National Instruments Returns to Double-Digit Revenue and Earnings Growth in Q3PXI and LabVIEW Real-Time Fuel Growth; Operating Income Rises 32 Percent
AUSTIN, Texas -- Oct. 17, 2002 -- National Instruments (Nasdaq: NATI) reported revenue of $96 million for the third quarter of 2002, a 13 percent increase from the third quarter of 2001, and fully diluted earnings per share of 13 cents. Operating income of $8.6 million grew 32 percent when compared to Q3 2001.
"Throughout our history, our investment in R&D has been a key factor in our growth. Our profitable business model has allowed us to continue increasing our R&D investment, which has paid off this quarter with the expansion of our vision for LabVIEW and the introduction of the most sophisticated measurement hardware products in our history," said James Truchard, NI President and CEO. "With these new products, and others still in development, we continue our penetration of new applications that leverage our core strengths."
Q3 2002 Highlights
- Return to double-digit revenue and earnings growth with fully diluted earnings per share of 13 cents
- Significant improvement in year-over-year revenue growth for the Americas, Europe, and Asia
- Strong increase in gross margins to 74 percent of revenue
- Record quarterly sales of PXI and FieldPoint platforms
- Release of revolutionary new products, including 6½ digit FlexDMM and 2.7 GHz RF signal analyzer
- Joint initiative with Tektronix to embed LabVIEW software inside leading oscilloscopes
Geographically, the change of revenue in U.S. dollar terms for Q3 2002 as compared to Q3 2001 was as follows: Europe, flat; Americas, up 13 percent; Asia, up 38 percent; and up 13 percent worldwide.
"In Q3 NI delivered a very good operational performance with significant improvements in our revenue growth rate and in our gross margins, resulting in a 32 percent increase in our operating income compared to Q3 2001," said Alex Davern, CFO of NI. "In fact, excluding the $2.5 million year-over-year change in patent litigation, operating income was up 87 percent over Q3 2001."
NI Announces Additional Stock Repurchase Plan
During the third quarter the company repurchased 813,000 shares of common stock at an average price of $24 per share. This almost completes the 1,000,000 share buyback plan approved by the NI Board in 1998. In October 2002 the NI Board authorized a new stock repurchase plan for up to 2,000,000 additional shares of the company's common stock.
NI to Establish Educational Foundation in Q4 2002
In Q4 2002, NI anticipates recognizing a net pre-tax gain of approximately $4 million arising from the consolidation of facilities and the resolution of a dispute with a tenant. NI intends to use the funds received to create a corporate foundation to continue its promotion of scientific and engineering research and education at higher education institutions worldwide. The expense of this donation will offset the impact of the $4 million gain on NI's net income for Q4 2002.
Q4 2002 Guidance
Currently, NI expects to see year-over-year revenue and earnings growth in Q4 2002 with fully diluted earnings per share between 19 and 21 cents per share.
This release contains "forward-looking statements," including statements about our investment in R&D, the amount and timing of a one-time gain in Q4 2002, competitive position, our expanding opportunities, and predictions of future revenue and earnings growth and earnings per share. 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, the success of our product development efforts, and unexpected changes in seasonal revenue patterns. 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.
Webcast Details
Beginning Oct. 17, 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 be available Oct. 17, 2002 at 7 p.m. CDT through Oct. 24, 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 #668597.
About National Instruments
National Instruments 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 3,000 employees and direct sales offices in 37 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.
The condensed consolidated balance sheets, statements of income, and cash flows to follow.
