~second quarter~~customer has specified delivery in a future period.

Our backlog was approximately $210 million and $154 million at March 31, 2022 and December 31, 2021, respectively, primarily driven by strong order growth during the year and longer lead times for certain components. We expect the majority of ~~2021, we continued~~backlog to ~~see~~be recognized as revenue within 12 months. While backlog on any particular date can be an indicator of short-term revenue performance, it is not necessarily a reliable indicator of medium or long-term revenue performance.

Current business outlook

We are continuing to experience strong demand from our customers across the geographic regions and end markets that we ~~serve.~~serve, with the value of total orders during the first quarter of 2022 increasing by approximately 27% compared to the same period in 2021. Although ~~we expect~~ the strength and duration of the recent trends will vary by region and ~~end market,~~offering, we remain optimistic about opportunities for additional order growth expected in 2022. We expect our customers will continue to make investments in emerging technologies related to 5G/mmWave, vehicle electrification, ~~and~~ advanced driver assistance systems ~~(ADAS). We also anticipate that recent additions~~(“ADAS") and ~~enhancements to our software offerings will differentiate our products and fuel demand across our various end markets.~~new space innovation.

~~Additionally, during the second quarter of 2021, we continued~~We continue to experience component shortages for some of our products as well as higher costs to obtain a consistent supply of certain components ~~in our supply chain~~ due to global capacity constraints that were amplified by the COVID-19 pandemic and increasing global demand. Historically, our backlog levels have remained fairly consistent at the end of each quarter, representing approximately a week of quarterly sales activity, and the majoritysupply chain constraints. The duration of these ~~orders are fulfilled quickly within the following quarter. However, due~~supply chain challenges remains uncertain. Additionally, strong demand and a strategic shift to the shortage of certain components from our suppliers and the increase in demand from our customers, our backlog at the end of the second quarter was more than four times the historical average, representing approximately one month of quarterly sales activity. Longerlonger lead times to fulfill orders for certain offerings ~~have~~has continued to shift the timing of revenue recognition into future periods and increased ~~our~~backlog. We have also recently experienced further delays in the fulfillment of orders in China due to additional COVID-19 lockdown protocols. During the remainder of 2022, we also expect operating costs to ~~obtain a consistent supply of certain components. Consequently, while~~increase due to wage inflation and increased travel. While we expect to continue to experience some ~~temporary headwinds~~challenges related to ~~the~~these supply chain constraints ~~to continue while~~as the global supply ~~chains~~chain continues to adjust to the significant increases in demand, we are optimistic about our ability to maintain competitive lead times while continuing to maintain higher backlog levels as part of our strategic focus on application-specific system ~~offerings through the remainder of 2021.~~

We remain committed to maintaining our critical investments and capacity to run our business while continuing to innovate. Furthermore, we continue to focus on scale and efficiency in serving our broad-based customers. Our focus to streamline the process of doing business with NI means both reducing our costs and improving the experience of the large number of smaller accounts we serve. This commitment and focus include plans to invest in ni.com for a better digital experience and significantly expand the usage of our distributor channel in 2021 and beyond. We believe these actions will allow our direct sales force to support proactive engagements with accounts where we can deliver enterprise-level value.offerings.

3433

~~During~~

Revenue from software and related services as a percentage of total revenue during the ~~three months ended June 30,~~first quarter of 2022 remained consistent with 2021, ~~indirect sales through our distributor channel increased to~~at approximately 8%20% of our total revenue. During the first quarter of 2022 we also undertook actions to accelerate our transition to a predominantly subscription-based licensing model for the majority of our software offerings. While we expect our subscription base, recurring revenue and cash flow to increase over time as a result of this licensing model transition, we expect some initial headwinds to our net sales ~~compared to 2% in the same period of 2020~~ and operating profitability during the ~~six months ended June 30, 2021, indirect sales through~~transition period. However, we expect recent additions and enhancements to our ~~distributor channels increased~~software portfolio will continue to ~~approximately 6%~~differentiate our products and fuel demand across our end markets. We currently estimate the impact of our subscription licensing transition will decrease total ~~net sales, compared to~~revenue by 2% in the same period of 2020. As of June 30, 2021, our distributors did not have significant amounts of inventory on-hand and were not eligible for any variable adjustments related to their previous purchases.during 2022.

As part of our efforts to streamline the process of doing business with NI, we have ~~also~~ increased our focus on customer account tiers when assessing trends in our order growth. Specifically, we have grouped our customers into tiers based on their historical spending patterns and potential for future order growth. Our "Focus" account tiers are comprised of approximately 2,500 accounts we have identified as having a high potential to maintain or expand our business through system-level offerings. The Focus tier currently represents approximately 70% of our total order value. Our "Broad-based" account tier is comprised of the remainder of our customer base of approximately 30,000 accounts. The Broad-based tier currently represents approximately 30% of our total order value. During the three months ended ~~June 30, 2021,~~March 31, 2022, orders from our Focus accounts and Broad-based accounts increased by 28% and ~~49%~~25%, respectively, compared to the same period in ~~2020.~~2021.

We also continue to focus on scale and efficiency when engaging with our Broad-based customers. Our focus to streamline the process of doing business with NI means effectively scaling our operations while also improving the experience for the large number of smaller accounts. We are making additional investments in ni.com for a better digital experience and expect to continue to expand customer reach through our distributor channel during 2022 and beyond. We are also simplifying our product offerings for the Broad-based customers to make our products easier-to-use. We believe these actions will allow our direct sales force to accelerate our revenue growth through proactive engagements with accounts where we can deliver enterprise-level value. During the ~~six~~three months ended ~~June 30, 2021, we saw continued volatility~~March 31, 2022, indirect sales through our distributor channels increased to represent about 13% of our total sales, compared to 5% in the ~~exchange rates between the U.S. dollar and many~~same period of ~~the currency markets where we have exposure. During the first half~~2021. As of ~~2021, the U.S. dollar index, as tracked by the St. Louis Federal Reserve, was approximately 6% weaker compared to the first half of 2020 resulting in a modest year over year benefit to~~March 31, 2022, our US dollar equivalent sales. We cannot predict to what degree foreign currency markets will fluctuate in the future. See Results of Operations - Net Sales below for additional discussion on the impact of foreign exchange rates on our net sales and Note 5 - Derivative instruments and hedging activities of Notes to Consolidated Financial Statements for a further descriptiondistributors were not carrying significant amounts of our ~~derivative instruments~~products in inventory and ~~hedging activities.~~were not eligible for any variable adjustments related to their previous purchases. For the three months ended March 31, 2022 no single distributor or end customer accounted for more than 2% of our total net sales.

Acquisitions and divestitures

Refer to Note 1 - Basis of presentation and Note 17 - Acquisitions of Notes to Consolidated Financial Statements for additional information on our acquisitions and divestitures during the periods presented.

Critical Accounting Estimates

In preparing our consolidated financial statements, we make assumptions, judgments and estimates that can have a significant impact on our net sales, operating income and net income, as well as on the value of certain assets and liabilities on our condensed consolidated balance sheets. We base our assumptions, judgments and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances. At least quarterly, we evaluate our assumptions, judgments and estimates, and make changes as deemed necessary.

These estimates may change as new events occur and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions. For further information about our critical accounting estimates, see the discussion in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” under the heading “Critical Accounting Estimates” in our 2021 Form 10-K. There have been no material changes to our critical accounting policies and estimates since the 2021 Form 10-K.

