Delaware
|
74-1871327
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification Number)
|
11500 North MoPac Expressway
|
78759
|
Austin,
|
|
Texas
|
|
(address of principal executive offices)
|
(zip code)
|
Title of Each Class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Stock, $0.01 par value
|
NATI
|
The NASDAQ Stock Market, LLC
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
Delivering value that gives our customers a competitive advantage
|
•
|
Providing a differentiated software-defined platform for automated test and automated measurement systems
|
•
|
Focusing on industry-specific applications that benefit from our platform's disruptive capabilities
|
•
|
Enhancing our system-level offerings to more fully meet customers' enterprise wide challenges
|
•
|
NI LabVIEW - a graphical programming approach that helps visualize every aspect of the application, including hardware configuration, measurement data, and debugging. This visualization makes it simple to integrate measurement hardware from various vendors, represent complex logic on the diagram, develop data analysis algorithms, and design custom engineering user interfaces.
|
•
|
NI LabWindows/CVI - an ANSI C integrated development environment and engineering toolbox with built-in libraries for measurement, analysis, and engineering UI design.
|
•
|
NI Measurement Studio - a suite of .NET tools designed for building engineering applications in Microsoft Visual Studio to acquire, analyze, and display measurement data.
|
•
|
NI TestStand - application software targeted for automated test and automated measurement applications in a manufacturing environment.
|
•
|
NI VeriStand - a ready-to-use software environment for configuring real-time testing applications, including hardware-in-the-loop test systems.
|
•
|
Flexlogger - application software optimized for quick sensor configuration and data logging of mixed signals to verify electromechanical systems.
|
•
|
NI InsightCM Enterprise - a software solution with tightly integrated hardware options for monitoring ancillary rotating equipment.
|
•
|
NI DIAdem - configuration-based technical data management, analysis, and report generation tools to interactively mine and analyze engineering and measurement data.
|
•
|
NI SystemLink - systems management software that enables the mass coordination of connected devices, software deployments, and data communications throughout a distributed system.
|
•
|
Semiconductor
|
•
|
Transportation
|
•
|
Aerospace, Defense and Government
|
•
|
Portfolio
|
•
|
fluctuations in foreign currencies relative to the U.S. dollar;
|
•
|
unexpected changes to currency policy or currency restrictions in foreign jurisdictions;
|
•
|
delays in collecting trade receivable balances from customers in developing economies;
|
•
|
tariffs and other trade barriers;
|
•
|
unexpected changes in regulatory requirements;
|
•
|
fluctuations in local economies;
|
•
|
disparate and changing employment laws in foreign jurisdictions;
|
•
|
difficulties in staffing and managing foreign operations;
|
•
|
costs and risks of localizing products for foreign countries;
|
•
|
major public health concerns, including the coronavirus:
|
•
|
enhanced exposure to potential unauthorized use, duplication, misappropriation, theft or other infringement or violation of our intellectual property rights;
|
•
|
government actions throughout the world; and
|
•
|
the burdens of complying with a wide variety of foreign laws.
|
•
|
the volatility of the Hungarian forint and the Malaysian ringgit relative to the U.S. dollar;
|
•
|
changing and potentially unstable political environments;
|
•
|
significant and frequent changes in corporate tax laws;
|
•
|
difficulty in managing manufacturing operations in foreign countries;
|
•
|
challenges in expanding capacity to meet increased demand;
|
•
|
difficulty in achieving or maintaining product quality;
|
•
|
interruption to transportation flows for delivery of components to us and finished goods to our customers;
|
•
|
major public health concerns, including the coronavirus;
|
•
|
restrictive labor codes; and
|
•
|
increasing labor costs.
|
•
|
burdens of complying with additional or more complex VAT and customs regulations; and
|
•
|
concentration of inventory increasing the risks associated with fire, natural disasters and logistics disruptions to customer order fulfillment.
|
•
|
continued foreign currency fluctuations;
|
•
|
increased manufacturing costs resulting from component supply shortages or component price fluctuations;
|
•
|
additional marketing costs for new product introductions or for conferences and tradeshows;
|
•
|
the timing, cost or outcome of any future intellectual property litigation or commercial disputes;
|
•
|
unanticipated costs related to acquisitions we may make; or
|
•
|
increased component costs resulting from vendors increasing their sales prices.
|
•
|
general market and economic conditions;
|
•
|
our ability to maintain and grow our business with our very large customers;
|
•
|
our ability to meet the volume and service requirements of our large customers;
|
•
|
success in developing and selling new products;
|
•
|
product pricing, including the impact of currency exchange rates;
|
•
|
industry consolidation, including acquisitions by us or our competitors;
|
•
|
capacity utilization and the efficiency of manufacturing operations;
|
•
|
timing of our new product introductions;
|
•
|
new product introductions by competitors;
|
•
|
the ability of competitors to more fully leverage low cost geographies for manufacturing or distribution;
|
•
|
effectiveness of sales and marketing resources and strategies;
|
•
|
adequate manufacturing capacity and supply of components and materials;
|
•
|
strategic relationships with our suppliers and other third parties;
|
•
|
product quality and performance;
|
•
|
protection of our products by effective use of intellectual property laws;
|
•
|
the financial strength of our competitors;
|
•
|
the outcome of any future litigation or commercial dispute;
|
•
|
barriers to entry imposed by competitors with significant market power in new markets; and
|
•
|
government actions throughout the world.
|
•
|
changes in the amount of revenue derived from very large orders (including orders from our very large customers) and the pricing, margins, and other terms of such orders;
|
•
|
tariffs and trade restrictions imposed by the U.S. or other countries;
|
•
|
fluctuations in foreign currency exchange rates;
|
•
|
changes in global economic conditions;
|
•
|
changes in the capacity utilization including at our facility in Malaysia;
|
•
|
changes in the mix of products sold;
|
•
|
the availability and pricing of components from third parties (especially limited sources);
|
•
|
the difficulty in maintaining margins, including the higher margins traditionally achieved in international sales;
|
•
|
changes in pricing policies by us, our competitors or suppliers;
|
•
|
the timing, cost or outcome of any future intellectual property litigation or commercial disputes;
|
•
|
delays in product shipments caused by human error or other factors;
|
•
|
disruptions in transportation channels; or
|
•
|
major public health concerns such as pandemics or other factors.
|
|
Dividend Amount
|
||
2019
|
|
||
March 4, 2019
|
$
|
0.25
|
|
June 3, 2019
|
$
|
0.25
|
|
September 3, 2019
|
$
|
0.25
|
|
December 2, 2019
|
$
|
0.25
|
|
|
|
||
2018
|
|
||
March 5, 2018
|
$
|
0.23
|
|
June 4, 2018
|
$
|
0.23
|
|
September 4, 2018
|
$
|
0.23
|
|
December 3, 2018
|
$
|
0.23
|
|
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)
|
||||
October 1, 2019 to October 31, 2019
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,794,324
|
|
November 1, 2019 to November 30, 2019
|
|
794,324
|
|
|
42.98
|
|
|
794,324
|
|
|
3,000,000
|
|
December 1, 2019 to December 31, 2019
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,000,000
|
|
Total
|
|
794,324
|
|
|
42.98
|
|
|
794,324
|
|
|
3,000,000
|
|
|
|
12/31/2014
|
|
12/31/2015
|
|
12/31/2016
|
|
12/31/2017
|
|
12/31/2018
|
|
12/31/2019
|
National Instruments
|
|
100
|
|
94.7
|
|
104.7
|
|
144.6
|
|
160.8
|
|
153.6
|
Nasdaq
|
|
100
|
|
107.1
|
|
116.7
|
|
151.4
|
|
147.2
|
|
201.2
|
Russell 2500
|
|
100
|
|
97.1
|
|
114.2
|
|
133.3
|
|
120.0
|
|
153.2
|
Russell 2000
|
|
100
|
|
95.6
|
|
115.9
|
|
132.9
|
|
118.2
|
|
148.4
|
|
|
For the years ended December 31,
|
||||||||||||||||||
|
|
(in thousands, except per share data)
|
||||||||||||||||||
|
|
2019 (1)
|
|
2018 (1)
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
Statements of Income Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Americas
|
|
$
|
538,679
|
|
|
$
|
538,388
|
|
|
$
|
504,626
|
|
|
$
|
482,039
|
|
|
$
|
496,746
|
|
EMEIA
|
|
403,424
|
|
|
432,977
|
|
|
408,625
|
|
|
389,843
|
|
|
409,119
|
|
|||||
APAC
|
|
411,112
|
|
|
387,767
|
|
|
376,135
|
|
|
356,297
|
|
|
319,591
|
|
|||||
Consolidated net sales
|
|
1,353,215
|
|
|
1,359,132
|
|
|
1,289,386
|
|
|
1,228,179
|
|
|
1,225,456
|
|
|||||
Cost of sales:
|
|
336,891
|
|
|
333,727
|
|
|
328,324
|
|
|
313,121
|
|
|
316,956
|
|
|||||
Gross profit
|
|
1,016,324
|
|
|
1,025,405
|
|
|
961,062
|
|
|
915,058
|
|
|
908,500
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Sales and marketing
|
|
473,392
|
|
|
482,576
|
|
|
477,921
|
|
|
461,236
|
|
|
452,262
|
|
|||||
Research and development
|
|
272,452
|
|
|
261,072
|
|
|
231,761
|
|
|
235,706
|
|
|
225,131
|
|
|||||
General and administrative
|
|
122,768
|
|
|
108,878
|
|
|
105,602
|
|
|
98,390
|
|
|
93,935
|
|
|||||
Gain on sale of assets
|
|
(26,842
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total operating expenses
|
|
841,770
|
|
|
852,526
|
|
|
815,284
|
|
|
795,332
|
|
|
771,328
|
|
|||||
Operating income
|
|
174,554
|
|
|
172,879
|
|
|
145,778
|
|
|
119,726
|
|
|
137,172
|
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest income
|
|
8,129
|
|
|
5,896
|
|
|
2,276
|
|
|
1,122
|
|
|
1,403
|
|
|||||
Net foreign exchange (loss) gain
|
|
(1,846
|
)
|
|
(3,423
|
)
|
|
892
|
|
|
(4,632
|
)
|
|
(7,075
|
)
|
|||||
Other (expense) income, net
|
|
(293
|
)
|
|
1,101
|
|
|
(1,566
|
)
|
|
(1,581
|
)
|
|
(221
|
)
|
|||||
Income before income taxes
|
|
180,544
|
|
|
176,453
|
|
|
147,380
|
|
|
114,635
|
|
|
131,279
|
|
|||||
Provision for income taxes
|
|
18,393
|
|
|
21,396
|
|
|
94,969
|
|
|
31,901
|
|
|
36,017
|
|
|||||
Net income
|
|
$
|
162,151
|
|
|
$
|
155,057
|
|
|
$
|
52,411
|
|
|
$
|
82,734
|
|
|
$
|
95,262
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Basic earnings per share
|
|
$
|
1.23
|
|
|
$
|
1.17
|
|
|
$
|
0.40
|
|
|
$
|
0.64
|
|
|
$
|
0.74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Weighted average shares outstanding - basic
|
|
131,722
|
|
|
131,987
|
|
|
130,300
|
|
|
128,453
|
|
|
127,997
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Diluted earnings per share
|
|
$
|
1.22
|
|
|
$
|
1.16
|
|
|
$
|
0.40
|
|
|
$
|
0.64
|
|
|
$
|
0.74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Weighted average shares outstanding - diluted
|
|
132,734
|
|
|
133,274
|
|
|
131,387
|
|
|
129,008
|
|
|
128,668
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash dividends declared per common share
|
|
$
|
1.00
|
|
|
$
|
0.92
|
|
|
$
|
0.84
|
|
|
$
|
0.80
|
|
|
$
|
0.76
|
|
(1) On January 1, 2018, we adopted the new revenue standard using the modified retrospective method of adoption. Prior periods have not been adjusted. See Note 1 - Operations and Summary of Significant Accounting Policies to the Consolidated Financial Statements for additional information.