National Instruments
Condensed Consolidated Balance Sheets
(in thousands)
|
|
September 30,
2002
(unaudited)
|
December 31,
2001
|
|
ASSETS
|
|
Current assets:
|
|
|
Cash and cash equivalents
|
$ 66,200
|
$ 49,089
|
|
Short-term investments
|
77,185
|
101,422
|
|
Accounts receivable, net
|
55,518
|
53,624
|
|
Inventories, net
|
39,622
|
32,607
|
|
Other current assets
|
22,513
|
27,016
|
|
Total current assets
|
261,038
|
263,758
|
|
|
|
Property and equipment, net
|
150,720
|
137,360
|
|
Intangibles and other assets
|
25,268
|
23,501
|
|
Total assets
|
$437,026
|
$424,619
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
Current liabilities:
|
|
Accounts payable
|
26,147
|
28,958
|
|
Accrued expenses
|
35,655
|
24,964
|
|
Total current liabilities
|
61,802
|
53,922
|
|
|
|
Deferred income taxes
|
3,230
|
4,533
|
|
Total liabilities
|
65,032
|
58,455
|
|
|
|
Stockholders' equity:
|
|
Common stock
|
508
|
512
|
|
Additional paid-in capital
|
65,308
|
78,261
|
|
Retained earnings
|
311,849
|
290,408
|
|
Accumulated other comprehensive loss
|
(5,671)
|
(3,017)
|
|
Total stockholders' equity
|
371,994
|
366,164
|
|
Total liabilities and stockholders' equity
|
$437,026
|
$424,619
|
National Instruments
Condensed Consolidated Statements of Income
(in thousands, except per share data)
(unaudited)
|
|
Three Months
Ended September 30,
|
Nine Months
Ended September 30,
|
|
|
2002
|
2001
|
Percent
Inc/(Dec)
|
2002
|
2001
|
Percent
Inc/(Dec)
|
|
Net sales
|
$96,020
|
$85,062
|
13%
|
$284,264
|
$290,849
|
(2%)
|
|
Cost of sales
|
25,196
|
23,288
|
8%
|
77,157
|
75,789
|
2%
|
|
Gross profit
|
70,824
|
61,774
|
15%
|
207,107
|
215,060
|
(4%)
|
|
|
|
Operating expenses:
|
|
Sales and marketing
|
36,679
|
34,275
|
7%
|
105,653
|
109,167
|
(3%)
|
|
Research and development
|
16,095
|
14,920
|
8%
|
47,762
|
45,950
|
4%
|
|
General and administrative
|
8,224
|
7,316
|
12%
|
22,559
|
22,705
|
(1%)
|
|
Patent litigation
|
1,220
|
(1,246)
|
NA
|
3,513
|
(1,246)
|
NA
|
|
Total operating expenses
|
62,218
|
55,265
|
13%
|
179,487
|
176,576
|
2%
|
|
|
|
Operating income
|
8,606
|
6,509
|
32%
|
27,620
|
38,484
|
(28%)
|
|
Interest income, net
|
785
|
1,303
|
(40%)
|
2,419
|
4,574
|
(47%)
|
|
Net foreign exchange gain (loss)
|
(612)
|
341
|
NA
|
(1,288)
|
(921)
|
(40%)
|
|
Other income
|
506
|
206
|
146%
|
1,028
|
601
|
71%
|
|
|
|
Income before income taxes
|
9,285
|
8,359
|
11%
|
29,779
|
42,738
|
(30%)
|
|
Provision for income taxes
|
2,600
|
2,674
|
(3%)
|
8,338
|
13,676
|
(39%)
|
|
|
|
Net income
|
$6,685
|
$5,685
|
18%
|
$21,441
|
$29,062
|
(26%)
|
|
|
|
Basic earnings per share
|
$0.13
|
$0.11
|
18%
|
$0.42
|
$0.57
|
(26%)
|
|
Diluted earnings per share
|
$0.13
|
$0.11
|
18%
|
$0.40
|
$0.54
|
(26%)
|
Weighted average shares
outstanding -- basic
|
51,195
|
50,956
|
--
|
51,286
|
50,848
|
1%
|
|
|
Weighted average shares
outstanding -- diluted
|
52,906
|
53,288
|
(1%)
|
53,603
|
53,682
|
--
|
National Instruments
Consolidated Statements of Cash Flows
(in thousands)
|
|
Three Months Ended
September 30,
(unaudited)
|
|
|
2002
|
2001
|
|
Cash flow from operating activities:
|
|
Net income
|
$6,685
|
$5,685
|
Adjustments to reconcile net income to
cash provided by operating activities:
|
|
Charges to income not requiring cash outlays:
|
|
Depreciation and amortization
|
4,940
|
3,680
|
|
Provision for (benefit from) deferred income taxes
|
4
|
(1,226)
|
|
Changes in operating assets and liabilities:
|
|
Decrease in accounts receivable
|
4,142
|
7,560
|
|
(Increase) decrease in inventory
|
(7,112)
|
79
|
|
(Increase) decrease in prepaid expense and other assets
|
2,818
|
(1,728)
|
|
Increase in current liabilities
|
653
|
11,389
|
|
Net cash provided by operating activities
|
12,130
|
25,439
|
|
|
|
Cash flow from investing activities:
|
|
Capital expenditures
|
(9,146)
|
(20,371)
|
|
Additions to intangibles
|
(2,364)
|
(1,489)
|
|
Purchases of short-term investments
|
(25,268)
|
(37,373)
|
|
Sales of short-term investments
|
47,117
|
38,991
|
|
Net cash provided by (used in) investing activities
|
10,339
|
(20,242)
|
|
|
|
Cash flow from financing activities
|
|
Proceeds from issuance of common stock
|
571
|
814
|
|
Repurchase of common stock
|
(17,420)
|
(910)
|
|
Net cash used in financing activities
|
(16,849)
|
(96)
|
|
|
|
Net increase in cash and cash equivalents
|
5,620
|
5,101
|
|
Cash and cash equivalents at beginning of period
|
60,580
|
69,686
|
|
Cash and cash equivalents at end of period
|
$ 66,200
|
$ 74,787
|
|
Non-cash financing activities:
|
|
|
|
Accrued payment for repurchase of common stock
|
$ 2,203
|
|
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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