3534

Results of Operations

The following table sets forth, for the periods indicated, the percentage of net sales represented by certain items reflected in our Consolidated Statements of Income:

Three Months Ended June 30, Six Months Ended June 30,
(Unaudited) (Unaudited)
2021 2020 2021 2020
Net sales:
Americas 38.8 % 40.4 % 38.3 % 40.4 %
EMEA 25.7 24.8 25.6 26.4
APAC 35.4 34.8 36.0 33.2
Total net sales 100.0 100.0 100.0 100.0
Cost of sales 28.6 28.5 28.5 27.8
Gross profit 71.4 71.5 71.5 72.2
Operating expenses:
Sales and marketing 32.1 35.0 33.4 36.2
Research and development 23.5 21.3 23.7 22.2
General and administrative 8.7 9.7 9.3 9.1
Total operating expenses 64.3 66.0 66.5 67.6
Gain on sale of business/asset —

—

—

26.2
Operating income 7.1 5.4 5.0 30.8
Other expense (0.9)

(0.4)

(1.2)

(0.1)
Income before income taxes 6.2 5.1 3.8 30.7
Provision for income taxes 1.2 1.5 0.6 7.2
Net income 5.0 % 3.6 % 3.2 % 23.5 %


	Three Months Ended March 31,
	(Unaudited)
	2022		2021
Net sales:
Americas	41.3	%	37.8	%
EMEA	26.1		25.5
APAC	32.6		36.7
Total net sales	100.0		100.0
Cost of sales	30.9		28.5
Gross profit	69.1		71.5
Operating expenses:
Sales and marketing	31.2		34.8
Research and development	21.3		23.9
General and administrative	8.6		10.0
Total operating expenses	61.1		68.7

Operating income	7.9		2.8
Other (expense) income:	—		(1.5)
Income before income taxes	7.9		1.3
(Benefit) Provision for income taxes	1.4		—
Net income	6.6	%	1.3	%

Figures may not sum due to rounding.

3635

Results of Operations for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~

Net Sales. The following table sets forth our net sales for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ along with the changes between the corresponding periods.


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended March 31,
		(Unaudited)						(Unaudited)							(Unaudited)
						Change						Change							Change
(In millions)	(In millions)	2021		2020		Dollars	Percentage	2021		2020		Dollars	Percentage	(In millions)	2022		2021		Dollars	Percentage

Product sales	Product sales	$	306.5	$	266.3	40.2	15%	$	601.6	$	540.2	61.3	11%	Product sales	$	343.7	$	295.1	48.6	16%
Software maintenance sales	Software maintenance sales	40.2		35.1		5.1	15%	80.3		70.5		9.8	14%	Software maintenance sales	41.6		40.1		1.5	4%
Total net sales	Total net sales	$	346.7	$	301.3	45.4	15%	$	681.9	$	610.7	71.2	12%	Total net sales	$	385.3	$	335.2	50.1	15%

Figures may not sum due to rounding.

Net Sales - Summary

Net sales for the three ~~and six~~ months ended ~~June 30, 2021 were up~~March 31, 2022 increased 15 percent ~~and 12 percent, respectively,~~ compared to the same period in ~~2020.~~2021.

•The increase in product sales was primarily attributable to strong demand for our system-level offerings, particularly our ADG and transportation solutions (See Note 2 - Revenue for additional information on revenue by industry grouping). Geographically, we saw strong growth in ~~semiconductor and electronics test solutions as well as our transportation-related offerings. Additionally, we implemented price increases for certain offerings~~the Americas region, which was partially driven by revenue from acquisitions completed within the last 12 months, which increased ~~net sales~~our total revenue by approximately ~~5 percent~~3% compared to same period in 2021. The impact of recent pricing changes also increased our total revenue by approximately 4% compared to the same ~~periods~~period in ~~2020.~~2021.

•The increase in software maintenance sales was primarily related to additional billings from annual renewals of software maintenance programs, ~~and our enterprise-level~~including enterprise-wide subscription licensing ~~arrangements during the trailing twelve months.~~

agreements.

Net Sales by Region

The following table sets forth our net sales by geographic region for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ along with the changes between the corresponding periods and the region’s percentage of total net sales.


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended March 31,
		(Unaudited)						(Unaudited)							(Unaudited)
						Change						Change									Change
(In millions)	(In millions)	2021		2020		Dollars	Percentage	2021		2020		Dollars	Percentage	(In millions)	2022			2021			Dollars	Percentage

Americas	Americas	$134.7		$121.7		13.0	11%	$261.4		$246.7		14.7	6%	Americas	$	159.2		$	126.7		32.5	26%
Percentage of total net sales	Percentage of total net sales	38.8	%	40.4	%			38.3	%	40.4	%			Percentage of total net sales	41.3		%	37.8		%

EMEA	EMEA	$89.2		$74.7		14.5	19%	$174.7		$161.4		13.3	8%	EMEA	$	100.4		$	85.5		14.8	17%
Percentage of total net sales	Percentage of total net sales	25.7	%	24.8	%			25.6	%	26.4	%			Percentage of total net sales	26.1		%	25.5		%

APAC	APAC	$122.9		$105.0		17.9	17%	$245.8		$202.6		43.2	21%	APAC	$	125.7		$	122.9		2.7	2%
Percentage of total net sales	Percentage of total net sales	35.4	%	34.8	%			36.0	%	33.2	%			Percentage of total net sales	32.6		%	36.7		%

Figures may not sum due to rounding.

We expect sales outside of the Americas to continue to represent a significant portion of our net sales. We intend to continue to expand our international operations by increasing our presence in existing markets, adding a presence in certain new geographical markets and continuing to increase the use of distributors to sell our products in some countries.

Almost all of the sales made by our direct sales offices in the Americas (excluding the U.S.), EMEA, and APAC are denominated in local currencies, and accordingly, the U.S. dollar equivalent of these sales is affected by changes in foreign currency exchange rates. In order to provide a framework for assessing how our underlying business performed excluding the effects of foreign currency fluctuations between periods, we compare the percentage change in our results from period to period using constant currency disclosure. To calculate the change in constant currency, current and comparative prior period results for entities reporting in currencies other than U.S. Dollars are converted into U.S. Dollars at constant exchange rates (i.e., the average rates in effect during the three ~~and six~~ months ended ~~June 30, 2020)~~March 31, 2021).

The following ~~tables present~~table presents this information, along with the impact of changes in foreign currency exchange rates on sales denominated in local currencies, for the three ~~and six~~ months ended ~~June 30, 2021.~~March 31, 2022.


		Three Months Ended June 30, 2020		Change in Constant Dollars		Impact of changes in foreign currency exchange rates on net sales		Three Months Ended June 30, 2021			Three Months Ended March 31, 2021		Change in Constant Dollars		Impact of changes in foreign currency exchange rates on net sales		Three Months Ended March 31, 2022
(In millions)	(In millions)	GAAP Net Sales		Dollars	Percentage	Dollars	Percentage	GAAP Net Sales		(In millions)	GAAP Net Sales		Dollars	Percentage	Dollars	Percentage	GAAP Net Sales

Americas	Americas	$	121.7	12.6	10.4%	0.4	0.3%	$	134.7	Americas	$	126.7	32.7	25.8%	(0.3)	(0.2)%	$	159.2
EMEA	EMEA	$	74.7	10.9	14.6%	3.6	4.8%	$	89.2	EMEA	$	85.5	18.4	21.5%	(3.5)	(4.1)%	$	100.4
APAC	APAC	$	105.0	14.4	13.7%	3.5	3.3%	$	122.9	APAC	$	122.9	4.1	3.3%	(1.4)	(1.1)%	$	125.7
Total net sales	Total net sales	$	301.3	38.0	12.6%	7.4	2.5%	$	346.7	Total net sales	$	335.2	55.2	16.5%	(5.1)	(1.5)%	$	385.3

		Six Months Ended June 30, 2020		Change in Constant Dollars		Impact of changes in foreign currency exchange rates on net sales		Six Months Ended June 30, 2021
(In millions)		GAAP Net Sales		Dollars	Percentage	Dollars	Percentage	GAAP Net Sales

Americas		$	246.7	14.2	5.7%	0.5	0.2%	$	261.4
EMEA		$	161.4	6.7	4.1%	6.6	4.1%	$	174.7
APAC		$	202.6	36.1	17.8%	7.1	3.5%	$	245.8
Total net sales		$	610.7	57.0	9.3%	14.2	2.4%	$	681.9

Figures may not sum due to rounding.