|
|
|
December 31,
|
||||||||||||||||||
|
|
(in thousands)
|
||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents
|
|
$
|
194,616
|
|
|
$
|
259,386
|
|
|
$
|
290,164
|
|
|
$
|
285,283
|
|
|
$
|
251,129
|
|
Short-term investments
|
|
237,983
|
|
|
271,396
|
|
|
121,888
|
|
|
73,117
|
|
|
81,789
|
|
|||||
Working capital
|
|
641,235
|
|
|
739,236
|
|
|
624,835
|
|
|
574,572
|
|
|
559,525
|
|
|||||
Total assets
|
|
1,651,889
|
|
|
1,671,235
|
|
|
1,566,434
|
|
|
1,496,564
|
|
|
1,453,856
|
|
|||||
Long-term debt, net of current portion
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25,000
|
|
|
37,000
|
|
|||||
Total stockholders' equity
|
|
1,176,350
|
|
|
1,238,358
|
|
|
1,128,021
|
|
|
1,114,219
|
|
|
1,081,721
|
|
|||||
|
|
|
Years ended December 31,
|
|||||||
|
|
2019
|
|
2018
|
|
2017
|
|||
Net sales:
|
|
|
|
|
|
|
|
|
|
Americas
|
|
39.8
|
%
|
|
39.6
|
%
|
|
39.1
|
%
|
EMEIA
|
|
29.8
|
|
|
31.9
|
|
|
31.7
|
|
APAC
|
|
30.4
|
|
|
28.5
|
|
|
29.2
|
|
Consolidated net sales
|
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
Cost of sales
|
|
24.9
|
|
|
24.6
|
|
|
25.5
|
|
Gross profit
|
|
75.1
|
|
|
75.4
|
|
|
74.5
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
35.0
|
|
|
35.5
|
|
|
37.1
|
|
Research and development
|
|
20.1
|
|
|
19.2
|
|
|
18.0
|
|
General and administrative
|
|
9.1
|
|
|
8.0
|
|
|
8.2
|
|
Gain on sale of assets
|
|
(2.0
|
)
|
|
—
|
|
|
—
|
|
Total operating expenses
|
|
62.2
|
|
|
62.7
|
|
|
63.3
|
|
Operating income
|
|
12.9
|
|
|
12.7
|
|
|
11.3
|
|
Other income (expense):
|
|
|
|
|
|
|
|
||
Interest income
|
|
0.6
|
|
|
0.4
|
|
|
0.2
|
|
Net foreign exchange gain (loss)
|
|
(0.1
|
)
|
|
(0.3
|
)
|
|
0.1
|
|
Other expense, net
|
|
—
|
|
|
0.1
|
|
|
(0.1
|
)
|
Income before income taxes
|
|
13.3
|
|
|
13.0
|
|
|
11.4
|
|
Provision for income taxes
|
|
1.4
|
|
|
1.6
|
|
|
7.4
|
|
Net income
|
|
12.0
|
%
|
|
11.4
|
%
|
|
4.1
|
%
|
|
|
Years ended December 31,
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||
($ in millions)
|
|
2019
|
|
Change
|
|
2018
|
|
Change
|
|
2017
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||||
Product sales
|
|
$
|
1,215.0
|
|
|
(0.4)%
|
|
$
|
1,220.0
|
|
|
4.0%
|
|
$
|
1,173.5
|
|
Software maintenance sales
|
|
138.2
|
|
|
(0.6)%
|
|
139.1
|
|
|
20.0%
|
|
115.9
|
|
|||
Total net sales
|
|
$
|
1,353.2
|
|
|
(0.4)%
|
|
$
|
1,359.1
|
|
|
5.4%
|
|
$
|
1,289.4
|
|
|
|
Years ended December 31,
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||
($ in millions)
|
|
2019
|
|
Change
|
|
2018
|
|
Change
|
|
2017
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||||
Americas
|
|
$
|
538.7
|
|
|
0.1%
|
|
$
|
538.4
|
|
|
6.7%
|
|
$
|
504.6
|
|
Percentage of total net sales
|
|
40
|
%
|
|
|
|
40
|
%
|
|
|
|
39
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
|
||||||
EMEIA
|
|
$
|
403.4
|
|
|
(6.8)%
|
|
$
|
433.0
|
|
|
6.0%
|
|
$
|
408.6
|
|
Percentage of total net sales
|
|
30
|
%
|
|
|
|
32
|
%
|
|
|
|
32
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
|
||||||
APAC
|
|
$
|
411.1
|
|
|
6.0%
|
|
$
|
387.8
|
|
|
3.1%
|
|
$
|
376.1
|
|
Percentage of total net sales
|
|
30
|
%
|
|
|
|
28
|
%
|
|
|
|
29
|
%
|
|
|
Year Ended December 31, 2018
|
|
Change
in Constant Dollars
|
|
Impact of changes in foreign currency exchange rates on net sales
|
|
Year Ended December 31, 2019
|
||||||||||||
($ in millions)
|
|
GAAP
Net Sales
|
|
Dollars
|
|
Percentage
|
|
Dollars
|
|
Percentage
|
|
GAAP
Net Sales
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Americas
|
|
$
|
538.4
|
|
|
$
|
1.0
|
|
|
0.2%
|
|
$
|
(0.7
|
)
|
|
(0.1)%
|
|
$
|
538.7
|
|
EMEIA
|
|
433.0
|
|
|
(19.2
|
)
|
|
(4.4)%
|
|
(10.4
|
)
|
|
(2.4)%
|
|
403.4
|
|
||||
APAC
|
|
387.8
|
|
|
31.1
|
|
|
8.0%
|
|
(7.7
|
)
|
|
(2.0)%
|
|
411.1
|
|
||||
Total net sales
|
|
$
|
1,359.1
|
|
|
$
|
12.9
|
|
|
1.0%
|
|
$
|
(18.9
|
)
|
|
(1.4)%
|
|
$
|
1,353.2
|
|
|
|
Year Ended December 31, 2017
|
|
Change
in Constant Dollars
|
|
Impact of changes in foreign currency exchange rates on net sales
|
|
Year Ended December 31, 2018
|
||||||||||||
($ in millions)
|
|
GAAP
Net Sales
|
|
Dollars
|
|
Percentage
|
|
Dollars
|
|
Percentage
|
|
GAAP
Net Sales
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Americas
|
|
$
|
504.6
|
|
|
$
|
33.0
|
|
|
6.5%
|
|
$
|
0.8
|
|
|
0.2%
|
|
$
|
538.4
|
|
EMEIA
|
|
408.6
|
|
|
10.5
|
|
|
2.6%
|
|
13.9
|
|
|
3.4%
|
|
433.0
|
|
||||
APAC
|
|
376.1
|
|
|
4.3
|
|
|
1.1%
|
|
7.4
|
|
|
2.0%
|
|
387.8
|
|
||||
Total net sales
|
|
$
|
1,289.4
|
|
|
$
|
47.7
|
|
|
3.7%
|
|
$
|
22.1
|
|
|
1.7%
|
|
$
|
1,359.1
|
|
|
|
Years Ended December 31,
|
||||||||||||||
($ in millions)
|
|
2019
|
|
Change
|
|
2018
|
|
Change
|
|
2017
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||||
Gross Profit
|
|
$
|
1,016.3
|
|
|
(0.9)%
|
|
$
|
1,025.4
|
|
|
6.7%
|
|
$
|
961.1
|
|
Gross Profit as a percentage of net sales
|
|
75.1
|
%
|
|
|
|
75.4
|
%
|
|
|
|
74.5
|
%
|
|
|
Years Ended December 31,
|
||||||||||||||
($ in thousands)
|
|
2019
|
|
Change
|
|
2018
|
|
Change
|
|
2017
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||||
Sales and marketing
|
|
$
|
473,392
|
|
|
(2)%
|
|
$
|
482,576
|
|
|
1%
|
|
$
|
477,921
|
|
Percentage of total net sales
|
|
35
|
%
|
|
|
|
36
|
%
|
|
|
|
37
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
|
||||||
Research and development
|
|
$
|
272,452
|
|
|
4%
|
|
$
|
261,072
|
|
|
13%
|
|
$
|
231,761
|
|
Percentage of total net sales
|
|
20
|
%
|
|
|
|
19
|
%
|
|
|
|
18
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
|
||||||
General and Administrative
|
|
$
|
122,768
|
|
|
13%
|
|
$
|
108,878
|
|
|
3%
|
|
$
|
105,602
|
|
Percentage of total net sales
|
|
9
|
%
|
|
|
|
8
|
%
|
|
|
|
8
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
|
||||||
Gain on sale of assets
|
|
$
|
(26,842
|
)
|
|
100%
|
|
$
|
—
|
|
|
—%
|
|
$
|
—
|
|
Percentage of total net sales
|
|
(2
|
)%
|
|
|
|
—
|
%
|
|
|
|
—
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
|
||||||
Total operating expenses
|
|
$
|
841,770
|
|
|
(1)%
|
|
$
|
852,526
|
|
|
5%
|
|
$
|
815,284
|
|
Percentage of total net sales
|
|
62
|
%
|
|
|
|
63
|
%
|
|
|
|
63
|
%
|
•
|
a $14 million increase due to additional stock-based compensation expense, primarily attributable to comparatively higher stock prices on the grant date of unvested RSU awards and a shorter average service period for our awards;
|
•
|
a $13 million decrease related to the year over year impact of changes in foreign currency exchange rates;
|
•
|
a $7 million increase due to a charitable contribution to a donor-advised fund using a portion of the proceeds from the sale of an office building;
|
•
|
a $5 million increase related to a decrease in software development costs eligible for capitalization, as described in more detail below;
|
•
|
a $6 million increase due to restructuring costs during the year; and
|
•
|
a $3 million decrease in personnel costs, primarily driven by a $12 million decrease in variable pay related to not attaining the performance targets under our company performance bonus for 2019, partially offset by increases in salaries and other variable pay plans intended to remain competitive with market levels;
|
•
|
a $29 million increase in research and development expenses, primarily attributable to a decrease in software development costs eligible for capitalization, as described in more detail above.
|
•
|
a $10 million increase in personnel costs, primarily attributable to an $8 million increase related to our equity compensation costs due to higher stock prices. Additionally, increases in variable compensation costs to be more competitive with market levels were partially offset by lower salary and benefits costs, primarily related to headcount reductions.
|
•
|
a $8 million increase related to the year over year impact of changes in foreign currency exchange rates.
|
•
|
a $7 million decrease related to reductions in travel, outside services, and building and equipment costs. The decrease in cash expenditures related to travel and outside services is consistent with our continued focus on disciplined expense management and cost optimization.
