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National Instruments Announces Record Quarterly Revenue and Double Digit Year-Over-Year Growth


Company Gains Market Share in Instrumentation Market

Austin, Texas -- July 28, 1998 -- National Instruments (NASDAQ:NATI) today announced record revenues of $67.8 million for the second quarter of fiscal year 1998.

"We are pleased with our double-digit growth and record revenues during an economic period in which many of our competitors experienced double-digit revenue decreases," said Dr. James Truchard, President and CEO. "In addition to our solid performance, our gain in market share in the instrumentation market is a testament to the mainstream acceptance of our cost-effective, computer-based measurement and automation approach."

Revenues for the second quarter were $67.8 million, up 13 percent (16 percent in constant local currencies) from $60.1 million in the second quarter of 1997. Geographically, the breakdown of revenue growth for the quarter compared to second quarter of 1997 was as follows: North America 10 percent revenue growth; Europe 25 percent revenue growth (29 percent in local currencies); and Asia/Pacific remained constant (14 percent revenue growth in local currencies). Net income for the quarter increased by 7 percent to $9.2 million compared to net income of $8.6 million in the second quarter of 1997.

National Instruments reported basic earnings per share of $0.28 for the second quarter of 1998 compared to basic earnings per share of $0.26 in the second quarter of 1997. The Company reported diluted earnings per share of $0.27 on 34.2 million weighted average shares outstanding for the second quarter of 1998 compared to diluted earnings per share of $0.26 on 33.4 million weighted average shares outstanding for the same period of the prior year.

"The linear nature of our business enabled us to manage our expenses effectively and focus our investment in strategic new product areas," said Alex Davern, Chief Financial Officer. "Our diverse customer base helped insulate us from significant slowdowns in any given region or industry and helped us deliver results consistent with our business model. In fact, preliminary orders for July show some improvement in growth."

Truchard added, "We are aggressively expanding our sales force and continually adding to our product lines. The economic situation has created new opportunities for our company to capitalize on our ability to focus, execute, and invest in the future."

For the six months ended June 30, 1998, revenues were $133.1 million, compared with $114.7 million in the six-month period a year earlier, a 16 percent increase (20% in local currency). Results for the six-month period ended June 30, 1998 included a 12 percent increase in net income to $18.0 million, or $0.55 basic earnings per share, compared to $16.1 million for the six months ended June 30, 1997, or $0.50 basic earnings per share. The Company reported diluted earnings per share of $0.53 on 34.2 million weighted average shares outstanding for the six-month period ending June 30, 1998 compared to diluted earnings per share of $0.48 on 33.4 million weighted average shares outstanding for the prior year period.

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

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 or by sending e-mail to nati@ni.com.

This release contains forward-looking statements that involve a number of risks and uncertainties. Actual results may differ materially from the expected results. The Company directs you to documents filed with the SEC for risks associated with the company's future performance.

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



National Instruments
Condensed Consolidated Balance Sheets
(in thousands)

June 30,
1998
(unaudited)
December 31,
1997
ASSETS
Current assets:
Cash and cash equivalents $ 31,678 $ 31,943
Short-term investments 46,886 51,067
Accounts receivable, net 41,070 37,411
Inventories 16,725 15,505
Other current assets 15,347 13,287
Total current assets 151,706 149,213
Property and equipment, net 66,830 46,805
Intangibles and other assets 6,624 8,472
Total assets $225,160 $204,490
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 848 $ 851
Accounts payable 16,738 16,946
Accrued expenses 20,828 19,274
Total current liabilities 38,414 37,071
Long-term debt 4,773 5,151
Deferred income taxes 514 514
Total liabilities 43,701 42,736
Stockholders' equity:
Common stock 328 326
Additional paid-in capital 49,164 47,160
Retained earnings 134,244 116,215
Accumulated other comprehensive loss (2,277) (1,947)
Total stockholders' equity 181,459 161,754
Total liabilities and stockholders' equity $225,160 $204,490

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

Three Months
Ended June 30,
Six Months
Ended June 30,
1998 1997 1998 1997
Net sales $67,770 $60,092 $133,123 $114,663
Cost of sales 16,089 14,009 31,658 26,302
Gross profit 51,681 46,083 101,465 88,361
Operating expenses
Sales and marketing 24,494 21,481 49,024 41,443
Research and development 8,953 7,658 16,703 14,135
General and administrative 5,201 4,543 9,921 8,813
Total operating expenses 38,648 33,682 75,648 64,391
Operating income 13,033 12,401 25,817 23,970
Interest income, net 762 705 1,432 1,403
Foreign exchange loss, net (67) (306) (341) (1,270)
Income before income taxes 13,728 12,800 26,908 24,103
Provision for income taxes 4,530 4,219 8,879 7,954
Net income $9,198 $8,581 $18,029 $16,149
Basic earnings per share $ 0.28 $0.26 $ 0.55 $0.50
Weighted average shares
outstanding -- basic
32,800 32,552 32,800 32,514
Diluted earnings per share $ 0.27 $0.26 $ 0.53 $0.48
Weighted average shares
outstanding -- diluted
34,200 33,435 34,200 33,435

Contact:
Investor Relations
National Instruments
(512) 683-5090

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