ToWe use a foreign currency cash flow hedging program to help protect against changes in U.S. dollar equivalent value caused by fluctuations in foreign currency exchange rates of forecasted foreign currency cash flows resulting from international ~~sales, we have a foreign currency cash flow hedging program.~~sales. We hedge portions of our forecasted net sales denominated in foreign currencies with average rate forward contracts. During the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ these hedges had the effect of increasing our net sales by $1.7 million and decreasing our net sales by $2.4 million and increasing our net sales by $2.7 million, respectively. During the six months ended June 30, 2021 and 2020, these hedges had the effect of decreasing our net sales by $4.4 million and increasing our net sales by $5.3$2.0 million, respectively. (See Note 5 - Derivative instruments and hedging activities of Notes to Consolidated Financial Statements for further discussion regarding our cash flow hedging program and its related impact on our net sales for ~~2021~~2022 and ~~2020)~~2021).

Gross Profit. Our gross profit as a percentage of sales is impacted by many factors ~~including changes~~as described in the ~~amount of revenues from our large customers and changes in the foreign currency exchange markets.~~table below. We continue to focus on cost control and cost reduction measures throughout our manufacturing cycle. The following table sets forth our gross profit and gross profit as a percentage of net sales for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ along with the percentage changes in gross profit for the corresponding periods.


		Three Months Ended June 30,		Six Months Ended June 30,			Three Months Ended March 31,
		(Unaudited)		(Unaudited)			(Unaudited)

(In millions)	(In millions)	2021	2020	2021	2020	(In millions)	2022	2021

Gross Profit	Gross Profit	$247.5	$215.4	$487.2	$441.0	Gross Profit	$266.0	$239.8
% change compared with prior period	% change compared with prior period	14.9%		10.5%		% change compared with prior period	11.0%
Gross Profit as a percentage of net sales	Gross Profit as a percentage of net sales	71.4%	71.5%	71.5%	72.2%	Gross Profit as a percentage of net sales	69.1%	71.5%

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The ~~decreases~~decrease in ~~our gross profit and~~ gross profit as a percentage of net sales ~~were~~was primarily related to the following:

Three Months Ended Six Months Ended
(Unaudited) (Unaudited)
June 30, 2020 71.5 % 72.2 %
Impact of amortization of acquired intangible and other purchase accounting adjustments (1.3) % (1.5) %
Impact of increases in outbound freight and other logistics costs due to COVID-19 — % (0.3) %
Impact of changes in sales mix and sales price 0.4 % 0.5 %
Changes in foreign currency exchange rates 0.8 % 0.6 %
June 30, 2021 71.4 % 71.5 %


	Three Months Ended
	(Unaudited)
March 31, 2021	71.5	%
Impact of increases in component costs	(4.0)	%
Impact of increases in our selling price	1.0	%
Impact of increases in outbound freight and other logistics costs	(1.0)	%
Impact of changes related to recently acquired/divested businesses	(0.2)	%
Impact of amortization of acquired intangibles and other purchase accounting adjustments	0.3	%
Impact of decrease in amortization of previously capitalized software development costs	1.5	%

March 31, 2022	69.1	%

To help protect against changes in our cost of sales caused by a fluctuation in foreign currency exchange rates of forecasted foreign currency cash flows, we have a foreign currency cash flow hedging program. We hedge portions of our forecasted costs of sales denominated in foreign currencies with average rate forward contracts. During the three months ended June 30, 2021 and 2020, these hedges had the effect of decreasing our cost of sales by less than $0.1 million and increasing our cost of sales by $0.9 million, respectively. During the six months ended June 30, 2021 and 2020, these hedges had the effect of increasing our cost of sales by less than $0.1 million and increasing our cost of sales by $1.4 million, respectively. (See Note 5 - Derivative instruments and hedging activities of Notes to Consolidated Financial Statements for further discussion regarding our cash flow hedging program and its related impact on our cost of sales for 2021 and 2020).

Operating Expenses. The following table sets forth our operating expenses for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020,~~ along with the percentage changes between the corresponding periods and the line item as a percentage of total net sales.

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

Sales and marketing $ 111,199 $ 105,419 5% $ 227,983 $ 221,165 3%
Percentage of total net sales 32% 35% 33% 36%

Research and development $ 81,434 $ 64,225 27% $ 161,520 $ 135,846 19%
Percentage of total net sales 23% 21% 24% 22%

General and administrative $ 30,277 $ 29,369 3% $ 63,636 $ 55,549 15%
Percentage of total net sales 9% 10% 9% 9%

Total operating expenses $ 222,910 $ 199,013 12% $ 453,139 $ 412,560 10%
Percentage of total net sales 64% 66% 66% 68%


	Three Months Ended March 31,
	(Unaudited)
(In thousands)	2022		2021		Change

Sales and marketing	$	120,157	$	116,783	3%
Percentage of total net sales	31%		35%

Research and development	$	82,161	$	80,086	3%
Percentage of total net sales	21%		24%

General and administrative	$	33,179	$	33,358	(1)%
Percentage of total net sales	9%		10%




Total operating expenses	$	235,497	$	230,227	2%
Percentage of total net sales	61%		69%

4038

~~Operating Expenses - Three Months Ended June 30, 2021~~

The year over year increase ~~of $24 million~~ in our total operating expenses of $5 million during the three months ~~ended June 30, 2021~~ending March 31, 2022 was primarily related to the following:

•~~$10~~a $7 million increase in ~~non-acquisition~~ personnel costs, primarily attributable to an increase in commissions, salaries, benefits and other personnel expenses as well as an increase in additional ~~accruals for estimated attainment under our variable compensation programs and~~ stock-based compensation expense (due to comparatively higher stock prices on the grant date of unvested RSU awards and ~~a shorter average service period for our awards)~~an increase in the number of RSU awards granted), partially offset by a ~~reduction~~decrease in ~~severance-related costs associated with~~ our ~~restructuring activities;~~variable compensation programs;

•~~$10~~a $5 million increase attributable to higher acquisition-related operating costs and amortization of acquisition-related intangibles, ~~and higher operating costs~~primarily related to our recently acquired ~~OptimalPlus~~NHR business, partially offset by lower ~~acquisition-related~~ transaction and integration costs;

•$3a $(1) million decrease in travel and other outside services due to less spend on marketing and advertising offset by an increase ~~related~~in travel during the period due to the ~~year over year impact~~loosening of ~~changes in foreign currency exchange rates;~~COVID-19 restrictions; and

•$1a $(6) million ~~increase~~decrease related to ~~lower software development costs eligible~~accruals for ~~capitalization.~~

restructuring-related severance activity.

Sales and Marketing

The primary drivers of the increase in sales and marketing expenses for the three months ended ~~June 30, 2021 compared to the same period in 2020~~March 31, 2022 were additional costs ~~related to accruals under our variable compensation programs~~associated with salaries and commissions, an increase in the amortization of acquired intangibles, and an increase in stock based compensation which were partially offset by lower severance-related ~~charges~~costs, variable compensation programs and ~~a reduction~~lower marketing and advertising expenses, compared to the same period in ~~headcount.~~2021.

