Investor RelationsTo Our Shareholders and Friends
National Instruments marked another year of solid growth with record revenues and record earnings. We continued our long track record of success with our 22nd consecutive year of double-digit growth. Our increased investment in R&D, expansion into new product areas, and the diversity of our business were all key to our success in 1998. Although challenging for the test and measurement industry, 1998 was a very healthy year for our company. The impact of the Asian crisis on the test and measurement market was sudden and severe in the second quarter. It quickly spread to the United States and worsened as the year progressed. Revenue at many test and measurement vendors was down by 10 percent or more. We felt the effects of the slowdown and saw revenue for some products decline in 1998. Overall, we came through a difficult year for the industry with another record performance and emerged healthy and confident. During our first decade, we focused on monitoring and controlling traditional instruments. During our second decade, we pioneered computer-based instrumentation, offering a more functional and cost-effective alternative to traditional instruments for test and measurement. Within the last two years, we expanded the scope of our computer-based technology to include industrial automation. Throughout our history, we have worked to build a business that is diverse across customers, industries, geographies, and markets. This diversity allows National INstruments to stand out from the crowd. No single customer accounted for more than 3 percent of sales, and no single industry accounted for more than 10 percent of our total business in 1998. This diversity enabled us to offset weakness in sales to particular customers and industries with strong growth in others. Our 16 percent local currency growth in 1998 enabled us to continue investing for the future. Over the past five years, our 25 percent compound annual increase in R&D spending has generated new products and significantly expanded our opportunities into new market areas. We expanded our U.S. sales force significantly in the second half of the year and plan to expand it further in 1999. Our management team sharpened our focus on growth opportunities and aggressive product development. Our ability to clearly see what was happening to our mature business and react quickly and effectively is a testament to the strength of our management, infrastructure, and people. Although we are pleased with our performance compared to our competitors and the overall market, let me assure you we are not satisfied with our performance compared to our own expectations. In 1999, our primary challenge is to increase our growth rate. Our strategy is to continue to invest heavily in R&D and expand our sales channel to accelerate the paradigm shift to computer-based measurement and automation. Although we remain cautious about the economic situation, we are committed to invest aggressively in new products and recruiting to see that we have the people and products in place to fuel our long-term growth. Our culture is based on meeting our growth goals to provide long-term value for our shareholders and long-term career paths for our employees. I congratulate and thank our customers, shareholders, employees, and suppliers for their support in making 1998 another record year. National Instruments is strong, healthy, and growing. We are proud of our track record of consistent growth and look forward to building on our strong position and pursuing growth opportunities in 1999.
|
