Company Quick10K Filing
⚲
National Instruments
Financials
Price41.94 EPS1
Shares133 P/E54
MCap5,573 P/FCF37
Net Debt-223 EBIT126
TEV5,351 TEV/EBIT42
TTM 2019-09-30, in MM, except price, ratios
Filings
10-Q 2020-09-30 Filed 2020-11-02
10-Q 2020-06-30 Filed 2020-08-04
10-Q 2020-03-31 Filed 2020-05-04
10-K 2019-12-31 Filed 2020-02-20
10-Q 2019-09-30 Filed 2019-10-31
10-Q 2019-06-30 Filed 2019-08-02
10-Q 2019-03-31 Filed 2019-05-01
10-K 2018-12-31 Filed 2019-02-21
10-Q 2018-09-30 Filed 2018-10-31
10-Q 2018-06-30 Filed 2018-08-02
10-Q 2018-03-31 Filed 2018-05-01
10-K 2017-12-31 Filed 2018-02-22
10-Q 2017-09-30 Filed 2017-10-31
10-Q 2017-06-30 Filed 2017-08-01
10-Q 2017-03-31 Filed 2017-05-01
10-K 2016-12-31 Filed 2017-02-16
10-Q 2016-09-30 Filed 2016-10-31
10-Q 2016-06-30 Filed 2016-08-01
10-Q 2016-03-31 Filed 2016-05-02
10-K 2015-12-31 Filed 2016-02-19
10-Q 2015-09-30 Filed 2015-10-30
10-Q 2015-06-30 Filed 2015-07-31
10-Q 2015-03-31 Filed 2015-05-01
10-K 2014-12-31 Filed 2015-02-19
10-Q 2014-09-30 Filed 2014-10-31
10-Q 2014-06-30 Filed 2014-08-01
10-Q 2014-03-31 Filed 2014-05-01
10-K 2013-12-31 Filed 2014-02-20
10-Q 2013-09-30 Filed 2013-11-01
10-Q 2013-06-30 Filed 2013-08-01
10-Q 2013-03-31 Filed 2013-05-02
10-K 2012-12-31 Filed 2013-02-19
10-Q 2012-09-30 Filed 2012-11-06
10-Q 2012-06-30 Filed 2012-08-03
10-Q 2012-03-31 Filed 2012-04-30
10-K 2011-12-31 Filed 2012-02-07
10-Q 2011-09-30 Filed 2011-10-27
10-Q 2011-06-30 Filed 2011-07-29
10-Q 2011-03-31 Filed 2011-04-29
10-K 2010-12-31 Filed 2011-02-18
10-Q 2010-09-30 Filed 2010-11-03
10-Q 2010-06-30 Filed 2010-08-06
10-Q 2010-03-31 Filed 2010-05-06
10-K 2009-12-31 Filed 2010-02-17
Reports
8-K 2020-10-30 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2020-10-29 Earnings, Exit Costs, Other Events, Exhibits
8-K 2020-07-30 Earnings, Other Events, Exhibits
8-K 2020-07-06 Off-BS Arrangement, Other Events, Exhibits
8-K 2020-06-15
8-K 2020-06-09
8-K 2020-06-02
8-K 2020-05-06
8-K 2020-04-30
8-K 2020-04-17
8-K 2020-04-02
8-K 2020-02-04
8-K 2020-01-30
8-K 2019-12-02
8-K 2019-11-01
8-K 2019-10-29
8-K 2019-07-30
8-K 2019-06-25
8-K 2019-05-14
8-K 2019-04-30
8-K 2019-02-01
8-K 2019-01-23
8-K 2019-01-22
8-K 2018-10-25
8-K 2018-10-25
8-K 2018-09-19
8-K 2018-07-26
8-K 2018-05-08
8-K 2018-04-26
8-K 2018-01-30

NATI 10Q Quarterly Report

Content
Part I - Financial Information
Item 1. Financial Statements
Note 1 - Basis of Presentation
Note 2 - Revenue
Note 3 - Short - Term Investments
Note 4 - Fair Value Measurements
Note 5 - Derivative Instruments and Hedging Activities
Note 6 - Inventories, Net
Note 7 - Intangible Assets and Goodwill, Net
Note 8 - Leases
Note 9 - Income Taxes
Note 10 - Comprehensive Income
Note 11 - Authorized Shares of Common and Preferred Stock and Stock - Based Compensation Plans
Note 12 - Segment and Geographic Information
Note 13 - Debt
Note 14 - Commitments and Contingencies
Note 15 - Restructuring
Note 16 - Litigation
Note 17 - Acquisitions
Note 18 - Subsequent Events
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 5. Other Information
Exhibits
EX-31.1 nati-20200930xex311.htm
EX-31.2 nati-20200930xex312.htm
EX-32.1 nati-20200930xex321.htm