Research and Development

The primary drivers of the increase in research and development expenses for the three months ended ~~June 30, 2021~~March 31, 2022 were additional costs for salaries, benefits, outside services, and stock-based compensation, which were partially offset by a decrease in accruals associated with our variable compensation programs, compared to the same period in 2020 were additional personnel costs related to accruals under our variable compensation programs, salaries, stock-based compensation and an anticipated decrease in software development costs eligible for capitalization.2021.

General and administrative

The primary drivers of the ~~increase~~decrease in general and administrative expenses for the three months ended ~~June 30, 2021 compared to the same period~~March 31, 2022 were a decrease in ~~2020 were additional personnel~~acquisition expenses and severance costs ~~related to accruals under our variable compensation programs~~partially offset by an increase in salary and benefits, outside service costs and stock-based compensation.

~~Operating Expenses - Six Months Ended June 30, 2021~~

~~The year over year increase of $41 million in our operating expenses during the six months ended June 30, 2021 was primarily related to the following:~~

•$25 million increase related to the amortization of acquisition-related intangibles, additional operating costs of our recently acquired OptimalPlus business, and transaction and integration costs related to a one-time redemption fee associated with recently acquired intellectual property;

•$12 million increase in non-acquisition personnel costs, primarily attributable to additional accruals for estimated attainment under our variable compensation programs and additional stock-based compensation expense (due to comparatively higher stock prices on the grant date of unvested awards and a shorter average service period for our awards), partially offset by lower salaries and benefits due to lower headcount and reduced severance costs;

•~~$6 million increase related to the year over year impact of changes in foreign currency exchange rates;~~

•~~$2 million increase related to lower software development costs eligible for capitalization; and~~

•~~$(4) million decrease in travel and event related expenses related to the travel restrictions from COVID-19 and strategic cost saving initiatives.~~

~~Sales and Marketing~~

The primary drivers of the increase in sales and marketing expenses for the six months ended June 30, 2021 compared to the same period in 2020 were additional costs associated with accruals under our variable compensation programs, higher salaries and the amortization of acquired intangibles, which were partially offset by lower travel, severance-related costs and a reduction in headcount.

~~Research and Development~~

The primary drivers of the increase in research and development expenses for the six months ended June 30, 2021 compared to the same period in 2020 were additional personnel costs associated with accruals under our variable compensation programs, higher salaries, stock-based compensation, as well as an anticipated decrease in software development costs eligible for capitalization, which were partially offset by lower severance-related costs.

~~General and administrative~~

The primary drivers of the increase in general and administrative expenses for the six months ended June 30, 2021 compared to the same period in 2020 were additional personnel costs associated with accruals under our variable compensation programs, stock-based compensation, and severance, as well as a one-time redemption fee associated with recently acquired intellectual property.

~~Gain on sale of business/assets.~~ As previously disclosed, on January 15, 2020, we completed the sale of our AWR subsidiary and recognized a gain on the sale of $160 million. These amounts are presented as "Gain on sale of business/assets" in our Consolidated Statements of Income.

Operating Income. For the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ operating income was ~~$25~~$31 million and ~~$16~~$10 million, ~~respectively.~~respectively, an increase of 220%. As a percentage of net sales, operating income was ~~7.1%~~7.9% and ~~5.4%~~2.8% for the three months ended ~~June 30,~~March 31, 2022 and 2021, and 2020, respectively. For the six months ended June 30, 2021 and 2020, operating income was $34 million and $188 million, respectively. As a percentage of net sales, operating income was 5.0% and 30.8% for the six months ended June 30, 2021 and 2020, respectively. The increase in operating income in absolute dollars for the three months ended ~~June 30, 2021,~~March 31, 2022, compared to the three months ended ~~June 30, 2020, is attributable to the factors discussed in Net Sales, Gross Profit and Operating Expenses above. The decrease in operating income in absolute dollars for the six months ended June 30,~~March 31, 2021, ~~compared to the six months ended June 30, 2020,~~ is primarily attributable to the ~~approximately $160 million gain on sale of our AWR subsidiary~~increases in ~~2020,~~revenue partially offset by the ~~factors discussed~~increases in ~~Net Sales, Gross Profit~~cost of sales and ~~Operating Expenses~~operating expenses described above.

Other (Expense) Income.

•Interest Income. For the three months ended March 31, 2022 and 2021, interest income was less than $0.1 million and $0.2 million, respectively. During the three months ended March 31, 2022, the Federal Reserve raised the federal funds rate target by 25 basis points to a range of 0.25 to 0.50% and signaled the possibility of additional increases in 2022.

•Interest Expense~~Interest Income.~~. For the three months ended ~~June 30,~~March 31, 2022 and 2021, and 2020, interest income was $0.1 million and $1.0 million, respectively. For the six months ended June 30, 2021 and 2020, interest income was $0.3 million and $3.3 million, respectively. During the six months ended June 30, 2021, the Federal Reserve maintained the federal funds rate target to a range of zero to 0.25%. This will likely continue to have a negative impact on our interest income for the remainder of 2021.

•~~Interest Expense.For the three months ended June 30, 2021 and 2020,~~ interest expense was approximately ~~$1.2~~$1.3 million, and ~~$0.1 million, respectively. For the six months ended June 30, 2021 and 2020, interest expense was approximately $1.9 million, and $0.1~~$0.7 million, respectively. These interest charges are due to interest on outstanding borrowings, commitment fees and amortization of deferred costs related to our Credit Agreement. During the three months ended June 30, 2021, we amended and restated in its entirety and refinanced our existing Credit Agreement. We recognized approximately $0.6 million of expense related to the portion of debt issuance costs that were allocated to the previous Credit Agreement and accounted for as an extinguishment of debt. Refer to Note 13 - Debt of Notes to Consolidated Financial Statements for additional information regarding the terms of our Credit Agreement and related borrowings.

•Gain/Loss From Equity-Method Investments. For the three months ended ~~June 30,~~March 31, 2022 and 2021, gain from equity-method investments was approximately $0.6 million and ~~2020,~~ loss from equity-method investments was approximately ~~$0.9 million. For the six months ended June 30, 2021 and 2020, loss from equity-methods investment was approximately $5.4 million and $1.9~~$4.2 million, respectively. The increase ~~in the six months ended June 30, 2021 compared to the same period in 2020~~ was primarily attributable to an impairment loss of $3.5 million recorded in the three months ended March 31, 2021.

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•Net Foreign Exchange Gain/~~Loss.~~(Loss). For the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ net foreign exchange loss was ~~$0.9~~$(1.2) million and ~~$0.8~~$(0.6) million, respectively. ~~During~~Gains and losses on foreign currency are primarily due to the ~~six months ended June 30, 2021~~impact of re-measuring foreign currency monetary assets and ~~2020, net~~liabilities into the functional currency of the corresponding entity. The amount of the gain or loss on foreign ~~exchange loss was $1.5 million~~currency is driven by the volume of foreign currency transactions and ~~$1.3 million, respectively. These results are attributable to movements in~~ the foreign currency exchange rates ~~between~~for the U.S. dollar and foreign currencies in subsidiaries for which our functional currency is not the U.S. dollar. We recognize the local currency as the functional currency in virtually all of our international subsidiaries.period. See ~~“Results~~"Results of Operations - Net ~~Sales”~~Sales" above for additional discussion on the impact of foreign exchange rates on our net sales of operations for the three ~~and six~~ months ended ~~June 30, 2021.~~March 31, 2022.

•Other Income. For the three months ended March 31, 2022 and 2021, other income also increased by $1.3 million, primarily related to proceeds received from resolution of claims related to a previous acquisition after the measurement period was finalized.

