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National Instruments Announces Record Revenues and Record Earnings

AUSTIN, Texas -- Jan. 26, 1999 -- National Instruments (NASDAQ:NATI) today announced record revenues of $73.2 million for the fourth quarter of 1998, and record earnings per share of $0.33 (basic).

"We're pleased to have continued our pattern of double-digit growth in earnings and revenues during this difficult economic period for the test and measurement industry," said Dr. James Truchard, President and CEO. "We believe that we may see a turnaround in 1999 in the test and measurement industry, and plan to invest carefully in anticipation of this."

Revenues for the fourth quarter were $73.2 million, up 12 percent from $65.6 million in the fourth quarter of 1997 (11 percent in constant local currencies). Geographically, the breakdown of revenue growth for the quarter compared to the fourth quarter of 1997 was as follows: North America was flat; Europe 36 percent revenue growth (31 percent in local currencies); and Asia/Pacific 4 percent revenue growth (9 percent in local currencies).

Net income for the quarter increased by 10 percent to $10.8 million, or $0.33 basic earnings per share, compared to net income of $9.9 million, or $0.30 basic earnings per share, in the fourth quarter of 1997. Fully diluted earnings per share was $0.32 on 34.1 million weighted average shares outstanding compared to $0.29 on 34 million weighted average shares outstanding in the fourth quarter of 1997.

"In the last quarter of a difficult year for the industry, we generated a record $12 million in free cash," said Alex Davern, Chief Financial Officer. "While economic conditions for the future are uncertain, we are committed to providing the investment necessary for sustained long-term growth."

For the year ended December 31, 1998, revenues were $274.2 million, compared with $240.9 million in 1997, a 14 percent increase (16 percent in constant local currencies). Results for the year ended December 31, 1998 included an 11 percent increase in net income to $37.4 million, or $1.14 basic earnings per share, compared to $33.6 million for 1997, or $1.03 basic earnings per share. The Company reported fully diluted earnings per share of $1.10 on 34.1 million weighted average shares outstanding for 1998 compared to fully diluted earnings per share of $1.00 on 33.7 million weighted average shares outstanding for 1997.

National Instruments, a leading supplier of computer-based measurement and automation products, manufactures hundreds of software and hardware products which, when combined with industry-standard computers, are used for test, measurement, and industrial automation applications.

This release contains "forward-looking statements" (as defined under securities laws) regarding an expected turnaround in the industry in 1999, the company's expenditures in 1999, and the performance of the company, which are subject to a number of risks and uncertainties. Actual results may differ materially from the expected results. Specific risks include the Asian economies not improving or even worsening; risk that there may be no turnaround in the Automated Test Equipment and semiconductor industries or in the test and measurement industry; and risk with regard to the Company's expanded sales force being able to execute effectively. The Company directs you to documents filed with the SEC for risks associated with the company's future performance.

National Instruments invites you to attend its presentations at the following conferences:

January 28, 1999
Salomon Smith Barney Emerging Growth Stocks Conference
New York City


February 24, 1999
Robertson Stephens Technology Conference
San Francisco

National Instruments stock is traded on the Nasdaq National Market System under the symbol NATI. Investment information may be obtained from the company's Investor Relations Department at (512) 349-5090, by sending e-mail to nati@ni.com, or on the Web at www.ni.com/nati Interested parties may listen to a replay of the National Instruments Quarterly Conference Call starting Tuesday, January 26 at 7 p.m. through Friday, January 29 at midnight by calling (719) 457-0820; confirmation code #598510.

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



National Instruments
Condensed Consolidated Balance Sheets
(in thousands)

December 31,
1998
December 31,
1997
ASSETS
Current assets:
Cash and cash equivalents $ 51,538 $ 31,943
Short-term investments 49,158 51,067
Accounts receivable, net 45,622 37,411
Inventories 16,454 15,505
Other current assets 11,624 13,287
Total current assets 174,396 149,213
Property and equipment, net 66,131 46,805
Intangibles and other assets 9,259 8,472
Total assets $249,786 $204,490
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 849 $ 851
Accounts payable 17,242 16,946
Accrued expenses 22,795 19,274
Total current liabilities 40,886 37,071
Long-term debt 4,379 5,151
Deferred income taxes 337 514
Total liabilities 45,602 42,736
Stockholders' equity:
Common stock 332 326
Additional paid-in capital 51,659 47,160
Retained earnings 153,601 116,215
Accumulated other comprehensive loss (1,408) (1,947)
Total stockholders' equity 204,184 161,754
Total liabilities and stockholders' equity $249,786 $204,490

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

Three Months
Ended December 31,
(unaudited)
Year
Ended December 31,
1998 1997 1998 1997
Net sales $73,233 $65,621 $274,230 $240,879
Cost of sales 17,243 14,580 65,187 55,096
Gross profit 55,990 51,041 209,043 185,783
Operating expenses:
Sales and marketing 26,788 23,836 100,783 87,096
Research and development 8,451 6,989 34,757 30,296
General and administrative 5,514 5,020 20,455 18,508
Total operating expenses 40,753 35,845 155,995 135,900
Operating income 15,237 15,196 53,048 49,883
Interest income, net 893 791 2,976 2,953
Foreign exchange gain (loss), net 35 (1,245) (224) (2,649)
Income before income taxes 16,165 14,742 55,800 50,187
Provision for income taxes 5,335 4,865 18,414 16,562
Net income $10,830 $9,877 $37,386 $33,625
Basic earnings per share $ 0.33 $0.30 $ 1.14 $1.03
Weighted average shares
outstanding -- basic
32,934 32,651 32,832 32,563
Diluted earnings per share $ 0.32 $0.29 $ 1.10 $1.00
Weighted average shares
outstanding -- diluted
34,100 34,003 34,100 33,656

Contact:

Tara Mason
Investor Relations
National Instruments
(512) 683-6873
Alex Davern
Chief Financial Officer
National Instruments
(512) 683-6977


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