National Instruments Reports 13 Percent Revenue and 36 Percent Earnings Growth in Q42002 Annual Revenue of $391 Million Marks 25th Year of Growth in Company's 26-Year History
AUSTIN, Texas -- Jan. 23, 2003 -- National Instruments (Nasdaq: NATI) reported revenue of $107 million for the fourth quarter of 2002, a 13 percent increase from the fourth quarter of 2001, and fully diluted earnings per share of 19 cents compared to 14 cents per share in the fourth quarter of 2001. With a dramatic 48 percent sequential increase in quarterly income, operating margins for the quarter improved to 12 percent of revenue and net margins improved to 9.4 percent of revenue, both at their highest levels in nearly two years. For 2002, revenue totaled $391 million, up from $385 million in 2001, marking the company's 25th year of growth in its 26-year history.
"While the economy has made the past two years very challenging, we are pleased with our performance in Q4 and for the year, especially with our execution in bringing new products to market," said James Truchard, NI president and CEO. "The strong profitability of our business model enabled us to substantially increase our investments in R&D as well as in strategic sales and marketing initiatives throughout the economic downturn, and these investments have continued to pay off."
Q4 2002 Highlights
- Double-digit revenue and earnings growth with fully diluted earnings per share of 19 cents
- Strong increase in gross margins to 74 percent of revenue as a result of improved efficiency
- Increased investments in R&D with engineering staff up 30 percent over the end of 2000
- Record quarterly sales for LabVIEW Real-Time, PXI, FieldPoint, and machine vision product lines
- Electronic Design, a leading publication covering the electronics industry, named the invention of LabVIEW among the top 50 industry milestones of the past 50 years
Geographically, NI reported growth in all regions for Q4 2002. The growth of revenue in Q4 2002 as compared to Q4 2001 was as follows: Europe, up 9 percent; Americas, up 9 percent; Asia, up 31 percent; and up 13 percent worldwide.
"Despite continuing problems for most in the industry, we delivered our second consecutive quarter of double-digit year-over-year revenue and earnings growth," said Alex Davern, NI CFO. "This reflects real earnings growth not from layoffs, cost cutting or restructuring, but from growth in revenue and improved gross margins. This was fueled by significant sequential increases in sales of our NI LabVIEW Real-Time, PXI modular instrumentation, and FieldPoint distributed I/O platforms."
Looking forward to the first quarter of 2003, capital expenditures in the global economy continued to be under pressure during the fourth quarter, and this pressure is likely to continue during early 2003. NI currently expects to report year-over-year growth in revenue and earnings and a fully diluted EPS of between 17 cents and 19 cents for Q1 2003. This guidance is net of $2 million, or $0.03 per share, in expected patent litigation expense.
In regard to President Bush's proposal to completely eliminate double taxation of dividends, National Instruments believes corporations exist to provide a return to shareholders and is continuously evaluating the most efficient vehicles to deliver that return. Moreover, with $154 million in net cash and short-term investments, NI is clearly in a position to offer a dividend and should the president's proposal to completely eliminate double taxation of dividends become law, National Instruments will review its existing policy toward dividends.
2002 Annual Highlights
- 2002 revenues totaled $391 million, making 2002 the 25th year of growth in the company's 26-year history
- Significantly expanded boundaries of virtual instrumentation with new products, including the PXI RF Signal Analyzer, 6½ digit FlexDMM, Compact FieldPoint, the LabVIEW Simulation Interface Toolkit and LabVIEW FPGA Pioneer System
- Announced joint initiative with Tektronix to embed LabVIEW software inside Open Windows oscilloscopes
- Test & Measurement World readers voted TestStand 2.0 Test Product of the Year
- Named 53rd on list of Fortune 100 Best Places to Work - fourth consecutive year NI appeared on national list
On Jan. 23, 2003 at 4 p.m. CST, interested parties may listen to a live broadcast of NI's quarterly conference call by visiting ni.com/call. A replay will be available Jan. 23, 2003 at 7 p.m. CST through Jan. 30, 2003 at 12 a.m. CST. The replay can be accessed by visiting the company's Web site at ni.com/call or by calling (719) 457-0820; confirmation code #584329.
This release contains "forward-looking statements," including statements about our return on R&D investments, capital expenditure pressure continuing during 2003, our expected EPS and year-over-year growth in revenue and earnings for Q1 2003, our expected patent litigation expenses for Q1 2003, and our policy on and ability to pay dividends. 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 slowdown in the global economy, foreign exchange fluctuations, unexpected changes in seasonal revenue patterns, 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.
About National Instruments
For more than 26 years, National Instruments has revolutionized the way engineers and scientists work by delivering virtual instrumentation solutions built on rapidly advancing commercial technologies, including industry-standard computers and the Internet. NI increases productivity for customers worldwide by delivering easy-to-integrate software, such as the NI LabVIEW graphical development environment, and modular hardware, such as PXI modules for data acquisition and instrumentation. 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.
Readers may obtain investment information 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 statements of cash flow to follow.