Provision for Income Taxes. For the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ our provision for income taxes reflected an effective tax rate of ~~20%~~17% and ~~29%, respectively. For the six months ended June 30, 2021 and 2020, our provision for income taxes reflected an effective tax rate of 16% and 24%~~(1)%, respectively. The factors that caused our effective tax rate to change year over year are detailed in the table below:

Three Months Ended Six Months Ended
June 30, 2021 June 30, 2021
(Unaudited) (Unaudited)
Effective tax rate at June 30, 2020 29 % 24 %
Transition tax on deferred foreign income (5) (1)
Employee share-based compensation and other discrete items (4) (7)
Gain on sale of AWR business (3) (1)
Enhanced deduction for certain research and development expenses (2) (2)
Foreign taxes greater than federal statutory rate — (2)
Research and development tax credit 1 1
Change in unrecognized tax benefits 1 1
Global intangible low-taxed income inclusion ("GILTI") 3 3
Effective tax rate at June 30, 2021 20 % 16 %


	Three Months Ended March 31,
	(Unaudited)
Effective tax rate at March 31, 2021	(1)	%
Foreign-derived intangible income deduction	(5)
Global intangible low-taxed income inclusion ("GILTI")	(2)
Enhanced deduction for certain research and development expenses	(1)
Change in unrecognized tax benefits	1
Research and development tax credits	2
Foreign taxes greater (less) than federal statutory rate	2
Employee share-based compensation and other discrete items	21
Effective tax rate at March 31, 2022	17	%

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Other operational metrics

We believe that the following additional unaudited operational metrics assist investors in assessing our operational performance relative to others in our industry and to our historical results. The following tables provide details with respect to the amount of GAAP charges related to certain items that were recorded in the line items indicated below (in thousands).


	Three Months Ended March 31,
(In thousands)	(Unaudited)
	2022		2021
Stock-based compensation
Cost of sales	$	1,222	$	1,113
Sales and marketing	7,089		5,696
Research and development	6,088		5,714
General and administrative	5,729		4,666
Provision for income taxes	(2,655)		(3,324)
Total	$	17,473	$	13,865


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
(In thousands)	(In thousands)	(Unaudited)				(Unaudited)				(In thousands)	(Unaudited)
		2021		2020		2021		2020			2022		2021
Stock-based compensation
Amortization of acquisition-related intangibles and fair value adjustments										Amortization of acquisition-related intangibles and fair value adjustments
Net sales										Net sales	$	371	$	813
Cost of sales	Cost of sales	$	1,191	$	932	$	2,305	$	1,736	Cost of sales	3,803		4,272
Sales and marketing	Sales and marketing	6,922		6,467		12,617		11,642		Sales and marketing	6,139		2,171
Research and development	Research and development	6,180		4,428		11,893		7,947		Research and development	(320)		—
General and administrative		5,854		3,404		10,520		6,008
Other (expense) income										Other (expense) income	516		394
Provision for income taxes	Provision for income taxes	(3,916)		(2,905)		(7,241)		(4,406)		Provision for income taxes	(1,355)		(975)
Total	Total	$	16,231	$	12,326	$	30,094	$	22,927	Total	$	9,154	$	6,675


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
(In thousands)	(In thousands)	(Unaudited)				(Unaudited)				(In thousands)	(Unaudited)
		2021		2020		2021		2020			2022		2021
Amortization of acquisition-related intangibles and fair value adjustments
Net sales		$	738	$	—	$	1,551	$	—
Acquisition-related transaction and integration costs, restructuring charges, and other										Acquisition-related transaction and integration costs, restructuring charges, and other
Cost of sales	Cost of sales	$	4,226	$	635	$	8,497	$	1,381	Cost of sales	$	785	$	75
Sales and marketing	Sales and marketing	2,357		480		4,528		966		Sales and marketing	307		4,648
Research and development	Research and development	—		28		—		55		Research and development	614		488
Other expense		554		117		948		241
General and administrative										General and administrative	1,771		5,666

Other (expense) income										Other (expense) income	(1,866)		3,725
Provision for income taxes	Provision for income taxes	(979)		(133)		(1,969)		(290)		Provision for income taxes	(658)		(2,883)
Total	Total	$	6,896	$	1,127	$	13,555	$	2,353	Total	$	953	$	11,719

Three Months Ended June 30, Six Months Ended June 30,
(In thousands) (Unaudited) (Unaudited)
2021 2020 2021 2020
Acquisition-related transaction and integration costs, restructuring charges, and other(1)(2)

Cost of sales $ (118) $ — $ (43) $ 20
Sales and marketing 839 1,239 5,487 7,612
Research and development 548 147 1,036 4,816
General and administrative 873 3,399 6,539 2,385
Gain on sale of business/assets — — — (159,753)
Other expense 280 — 4,006 128
Provision for income taxes (578) (78) (3,463) 34,676
Total $ 1,844 $ 4,707 $ 13,562 $ (110,116)
(1): During the first quarter of 2020, we recognized a gain of approximately $160 million related to the divestiture of AWR, presented within "Gain on sale of business/assets".
(2): During the first quarter of 2021, we recognized a $3.5 million impairment loss related to one of our equity-method investments.


											Three Months Ended March 31,
		Three Months Ended June 30,				Six Months Ended June 30,					(Unaudited)
(In thousands)	(In thousands)	(Unaudited)				(Unaudited)				(In thousands)	2022		2021
		2021		2020		2021		2020
Capitalization and amortization of internally developed software costs	Capitalization and amortization of internally developed software costs									Capitalization and amortization of internally developed software costs
Cost of sales	Cost of sales	$	6,227	$	7,144	$	13,101	$	14,226	Cost of sales	$	2,033	$	6,874
Research and development	Research and development	(495)		(1,181)		(721)		(3,095)		Research and development	(187)		(226)
Provision for income taxes	Provision for income taxes	(1,204)		(1,252)		(2,600)		(2,337)		Provision for income taxes	(407)		(1,396)
Total	Total	$	4,528	$	4,711	$	9,780	$	8,794	Total	$	1,439	$	5,252

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Liquidity and Capital Resources

Overview

At ~~June 30, 2021,~~March 31, 2022, we had ~~$265~~$143 million in cash and cash ~~equivalents and short-term investments.~~equivalents. Our cash and cash equivalent balances are held in numerous financial institutions throughout the world, including substantial amounts held outside of the U.S.~~, however, all of our short-term investments that are located outside of the U.S. are denominated in the U.S. dollar.~~ The following table presents the geographic distribution of our cash and cash equivalents ~~and short-term investments~~ as of ~~June 30, 2021~~March 31, 2022 (in millions):

Domestic International Total
Cash and cash equivalents $113.3 $137.1 $250.4
45% 55%
Short-term investments $10.1 $4.0 $14.1
72% 28%
Total cash, cash equivalents and short-term investments $123.4 $141.1 $264.5
47% 53%


(in millions)	Domestic	International	Total
Cash and cash equivalents	$29.8	$113.0	$142.9
	21%	79%


Total cash and cash equivalents	$29.8	$113.0	$142.9
	21%	79%

Figures may not sum due to rounding.