|
|
Years ended
December 31,
|
|
Effective tax rate for 2018
|
12
|
%
|
Increased profits in foreign jurisdictions with reduced income tax rates
|
4
|
|
Change in enhanced deduction for certain research and development expenses
|
1
|
|
Change in intercompany prepaid tax asset
|
1
|
|
Change in state income taxes, net of federal benefit
|
(2
|
)
|
Global intangible low-taxed income inclusion ("GILTI")
|
(1
|
)
|
Foreign-derived intangible income deduction
|
(2
|
)
|
Global intangible low-taxed income deferred
|
2
|
|
Research and development tax credit
|
(1
|
)
|
Nondeductible officer compensation
|
1
|
|
Outside basis difference on asset held for sale
|
(6
|
)
|
Foreign tax on undistributed earnings
|
1
|
|
Effective tax rate for 2019
|
10
|
%
|
|
Years ended
December 31,
|
|
Effective tax rate for 2017
|
64
|
%
|
Change in U.S. federal tax rate
|
(14
|
)
|
Increased profits in foreign jurisdictions with reduced income tax rates
|
8
|
|
Change in enhanced deduction for certain research and development expenses
|
(1
|
)
|
Change in intercompany prepaid tax asset
|
2
|
|
Change in state income taxes, net of federal benefit
|
2
|
|
Remeasurement of U.S. deferred tax balance
|
10
|
|
Transition tax on deferred foreign income
|
(55
|
)
|
Global intangible low-taxed income deferred ("GILTI")
|
(2
|
)
|
Foreign tax on undistributed earnings
|
(3
|
)
|
Foreign-derived intangible income deduction
|
(1
|
)
|
Global intangible low-taxed income inclusion
|
2
|
|
Effective tax rate for 2018
|
12
|
%
|
|
|
Three months ended
|
||||||||||||||
|
|
(in thousands, except per share data)
|
||||||||||||||
|
|
March 31, 2019
|
|
June 30, 2019
|
|
September 30, 2019
|
|
December 31, 2019
|
||||||||
Net sales
|
|
$
|
311,074
|
|
|
$
|
334,231
|
|
|
$
|
340,442
|
|
|
$
|
367,468
|
|
Gross profit
|
|
234,999
|
|
|
250,465
|
|
|
254,527
|
|
|
276,333
|
|
||||
Operating income
|
|
23,399
|
|
|
32,296
|
|
|
65,178
|
|
|
53,681
|
|
||||
Net income
|
|
23,220
|
|
|
28,692
|
|
|
51,644
|
|
|
58,596
|
|
||||
Basic earnings per share
|
|
$
|
0.18
|
|
|
$
|
0.22
|
|
|
$
|
0.39
|
|
|
$
|
0.45
|
|
Diluted earnings per share
|
|
$
|
0.17
|
|
|
$
|
0.22
|
|
|
$
|
0.39
|
|
|
$
|
0.45
|
|
Dividends declared per share
|
|
$
|
0.25
|
|
|
$
|
0.25
|
|
|
$
|
0.25
|
|
|
$
|
0.25
|
|
|
|
Three months ended
|
||||||||||||||
|
|
(in thousands, except per share data)
|
||||||||||||||
|
|
March 31, 2018
|
|
June 30, 2018
|
|
September 30, 2018
|
|
December 31, 2018
|
||||||||
Net sales
|
|
$
|
311,897
|
|
|
$
|
341,009
|
|
|
$
|
346,127
|
|
|
$
|
360,099
|
|
Gross profit
|
|
237,374
|
|
|
258,850
|
|
|
257,112
|
|
|
272,070
|
|
||||
Operating income
|
|
28,137
|
|
|
36,912
|
|
|
46,010
|
|
|
61,821
|
|
||||
Net income
|
|
24,268
|
|
|
31,054
|
|
|
43,194
|
|
|
56,541
|
|
||||
Basic earnings per share
|
|
$
|
0.19
|
|
|
$
|
0.24
|
|
|
$
|
0.33
|
|
|
$
|
0.43
|
|
Diluted earnings per share
|
|
$
|
0.18
|
|
|
$
|
0.23
|
|
|
$
|
0.32
|
|
|
$
|
0.42
|
|
Dividends declared per share
|
|
$
|
0.23
|
|
|
$
|
0.23
|
|
|
$
|
0.23
|
|
|
$
|
0.23
|
|
|
|
Three Months Ended December 31,
|
|
Years Ended December 31,
|
||||||||||||
(In thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Stock-based compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of sales
|
|
$
|
887
|
|
|
$
|
816
|
|
|
$
|
3,475
|
|
|
$
|
3,231
|
|
Sales and marketing
|
|
4,868
|
|
|
3,810
|
|
|
19,612
|
|
|
14,218
|
|
||||
Research and development
|
|
4,236
|
|
|
3,489
|
|
|
16,265
|
|
|
12,580
|
|
||||
General and administrative
|
|
3,393
|
|
|
2,010
|
|
|
12,086
|
|
|
7,587
|
|
||||
(Benefit) Provision for income taxes
|
|
(1,433
|
)
|
|
(1,707
|
)
|
|
(9,337
|
)
|
|
(7,822
|
)
|
||||
Total
|
|
$
|
11,951
|
|
|
$
|
8,418
|
|
|
$
|
42,101
|
|
|
$
|
29,794
|
|
|
|
Three Months Ended December 31,
|
|
Years Ended December 31,
|
||||||||||||
(In thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Amortization of acquisition intangibles
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of sales
|
|
$
|
823
|
|
|
$
|
810
|
|
|
$
|
3,348
|
|
|
$
|
3,258
|
|
Sales and marketing
|
|
485
|
|
|
505
|
|
|
1,970
|
|
|
2,085
|
|
||||
Research and development
|
|
28
|
|
|
28
|
|
|
112
|
|
|
113
|
|
||||
Other loss, net
|
|
124
|
|
|
—
|
|
|
409
|
|
|
—
|
|
||||
(Benefit) Provision for income taxes
|
|
(127
|
)
|
|
(163
|
)
|
|
(703
|
)
|
|
(681
|
)
|
||||
Total
|
|
$
|
1,333
|
|
|
$
|
1,180
|
|
|
$
|
5,136
|
|
|
$
|
4,775
|
|
|
|
Three Months Ended December 31,
|
|
Years Ended December 31,
|
||||||||||||
(In thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Acquisition transaction costs, restructuring charges, and other
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of sales
|
|
$
|
—
|
|
|
$
|
244
|
|
|
$
|
—
|
|
|
$
|
2,057
|
|
Sales and marketing
|
|
5,356
|
|
|
2,300
|
|
|
13,646
|
|
|
10,654
|
|
||||
Research and development
|
|
3,266
|
|
|
297
|
|
|
4,166
|
|
|
2,092
|
|
||||
General and administrative (1)
|
|
2,002
|
|
|
341
|
|
|
11,527
|
|
|
1,879
|
|
||||
Gain on sale of asset (1)
|
|
—
|
|
|
—
|
|
|
(26,842
|
)
|
|
—
|
|
||||
Other loss, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
709
|
|
||||
(Benefit) Provision for income taxes (2)
|
|
(13,477
|
)
|
|
237
|
|
|
(12,237
|
)
|
|
(3,749
|
)
|
||||
Total
|
|
$
|
(2,853
|
)
|
|
$
|
3,419
|
|
|
$
|
(9,740
|
)
|
|
$
|
13,642
|
|
(1): During the third quarter of 2019, we recognized a gain of $27 million related to the sale of an office building, presented within "Gain on sale of assets". During the third quarter of 2019, we also recognized a charitable contribution expense of $7 million related to a donation using a portion of the proceeds from the sale of the property, presented within "General and Administrative".
|
||||||||||||||||
(2): During the fourth quarter of 2019, we recognized an income tax benefit of $11 million related to the recognition of deferred taxes on the outside basis difference of our AWR business, which was held-for-sale as of December 31, 2019.
|
|
|
Three Months Ended December 31,
|
|
Years Ended December 31,
|
||||||||||||
(In thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
(Capitalization) and amortization of internally developed software costs
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of sales
|
|
$
|
7,012
|
|
|
$
|
6,557
|
|
|
$
|
27,085
|
|
|
$
|
25,293
|
|
Research and development
|
|
(1,887
|
)
|
|
(1,056
|
)
|
|
(9,066
|
)
|
|
(14,208
|
)
|
||||
(Benefit) Provision for income taxes
|
|
(1,076
|
)
|
|
(1,155
|
)
|
|
(3,784
|
)
|
|
(2,328
|
)
|
||||
Total
|
|
$
|
4,049
|
|
|
$
|
4,346
|
|
|
$
|
14,235
|
|
|
$
|
8,757
|
|
|
Domestic
|
International
|
Total
|
Cash and Cash Equivalents
|
$55.9
|
$138.7
|
$194.6
|
|
29%
|
71%
|
|
Short-term Investments
|
$164.3
|
$73.7
|
$238.0
|
|
69%
|
31%
|
|
Cash, Cash Equivalents and Short-term Investments
|
$220.2
|
$212.4
|
$432.6
|
|
51%
|
49%
|
|
(In thousands)
|
|
December 31, 2019
|
|
December 31, 2018
|
|
Increase/
(Decrease)
|
||||||
|
|
|
|
|
|
|
|
|
||||
Working capital
|
|
$
|
641,235
|
|
|
$
|
739,236
|
|
|
$
|
(98,001
|
)
|
Cash and cash equivalents (1)
|
|
194,616
|
|
|
259,386
|
|
|
(64,770
|
)
|
|||
Short-term investments (1)
|
|
237,983
|
|
|
271,396
|
|
|
(33,413
|
)
|
|||
Total cash, cash equivalents and short-term investments
|
|
$
|
432,599
|
|
|
$
|
530,782
|
|
|
$
|
(98,183
|
)
|
•
|
Cash, cash equivalents, and short-term investments decreased by $98 million. Additional analysis of the changes in our cash flows for the year ended December 31, 2019 compared to the year ended December 31, 2018 are discussed below.
|
•
|
"Accounts receivable, net" increased by $6 million. Days sales outstanding remained flat at 65 days at December 31, 2019, compared to December 31, 2018 related to increased sales during the fourth quarter of 2019.
|
•
|
Inventory increased by $6 million to $200 million at December 31, 2019, from $194 million at December 31, 2018. Inventory turns decreased to 1.7 at December 31, 2019, compared to 1.8 at December 31, 2018. The increase in inventory is primarily attributable to increases in raw materials to support production of newly released product offerings.
|
•
|
Prepaid expenses and other current assets increased by $11 million, primarily related to the timing of prepaid insurance and maintenance contracts.
|
•
|
Accounts payable and accrued expenses increased by $4 million, primarily related to timing of invoice payments to vendors.
|
•
|
Accrued compensation increased by $2 million primarily related to a $6 million increase in accruals related to severance as part of our restructuring initiative, partially offset by a decrease in accruals for variable pay.
|
•
|
The current portion of deferred revenue increased by $4 million, primarily related to extended hardware warranties.
|
•
|
Other current liabilities decreased by $5 million, primarily related to changes in the fair value of our foreign currency forward exchange contracts offset by increases in the amount of current income taxes payable.
|
•
|
Operating lease liabilities, current increased by $13 million, related to the adoption of the new leasing standard on January 1, 2019, as discussed in Note 1 - Operations and summary of significant accounting policies and Note 9 - Leases of Notes to Consolidated Financial Statements.
|
•
|
Other taxes payable increased by $5 million, primarily related to the timing of payments for VAT and other indirect taxes.
|
(In thousands)
|
|
December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Cash provided by operating activities
|
|
$
|
224,405
|
|
|
$
|
274,580
|
|
|
$
|
224,442
|
|
Cash used by investing activities
|
|
(17,948
|
)
|
|
(209,996
|
)
|
|
(122,410
|
)
|
|||
Cash used by financing activities
|
|
(270,817
|
)
|
|
(90,843
|
)
|
|
(106,299
|
)
|
|||
Effect of exchange rate changes on cash
|
|
(410
|
)
|
|
(4,519
|
)
|
|
9,148
|
|
|||
Net change in cash equivalents
|
|
(64,770
|
)
|
|
(30,778
|
)
|
|
4,881
|
|
|||
Cash and cash equivalents at beginning of year
|
|
259,386
|
|
|
290,164
|
|
|
285,283
|
|
|||
Cash and cash equivalents at end of year
|
|
$
|
194,616
|
|
|
$
|
259,386
|
|
|
$
|
290,164
|
|
(In thousands)
|
|
Total
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Beyond
|
||||||||||||||
Purchase obligations
|
|
6,483
|
|
|
6,483
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Total commercial commitments
|
|
$
|
6,483
|
|
|
$
|
6,483
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
•
|
repurchase of our common stock;
|
•
|
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;
|
•
|
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 level of stock purchases under our employee stock purchase plan.
|
•
|
Revenue recognition
|
•
|
Estimating allowances, specifically the adjustment for excess and obsolete inventories
|
•
|
Accounting for costs of computer software
|
•
|
Valuation of long-lived and intangible assets
|
•
|
Accounting for income taxes
|
•
|
Loss contingencies
|
•
|
Accounting for costs related to exit or disposal activities
|
(i)
|
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
|
(ii)
|
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
|
(iii)
|
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.
|
(a)
|
Documents Filed with Report
|
1.
|
Financial Statements.
|
2.
|
Financial Statement Schedules.
|
EXHIBITS
|
|
4.1(4)
|
Specimen of Common Stock certificate of the Company.
|
10.1(4)
|
Form of Indemnification Agreement.
|
|
|
|
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
104
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
|
(1)
|
Incorporated by reference to the same-numbered exhibit filed with the Company’s Form 10-K for the fiscal year ended December 31, 2013.
|
(2)
|
Incorporated by reference to exhibit 3.1 to the Company’s Form 8-K filed on January 28, 2019 (File No. 000-25426).
|
(3)
|
Incorporated by reference to the same-numbered exhibit to the Company’s Form 8-A filed on April 27, 2004 (File No. 000-25426).
|
(4)
|
Incorporated by reference to the Company’s Form S-1 (Reg. No. 33-88386) declared effective March 13, 1995.
|
(5)
|
Incorporated by reference to exhibit A to the Company’s Proxy Statement filed on April 01, 2019.
|
(6)
|
Incorporated by reference to the same-numbered exhibit filed with the Company’s Form 10-K for the fiscal year ended December 31, 2016.
|
(7)
|
Incorporated by reference to exhibit A to the Company’s Proxy Statement filed on April 4, 2005 (File No. 000-25426).
