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National Instruments Reports Third Consecutive Quarter of Revenue Growth


Strong Growth in Asia Drives Earnings of 13 Cents Per Share

AUSTIN, Texas -- April 17, 2003 -- National Instruments (NASDAQ: NATI) today announced revenue for the first quarter of 2003 of $99.2 million, a five percent increase over the first quarter of 2002, and the company's third straight quarter of year-over-year revenue growth. Diluted earnings per share for the first quarter of 2003 are $0.13. This number includes a $2.7 million expense, or approximately $0.04 per share, related to winning a favorable jury verdict in a patent infringement case filed by NI.

"Despite a difficult quarter with geopolitical uncertainty impacting our revenue in the U.S. and Europe, we are pleased that Q1 2003 represents our third consecutive quarter of overall revenue growth," said Alex Davern, NI CFO. "We saw strong results in Asia during the quarter and plan to continue investing in strategic areas of our business, primarily in R&D and Asia."

The geographic breakdown of revenue growth in U.S. dollars in the first quarter of 2003 as compared to the first quarter of 2002 was as follows: Americas, down two percent; Europe, up eight percent; Asia, up 17 percent; and up five percent worldwide. In local currency terms, revenue was down two percent in the Americas, down three percent in Europe, up 38 percent in Asia, and up four percent worldwide.

"While I am not satisfied with our overall growth rate, I am pleased with our internal execution throughout the company in the first quarter and am optimistic about future prospects," said James Truchard, NI president and CEO. "We continue to aggressively pursue new product development and plan to introduce revolutionary new products during the next few quarters that should drive virtual instrumentation into the mainstream of measurement and automation and target an expanded range of applications."

Cash flow from operations was $13.5 million, up from $4.4 million in the first quarter of 2002. NI continues to have a very strong balance sheet with a near record $158 million in cash and short-term investments, and no debt.

Orders for the first half of April are up by double digits. However, given the easier compares with early April 2002 and the current global economic uncertainty, the company feels it is appropriate to set expectations at single digit, year-over-year revenue growth in the second quarter of 2003 and diluted earnings per share in the range of $0.12 and $0.16 per share. This earnings per share estimate is net of approximately $600,000 in expected legal expenses related to ongoing patent litigation. The company will decide how to recognize the gain on the Jury's $3.5 million damages award when it receives the Court's disposition of post-trial motions.

As a result of the better than expected ramp up of the company's new Hungarian manufacturing facility, NI currently estimates its effective tax rate for 2003 and 2004 will drop to approximately 25 percent, down from 28 percent in 2002.

Interested parties can listen to a conference call today, April 17, 2003, beginning at 4 p.m. CDT, on ni.com/call. Replay information will be available by calling (719) 457-0820, confirmation code #597410, from 7 p.m. CDT April 17, 2003, through May 1, 2003 at 12 a.m. CDT.

This release contains "forward-looking statements," including the company's plans to continue investing in strategic areas, optimism about future prospects, the aggressive pursuit of new product development, and expected revenue, earnings, tax rates, and expenses. These are subject to a number of risks and uncertainties, including the risk of further deterioration in the global economy, delays in the release of new products, fluctuations in customer demand for NI products, manufacturing inefficiencies, and foreign exchange fluctuations. Actual results may differ materially from the expected results. The company directs you to documents filed with the SEC for other risks associated with the company's future performance.

About National Instruments
National Instruments (http://ni.com) is a technology pioneer and leader in virtual instrumentation -- a revolutionary concept that has changed the way engineers and scientists approach measurement and automation. Leveraging the PC and its related technologies, virtual instrumentation increases productivity and lowers costs for customers worldwide through easy-to-integrate software, such as the NI LabVIEW graphical development environment, and modular hardware, such as PXI modules for data acquisition, instrument control and machine vision. Headquartered in Austin, Texas, NI has more than 3,000 employees and direct operations in 40 countries. In 2002, the company sold products to more than 25,000 different companies in more than 80 countries around the world. For the past four 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.

The condensed consolidated balance sheets, statements of income, and cash flows to follow.



National Instruments
Condensed Consolidated Balance Sheets
(in thousands)

March 31,
2003
(unaudited)
December 31,
2002
ASSETS
Current assets:
Cash and cash equivalents $ 36,854 $ 40,240
Short-term investments 121,035 113,638
Accounts receivable, net 62,229 62,981
Inventories 37,570 39,247
Other current assets 18,822 21,860
Total current assets 276,510 277,966
Property and equipment, net 150,711 152,133
Intangibles and other assets 35,344 28,615
Total assets $462,565 $458,714
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable 27,728 25,578
Accrued expenses 34,468 40,935
Total current liabilities 62,196 66,513
Deferred income taxes 5,538 5,738
Total liabilities 67,734 72,251
Stockholders' equity:
Common stock 512 511
Additional paid-in capital 73,806 72,063
Retained earnings 328,576 321,813
Other (8,063) (7,924)
Total stockholders' equity 394,831 386,463
Total liabilities and stockholders' equity $462,565 $458,714


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

Three months ended March 31,
(unaudited)

2003 2002
Net sales $99,173 $94,739
Cost of sales 26,013 25,358
Gross profit 73,160 69,381
Sales and marketing 38,545 35,407
Research and development 15,251 15,933
General and administrative 8,338 7,281
Patent litigation 2,702 505
Total operating expenses 64,836 59,126
Operating income 8,324 10,255
Interest income, net 686 797
Foreign exchange loss, net (14) (894)
Other income 21 74
Income before income taxes 9,017 10,232
Provision for income taxes 2,254 2,865
Net income $6,763 $7,367
Earnings per share:
Basic $0.13 $0.14
Diluted $0.13 $0.14
Weighted average shares outstanding:
Basic 51,156 51,205
Diluted 53,273 53,953


National Instruments
Consolidated Statements of Cash Flows
(in thousands)

Three Months Ended
March 31,
(unaudited)
2003 2002
Cash flow from operating activities:
Net income $6,763 $7,367
Adjustments to reconcile net income to
cash from operating activities:
Charges to income not requiring cash outlays:
Depreciation and amortization 6,097 4,350
Provision for (benefit from) deferred income taxes (582) (1,456)
Tax benefit from stock option plans 752 459
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 752 (6,550)
Decrease in inventory 1,677 1,800
Decrease (increase) in prepaid expense and other assets 2,336 (3,376)
Increase (decrease) in current liabilities (4,317) 1,853
Net cash provided by operating activities 13,478 4,447
Cash flow from investing activities:
Capital expenditures (3,113) (6,871)
Additions to intangibles (8,097) (605)
Purchases of short-term investments (37,272) (49,084)
Sales of short-term investments 29,875 42,282
Net cash used in investing activities (18,607) (14,278)
Cash flow from financing activities
Proceeds from issuance of common stock,
net of repurchases
1,743 1,242
Net cash provided by financing activities 1,743 1,242
Net decrease in cash and cash equivalents (3,386) (8,589)
Cash and cash equivalents at beginning of period 40,240 49,089
Cash and cash equivalents at end of period $ 36,854 $ 40,500

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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