The following table presents our working capital, cash and cash equivalents and short-term investments:


		June 30, 2021		December 31,		Increase/			March 31, 2022		December 31,		Increase/
(In thousands)	(In thousands)	(unaudited)		2020		(Decrease)		(In thousands)	(unaudited)		2021		(Decrease)

Working capital	Working capital	$	483,339	$	467,655	$	15,684	Working capital	$	483,534	$	486,335	$	(2,801)
Cash and cash equivalents (1)	Cash and cash equivalents (1)	250,421		260,232		(9,811)		Cash and cash equivalents (1)	142,883		211,106		(68,223)
Short-term investments (1)	Short-term investments (1)	14,110		59,923		(45,813)		Short-term investments (1)	—		—		—
Total cash, cash equivalents and short-term investments	Total cash, cash equivalents and short-term investments	$	264,531	$	320,155	$	(55,624)	Total cash, cash equivalents and short-term investments	$	142,883	$	211,106	$	(68,223)

(1) Included in working capital	(1) Included in working capital							(1) Included in working capital

Our principal sources of liquidity include existing cash, cash equivalents, cash generated from the sale and maturity of marketable securities, balances and available borrowings under our Credit Facility, cash flows generated from our operations, and cash generated from ~~purchase~~purchases of common stock through our employee stock purchase ~~plan and available borrowings under our Credit Agreement.~~plan. The primary drivers of the net increase in working capital between December 31, ~~2020~~2021 and ~~June 30, 2021~~March 31, 2022 were:

◦Cash and cash equivalents ~~and short-term investments~~ decreased by ~~$56 million for the six-month period ended June 30, 2021.~~$68 million. Additional analysis of the changes in our cash flows for the ~~period~~three months ended ~~June 30, 2021 compared to the year ended December~~March 31, ~~2020~~2022 is discussed below;

◦Accounts receivable ~~net~~ decreased by $8$28 million. Days sales outstanding increased to 5759 days at ~~June 30, 2021,~~March 31, 2022, compared to 5658 days at December 31, ~~2020.~~2021. The decrease in accounts receivable is primarily related to quarterly fluctuations in our net ~~sales;~~sales.

◦Inventory increased by ~~$17~~$19 million. Inventory turns ~~on a trailing twelve month basis~~ were 1.6 at ~~June 30, 2021 and 1.7~~March 31, 2022 compared to 1.5 at December 31, ~~2020.~~2021. The increase in inventory was primarily attributable to ~~an increase in~~additional purchases of raw materials to support ~~increased~~forecasted demand ~~for our products~~ and ~~minimize~~timing differences related to delayed fulfillment of certain orders related to supply chain ~~disruptions;~~constraints.

◦~~The~~Prepaid expenses and other current ~~portion of deferred revenue decreased~~assets increased by $6$20 million ~~which was~~ primarily ~~related~~due to ~~the~~related timing of ~~annual software maintenance~~prepaid insurance, other prepaid renewals, ~~for~~changes in the fair value of our ~~enterprise-level licensing arrangements;~~foreign currency forward contracts, changes in sales and VAT taxes and prepayment of freight costs.

◦Accrued compensation decreased by ~~$18~~$60 million attributable to annual payments under our variable compensation programs related to ~~2020 performance and severance payments under our current restructuring initiative,~~2021 attainment, partially offset by accruals related to expected payouts under our ~~2021~~2022 variable compensation ~~programs;~~programs.

◦Deferred revenue, current decreased by $3 million primarily related changes in foreign currency exchange rates and recognition of point-in-time deferrals during the first quarter of 2022, partially offset by additional software-related deferrals.

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◦Other current liabilities decreased by $16 million which was primarily related to income tax payments and changes in the fair value of foreign currency forward contracts designated as hedging instruments; and

◦~~Other taxes payable decreased by $9 million primarily related to the timing of payments for VAT and other indirect taxes.~~

Analysis of Cash Flow

The following table summarizes our cash flow results for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 and ~~2020.~~2021.



		Six Months Ended June 30,					Three Months Ended March 31,
(In thousands)	(In thousands)	(unaudited)				(In thousands)	(unaudited)
		2021		2020			2022		2021
Cash provided by operating activities		$	52,323	$	101,498
Cash (used in) provided by investing activities		(6,315)		231,791
Cash (used in) provided by financing activities		(54,932)		13,936
Cash (used by) provided by operating activities						Cash (used by) provided by operating activities	$	(3,848)	$	29,841
Cash (used by) provided by investing activities						Cash (used by) provided by investing activities	(29,153)		6,393
Cash used in financing activities						Cash used in financing activities	(34,187)		(28,218)
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	(887)		(636)		Effect of exchange rate changes on cash	(1,035)		(1,536)
Net change in cash and cash equivalents	Net change in cash and cash equivalents	(9,811)		346,589		Net change in cash and cash equivalents	(68,223)		6,480
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	260,232		194,616		Cash and cash equivalents at beginning of period	211,106		260,232
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	250,421	$	541,205	Cash and cash equivalents at end of period	$	142,883	$	266,712

Operating Activities

Cash provided by operating activities isis comprised of net income adjusted for certain items and changes in working capital. Cash flows from operating activities can fluctuate significantly from period to period as working capital needs and the timing of payments for income taxes, variable pay, restructuring activities, and other items impact reported cash flows.

Cash provided by operating activities for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 decreased by ~~$49~~$34 million compared to the same period in ~~2020.~~2021. This decrease was primarily due to a ~~$111~~$50 million decrease in cash provided by changes in operating assets and liabilities during the year, further described below, partially offset by ana $16 million increase ~~of $62 million~~ in net income ~~adjusted for certain~~excluding the effect of non-cash ~~operating~~ items including stock-based compensation, depreciation and amortization, ~~and gains~~gain on sale of ~~assets/businesses:~~business/assets, loss from equity-method investments and deferred tax benefits.

•The aggregate of changes in accounts receivable, inventory and accounts payable ~~used~~provided net cash of $7$1 million during the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 compared to net cash provided of ~~$19~~$21 million in the comparable period in ~~2020.~~2021. The amount of cash flow generated from or used by the aggregate of accounts receivable, inventory and accounts payable depends upon the cash conversion cycle, which represents the number of days that elapse from the day we pay for the purchase of raw materials and components to the collection of cash from our customers and can be significantly impacted by the timing of shipments and purchases, as well as collections and payments in a period.

◦The changes in accrued compensation used cash of $58 million during the three months ended March 31, 2022 compared to net cash used of $26 million during the three months ended March 31, 2021. The year over year change is primarily related to an increase in payments under our variable pay programs due to 2021 attainment partially offset by lower severance payments.

◦The aggregate of changes in prepaid assets, deferred revenue and other ~~movements in~~ assets and liabilities used net operating cash of ~~$57~~$10 million during the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 compared to net ~~operating~~ cash ~~provided~~used of ~~$29~~$11 million in the comparable period in ~~2020.~~2021. The year over year change is primarily ~~attributable~~related to ~~the~~ timing and amount of payments offor prepaid goods and services, federal income taxes, ~~variable compensation programs~~payroll taxes, and ~~severance payments under our current restructuring initiative.~~

other indirect taxes.

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Investing Activities

Cash ~~provided~~used by investing activities ~~decreased by $238 million~~ for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 increased by $36 million compared to the same period in ~~2020. This was~~2021, primarily ~~attributable~~related to ~~a $160~~the following:

•$28 million decrease in ~~proceeds received from~~cash inflows related to the net sale of ~~our AWR subsidiary in January 2020, a $32~~short-term investments. We did not buy or sell short-term investments during the period.

•$6 million increase in cash outflows related to acquisitions and equity-method investments ~~and a net sale of short-term investments of $46~~

•$2 million increase in cash outflows related to capital expenditures for long-lived assets.

Financing Activities

Cash used in financing activities increased by $6 million for the ~~six~~three months ended June 30, 2021 compared to a net sale of short-term investments of $101 million during the same period in 2020. The decrease in investing inflows was partially offset by a decrease of $10 million in capital expenditures and internally developed software costs that were eligible for capitalization during the six months ended June 30, 2021,March 31, 2022 compared to the same period in ~~2020.~~

~~Financing Activities~~

~~Cash provided by financing activities decreased by $69 million for the six months ended June 30, 2021 compared to the same period in 2020.~~2021. This was primarily related to an ~~$89~~increase of $31 million ~~decrease in net proceeds received under our term and revolving loan facilities, net of issuance costs, and an increase~~ in cash outflows ~~of $3 million~~ related to repurchases of our ~~quarterly dividends,~~common stock during 2021, partially offset by ~~a decrease~~$25 million in ~~cash outflows of $24 million related to shares repurchased during the comparable period in 2020.~~additional borrowings on our revolving credit agreement. (See Note 11 – Authorized shares of common and preferred stock and ~~stock based~~stock-based compensation plans of Notes to Consolidated Financial Statements for additional discussion about our equity compensation plans and share repurchase program).