|
(8)
|
Incorporated by reference to exhibit 10.8 to the Company’s Form 10-Q filed on August 2, 2006 (File No. 000-25426).
|
(9)
|
Incorporated by reference to exhibit 10.9 to the Company’s Form 10-Q filed on August 2, 2006 (File No. 000-25426).
|
(10)
|
Incorporated by reference to exhibit 10.10 to the Company’s Form 10-Q filed on August 2, 2006 (File No. 000-25426).
|
(11)
|
Incorporated by reference to exhibit 10.11 to the Company’s Form 10-Q filed on August 2, 2006 (File No. 000-25426).
|
(12)
|
Incorporated by reference to exhibit 10.1 to the Company’s Form 8-K filed on May 17, 2010 (File No. 000-25426).
|
(13)
|
Incorporated by reference to exhibit 10.2 to the Company’s Form 8-K filed on June 24, 2010 (File No. 000-25426).
|
(14)
|
Incorporated by reference to exhibit 10.3 to the Company’s Form 8-K filed on June 24, 2010 (File No. 000-25426).
|
(15)
|
Incorporated by reference to exhibit 10.4 to the Company’s Form 8-K filed on June 24, 2010 (File No. 000-25426).
|
(16)
|
Incorporated by reference to exhibit 10.5 to the Company’s Form 8-K filed on June 24, 2010 (File No. 000-25426).
|
(17)
|
Incorporated by reference to exhibit 10.1 to the Company’s Form 8-K filed on April 25, 2014.
|
(18)
|
Incorporated by reference to exhibit 10.16 to the Company’s Form 10-K for the fiscal year ended December 31, 2014.
|
(19)
|
Incorporated by reference to exhibit 10.1 to the Company’s Form 8-K filed on May 13, 2013.
|
(20)
|
Incorporated by reference to exhibit B to the Company’s Proxy Statement filed on April 1, 2015.
|
(21)
|
Incorporated by reference to exhibit 10.18 to the Company’s Form 10-Q filed on July 31, 2015.
|
(22)
|
Incorporated by reference to exhibit 10.19 to the Company’s Form 10-Q filed on July 31, 2015.
|
(23)
|
Incorporated by reference to exhibit 10.20 to the Company’s Form 10-Q filed on July 31, 2015.
|
(24)
|
Incorporated by reference to exhibit 10.21 to the Company’s Form 10-Q filed on July 31, 2015.
|
(25)
|
Incorporated by reference to exhibit 10.22 to the Company’s Form 10-Q filed on July 31, 2015.
|
(26)
|
Incorporated by reference to exhibit 10.1 to the Company’s Form 8-K filed on December 16, 2016.
|
(27)
|
Incorporated by reference to exhibit C to the Company’s Proxy Statement filed on April 1, 2015.
|
(28)
|
Incorporated by reference to exhibit 10.1 to the Company’s Form 8-K filed on October 30, 2015.
|
(29)
|
Incorporated by reference to exhibit 10.26 to the Company’s Form 10-Q filed on May 2, 2016.
|
(30)
|
Incorporated by reference to exhibit 10.29 to the Company’s Form 10-Q filed on May 1, 2017.
|
(31)
|
Incorporated by reference to exhibit 10.30 to the Company's Form 10-Q filed on May 1, 2018.
|
(32)
|
Incorporated by reference to exhibit 10.1 to the Company's Form 8-K filed on January 28, 2019.
|
(33)
|
Incorporated by reference to exhibit 10.32 to the Company's Form 10-Q filed on May 1, 2019.
|
(34)
|
Incorporated by reference to exhibit 10.33 to the Company's Form 10-Q filed on August 2, 2019.
|
(35)
|
Incorporated by reference to exhibit 10.1 to the Company's Form 8-K filed on January 30, 2020.
|
*
|
Management Contract or Compensatory Plan or Arrangement
|
†
|
Certain confidential portions of this exhibit have been omitted pursuant to Item 601(b) of Regulation S-K
|
|
|
Registrant
|
|
|
NATIONAL INSTRUMENTS CORPORATION
|
February 20, 2020
|
BY:
|
/s/ Eric Starkloff
|
|
|
Eric Starkloff
|
|
|
Chief Executive Officer
|
Signature
|
|
Capacity in Which Signed
|
|
Date
|
|
|
|
|
|
/s/ Eric Starkloff
|
|
Director and Chief Executive Officer
(Principal Executive Officer)
|
|
February 20, 2020
|
Eric Starkloff
|
|
|
|
|
|
|
|
|
|
/s/ Karen Rapp
|
|
Executive Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer and Principal Accounting Officer)
|
|
February 20, 2020
|
Karen Rapp
|
|
|
|
|
|
|
|
|
|
/s/ Michael E. McGrath
|
|
Chairman of the Board
|
|
February 20, 2020
|
Michael E. McGrath
|
|
|
|
|
|
|
|
|
|
/s/ Jim Cashman III
|
|
Director
|
|
February 20, 2020
|
Jim Cashman III
|
|
|
|
|
|
|
|
|
|
/s/ Alex M. Davern
|
|
Director
|
|
February 20, 2020
|
Alex M. Davern
|
|
|
|
|
|
|
|
|
|
/s/ Gerhard Fettweis
|
|
Director
|
|
February 20, 2020
|
Dr. Gerhard P. Fettweis
|
|
|
|
|
|
|
|
|
|
/s/ Liam Griffin
|
|
Director
|
|
February 20, 2020
|
Liam Griffin
|
|
|
|
|
|
|
|
|
|
/s/ Jeffrey L. Kodosky
|
|
Director
|
|
February 20, 2020
|
Jeffrey L. Kodosky
|
|
|
|
|
|
|
|
|
|
/s/ Duy-Loan T. Le
|
|
Director
|
|
February 20, 2020
|
Duy-Loan T. Le
|
|
|
|
|
|
|
|
|
|
/s/ Charles J. Roesslein
|
|
Director
|
|
February 20, 2020
|
Charles J. Roesslein
|
|
|
|
|
|
|
|
|
|
|
|
Determining the Adjustment for Excess and Obsolete Inventories
|
Description of the Matter
|
|
As discussed in Note 1 to the financial statements, inventory is presented net of the adjustment for excess and obsolete inventories which is the difference between the cost of inventory and estimated net realizable value based on assumptions of future demand and market conditions. As of December 31, 2019, the Company’s net inventory balance was $200.4 million, net of the adjustment for excess and obsolete inventories of $15.5 million.
Auditing management’s estimate of the adjustment for excess and obsolete inventories was complex and judgmental due to the high degree of subjectivity of certain assumptions and inputs. In particular, the estimate of the adjustment for excess and obsolete inventories was sensitive to significant assumptions such as the customer forecasted demand of each inventory part and the adjustment percentage for those parts. The adjustment percentage by part is estimated through historical and forecasted usage and scrap rates. These assumptions, among other observable inputs, are utilized to calculate the estimate of the adjustment for excess and obsolete inventories.
|
How We Addressed the Matter in Our Audit
|
|
We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s process used in determining the adjustment for excess and obsolete inventories. This included controls over the Company’s calculation and review of the significant assumptions underlying the estimate of the adjustment for excess and obsolete inventories including the customer forecasted demand and the adjustment percentage.
To test the estimate of the adjustment for excess and obsolete inventories, we performed audit procedures that included, among others, evaluating the methodology utilized to calculate the adjustment, evaluating the significant assumptions stated above and testing the accuracy and completeness of the underlying data used in management’s calculation of the estimate. We tested management’s assumptions relating to forecasted product demand, which included inspecting a one-year look-back analysis on forecasted demand compared to actual usage as well as conducting inquiries with, and obtaining forecast support from, individuals outside of the accounting department who are involved in manufacturing and part-level planning.
|
|
|
Determining Reserve for Uncertain Tax Positions
|
Description of the Matter
|
|
As discussed in Note 10 to the financial statements, the Company operates in a complex multinational tax environment and is subject to international tax law and transfer pricing guidelines for intercompany transactions. Uncertainty in a tax position may arise as tax laws are subject to interpretation. The Company uses significant judgment in (1) determining whether a tax position’s technical merits are more-likely-than-not to be sustained and (2) measuring the amount of tax benefit that qualifies for recognition. As of December 31, 2019, the Company accrued liabilities of $6.7 million with respect to uncertain tax positions including transfer pricing.
Auditing the recognition and measurement of tax positions related to transfer pricing was especially challenging due to first establishing the technical merits of the income tax position for purposes of recognition and second due to the measurement of the tax position. The key assumptions used in determining the reserve for the uncertain tax positions related to transfer pricing are how the taxing authority would classify the relevant related parties and the royalty rates and operating margins by jurisdiction that are utilized in transfer pricing as well as the probabilities applied to the scenarios utilized to calculate the amount of benefit to recognize.
|
How We Addressed the Matter in Our Audit
|
|
We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s accounting process to assess the technical merits of tax positions related to transfer pricing including evaluating certain intercompany transactions and to measure the potential exposure to reserve for those tax positions. This included controls over the completeness of the tax positions evaluated for recognition and measurement and the probabilities applied to each scenario.
To test the reserve for uncertain tax positions related to transfer pricing, our audit procedures included, among others, involving our tax and transfer price professionals to assist us in assessing the technical merits and measurement of certain of the Company’s tax positions. This included assessing the Company’s correspondence with the relevant tax authorities and evaluating income tax opinions and other third-party advice obtained by the Company. To support our evaluation, we used our knowledge of and experience with the application of international, transfer pricing and local income tax laws by the relevant income tax authorities to evaluate the Company’s accounting for those uncertain tax positions. We analyzed the Company’s assumptions and data used to determine the amount of tax position to recognize and tested the accuracy of the calculations. We have also evaluated the Company’s income tax disclosures included in Note 10 of the financial statements in relation to these matters.