National Instruments Earnings 2020-09-30

Balance SheetIncome StatementCash Flow
1.71.41.00.70.30.02012201420172020
Assets, Equity
 0.40.30.20.10.0-0.12012201420172020
Rev, G Profit, Net Income
 0.10.0-0.0-0.1-0.1-0.22012201420172020
Ops, Inv, Fin
nati-20200930
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UNITED STATES  
SECURITIES AND EXCHANGE COMMISSION  
Washington, D.C. 20549  

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

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

  
  
  
  
  
 
  
  
  
  
  

2

PART I - FINANCIAL INFORMATION  

ITEM 1. Financial Statements
NATIONAL INSTRUMENTS CORPORATION  
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
September 30,December 31,
20202019
Assets(unaudited) 
Current assets:  
Cash and cash equivalents$197,319 $194,616 
Short-term investments92,853 237,983 
Accounts receivable, net214,620 248,872 
Inventories, net209,558 200,410 
Prepaid expenses and other current assets72,956 65,477 
Total current assets787,306 947,358 
Property and equipment, net253,073 243,717 
Goodwill487,101 262,242 
Intangible assets, net183,067 84,083 
Operating lease right-of-use assets69,395 70,407 
Other long-term assets63,930 44,082 
Total assets$1,843,872 $1,651,889 
Liabilities and stockholders' equity  
Current liabilities:  
Accounts payable and accrued expenses$48,886 $52,192 
Accrued compensation53,496 47,732 
Deferred revenue - current116,871 131,445 
Operating lease liabilities - current16,177 13,431 
Other taxes payable41,604 40,607 
Debt, current3,500 — 
Other current liabilities50,259 20,716 
Total current liabilities330,793 306,123 
Deferred income taxes41,514 14,065 
Income tax payable - non-current61,628 69,151 
Liability for uncertain tax positions6,867 6,652 
Deferred revenue - non-current34,210 33,480 
Operating lease liabilities - non-current37,767 40,650 
Debt, non-current84,289 — 
Other long-term liabilities7,606 5,418 
Total liabilities604,674 475,539 
Commitments and contingencies
Stockholders' equity:  
Preferred stock:  par value $0.01;  5,000,000 shares authorized; none issued and outstanding 
— — 
Common stock:  par value $0.01;  360,000,000 shares authorized; 131,245,640 shares and 130,504,535 shares issued and outstanding, respectively 
1,312 1,305 
Additional paid-in capital1,012,656 953,578 
Retained earnings247,970 242,537 
Accumulated other comprehensive loss(22,740)(21,070)
Total stockholders’ equity1,239,198 1,176,350 
Total liabilities and stockholders’ equity$1,843,872 $1,651,889 
The accompanying notes are an integral part of the financial statements. 

3

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

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

5

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

6


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


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

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




NATIONAL INSTRUMENTS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
  
Note 1 – Basis of presentation  
  
The accompanying unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended December 31, 2019, included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on February 20, 2020 (the "Form 10-K"). In our opinion, the accompanying consolidated financial statements reflect all adjustments (consisting only of normal recurring items) considered necessary to present fairly our financial position at September 30, 2020 and December 31, 2019, the results of our operations and comprehensive income for three and nine months ended September 30, 2020 and 2019, our cash flows for the nine months ended September 30, 2020 and 2019 and our statement of stockholders' equity for the three and nine months ended September 30, 2020 and 2019. Our operating results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States.

Reclassifications

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

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

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


Recently Adopted Accounting Pronouncements

Current Expected Credit Losses ("CECL")

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


9

Implementation Costs Incurred in a Cloud Computing Arrangement

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

Fair Value Measurements

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

Income Taxes

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

Disclosures about Acquired and Disposed Businesses

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

Summary of Significant Accounting Policies

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

Divestitures

AWR

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


10

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

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

Other (Expense) Income

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

Earnings Per Share

Basic earnings per share (“EPS”) is computed by dividing net income by the weighted average number of common shares outstanding during each period. Diluted EPS is computed by dividing net income by the weighted average number of common shares and common share equivalents outstanding (if dilutive) during each period. The number of common share equivalents, which includes restricted stock units ("RSUs"), is computed using the treasury stock method. The reconciliation of the denominators used to calculate basic EPS and diluted EPS for the three and nine months ended September 30, 2020 and 2019, are as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
(Unaudited)(Unaudited)
20202019