Contractual Cash Obligations. Information related to our contractual obligations as of December 31, ~~2020~~2021 can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Contractual Obligations,” in Part II-Item 7 of the Form 10-K. At ~~June 30, 2021,~~March 31, 2022, there were no material changes outside the ordinary course of business to our contractual obligations from those reported in our 2021 Form 10-K. See Note 8 - Leases of Notes to Consolidated Financial Statements for additional information regarding our non-cancellable operating lease obligations as of ~~June 30,~~March 31, 2021.

~~Below are the payments due by period for our debt outstanding as of June 30, 2021:~~

Payments due by period
(In thousands) Total Less than one year One to three years Three to five years More than five years
Revolving line of credit $ 100,000 — — 100,000 —

Credit Agreement. ~~Refer to Note 13 - Debt of Notes to Consolidated Financial Statements for additional details on our secured revolving loan facility.~~On June 18, 2021, we entered into a Second Amended and Restated Credit Agreement (the "Credit Agreement") with Wells Fargo Bank, National Association, as the administrative agent, swingline lender and issuing lender (the “Administrative Agent”), Wells Fargo Securities, LLC, as sole lead arranger and bookrunner, and the lenders party thereto. As of ~~June 30, 2021,~~March 31, 2022, we had ~~approximately $400~~$174 million in available borrowing capacity under the Credit Agreement. Proceeds of additional borrowings made under the Credit Agreement may be used for working capital and other general corporate purposes. We may prepay the loans under the Credit Agreement in whole or in part at any time without premium or penalty. Certain of our future material domestic subsidiaries are required to guaranty our obligations under the Credit Agreement. (See Note 13 - Debt of Notes to Consolidated Financial Statements for additional details on our Credit Agreement).

Off-Balance Sheet Arrangements. We do not have any off-balance sheet debt. At ~~June 30, 2021,~~March 31, 2022, we did not have any relationships with any unconsolidated entities or financial partnerships, such as entities often referred to as structured finance entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. As such, we are not exposed to any financing, liquidity, market or credit risk that could arise if we were engaged in such relationships.

Prospective Capital Needs. We believe that our existing cash, cash equivalents and short-term investments, together with cash generated from operations, cash generated from the purchase of common stock through our employee stock purchase plan and available borrowing under our Credit Agreement will be sufficient to cover our working capital needs, capital expenditures, investment requirements, commitments, payment of dividends to our stockholders and repurchases of our common stock for at least the next 12 months. We may also seek to pursue additional financing or to raise additional funds by seeking an additional increase in our secured revolving line of credit and/or term loan commitments under ~~our~~the Credit Agreement or selling equity or debt to the public or in private transactions from time to time. If we elect to raise additional funds, we may not be able to obtain such funds on a timely basis or on acceptable terms, if at all. If we raise additional funds by issuing additional equity or convertible debt securities, the ownership percentages of our existing stockholders would be reduced. In addition, the equity or debt securities that we issue may have rights, preferences or privileges senior to those of our common stock.

Although we believe that we have sufficient capital to fund our operating activities for at least the next 12 months, our future capital requirements may vary materially from those now planned. We anticipate that the amount of capital we will need in the future will depend on many factors, including:

•payment of dividends to our stockholders;

•required levels of research and development and other operating costs;

•our business, product, capital expenditure and research and development plans, and product and technology roadmaps;

•acquisitions of other businesses, assets, products or technologies;

•repurchase of our common stock;

•the overall levels of sales of our products and gross profit margins;

•the levels of inventory and accounts receivable that we maintain;

•general economic and political uncertainty and specific conditions in the markets we address, including any volatility in the industrial economy in the various geographic regions in which we do business;

•the inability of certain of our customers who depend on credit to have access to their traditional sources of credit to finance the purchase of products from us, which may lead them to reduce their level of purchases or to seek credit or other accommodations from us;

•capital improvements for facilities;

•our relationships with suppliers and customers; and

•the amount of proceeds received as a result of our employee stock purchase plan.

Recently Issued Accounting Pronouncements

See Note 1 – Basis of presentation in Notes to Consolidated Financial Statements.

4846

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Changes in currency exchange rates and interest rates are our primary financial market risks. Quantitative and qualitative disclosures about market risk appear in “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in Part II of our 2021 Form 10-K and, ~~the~~except as noted below, there were no material changes during the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 to this information reported in our 2021 Form ~~10-K are described below.~~10-K.

Interest Expense Risk

Our borrowings under our Credit Agreement bear interest at a variable rate which exposes us to market risk related to changes in interest rates. We have not entered into derivative transactions related to our borrowing arrangements. The primary base interest rate is LIBOR. Assuming the outstanding balance on our floating rate indebtedness remains constant over a year, a 100-basis point increase in the interest rate would decrease annual net income and cash flow by ~~less than $1~~$3.3 million. We do not expect changes in interest rates to have a material adverse effect on our income or our cash flows in ~~2021.~~2022. However, ~~we can give~~there is no assurance that interest rates will not significantly change in the future.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Based on an evaluation under the supervision and with the participation of our management, our principal executive officer and our principal financial officer have concluded that our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act were effective as of ~~June 30, 2021,~~March 31, 2022, to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the ~~second~~first quarter of ~~2021,~~2022, which were identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We are not currently a party to any material litigation. However, in the ordinary course of our business, we have in the past, are currently and will likely become involved in various legal proceedings, claims, and regulatory, tax or government inquiries and investigations, and could incur uninsured liability in any one or more of them. We also periodically receive notifications from various third parties related to alleged infringement of patents or intellectual property rights, commercial disputes or other matters. No assurances can be given with respect to the extent or outcome of any investigation, litigation or dispute.

Item 1A. Risk Factors

Our business, financial condition and operating results can be affected by a number of factors, whether currently known or unknown, including but not limited to those described in Part I, Item 1A of our 2021 Form 10-K under the heading “Risk Factors,” any one or more of which could, directly or indirectly, cause our actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect our business, financial condition, operating results and stock price.

The following risk factor is provided to update the risk factors previously disclosed under the heading “Risk Factors” in our Form 10-K. The developments described in the additional risk factor presented below have heightened, or in some cases manifested, certain of the risks disclosed in the other risk factors identified in the “Risk Factors” section of our2021 Form 10-K.