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
Assets
|
|
|
|
|
|
|||
Current assets:
|
|
|
|
|
|
|
||
Cash and cash equivalents
|
|
$
|
194,616
|
|
|
$
|
259,386
|
|
Short-term investments
|
|
237,983
|
|
|
271,396
|
|
||
Accounts receivable, net
|
|
248,872
|
|
|
242,955
|
|
||
Inventories, net
|
|
200,410
|
|
|
194,146
|
|
||
Prepaid expenses and other current assets
|
|
65,477
|
|
|
54,337
|
|
||
Total current assets
|
|
947,358
|
|
|
1,022,220
|
|
||
Property and equipment, net
|
|
243,717
|
|
|
245,201
|
|
||
Goodwill
|
|
262,242
|
|
|
264,530
|
|
||
Intangible assets, net
|
|
84,083
|
|
|
110,783
|
|
||
Operating lease right-of-use assets
|
|
70,407
|
|
|
—
|
|
||
Other long-term assets
|
|
44,082
|
|
|
28,501
|
|
||
Total assets
|
|
$
|
1,651,889
|
|
|
$
|
1,671,235
|
|
Liabilities and stockholders' equity
|
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
|
||
Accounts payable and accrued expenses
|
|
$
|
52,192
|
|
|
$
|
48,388
|
|
Accrued compensation
|
|
47,732
|
|
|
45,821
|
|
||
Deferred revenue - current
|
|
131,445
|
|
|
127,288
|
|
||
Other lease liabilities - current
|
|
13,431
|
|
|
—
|
|
||
Other taxes payable
|
|
40,607
|
|
|
35,574
|
|
||
Other current liabilities
|
|
20,716
|
|
|
25,913
|
|
||
Total current liabilities
|
|
306,123
|
|
|
282,984
|
|
||
Deferred income taxes
|
|
14,065
|
|
|
25,457
|
|
||
Income tax payable - non-current
|
|
69,151
|
|
|
74,546
|
|
||
Liability for uncertain tax positions
|
|
6,652
|
|
|
9,775
|
|
||
Deferred revenue - non-current
|
|
33,480
|
|
|
32,636
|
|
||
Operating lease liabilities - non-current
|
|
40,650
|
|
|
—
|
|
||
Other long-term liabilities
|
|
5,418
|
|
|
7,479
|
|
||
Total liabilities
|
|
475,539
|
|
|
432,877
|
|
||
Commitments and contingencies
|
|
|
|
|
|
|
||
Stockholders' equity:
|
|
|
|
|
|
|
||
Preferred stock: par value $0.01; 5,000,000 shares authorized; none issued and outstanding
|
|
—
|
|
|
—
|
|
||
Common stock: par value $0.01; 360,000,000 shares authorized; 130,504,535 and 132,655,941 shares issued and outstanding, respectively
|
|
1,305
|
|
|
1,327
|
|
||
Additional paid-in capital
|
|
953,578
|
|
|
897,544
|
|
||
Retained earnings
|
|
242,537
|
|
|
356,418
|
|
||
Accumulated other comprehensive loss
|
|
(21,070
|
)
|
|
(16,931
|
)
|
||
Total stockholders’ equity
|
|
1,176,350
|
|
|
1,238,358
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
1,651,889
|
|
|
$
|
1,671,235
|
|
|
|
For the years ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Net sales:
|
|
|
|
|
|
|
|
|
|
|||
Product
|
|
$
|
1,215,014
|
|
|
$
|
1,220,027
|
|
|
$
|
1,173,476
|
|
Software maintenance
|
|
138,201
|
|
|
139,105
|
|
|
115,910
|
|
|||
Total net sales
|
|
1,353,215
|
|
|
1,359,132
|
|
|
1,289,386
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Cost of sales:
|
|
|
|
|
|
|
|
|
|
|||
Product
|
|
329,364
|
|
|
325,208
|
|
|
318,863
|
|
|||
Software maintenance
|
|
7,527
|
|
|
8,519
|
|
|
9,461
|
|
|||
Total cost of sales
|
|
336,891
|
|
|
333,727
|
|
|
328,324
|
|
|||
|
|
|
|
|
|
|
|
|||||
Gross profit
|
|
1,016,324
|
|
|
1,025,405
|
|
|
961,062
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|||
Sales and marketing
|
|
473,392
|
|
|
482,576
|
|
|
477,921
|
|
|||
Research and development
|
|
272,452
|
|
|
261,072
|
|
|
231,761
|
|
|||
General and administrative
|
|
122,768
|
|
|
108,878
|
|
|
105,602
|
|
|||
Gain on sale of assets
|
|
(26,842
|
)
|
|
—
|
|
|
—
|
|
|||
Total operating expenses
|
|
841,770
|
|
|
852,526
|
|
|
815,284
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Operating income
|
|
174,554
|
|
|
172,879
|
|
|
145,778
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|||
Interest income
|
|
8,129
|
|
|
5,896
|
|
|
2,276
|
|
|||
Net foreign exchange (loss) gain
|
|
(1,846
|
)
|
|
(3,423
|
)
|
|
892
|
|
|||
Other (expense) income, net
|
|
(293
|
)
|
|
1,101
|
|
|
(1,566
|
)
|
|||
Income before income taxes
|
|
180,544
|
|
|
176,453
|
|
|
147,380
|
|
|||
Provision for income taxes
|
|
18,393
|
|
|
21,396
|
|
|
94,969
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Net income
|
|
$
|
162,151
|
|
|
$
|
155,057
|
|
|
$
|
52,411
|
|
|
|
|
|
|
|
|
|
|
|
|||
Basic earnings per share
|
|
$
|
1.23
|
|
|
$
|
1.17
|
|
|
$
|
0.40
|
|
|
|
|
|
|
|
|
|
|
|
|||
Weighted average shares outstanding - basic
|
|
131,722
|
|
|
131,987
|
|
|
130,300
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Diluted earnings per share
|
|
$
|
1.22
|
|
|
$
|
1.16
|
|
|
$
|
0.40
|
|
|
|
|
|
|
|
|
|
|
|
|||
Weighted average shares outstanding - diluted
|
|
132,734
|
|
|
133,274
|
|
|
131,387
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Dividends declared per share
|
|
$
|
1.00
|
|
|
$
|
0.92
|
|
|
$
|
0.84
|
|
|
|
For the years ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
|
|
|
|
|||
Net income
|
|
$
|
162,151
|
|
|
$
|
155,057
|
|
|
$
|
52,411
|
|
Other comprehensive income, before tax and net of reclassification adjustments:
|
|
|
|
|
|
|
|
|
|
|||
Foreign currency translation adjustment
|
|
(3,346
|
)
|
|
(9,768
|
)
|
|
24,470
|
|
|||
Unrealized gain (loss) on securities available-for-sale
|
|
1,141
|
|
|
(378
|
)
|
|
(120
|
)
|
|||
Unrealized (loss) gain on derivative instruments
|
|
(2,629
|
)
|
|
12,525
|
|
|
(9,488
|
)
|
|||
Other comprehensive income, before tax
|
|
(4,834
|
)
|
|
2,379
|
|
|
14,862
|
|
|||
Tax (benefit) provision related to items of other comprehensive income
|
|
(695
|
)
|
|
2,801
|
|
|
(3,250
|
)
|
|||
Other comprehensive (loss) income, net of tax
|
|
(4,139
|
)
|
|
(422
|
)
|
|
18,112
|
|
|||
Comprehensive income
|
|
$
|
158,012
|
|
|
$
|
154,635
|
|
|
$
|
70,523
|
|
|
|
For the years ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Cash flow from operating activities:
|
|
|
|
|
|
|
|
|
|
|||
Net income
|
|
$
|
162,151
|
|
|
$
|
155,057
|
|
|
$
|
52,411
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
||||||
Depreciation and amortization
|
|
73,541
|
|
|
70,667
|
|
|
72,695
|
|
|||
Stock-based compensation
|
|
51,438
|
|
|
37,616
|
|
|
29,145
|
|
|||
Disposal gain on sale of assets
|
|
(26,842
|
)
|
|
—
|
|
|
—
|
|
|||
Tax benefit from deferred income taxes
|
|
(12,680
|
)
|
|
(11,738
|
)
|
|
(5,774
|
)
|
|||
Changes in operating assets and liabilities (net of effects of acquisitions):
|
|
|
|
|
|
|
||||||
Accounts receivable
|
|
(7,193
|
)
|
|
8,446
|
|
|
(15,269
|
)
|
|||
Inventories
|
|
(6,773
|
)
|
|
(10,642
|
)
|
|
10,154
|
|
|||
Prepaid expenses and other assets
|
|
(7,926
|
)
|
|
12,628
|
|
|
1,971
|
|
|||
Accounts payable and accrued expenses
|
|
4,034
|
|
|
(3,976
|
)
|
|
1,584
|
|
|||
Deferred revenue
|
|
5,579
|
|
|
19,061
|
|
|
1,791
|
|
|||
Taxes, accrued compensation, and other current liabilities
|
|
(10,924
|
)
|
|
(2,539
|
)
|
|
75,734
|
|
|||
Net cash provided by operating activities
|
|
224,405
|
|
|
274,580
|
|
|
224,442
|
|
|||
|
|
|
|
|
|
|
||||||
Cash flow from investing activities:
|
|
|
|
|
|
|
||||||
Capital expenditures
|
|
(60,857
|
)
|
|
(34,659
|
)
|
|
(30,256
|
)
|
|||
Proceeds from sale of assets
|
|
32,492
|
|
|
—
|
|
|
—
|
|
|||
Capitalization of internally developed software
|
|
(9,065
|
)
|
|
(14,208
|
)
|
|
(41,662
|
)
|
|||
Additions to other intangibles
|
|
(1,209
|
)
|
|
(5,399
|
)
|
|
(2,384
|
)
|
|||
Acquisitions of equity-method investments
|
|
(13,670
|
)
|
|
—
|
|
|
—
|
|
|||
Acquisitions, net of cash received
|
|
—
|
|
|
(5,534
|
)
|
|
—
|
|
|||
Purchases of short-term investments
|
|
(185,267
|
)
|
|
(313,726
|
)
|
|
(87,735
|
)
|
|||
Sales and maturities of short-term investments
|
|
219,628
|
|
|
163,530
|
|
|
39,627
|
|
|||
Net cash used in investing activities
|
|
(17,948
|
)
|
|
(209,996
|
)
|
|
(122,410
|
)
|
|||
|
|
|
|
|
|
|
||||||
Cash flow from financing activities:
|
|
|
|
|
|
|
||||||
Principal payments on revolving line of credit
|
|
—
|
|
|
—
|
|
|
(25,000
|
)
|
|||
Proceeds from issuance of common stock
|
|
33,191
|
|
|
31,601
|
|
|
29,094
|
|
|||
Repurchase of common stock
|
|
(171,316
|
)
|
|
—
|
|
|
—
|
|
|||
Dividends paid
|
|
(131,855
|
)
|
|
(121,537
|
)
|
|
(109,551
|
)
|
|||
Other
|
|
(837
|
)
|
|
(907
|
)
|
|
(842
|
)
|
|||
Net cash used in financing activities
|
|
(270,817
|
)
|
|
(90,843
|
)
|
|
(106,299
|
)
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Effect of exchange rate changes on cash
|
|
(410
|
)
|
|
(4,519
|
)
|
|
9,148
|
|
|||
|
|
|
|
|
|
|
||||||
Net change in cash and cash equivalents
|
|
(64,770
|
)
|
|
(30,778
|
)
|
|
4,881
|
|
|||
Cash and cash equivalents at beginning of period
|
|
259,386
|
|
|
290,164
|
|
|
285,283
|
|
|||
Cash and cash equivalents at end of period
|
|
$
|
194,616
|
|
|
$
|
259,386
|
|
|
$
|
290,164
|
|
Supplemental disclosures:
|
|
|
|
|
|
|
||||||
Interest paid
|
|
$
|
—
|
|
|
$
|
78
|
|
|
$
|
478
|
|
Income taxes paid
|
|
$
|
46,096
|
|
|
$
|
32,786
|
|
|
$
|
38,033
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
Common Stock Shares
|
|
Common Stock Amount
|
|
Additional Paid-in Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income/(Loss)
|
|
Total Stockholders' Equity
|
|||||||||||
Balance at December 31, 2016
|
|
129,202,979
|
|
|
1,292
|
|
|
771,346
|
|
|
376,202
|
|
|
(34,621
|
)
|
|
1,114,219
|
|
|||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
52,411
|
|
|
—
|
|
|
52,411
|
|
|||||
Other comprehensive income, net of tax
|
|
—
|
|
|
|
|
|
—
|
|
|
—
|
|
|
18,112
|
|
|
18,112
|
|
|||||
Issuance of common stock under employee plans, including tax benefits
|
|
1,775,968
|
|
|
18
|
|
|
29,076
|
|
|
—
|
|
|
—
|
|
|
29,094
|
|
|||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
29,557
|
|
|
—
|
|
|
—
|
|
|
29,557
|
|
|||||
Adoption of ASU 2016-16
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,821
|
)
|
|
—
|
|
|
(5,821
|
)
|
|||||
Dividends paid
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(109,551
|
)
|
|
—
|
|
|
(109,551
|
)
|
|||||
Balance at December 31, 2017
|
|
130,978,947
|
|
|
1,310
|
|
|
829,979
|
|
|
313,241
|
|
|
(16,509
|
)
|
|
1,128,021
|
|
|||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
155,057
|
|
|
—
|
|
|
155,057
|
|
|||||
Other comprehensive income, net of tax
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
(422
|
)
|
|
(422
|
)
|
||||||
Issuance of common stock under employee plans, including tax benefits
|
|
1,676,994
|
|
|
17
|
|
|
30,677
|
|
|
—
|
|
|
—
|
|
|
30,694
|
|
|||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
36,888
|
|
|
—
|
|
|
—
|
|
|
36,888
|
|
|||||
Adoption of ASU 2014-09
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,657
|
|
|
|
|
9,657
|
|
||||||
Dividends paid
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(121,537
|
)
|
|
—
|
|
|
(121,537
|
)
|
|||||
Balance at December 31, 2018
|
|
132,655,941
|
|
|
$
|
1,327
|
|
|
$
|
897,544
|
|
|
$
|
356,418
|
|
|
$
|
(16,931
|
)
|
|
$
|
1,238,358
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
162,151
|
|
|
—
|
|
|
162,151
|
|
|||||
Other comprehensive income, net of tax
|
|
—
|
|
|
|
|
|
—
|
|
|
—
|
|
|
(4,139
|
)
|
|
(4,139
|
)
|
|||||
Issuance of common stock under employee plans, including tax benefits
|
|
1,848,594
|
|
|
18
|
|
|
32,336
|
|
|
—
|
|
|
—
|
|
|
32,354
|
|
|||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
50,797
|
|
|
—
|
|
|
—
|
|
|
50,797
|
|
|||||
Repurchase of common stock
|
|
(4,000,000
|
)
|
|
(40
|
)
|
|
(27,099
|
)
|
|
(144,177
|
)
|
|
—
|
|
|
(171,316
|
)
|
|||||
Dividends paid
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(131,855
|
)
|
|
—
|
|
|
(131,855
|
)
|
|||||
Balance at December 31, 2019
|
|
130,504,535
|
|
|
$
|
1,305
|
|
|
$
|
953,578
|
|
|
$
|
242,537
|
|
|
$
|
(21,070
|
)
|
|
$
|
1,176,350
|
|
|
|
Year Ended December 31,
|
||
(In thousands)
|
|
2019
|
||
Assets
|
|
|
||
Cash
|
|
$
|
6,015
|
|
Accounts receivable, net
|
|
9,544
|
|
|
Prepaids and other current assets
|
|
291
|
|
|
Property, plant and equipment, net
|
|
268
|
|
|
Goodwill
|
|
7,593
|
|
|
Intangibles, net
|
|
141
|
|
|
Operating lease right-of-use assets
|
|
461
|
|
|
Other long-term assets
|
|
119
|
|
|
Total Assets
|
|
$
|
24,432
|
|
|
|
|
||
Liabilities
|
|
|
||
Accounts payable and accrued liabilities
|
|
$
|
1,030
|
|
Accrued compensation
|
|
1,474
|
|
|
Deferred revenue
|
|
17,851
|
|
|
Other current liabilities
|
|
503
|
|
|
Operating lease liabilities - non-current
|
|
290
|
|
|
Total Liabilities
|
|
21,148
|
|
|
Net Assets Classified as Held for Sale
|
|
$
|
3,284
|
|
Performance Obligation
|
When performance obligation is typically satisfied
|
When payment is typically due
|
How standalone selling price is typically estimated
|
Product revenue
|
|||
Modular hardware
|
When customer obtains control of the product (point-in-time)
|
Within 30-90 days of shipment
|
Observable in transactions without multiple performance obligations
|
Software licenses
|
When software media is delivered to customer or made available for download electronically, and the applicable license period has begun (point-in-time)
|
Within 30-90 days of the beginning of license period
|
Perpetual/Subscription licenses: Value relationships based on (i) the directly observable pricing of the license bundled with software maintenance and (ii) the directly observable pricing of software maintenance renewals, when they are sold on a standalone basis.
