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National Instruments Announces Record Quarterly Revenues and Double-Digit Growth


Company Announces Stock Repurchase Plan

AUSTIN, Texas -- Oct. 27, 1998 -- National Instruments (NASDAQ:NATI) today announced record revenues of $67.9 million for the third quarter of 1998, and fully diluted earnings per share of $0.27, excluding acquisition charges. In a separate announcement, the company also announced that it has authorized a stock repurchase program whereby up to 1,000,000 shares of its common stock may be, from time to time, purchased on the open market.

"Our diverse customer base has helped insulate us from significant slowdowns in given regions and industries," stated Dr. James Truchard, President and CEO. "We are pleased that our computer-based approach continued to gain market share and that we delivered record revenues during this difficult economic period."

Revenues for the third quarter were $67.9 million, up 12 percent from $60.6 million in the third quarter of 1997 (14 percent in constant local currencies). Geographically, the breakdown of revenue growth for the quarter compared to the third quarter of 1997 was as follows: North America 5 percent revenue growth; Europe 35 percent revenue growth (34 percent in local currencies); and Asia/Pacific 4 percent revenue growth (21 percent in local currencies).

Net income for the quarter increased by 12 percent to $8.5 million, or $0.26 basic earnings per share, compared to net income of $7.6 million, or $0.23 basic earnings per share, in the third quarter of 1997. The foregoing amounts include a $750,000 and a $1.4 million charge related to acquisitions for the third quarter of 1998 and 1997, respectively. Excluding these charges, third quarter net income would have been $9.0 million, or $0.27 basic earnings per share and $8.5 million, or $0.26 basic earnings per share in 1998 and 1997, respectively.

Excluding the acquisition charges, fully diluted earnings per share would have been $0.27 on 34.0 million weighted average shares outstanding and $0.25 on 33.8 million weighted average shares outstanding for the third quarters ending in 1998 and 1997, respectively. Including the acquisition charge, fully diluted earnings per share was $0.25 for the third quarter of 1998 compared to $0.23 for the same period of the prior year.

"Our results are consistent with our historical pattern and business model," added Alex Davern, Chief Financial Officer. "The linear nature of our business and the wise stewardship of our resources enabled us to manage our expenses very effectively while continuing to invest in strategic new product areas."

For the nine months ended September 30, 1998, revenues were $201.0 million, compared with $175.3 million in the nine-month period a year earlier, a 15 percent increase (18 percent in constant local currencies). Results for the nine-month period ended September 30, 1998 included a 12 percent increase in net income to $26.6 million, or $0.81 basic earnings per share, compared to $23.7 million for the nine months ended September 30, 1997, or $0.73 basic earnings per share. The Company reported fully diluted earnings per share of $0.78 on 34.1 million weighted average shares outstanding for the nine-month period ending September 30, 1998 compared to fully diluted earnings per share of $0.71 on 33.5 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, when 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 by visiting the company's Web site at www.ni.com/investor, sending e-mail to nati@ni.com or by calling (512) 349-5090.

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)

September 30,
1998
(unaudited)
December 31,
1997
ASSETS
Current assets:
Cash and cash equivalents $ 41,104 $ 31,943
Short-term investments 47,585 51,067
Accounts receivable, net 42,264 37,411
Inventories 16,403 15,505
Other current assets 16,736 13,287
Total current assets 164,092 149,213
Property and equipment, net 66,619 46,805
Intangibles and other assets 6,817 8,472
Total assets $237,528 $204,490
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 851 $ 851
Accounts payable 15,574 16,946
Accrued expenses 24,933 19,274
Total current liabilities 41,358 37,071
Long-term debt 4,597 5,151
Deferred income taxes 514 514
Total liabilities 46,469 42,736
Stockholders' equity:
Common stock 328 326
Additional paid-in capital 49,498 47,160
Retained earnings 142,771 116,215
Accumulated other comprehensive loss (1,538) (1,947)
Total stockholders' equity 191,059 161,754
Total liabilities and stockholders' equity $237,528 $204,490

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

Three Months
Ended September 30,
Nine Months
Ended September 30,
1998 1997 1998 1997
Net sales $67,874 $60,595 $200,997 $175,259
Cost of sales 16,286 14,214 47,944 40,517
Gross profit 51,588 46,381 153,053 134,742
Operating expenses:
Sales and marketing 24,971 21,817 73,995 63,260
Research and development 9,603 9,172 26,306 23,307
General and administrative 5,020 4,675 14,941 13,488
Total operating expenses 39,594 35,664 115,242 100,055
Operating income 11,994 10,717 37,811 34,687
Interest income, net 651 759 2,083 2,162
Net foreign exchange gain (loss) 82 (134) (259) (1,404)
Income before income taxes 12,727 11,342 39,635 35,445
Provision for income taxes 4,200 3,743 13,079 11,697
Net income $8,527 $7,599 $26,556 $23,748
Basic earnings per share $ 0.26 $0.23 $ 0.81 $0.73
Weighted average shares
outstanding -- basic
32,850 32,572 32,800 32,534
Diluted earnings per share $ 0.25 $0.23 $ 0.78 $0.71
Weighted average shares
outstanding -- diluted
33,950 33,750 34,100 33,533

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

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