Uncertain Global ~~Shortage of Key Components Has~~Economic and ~~May Continue to~~Geopolitical Conditions, Including in China and other countries, Could Materially Adversely Affect Our Business and ~~Result~~Results of Operations.~~Various factors,~~ Our operations and performance are sensitive to fluctuations in general economic and geopolitical conditions, both in the U.S. and globally. Uncertainty about global and regional economic conditions poses a risk to us as businesses may decrease or postpone spending in response to events such as continued trade tensions between the U.S. and China, or new or existing trade tensions with other countries, geopolitical instability, pandemics and other major public health issues including ~~increased~~the COVID-19 pandemic, financial market volatility, tariffs or other trade restrictions, government regulatory actions, negative financial news or other factors. Negative trends or sentiments in worldwide and regional economic conditions have in the past and could again have a material adverse effect on demand for ~~certain components and production delays due to COVID-19 and other natural events and disasters, are contributing to shortages of certain components used in~~ our products and services. For example, in recent years, there have been significant changes to U.S. trade policies, legislation, treaties and tariffs, in particular trade policies and tariffs affecting China. Some of these trade policies, including the U.S.’s trading relationship with China, have been renegotiated during this timeframe and are subject to further changes in the future. Changes to current policies by the U.S. or other governments could adversely affect our business, including potentially through increased ~~difficulties~~import tariffs and other influences on U.S. trade relations with China and other countries. The imposition of additional tariffs or other trade barriers could increase our costs in certain markets, and may cause our customers to find alternative sourcing. Protectionist and retaliatory trade measures by any of the United States, China or another country could limit our customers’ ability to ~~obtain a consistent supply of materials at stable pricing levels. Supply shortages~~sell their products and ~~longer lead times~~services and could reduce demand for ~~components used in~~ our products, including limited source components, can result in significant additional costs and inefficiencies in manufacturing. A shortage of key components may cause a significant disruption to our production activities, whichcustomers’ products. Even if resolved, these trends could have a ~~substantial adverse effect on our financial condition or results of operations. If we are unsuccessful in resolving any such component shortages in a timely manner, we will experience a significant~~broad negative impact on the ~~timing of revenue, a possible loss of revenue, or an increase in manufacturing costs, any of~~global industrial economy, which ~~would~~could have a material adverse impact on our ~~operating results.~~business and our results of operations. In addition, the application of various regulations depends on the classification of our products which can change over time as such regulations are modified or interpreted. The ongoing geopolitical tensions related to Russia’s invasion of the Ukraine and resulting sanctions imposed by the U.S. and other countries have impacted our shipments and ongoing services to customers with operations in Russia and Ukraine. During the first quarter of 2022, we suspended sales into Russia. Although our sales into Russia represented less than 1 percent of our total revenue in 2021, further escalation of geopolitical tensions could have a broader impact that expands into other markets where we do business, which could adversely affect our business and/or our supply chain, business partners or customers in the broader region.

We have recently experienced an increase in inflationary pressures in many of the jurisdictions in which we operate. We have and may continue to attempt to offset the effect of these inflationary pressures by increasing the prices of our products. These factors as well as others we may not contemplate could have a material adverse effect on the spending patterns of businesses including our current and potential customers which could have a material adverse effect on our net sales and our results of operations. See “Current business outlook” in this Form 10-Q for information regarding recent business conditions.

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

~~None.~~Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The following tables provide information as of March 31, 2022 with respect to the shares of our common stock that we repurchased under our stock repurchase programs during the first quarter of 2022.

2019 Stock Buyback Program


Period	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs	Maximum number of shares that may yet be purchased under the plans or programs (1)

January 1, 2022 to January 31, 2022	160,967	$	40.91	160,967	109,478

February 1, 2022 to February 28, 2022	109,478	$	41.35	109,478	—

March 1, 2022 to March 31, 2022	—	$	—	—	—
Total	270,445	$	41.10	270,445	—
(1) On April 21, 2010, our Board of Directors authorized a program to repurchase shares of our common stock from time to time, depending on market conditions and other factors. On October 23, 2019, our Board of Directors amended our stock repurchase program to increase the number of shares that may be repurchased by 3,000,000 shares. At March 31, 2022, there were 0 shares available for repurchase under our repurchase program. Such program does not have an expiration date.

2022 Stock Buyback Program


Period	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs	Maximum approximate dollar value of shares of common stock that may yet be purchased under the program

January 1, 2022 to January 31, 2022	—	$	—	—	250,000,000

February 1, 2022 to February 28, 2022	337,541	$	41.14	337,541	236,114,899

March 1, 2022 to March 31, 2022	164,066	$	39.34	164,066	229,659,880
Total	501,607	$	40.55	501,607	229,659,880
(1) On January 19, 2022, our Board of Directors approved a new stock repurchase plan for up to $250 million of our common stock, which is in addition to the existing program as described in the table above. The new stock repurchase plan does not have an expiration date.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

~~None.~~Not applicable.

Item 5. Other Information

On August 1, 2021, following a review of corporate law developments and market practices, our Board of Directors amended our Amended and Restated By-laws (the “By-Laws”) to clarify and update certain disclosure requirements and procedures, account for legal changes, and make related technical and conforming changes. The By-Laws were last amended in 2019. The amendments to the By-Laws were effective immediately and include, among other changes: (i) updating terminology and gender-related references; (ii) updating the provisions regarding stockholder meetings to further address the use of stockholder meetings conducted by means of remote communication (e.g., “virtual” meetings), rules for conduct at stockholder meetings and use of inspectors of election and related matters; (iii) making various changes to conform with the provisions of the Delaware General Corporation Law; (iv) updating the disclosure and notice content requirements for director nominations and stockholder proposals submitted outside of the Rule 14a-8 process, in each case by stockholders, and addressing completion of director and officer questionnaires and representations and agreements by such nominees; (v) updating provisions regarding officer titles and roles and the Board’s ability to empower the Chief Executive Officer to appoint and remove other officers; (vi) requiring resignation notices to be provided in writing as contemplated by the Delaware General Corporation Law rather than merely orally; and (vii) updating procedures concerning Board action taken without a meeting (including through use of electronic transmission of consents) and the calling of special and regular meetings of the Board and Board committees.None.

~~The above summary description of the amendments to the By-laws is qualified in its entirety by reference to the full text of the By-laws, a copy of which is included as Exhibit 3.2 hereto.~~

Item 6. Exhibits


EXHIBITS

3.1(1)			Certificate of Incorporation, as amended, of the ~~Registrant,~~Company , effective May 14, 2013
3.2*3.2(2)			Amended and Restated ~~By-laws~~Bylaws of the ~~Registrant~~Company, effective August 1, 2021















































31.1*			Certification of Chief Executive Officer ~~pursuant~~Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*			Certification of Chief Financial Officer ~~pursuant~~Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**			Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*2002
~~10.1(2)~~			Second Amended and Restated Credit Agreement, dated as of June 18, 2021, among the Registrant, as borrower, the lenders from time to time party thereto, and Wells Fargo Bank, National Association, as the administrative agent, swingline lender and issuing lender
~~10.2(3)~~			Amended and Restated Collateral Agreement, dated as of June 18, 2021, among the Registrant, and certain of its subsidiaries from time to time party thereto, as grantors in favor of Wells Fargo Bank, National Association, as administrative agent
101*			Inline XBRL Document Set for the condensed consolidated financial statements and accompanying notes in Part I, Item 1, ~~“Financial Statements”~~"Financial Statements" of this Quarterly Report on Form ~~10-Q~~ 10-Q.






104*			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
(1)			Incorporated by reference to ~~Exhibit 3.1~~the same-numbered exhibit filed with the ~~Registrant's~~Company’s Form 10-K for the fiscal year ended December 31, 2013 filed ~~with the Commission~~ on February 20, 2014 (File No. 000-25426).
(2)			Incorporated by reference to ~~Exhibit 10.1~~the same-numbered exhibit filed with the ~~Registrant's~~Company’s Form ~~8-K~~10-Q on ~~June 23,~~August 2, 2021
~~(3)~~			~~Incorporated by reference to Exhibit 10.2 filed with the Registrant's Form 8-K on June 23, 2021~~







			(File No. 000-25426).




































*			Filed herewith
**			Furnished herewith

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: ~~August 2, 2021~~April 29, 2022


NATIONAL INSTRUMENTS CORPORATION
By: /s/ Karen Rapp
Karen Rapp
EVP, Chief Financial Officer
(Principal Financial Officer)


	As of June 30, 2021		As of December 31,
	(unaudited)		2020
Income taxes payable - current	$	0	$	13,720
Hedge payable - current	7,671		13,031
Other	19,183		15,827
Total	$	26,854	$	42,578


(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


	Payments due by period
(In thousands)	Total		Less than one year	One to three years	Three to five years	More than five years

Revolving line of credit	$	100,000	—	—	100,000	—