Enterprise-wide term licenses: Residual method
|
Extended hardware warranty
|
Ratably over the course of the support contract (over time)
|
Within 30-90 days of the beginning of the contract period
|
Observable in renewal transactions
|
Other related support offerings
|
As work is performed (over time) or course is delivered (point-in-time)
|
Within 30-90 days of delivery
|
Observable in transactions without multiple performance obligations
|
Software maintenance revenue
|
|||
Software maintenance
|
Ratably over the course of the support contract (over time)
|
Within 30-90 days of the beginning of the contract period
|
Observable in renewal transactions
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|||||||
Year
|
|
Description
|
|
Balance at Beginning of Period
|
|
Provisions
|
|
Write-Offs
|
|
Balance at End of Period
|
|||||||
2017
|
|
Adjustment for excess and obsolete inventories
|
|
$
|
12,639
|
|
|
$
|
7,130
|
|
|
3,322
|
|
|
$
|
16,447
|
|
2018
|
|
Adjustment for excess and obsolete inventories
|
|
$
|
16,447
|
|
|
$
|
7,870
|
|
|
8,932
|
|
|
$
|
15,385
|
|
2019
|
|
Adjustment for excess and obsolete inventories
|
|
$
|
15,385
|
|
|
$
|
6,046
|
|
|
5,942
|
|
|
$
|
15,489
|
|
|
Domestic
|
International
|
Total
|
Cash and Cash Equivalents
|
$55.9
|
$138.7
|
$194.6
|
|
29%
|
71%
|
|
Short-term Investments
|
$164.3
|
$73.7
|
$238.0
|
|
69%
|
31%
|
|
Cash, Cash Equivalents and Short-term Investments
|
$220.2
|
$212.4
|
$432.6
|
|
51%
|
49%
|
|
|
|
Years ended December 31,
|
|||||||
(In thousands)
|
|
2019
|
|
2018
|
|
2017
|
|||
Weighted average shares outstanding-basic
|
|
131,722
|
|
|
131,987
|
|
|
130,300
|
|
Plus: Common share equivalents
|
|
|
|
|
|
|
|
|
|
RSUs
|
|
1,012
|
|
|
1,287
|
|
|
1,087
|
|
Weighted average shares outstanding-diluted
|
|
132,734
|
|
|
133,274
|
|
|
131,387
|
|
|
Balance at December 31, 2018
|
Adjustments Due to New Lease Standard
|
Balance at January 1, 2019
|
||||||
|
|
|
|
||||||
Assets
|
|
|
|
||||||
Property, plant and equipment, net
|
$
|
245,201
|
|
$
|
(18,606
|
)
|
$
|
226,595
|
|
Operating lease right-of-use assets
|
—
|
|
$
|
68,938
|
|
$
|
68,938
|
|
|
Total Assets
|
245,201
|
|
50,332
|
|
295,533
|
|
|||
|
|
|
|
||||||
Liabilities and Stockholders' Equity
|
|
|
|
||||||
Operating lease liabilities, current
|
—
|
|
$
|
18,597
|
|
$
|
18,597
|
|
|
Operating lease liabilities, non-current
|
—
|
|
$
|
33,853
|
|
$
|
33,853
|
|
|
Other current liabilities
|
$
|
25,913
|
|
$
|
(2,118
|
)
|
$
|
23,795
|
|
Total Liabilities and Stockholders' Equity
|
$
|
25,913
|
|
$
|
50,332
|
|
$
|
76,245
|
|
Total Assets less Total Liabilities and Stockholders' Equity
|
$
|
219,288
|
|
$
|
—
|
|
$
|
219,288
|
|
(In thousands)
|
Balance at December 31, 2017
|
Adjustments Due to New Revenue Standard
|
Balance at January 1, 2018
|
||||
Balance Sheet
|
|
|
|
||||
Assets
|
|
|
|
||||
Accounts receivable, net
|
248,825
|
|
$
|
2,399
|
|
251,224
|
|
Other long-term assets
|
32,553
|
|
1,065
|
|
33,618
|
|
|
|
|
|
|
||||
Liabilities and Stockholders' Equity
|
|
|
|
||||
Deferred revenue - current
|
120,638
|
|
(9,067
|
)
|
111,571
|
|
|
Deferred revenue - long-term
|
33,742
|
|
(997
|
)
|
32,745
|
|
|
Other current liabilities
|
23,782
|
|
2,100
|
|
25,882
|
|
|
Deferred income taxes
|
33,609
|
|
1,771
|
|
35,380
|
|
|
Retained earnings
|
313,241
|
|
$
|
9,657
|
|
322,898
|
|
|
|
|
|
Year Ended December 31,
|
|
|
||||||
|
|
2019
|
||||||||||
(In thousands)
|
|
|
|
|
|
|
||||||
Net sales:
|
|
Point-in-Time
|
|
Over Time
|
|
Total
|
||||||
Americas
|
|
$
|
446,703
|
|
|
$
|
91,976
|
|
|
$
|
538,679
|
|
EMEIA
|
|
324,410
|
|
|
79,014
|
|
|
403,424
|
|
|||
APAC
|
|
376,631
|
|
|
34,481
|
|
|
411,112
|
|
|||
Total net sales (1)
|
|
$
|
1,147,744
|
|
|
$
|
205,471
|
|
|
$
|
1,353,215
|
|
(1) Net sales contain 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
|
|
Amount
|
||
|
(In thousands)
|
||
Deferred Revenue at January 1, 2019
|
$
|
159,924
|
|
Deferral of revenue billed in current period, net of recognition
|
116,842
|
|
|
Recognition of revenue deferred in prior periods
|
(111,417
|
)
|
|
Foreign currency translation impact
|
(424
|
)
|
|
Balance as of December 31, 2019
|
$
|
164,925
|
|
•
|
We generally expense sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within sales and marketing expenses.
|
•
|
We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.
|
•
|
We do not consider the time value of money for contracts with original durations of one year or less.
|
(In thousands)
|
|
As of December 31, 2019
|
||||||||||||||
|
|
Adjusted Cost
|
|
Gross
Unrealized Gain
|
|
Gross
Unrealized Loss
|
|
Fair Value
|
||||||||
Corporate bonds
|
|
$
|
237,423
|
|
|
$
|
628
|
|
|
$
|
(68
|
)
|
|
$
|
237,983
|
|
Short-term investments
|
|
$
|
237,423
|
|
|
$
|
628
|
|
|
$
|
(68
|
)
|
|
$
|
237,983
|
|
(In thousands)
|
|
As of December 31, 2018
|
||||||||||||||
|
|
Adjusted Cost
|
|
Gross
Unrealized Gain |
|
Gross
Unrealized Loss
|
|
Fair Value
|
||||||||
Corporate bonds
|
|
$
|
235,045
|
|
|
$
|
726
|
|
|
$
|
(1,298
|
)
|
|
$
|
234,473
|
|
U.S. treasuries and agencies
|
|
36,932
|
|
|
2
|
|
|
(11
|
)
|
|
36,923
|
|
||||
Short-term investments
|
|
$
|
271,977
|
|
|
$
|
728
|
|
|
$
|
(1,309
|
)
|
|
$
|
271,396
|
|
(In thousands)
|
|
As of December 31, 2019
|
||||||
|
|
Adjusted Cost
|
|
Fair Value
|
||||
Due in less than 1 year
|
|
$
|
102,843
|
|
|
$
|
103,239
|
|
Due in 1 to 5 years
|
|
134,580
|
|
|
134,744
|
|
||
Total available-for-sale debt securities
|
|
$
|
237,423
|
|
|
$
|
237,983
|
|
|
|
|
|
|
||||
Due in less than 1 year
|
|
Adjusted Cost
|
|
Fair Value
|
||||
Corporate bonds
|
|
$
|
102,843
|
|
|
$
|
103,239
|
|
Total available-for-sale debt securities
|
|
$
|
102,843
|
|
|
$
|
103,239
|
|
|
|
|
|
|
||||
Due in 1 to 5 years
|
|
Adjusted Cost
|
|
Fair Value
|
||||
Corporate bonds
|
|
134,580
|
|
|
134,744
|
|
||
Total available-for-sale debt securities
|
|
$
|
134,580
|
|
|
$
|
134,744
|
|
(In thousands)
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||||
Description
|
|
December 31, 2019
|
|
|
Quoted Prices in Active Markets for Identical Assets (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
|||||||
Assets
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents available for sale:
|
|
|
|
|
|
|
|
|
||||||||
Money Market Funds
|
|
$
|
87,397
|
|
|
$
|
87,397
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Corporate notes and bonds
|
|
9,962
|
|
|
—
|
|
|
9,962
|
|
|
—
|
|
||||
Short-term investments available for sale:
|
|
|
|
|
|
|
|
|
||||||||
Corporate bonds
|
|
237,983
|
|
|
—
|
|
|
237,983
|
|
|
—
|
|
||||
Derivatives
|
|
8,209
|
|
|
—
|
|
|
8,209
|
|
|
—
|
|
||||
Total Assets
|
|
$
|
343,551
|
|
|
$
|
87,397
|
|
|
$
|
256,154
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities
|
|
|
|
|
|
|
|
|
||||||||
Derivatives
|
|
$
|
(2,872
|
)
|
|
—
|
|
|
(2,872
|
)
|
|
—
|
|
|||
Total Liabilities
|
|
$
|
(2,872
|
)
|
|
$
|
—
|
|
|
$
|
(2,872
|
)
|
|
$
|
—
|
|
(In thousands)
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||||
Description
|
|
December 31, 2018
|
|
|
Quoted Prices in Active Markets for Identical Assets (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
|||||||
Assets
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents available for sale:
|
|
|
|
|
|
|
|
|
||||||||
Money Market Funds
|
|
$
|
62,094
|
|
|
$
|
62,094
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Corporate notes and bonds
|
|
9,979
|
|
|
—
|
|
|
9,979
|
|
|
—
|
|
||||
Short-term investments available for sale:
|
|
|
|
|
|
|
|
|
||||||||
Corporate bonds
|
|
234,473
|
|
|
—
|
|
|
234,473
|
|
|
—
|
|
||||
U.S. treasuries and agencies
|
|
36,923
|
|
|
—
|
|
|
36,923
|
|
|
—
|
|
||||
Derivatives
|
|
9,369
|
|
|
—
|
|
|
9,369
|
|
|
—
|
|
||||
Total Assets
|
|
$
|
352,838
|
|
|
$
|
62,094
|
|
|
$
|
290,744
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities
|
|
|
|
|
|
|
|
|
||||||||
Derivatives
|
|
$
|
(1,483
|
)
|
|
$
|
—
|
|
|
$
|
(1,483
|
)
|
|
$
|
—
|
|
Total Liabilities
|
|
$
|
(1,483
|
)
|
|
$
|
—
|
|
|
$
|
(1,483
|
)
|
|
$
|
—
|
|
(In thousands)
|
|
U.S. Dollar Equivalent
|
||||||
|
|
As of December 31, 2019
|
|
As of December 31, 2018
|
||||
Chinese yuan
|
|
$
|
32,970
|
|
|
$
|
45,520
|
|
Euro
|
|
130,122
|
|
|
134,654
|
|
||
Japanese yen
|
|
53,527
|
|
|
15,141
|
|
||
Hungarian forint
|
|
95,228
|
|
|
35,384
|
|
||
British pound
|
|
13,988
|
|
|
9,948
|
|
||
