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National Instruments Reports Solid Profits; Sales Match Historical Seasonal Pattern


Record Sales of LabVIEW Real-Time Software and Modular PXI Hardware

AUSTIN, Texas -- April 18, 2002 -- National Instruments (NASDAQ: NATI) today announced revenue of $94.7 million for the first quarter of 2002 with diluted earnings per share (EPS) of 14 cents. NI reported operating margins of 11 percent and net income of $7.4 million for Q1 2002.

"During the quarter, the diversity of our business and the strength of new platforms like LabVIEW Real-Time and PXI enabled us to win business in strategic new application areas," said James Truchard, NI President and CEO. "Our performance validates that virtual instrumentation is coming of age, and our aggressive new product initiatives and expanded field sales force make us more competitive than ever."

Q1 2002 Highlights

  • Solid profitability with diluted EPS of 14 cents
  • LabVIEW 6.1 released with new Web and wireless capabilities
  • Record sales of LabVIEW Real-Time software and modular PXI hardware
  • Test & Measurement World readers vote TestStand 2.0 Test Product of the Year

"In Q1 2002, we continued to manage our expenses effectively while expanding our business opportunities," said Alex Davern, CFO of NI. "After declining in the first three quarters of last year, revenue in Q4 2001 and Q1 2002 has followed the historical seasonal pattern that we saw prior to 2001. This gives us confidence that our business is returning to normal and when combined with what we're seeing from leading U.S. economic data, indicates we are entering a more stable economic environment."

Geographically, the breakdown of revenue in U.S. dollar terms for Q1 2002 as compared to the first quarter of 2001 was as follows: Americas, down 15 percent; Europe, down 13 percent; Asia, down 1 percent; and down 12 percent worldwide.

Since NI's IPO in 1995, revenue typically has followed a seasonal pattern of increasing from the first quarter to the second quarter by an average of 3 percent. Given the improving economic data and the return of revenue to its historical seasonal pattern for the past two quarters, NI expects revenue in the second quarter of 2002 to continue this trend and show a modest sequential increase over Q1 2002. NI expects to return to year-over-year revenue growth in the third quarter of 2002. NI estimates expenses in Q2 2002 will be approximately $61 million, up from $59 million in Q1 2002.

The above are "forward-looking statements." Actual revenue in Q2 and Q3 2002 could be affected by many factors including the performance of the global economy, foreign exchange fluctuations, and by any delay in the release of new products.

About NI
NI leverages commercial technologies, such as industry-standard computers and the Internet, to deliver customer-defined measurement and automation solutions. Headquartered in Austin, Texas, NI has more than 2,800 employees and direct sales offices in more than 35 countries. NI is increasing the productivity of engineers and scientists worldwide by delivering easy-to-integrate software and modular hardware. For the past three consecutive years, FORTUNE magazine has named NI one of the 100 best companies to work for in America.

NI investment information may be obtained from the company's Investor Relations Department at (512) 683-5090, by sending e-mail to nati@ni.com, or on the Web at ni.com/nati

Beginning Thursday, April 18, 2002 at 4 p.m. CDT, interested parties may listen to a live broadcast of NI's quarterly conference call by visiting ni.com/call. A replay will then be available Thursday, April 18, 2002 at 7 p.m. CDT through Friday, April 26, 2002 at 12 a.m. CDT. The replay can be accessed by visiting the company's Web site at ni.com/call or by calling (719) 457-0820; confirmation code #594428.

This release contains "forward-looking statements," including statements about our competitive position, our expanding opportunities, our business returning to the previous seasonal pattern, and predictions of future revenue and expenses. These are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks could include expenses exceeding the company's budget targets, continued recession in the global economy, foreign exchange fluctuations, changes in demand for the company's products, and delays in the release of new products. The company directs you to documents filed with the SEC, including its recent Form 10-K, for risks associated with the company's future performance.

The condensed consolidated statement of income, balance, and cash flow sheets to follow.


National Instruments
Condensed Consolidated Balance Sheets
(in thousands)

March 31,
2002
(unaudited) 		December 31,
2001
ASSETS
Current assets:
Cash and cash equivalents $ 40,500 $ 49,089
Short-term investments 108,224 101,422
Accounts receivable, net 60,174 53,624
Inventories 30,807 32,607
Other current assets 29,476 27,016
Total current assets 269,181 263,758
Property and equipment, net 141,042 137,360
Intangibles and other assets 22,895 23,501
Total assets $433,118 $424,619
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable 24,597 28,958
Accrued expenses 31,178 24,964
Total current liabilities 55,775 53,922
Deferred income taxes 4,723 4,533
Total liabilities 60,498 58,455
Stockholders' equity:
Common stock 513 512
Additional paid-in capital 79,503 78,261
Retained earnings 297,775 290,408
Other (5,171) (3,017)
Total stockholders' equity 372,620 366,164
Total liabilities and stockholders' equity $433,118 $424,619

National Instruments
Condensed Consolidated Statements of Income
(in thousands, except per share data)

Three months ended March 31,
(unaudited)

2002 2001
Net sales $94,739 $108,080
Cost of sales 25,358 26,873
Gross profit 69,381 81,207
Operating expenses:
Sales and marketing 35,407 38,503
Research and development 15,933 15,097
General and administrative 7,786 7,717
Total operating expenses 59,126 61,317
Operating income 10,255 19,890
Interest income, net 797 1,801
Foreign exchange loss, net (894) (1,378)
Other income 74 198
Income before income taxes 10,232 20,511
Provision for income taxes 2,865 6,564
Net income $7,367 $13,947
Earnings per share:
Basic $0.14 $0.28
Diluted $0.14 $0.26
Weighted average shares outstanding:
Basic 51,205 50,701
Diluted 53,953 53,873

National Instruments
Consolidated Statements of Cash Flows
(in thousands)

Three Months Ended
March 31,
(unaudited)
2002 2001
Cash flow from operating activities:
Net income $7,367 $13,947
Adjustments to reconcile net income to
cash provided by operating activities:
Charges to income not requiring cash outlays:
Depreciation and amortization 4,350 4,407
Provision for (benefit from) deferred income taxes (997) 2,296
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (6,550) 8,571
Decrease (increase) in inventory 1,800 (1,503)
Increase in prepaid expense and other assets (3,376) (7,706)
Increase (decrease) in current liabilities 1,853 (3,983)
Net cash provided by operating activities 4,447 16,029
Cash flow from investing activities:
Capital expenditures (6,871) (12,307)
Additions to intangibles (605) (1,163)
Purchases of short-term investments (49,084) (42,386)
Sales of short-term investments 42,282 39,733
Net cash used in investing activities (14,278) (16,123)
Cash flow from financing activities
Proceeds from issuance of common stock,
net of repurchases 		1,242 1,378
Net cash provided by financing activities 1,242 1,378
Net (decrease) increase in cash and cash equivalents (8,589) 1,284
Cash and cash equivalents at beginning of period 49,089 75,277
Cash and cash equivalents at end of period $ 40,500 $ 76,561

Contact:

Kimberly Allen
Investor Relations Manager
National Instruments
(512) 683-6873		 Kathleen Fisher
Business Communications Manager
National Instruments
(512) 683-5731


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