National Instruments
Condensed Consolidated Balance Sheets
(in thousands)
|
|
December 31,
2002
(unaudited)
|
December 31,
2001
|
|
ASSETS
|
|
Current assets:
|
|
|
Cash and cash equivalents
|
$ 40,240
|
$ 49,089
|
|
Short-term investments
|
113,638
|
101,422
|
|
Accounts receivable, net
|
62,981
|
53,624
|
|
Inventories, net
|
39,247
|
32,607
|
|
Other current assets
|
21,860
|
27,016
|
|
Total current assets
|
277,966
|
263,758
|
|
|
|
Property and equipment, net
|
152,133
|
137,360
|
|
Intangibles and other assets, net
|
28,615
|
23,501
|
|
Total assets
|
$458,714
|
$424,619
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
Current liabilities:
|
|
Accounts payable
|
25,578
|
28,958
|
|
Accrued expenses
|
40,935
|
24,964
|
|
Total current liabilities
|
66,513
|
53,922
|
|
|
|
Deferred income taxes
|
5,738
|
4,533
|
|
Total liabilities
|
72,251
|
58,455
|
|
|
|
Stockholders' equity:
|
|
Common stock
|
511
|
512
|
|
Additional paid-in capital
|
72,063
|
78,261
|
|
Retained earnings
|
321,813
|
290,408
|
|
Accumulated other comprehensive loss
|
(7,924)
|
(3,017)
|
|
Total stockholders' equity
|
386,463
|
366,164
|
|
Total liabilities and stockholders' equity
|
$458,714
|
$424,619
|
National Instruments
Condensed Consolidated Statements of Income
(in thousands, except per share data)
|
|
Three Months Ended December 31,
(unaudited)
|
Year Ended December 31,
(unaudited)
|
|
|
2002
|
2001
|
Percent
Inc/(Dec)
|
2002
|
2001
|
Percent
Inc/(Dec)
|
|
Net sales
|
$106,525
|
$94,426
|
13%
|
$390,790
|
$385,275
|
1%
|
|
Cost of sales
|
27,928
|
25,508
|
9%
|
105,086
|
101,297
|
4%
|
|
Gross profit
|
78,597
|
68,918
|
14%
|
285,704
|
283,978
|
1%
|
|
|
|
Operating expenses:
|
|
Sales and marketing
|
40,018
|
36,388
|
10%
|
145,671
|
145,555
|
--
|
|
Research and development
|
16,201
|
14,795
|
10%
|
63,964
|
60,745
|
5%
|
|
General and administrative
|
8,453
|
7,775
|
9%
|
31,011
|
30,480
|
2%
|
|
Patent litigation
|
1,190
|
--
|
NA
|
4,703
|
(1,246)
|
477%
|
|
Total operating expenses
|
65,862
|
58,958
|
12%
|
245,349
|
235,534
|
4%
|
|
|
|
Operating income
|
12,735
|
9,960
|
28%
|
40,355
|
48,444
|
(17%)
|
|
Interest income, net
|
748
|
1,170
|
(36%)
|
3,167
|
5,811
|
(45%)
|
|
Net foreign exchange gain (loss)
|
565
|
(503)
|
212%
|
(724)
|
(1,424)
|
49%
|
|
Other income (expense), net
|
(208)
|
168
|
(224%)
|
820
|
702
|
17%
|
|
|
|
Income before income taxes
|
13,840
|
10,795
|
28%
|
43,618
|
53,533
|
(19%)
|
|
Provision for income taxes
|
3,875
|
3,455
|
12%
|
12,213
|
17,131
|
(29%)
|
|
|
|
Net income
|
$9,965
|
$7,340
|
36%
|
$31,405
|
$36,402
|
(14%)
|
|
|
|
Basic earnings per share
|
$0.20
|
$0.14
|
43%
|
$0.61
|
$0.72
|
(15%)
|
|
Diluted earnings per share
|
$0.19
|
$0.14
|
36%
|
$0.59
|
$0.68
|
(13%)
|
Weighted average shares
outstanding -- basic
|
51,013
|
51,095
|
--
|
51,219
|
50,910
|
1%
|
|
|
Weighted average shares
outstanding -- diluted
|
52,875
|
53,524
|
(1%)
|
53,411
|
53,651
|
--
|
National Instruments
Consolidated Statements of Cash Flows
(in thousands)
|
|
Year Ended
December 31,
(unaudited)
|
|
|
2002
|
2001
|
|
Cash flow from operating activities:
|
|
Net income
|
$31,405
|
$36,402
|
Adjustments to reconcile net income to
cash provided by operating activities:
|
|
Charges to income not requiring cash outlays:
|
|
Depreciation and amortization
|
20,748
|
16,802
|
|
Provision for (benefit from) deferred income taxes
|
(1,437)
|
2,186
|
|
Changes in operating assets and liabilities:
|
|
Decrease (increase) in accounts receivable
|
(9,357)
|
21,080
|
|
Decrease (increase) in inventory
|
(6,640)
|
685
|
|
Decrease (increase) in prepaid expense and other assets
|
1,823
|
(9,574)
|
|
Increase (decrease) in current liabilities
|
12,591
|
(10,428)
|
|
Net cash provided by operating activities
|
49,133
|
57,153
|
|
|
|
Cash flow from investing activities:
|
|
Capital expenditures
|
(30,817)
|
(65,274)
|
|
Additions to intangibles
|
(8,750)
|
(4,903)
|
|
Purchases of short-term investments
|
(134,434)
|
(149,505)
|
|
Sales of short-term investments
|
122,218
|
127,608
|
|
Net cash used in investing activities
|
(51,783)
|
(92,074)
|
|
|
|
Cash flow from financing activities
|
|
Proceeds from issuance of common stock
|
13,424
|
12,242
|
|
Repurchase of common stock
|
(19,623)
|
(3,509)
|
|
Net cash provided by (used in) financing activities
|
(6,199)
|
8,733
|
|
|
|
Net decrease in cash and cash equivalents
|
(8,849)
|
(26,188)
|
|
Cash and cash equivalents at beginning of period
|
49,089
|
75,277
|
|
Cash and cash equivalents at end of period
|
$ 40,240
|
$ 49,089
|
Contact:
Kathleen Fisher
Business Communications Manager
National Instruments
(512) 683-5731 |
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