Malaysian ringgit
|
|
32,725
|
|
|
27,778
|
|
||
Korean won
|
|
$
|
24,728
|
|
|
$
|
8,331
|
|
Total forward contracts notional amount
|
|
$
|
383,288
|
|
|
$
|
276,756
|
|
|
|
Asset Derivatives
|
||||||||||
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||
(In thousands)
|
|
|
|
|
|
|
|
|
||||
|
|
Balance Sheet Location
|
|
Fair Value
|
|
Balance Sheet Location
|
|
Fair Value
|
||||
Derivatives designated as hedging instruments
|
|
|
|
|
|
|
|
|
|
|
||
Foreign exchange contracts - ST forwards
|
|
Prepaid expenses and other current assets
|
|
$
|
7,039
|
|
|
Prepaid expenses and other current assets
|
|
$
|
7,594
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign exchange contracts - LT forwards
|
|
Other long-term assets
|
|
970
|
|
|
Other long-term assets
|
|
1,380
|
|
||
Total derivatives designated as hedging instruments
|
|
|
|
$
|
8,009
|
|
|
|
|
$
|
8,974
|
|
|
|
|
|
|
|
|
|
|
||||
Derivatives not designated as hedging instruments
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||||
Foreign exchange contracts - ST forwards
|
|
Prepaid expenses and other current assets
|
|
$
|
200
|
|
|
Prepaid expenses and other current assets
|
|
$
|
395
|
|
Total derivatives not designated as hedging instruments
|
|
|
|
$
|
200
|
|
|
|
|
$
|
395
|
|
|
|
|
|
|
|
|
|
|
||||
Total derivatives
|
|
|
|
$
|
8,209
|
|
|
|
|
$
|
9,369
|
|
|
|
Liability Derivatives
|
||||||||||
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||
(In thousands)
|
|
|
|
|
|
|
|
|
||||
|
|
Balance Sheet Location
|
|
Fair Value
|
|
Balance Sheet Location
|
|
Fair Value
|
||||
Derivatives designated as hedging instruments
|
|
|
|
|
|
|
|
|
|
|
||
Foreign exchange contracts - ST forwards
|
|
Other current liabilities
|
|
$
|
(2,089
|
)
|
|
Other current liabilities
|
|
$
|
(662
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||
Foreign exchange contracts - LT forwards
|
|
Other long-term liabilities
|
|
(351
|
)
|
|
Other long-term liabilities
|
|
(191
|
)
|
||
Total derivatives designated as hedging instruments
|
|
|
|
$
|
(2,440
|
)
|
|
|
|
$
|
(853
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||
Derivatives not designated as hedging instruments
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
Foreign exchange contracts - ST forwards
|
|
Other current liabilities
|
|
$
|
(432
|
)
|
|
Other current liabilities
|
|
$
|
(630
|
)
|
Total derivatives not designated as hedging instruments
|
|
|
|
$
|
(432
|
)
|
|
|
|
$
|
(630
|
)
|
|
|
|
|
|
|
|
|
|
||||
Total derivatives
|
|
|
|
$
|
(2,872
|
)
|
|
|
|
$
|
(1,483
|
)
|
December 31, 2019
|
||||||||||
(In thousands)
|
||||||||||
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
|
|
$
|
(1,286
|
)
|
|
Net sales
|
|
$
|
11,709
|
|
|
|
|
|
|
|
|
||||
Foreign exchange contracts - forwards
|
|
(707
|
)
|
|
Cost of sales
|
|
(482
|
)
|
||
|
|
|
|
|
|
|
||||
Foreign exchange contracts - forwards
|
|
(636
|
)
|
|
Operating expenses
|
|
(383
|
)
|
||
Total
|
|
$
|
(2,629
|
)
|
|
|
|
$
|
10,844
|
|
December 31, 2018
|
||||||||||
(In thousands)
|
||||||||||
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
|
|
$
|
17,422
|
|
|
Net sales
|
|
$
|
(210
|
)
|
|
|
|
|
|
|
|
||||
Foreign exchange contracts - forwards
|
|
(2,591
|
)
|
|
Cost of sales
|
|
680
|
|
||
|
|
|
|
|
|
|
||||
Foreign exchange contracts - forwards
|
|
(2,306
|
)
|
|
Operating expenses
|
|
916
|
|
||
Total
|
|
$
|
12,525
|
|
|
|
|
$
|
1,386
|
|
(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
|
||||
|
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
Foreign exchange contracts - forwards
|
|
Net foreign exchange gain/(loss)
|
|
$
|
(348
|
)
|
|
$
|
343
|
|
|
|
|
|
|
|
|
||||
Total
|
|
|
|
$
|
(348
|
)
|
|
$
|
343
|
|
(In thousands)
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
|
|
|
|
|
|
|
||
Raw materials
|
|
$
|
110,078
|
|
|
$
|
98,346
|
|
Work-in-process
|
|
10,613
|
|
|
9,306
|
|
||
Finished goods
|
|
79,719
|
|
|
86,494
|
|
||
Total
|
|
$
|
200,410
|
|
|
$
|
194,146
|
|
(In thousands)
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
|
|
|
|
|
|
|
||
Land
|
|
$
|
12,366
|
|
|
$
|
32,967
|
|
Buildings
|
|
219,473
|
|
|
218,289
|
|
||
Furniture and equipment
|
|
415,216
|
|
|
388,102
|
|
||
|
|
647,055
|
|
|
639,358
|
|
||
Accumulated depreciation
|
|
(403,338
|
)
|
|
(394,157
|
)
|
||
Total, net
|
|
$
|
243,717
|
|
|
$
|
245,201
|
|
(In thousands)
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||||||||
Capitalized software development costs
|
|
$
|
132,789
|
|
|
$
|
(76,910
|
)
|
|
$
|
55,879
|
|
|
$
|
123,842
|
|
|
$
|
(49,299
|
)
|
|
$
|
74,543
|
|
Acquired technology
|
|
91,900
|
|
|
(87,917
|
)
|
|
3,983
|
|
|
92,236
|
|
|
(84,962
|
)
|
|
7,274
|
|
||||||
Patents
|
|
35,609
|
|
|
(23,993
|
)
|
|
11,616
|
|
|
34,427
|
|
|
(21,725
|
)
|
|
12,702
|
|
||||||
Other
|
|
44,490
|
|
|
(31,885
|
)
|
|
12,605
|
|
|
46,437
|
|
|
(30,173
|
)
|
|
16,264
|
|
||||||
Total
|
|
$
|
304,788
|
|
|
$
|
(220,705
|
)
|
|
$
|
84,083
|
|
|
$
|
296,942
|
|
|
$
|
(186,159
|
)
|
|
$
|
110,783
|
|
|
Amount
|
||
|
(In thousands)
|
||
2020
|
$
|
36,029
|
|
2021
|
25,463
|
|
|
2022
|
11,079
|
|
|
2023
|
4,324
|
|
|
2024
|
1,698
|
|
|
Thereafter
|
5,490
|
|
|
Total
|
$
|
84,083
|
|
|
Amount
|
||
|
(In thousands)
|
||
Balance as of December 31, 2017
|
$
|
266,783
|
|
Acquisitions
|
2,819
|
|
|
Foreign currency translation impact
|
(5,072
|
)
|
|
Balance as of December 31, 2018
|
$
|
264,530
|
|
Foreign currency translation impact
|
(2,288
|
)
|
|
Balance as of December 31, 2019
|
$
|
262,242
|
|
|
Twelve Months Ended
|
||
(In thousands)
|
December 31, 2019
|
||
Operating Lease Cost (a)
|
$
|
22,708
|
|
(a) includes variable and short-term lease costs
|
|
|
Twelve Months Ended
|
||
(In thousands)
|
December 31, 2019
|
||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
||
Cash paid for operating lease liabilities
|
$
|
20,919
|
|
Supplemental non-cash information:
|
|
||
Operating lease right-of-use assets obtained in exchange for new operating lease obligations
|
$
|
18,938
|
|
(In thousands)
|
|
Years Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Domestic
|
|
$
|
98,476
|
|
|
$
|
56,068
|
|
|
$
|
46,308
|
|
Foreign
|
|
82,068
|
|
|
120,385
|
|
|
101,072
|
|
|||
Total
|
|
$
|
180,544
|
|
|
$
|
176,453
|
|
|
$
|
147,380
|
|
(In thousands)
|
|
Years Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Current tax expense:
|
|
|
|
|
|
|
||||||
U.S. federal
|
|
$
|
18,212
|
|
|
$
|
15,898
|
|
|
$
|
91,043
|
|
State
|
|
2,705
|
|
|
2,963
|
|
|
348
|
|
|||
Foreign
|
|
10,156
|
|
|
14,273
|
|
|
9,352
|
|
|||
Total current
|
|
$
|
31,073
|
|
|
$
|
33,134
|
|
|
$
|
100,743
|
|
Deferred tax benefit:
|
|
|
|
|
|
|
||||||
U.S. federal
|
|
$
|
(9,168
|
)
|
|
$
|
(10,724
|
)
|
|
$
|
(4,796
|
)
|
State
|
|
(1,218
|
)
|
|
1,134
|
|
|
(151
|
)
|
|||
Foreign
|
|
(3,045
|
)
|
|
(2,148
|
)
|
|
(827
|
)
|
|||
Total deferred
|
|
$
|
(13,431
|
)
|
|
$
|
(11,738
|
)
|
|
$
|
(5,774
|
)
|
Change in valuation allowance
|
|
751
|
|
|
—
|
|
|
—
|
|
|||
Total provision
|
|
$
|
18,393
|
|
|
$
|
21,396
|
|
|
$
|
94,969
|
|
(In thousands)
|
|
December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Capitalized software
|
|
$
|
12,202
|
|
|
$
|
16,756
|
|
Depreciation and amortization
|
|
11,756
|
|
|
12,964
|
|
||
Intangible assets
|
|
13,490
|
|
|
13,492
|
|
||
Right of use asset
|
|
9,833
|
|
|
—
|
|
||
Unrealized gain on derivative instruments
|
|
1,176
|
|
|
1,871
|
|
||
Undistributed earnings of foreign subsidiaries
|
|
3,482
|
|
|
3,449
|
|
||
Gross deferred tax liabilities
|
|
51,939
|
|
|
48,532
|
|
||
Operating loss carryforwards
|
|
(87,074
|
)
|
|
(83,013
|
)
|
||
Vacation and other accruals
|
|
(4,979
|
)
|
|
(5,391
|
)
|
||
Inventory valuation and warranty provisions
|
|
(2,317
|
)
|
|
(2,576
|
)
|
||
Doubtful accounts and sales provisions
|
|
(860
|
)
|
|
(890
|
)
|
||
Unrealized exchange loss
|
|
(1,052
|
)
|
|
(1,735
|
)
|
||
Deferred revenue
|
|
(7,708
|
)
|
|
(8,199
|
)
|
||
Operating lease liabilities
|
|
(10,426
|
)
|
|
—
|
|
||
Accrued expenses
|
|
(262
|
)
|
|
(848
|
)
|
||
Global intangible low-taxed income
|
|
(3,444
|
)
|
|
(4,339
|
)
|
||
Stock-based compensation
|
|
(5,809
|
)
|
|
(5,216
|
)
|
||
Research and development tax credit carryforward
|
|
—
|
|
|
(258
|
)
|
||
Capital loss carryforward
|
|
—
|
|
|
(250
|
)
|
||
Foreign tax credit carryforward
|
|
(674
|
)
|
|
(42
|
)
|
||
Outside basis difference on asset held for sale
