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National Instruments Announces Record Earnings for Third Quarter 1996


Net Income Up 66 Percent Over Third Quarter of 1995

Austin, Texas -- Oct. 22, 1996 -- National Instruments (NASDAQ: NATI) today announced record earnings for the third quarter of fiscal year 1996 ended September 30, 1996. Revenues for the third quarter were $49.7 million, up 24 percent from $40.1 million in the third quarter of 1995, and off 1 percent from the $50.2 million reported in the second quarter of 1996 in keeping with seasonal patterns. Including the effect of a $500,000 write-off of intangibles in conjunction with the purchase of software technology acquired during the quarter, income from operations was $8.8 million for the quarter ended September 30, 1996 compared with $6.3 million in 1995, a 40 percent increase. Net income in the quarter was $6.4 million, up 66 percent from $3.8 million a year ago, and up 18 percent from the $5.4 million reported in the immediately prior quarter.

National Instruments reported earnings per share of $0.29 on 22.1 million weighted shares outstanding, compared with earnings per share of $0.18 on 21.6 million weighted shares outstanding in the third quarter of 1995 and $0.25 on 21.9 million weighted average shares outstanding in the second quarter of 1996. The foregoing income from operations for the third quarter of 1996, net income and earnings per share amounts include a $500,000 charge against earnings for the write-off of intangible assets arising from the acquisition of software technology. Excluding the effect of this charge, income from operations would have been $9.3 million and net income would have been $6.7 million, which would have resulted in earnings per share of $0.30.

For the nine months ended September 30, 1996, revenue was $146.3 million, compared with $120.4 million in the nine-month period a year earlier, a 21 percent increase. For the nine months ended September 30, 1996, income from operations was $25.4 million, compared with $18.1 million in the nine-month period a year earlier, a 40 percent increase. Results for the nine-month period ended September 30, 1996 included net income of $17.2 million or $0.79 per share on 21.9 million weighted shares outstanding, compared with $12.0 million and $0.58 per share on 20.7 million weighted shares outstanding for the same period in 1995. Net income increased 44 percent from the nine months ended September 30, 1995. Excluding the $500,000 charge for the write-off of intangible assets this quarter and a charge last quarter for in-process research and development associated with the acquisition of Georgetown Systems, income from operations for the nine-month period would have been $26.9 million with net income of $18.2 million, which would have resulted in earnings per share of $0.83.

The balance sheet remained strong, with cash and equivalents and short-term investments totaling $71.7 million, compared with $49.8 million at December 31, 1995; total assets stood at $158.0 million at September 30, 1996 compared with $137.1 million at December 31, 1995.

"We are pleased with our execution on new product shipments during the third quarter," notes James Truchard, President and CEO. "We shipped a total of 18 new products, including a new line of VXI instruments. Our investment in our custom MITE ASIC is now paying off as we leverage this technology to easily move our popular data acquisition products to the VXI platform. We have now expanded our VXI product line beyond controllers and software to include instruments, offering a more complete solution to our VXI customers. With regard to software, we shipped versions of LabVIEW 4.0 for France and Germany with native language documentation."

National Instruments manufactures software and hardware products for PCs and workstations that scientists and engineers worldwide use to build virtual instrumentation systems in a variety of applications and industries. National Instruments is traded on the NASDAQ National Market System under the symbol NATI. More information on National Instruments is available from the company's SEC filings or by contacting the company's Investor Relations Department at 6504 Bridge Point Parkway, Austin, Texas 78730-5039, (512) 349-5090. General company and financial information can also be accessed through the National Instruments InstrumentationWeb at www.ni.com.

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

Product and company names listed are trademarks or tradenames of their respective companies.



National Instruments
Condensed Consolidated Balance Sheets
(in thousands)

Sept 30
1996
(unaudited)
December 31
1995
ASSETS
Current assets:
Cash and cash equivalents $ 28,795 $ 12,016
Marketable securities 42,293 37,765
Accounts receivable, net 31,636 28,789
Inventories 11,406 15,295
Other current assets 5,996 6,788
Total current assets 120,756 100,653
Intangibles and other assets 4,949 3,853
Property and equipment, net 32,290 32,596
Total assets $157,995 $137,102
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 2,008 $ 2,137
Accounts payable 10,317 9,783
Accrued expenses 17,937 14,187
Total current liabilities 30,262 26,107
Long-term debt 9,194 11,603
Deferred income taxes 656 656
Total liabilities 40,112 38,366
Stockholder's equity:
Common stock 216 215
Additional paid-in capital 43,512 41,277
Retained earnings 74,350 57,104
Other (195) 140
Total stockholders' equity 117,883 98,736
Total liabilities and stockholders' equity $157,995 $137,102

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

Three Months
Ended Sept 30,
Nine Months
Ended Sept 30,
1996 1995 1996 1995
Net sales $49,679 $40,122 $146,328 $120,443
Cost of sales 12,623 8,920 36,651 28,574
Gross profit 37,056 31,202 109,677 91,869
Operating expenses
Sales and marketing 17,466 15,718 53,108 47,663
Research and development 6,412 5,161 18,239 15,100
General and administrative 4,401 4,053 12,963 10,958
Total operating expenses 28,279 24,932 84,310 73,721
Operating income 8,777 6,270 25,367 18,148
Interest income, net 499 146 1,070 498
Foreign exchange (loss) gain, net (31) (637) (696) 363
Income before income taxes 9,245 5,779 25,741 19,009
Provision for income taxes 2,887 1,940 8,495 7,034
Net income $6,358 $3,839 $ 17,246 $11,975
Earnings per share $ 0.29 $0.18 $ 0.79 $0.58
Weighted average shares outstanding 22,061 21,593 21,872 20,707

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

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