|
|
(10,762
|
)
|
|
—
|
|
||
Cumulative translation adjustment on undistributed earnings
|
|
(985
|
)
|
|
(912
|
)
|
||
Other
|
|
(2,072
|
)
|
|
(1,776
|
)
|
||
Gross deferred tax assets
|
|
(138,424
|
)
|
|
(115,445
|
)
|
||
Valuation allowance
|
|
85,516
|
|
|
79,624
|
|
||
Net deferred tax liability
|
|
$
|
(969
|
)
|
|
$
|
12,711
|
|
|
|
Years Ended December 31,
|
|||||||
|
|
2019
|
|
2018
|
|
2017
|
|||
U.S. federal statutory rate
|
|
21
|
%
|
|
21
|
%
|
|
35
|
%
|
Foreign taxes greater (less) than federal statutory rate
|
|
—
|
|
|
(4
|
)
|
|
(12
|
)
|
Outside basis difference on asset held for sale
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
Research and development tax credits
|
|
(3
|
)
|
|
(2
|
)
|
|
(3
|
)
|
Enhanced deduction for certain research and development expenses
|
|
(3
|
)
|
|
(4
|
)
|
|
(3
|
)
|
State income taxes, net of federal tax benefit
|
|
—
|
|
|
2
|
|
|
—
|
|
Nondeductible officer compensation
|
|
1
|
|
|
—
|
|
|
—
|
|
Change in intercompany prepaid tax asset
|
|
—
|
|
|
(1
|
)
|
|
(2
|
)
|
Foreign-derived intangible income deduction
|
|
(3
|
)
|
|
(1
|
)
|
|
—
|
|
Global intangible low-taxed income inclusion ("GILTI")
|
|
1
|
|
|
2
|
|
|
—
|
|
Amortization of intangible assets
|
|
—
|
|
|
—
|
|
|
1
|
|
Remeasurement of U.S. deferred tax balance
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
Transition tax on deferred foreign income
|
|
1
|
|
|
1
|
|
|
54
|
|
Global intangible low-taxed income deferred
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
Foreign tax on undistributed foreign earnings
|
|
—
|
|
|
(1
|
)
|
|
3
|
|
Other
|
|
1
|
|
|
1
|
|
|
1
|
|
Effective tax rate
|
|
10
|
%
|
|
12
|
%
|
|
64
|
%
|
(In thousands)
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
Balance at beginning of period
|
|
$
|
9,775
|
|
|
$
|
10,158
|
|
Additions based on tax positions related to the current year
|
|
776
|
|
|
1,486
|
|
||
Reductions for tax positions of prior years
|
|
—
|
|
|
(1,208
|
)
|
||
Additions for tax positions of prior years
|
|
390
|
|
|
1,207
|
|
||
Reductions as a result of settlement with taxing authorities
|
|
(725
|
)
|
|
—
|
|
||
Reductions as a result of the closing of open tax periods
|
|
(3,564
|
)
|
|
(1,868
|
)
|
||
Balance at end of period
|
|
$
|
6,652
|
|
|
$
|
9,775
|
|
|
|
December 31, 2019
|
||||||||||||||
(In thousands)
|
|
Currency translation adjustment
|
|
Investments
|
|
Derivative instruments
|
|
Accumulated other comprehensive income (loss)
|
||||||||
Balance as of December 31, 2018
|
|
$
|
(22,485
|
)
|
|
$
|
(1,308
|
)
|
|
$
|
6,862
|
|
|
$
|
(16,931
|
)
|
Current-period other comprehensive (loss) income
|
|
(3,346
|
)
|
|
1,141
|
|
|
(13,473
|
)
|
|
(15,678
|
)
|
||||
Reclassified from accumulated OCI into income
|
|
—
|
|
|
—
|
|
|
10,844
|
|
|
10,844
|
|
||||
Income tax benefit (expense)
|
|
—
|
|
|
82
|
|
|
613
|
|
|
695
|
|
||||
Balance as of December 31, 2019
|
|
$
|
(25,831
|
)
|
|
$
|
(85
|
)
|
|
$
|
4,846
|
|
|
$
|
(21,070
|
)
|
|
|
December 31, 2018
|
||||||||||||||
(In thousands)
|
|
Currency translation adjustment
|
|
Investments
|
|
Derivative instruments
|
|
Accumulated other comprehensive income (loss)
|
||||||||
Balance as of December 31, 2017
|
|
$
|
(12,717
|
)
|
|
$
|
(782
|
)
|
|
$
|
(3,010
|
)
|
|
$
|
(16,509
|
)
|
Current-period other comprehensive income (loss)
|
|
(9,768
|
)
|
|
(378
|
)
|
|
11,139
|
|
|
993
|
|
||||
Reclassified from accumulated OCI into income
|
|
—
|
|
|
—
|
|
|
1,386
|
|
|
1,386
|
|
||||
Income tax (expense) benefit
|
|
—
|
|
|
(148
|
)
|
|
(2,653
|
)
|
|
(2,801
|
)
|
||||
Balance as of December 31, 2018
|
|
$
|
(22,485
|
)
|
|
$
|
(1,308
|
)
|
|
$
|
6,862
|
|
|
$
|
(16,931
|
)
|
|
|
RSUs
|
|||||
|
|
Number of RSUs
|
|
Weighted average grant price per share
|
|||
Outstanding at December 31, 2016
|
|
2,806,201
|
|
|
$
|
28.76
|
|
Granted
|
|
1,205,920
|
|
|
$
|
34.57
|
|
Earned
|
|
(666,786
|
)
|
|
$
|
28.05
|
|
Canceled
|
|
(192,371
|
)
|
|
$
|
29.73
|
|
Outstanding at December 31, 2017
|
|
3,152,964
|
|
|
$
|
31.07
|
|
Granted
|
|
1,100,067
|
|
|
$
|
48.42
|
|
Earned
|
|
(823,816
|
)
|
|
$
|
30.78
|
|
Canceled
|
|
(250,679
|
)
|
|
$
|
34.13
|
|
Outstanding at December 31, 2018
|
|
3,178,536
|
|
|
$
|
36.91
|
|
Granted
|
|
1,306,387
|
|
|
$
|
46.76
|
|
Earned
|
|
(958,995
|
)
|
|
$
|
35.86
|
|
Canceled
|
|
(236,291
|
)
|
|
$
|
38.82
|
|
Outstanding at December 31, 2019
|
|
3,289,637
|
|
|
$
|
40.99
|
|
|
|
2019
|
|
2018
|
|
2017
|
|||
Dividend yield
|
|
0.558
|
%
|
|
0.518
|
%
|
|
0.650
|
%
|
Expected life
|
|
3 months
|
|
|
3 months
|
|
|
3 months
|
|
Expected volatility
|
|
34
|
%
|
|
24
|
%
|
|
18
|
%
|
Risk-free interest rate
|
|
2.32
|
%
|
|
1.39
|
%
|
|
0.48
|
%
|
|
|
Number of Shares
|
|
Weighted average fair value per share
|
|||
2017
|
|
1,065,154
|
|
|
$
|
6.80
|
|
2018
|
|
872,853
|
|
|
$
|
8.97
|
|
2019
|
|
909,274
|
|
|
$
|
9.40
|
|
|
Amount
|
||
|
(In thousands)
|
||
2020
|
$
|
16,104
|
|
2021
|
12,752
|
|
|
2022
|
8,984
|
|
|
2023
|
7,415
|
|
|
2024
|
6,844
|
|
|
Thereafter
|
14,153
|
|
|
Total
|
$
|
66,252
|
|
|
|
|
|
||||
(In thousands)
|
Years Ended
|
|
|||||
|
2019
|
2018
|
2017
|
||||
Cost of sales
|
$
|
—
|
|
(150
|
)
|
1,208
|
|
Research and development
|
3,888
|
|
1,890
|
|
2,990
|
|
|
Sales and marketing
|
13,300
|
|
10,655
|
|
10,968
|
|
|
General and administrative
|
2,877
|
|
1,702
|
|
1,898
|
|
|
Total restructuring and other related costs
|
$
|
20,065
|
|
14,097
|
|
17,064
|
|
|
Restructuring Liability
|
||
Balance as of December 31, 2018
|
$
|
3,506
|
|
Income statement expense
|
20,065
|
|
|
Cash payments
|
(14,044
|
)
|
|
Balance as of December 31, 2019
|
$
|
9,527
|
|
•
|
acquisition of the Company by means of a tender offer,
|
•
|
acquisition of the Company by means of a proxy contest or otherwise, or
|
•
|
removal of the Company’s incumbent officers and directors.
|
Title
|
Date
|
Identifying Number or Brief Description
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R E S T R I C T E D S T O C K U N I T S
|
|
||||||||||
|
|
|||||||||||
Name
|
Number
|
|
Award
Date |
Plan
|
Shares to be Vested
|
|
Scheduled
Release Date |
|
Vesting Year
|
|||
Davern, Alex
|
26586
|
|
01/24/2017
|
2015
|
50,000
|
|
12/16/2019
|
|
2019
|
|||
2019 Total
|
|
|
|
|
50,000
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Davern, Alex
|
18240
|
|
04/20/2011
|
2010
|
2,500
|
|
05/01/2020
|
|
2020
|
|||
Davern, Alex
|
20129
|
|
04/18/2012
|
2010
|
2,500
|
|
05/01/2020
|
|
2020
|
|||
Davern, Alex
|
22034
|
|
04/23/2013
|
2010
|
1,500
|
|
05/01/2020
|
|
2020
|
|||
Davern, Alex
|
23866
|
|
04/22/2014
|
2010
|
1,500
|
|
05/01/2020
|
|
2020
|
|||
Davern, Alex
|
24356
|
|
04/21/2015
|
2010
|
2,500
|
|
05/01/2020
|
|
2020
|
|||
Davern, Alex
|
25622
|
|
04/26/2016
|
2015
|
2,500
|
|
05/01/2020
|
|
2020
|
|||
Davern, Alex
|
31370
|
|
04/25/2017
|
2015
|
12,500
|
|
05/01/2020
|
|
2020
|
|||
Davern, Alex
|
31697
|
|
04/25/2018
|
2015
|
11,250
|
|
05/01/2020
|
|
2020
|
|||
Davern, Alex
|
33812
|
|
02/01/2019
|
2015
|
17,667
|
|
05/01/2020
|
|
2020
|
|||
2020 Total
|
|
|
|
|
54,417
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Davern, Alex
|
18240
|
|
04/20/2011
|
2010
|
192
|
|
05/03/2021
|
|
2021
|
|||
Davern, Alex
|
20129
|
|
04/18/2012
|
2010
|
2,500
|
|
05/03/2021
|
|
2021
|
|||
Davern, Alex
|
22034
|
|
04/23/2013
|
2010
|
1,500
|
|
05/01/2021
|
|
2021
|
|||
Davern, Alex
|
23866
|
|
04/22/2014
|
2010
|
1,500
|
|
05/03/2021
|
|
2021
|
|||
Davern, Alex
|
24356
|
|
04/21/2015
|
2010
|
2,500
|
|
05/03/2021
|
|
2021
|
|||
Davern, Alex
|
25622
|
|
04/26/2016
|
2015
|
2,500
|
|
05/03/2021
|
|
2021
|
|||
Davern, Alex
|
31370
|
|
04/25/2017
|
2015
|
12,500
|
|
05/03/2021
|
|
2021
|
|||
Davern, Alex
|
31697
|
|
04/25/2018
|
2015
|
11,250
|
|
05/03/2021
|
|
2021
|
|||
Davern, Alex
|
33812
|
|
02/01/2019
|
2015
|
17,666
|
|
05/03/2021
|
|
2021
|
|||
2021 Total
|
|
|
|
|
52,108
|
|
|
|
|
1.
|
I have reviewed this report on Form 10-K of National Instruments Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
By: /s/ Eric Starkloff
|
Eric Starkloff
|
Chief Executive Officer
|
1.
|
I have reviewed this report on Form 10-K of National Instruments Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
By: /s/ Karen Rapp
|
Karen Rapp
|
Chief Financial Officer
|
By: /s/ Eric Starkloff
|
Eric Starkloff
|
Chief Executive Officer
|
By: /s/ Karen Rapp
|
Karen Rapp
|
Chief Financial Officer
|