EX-99.1 2 rrd48952_610.htm PRESS RELEASE DATED JULY 27, 2004

Contacts:

Kimberly Allen
Investor Relations Manager
(512) 683-6873

Jennifer Howard-Brown
Media Relations Manager
(512) 683-8713

National Instruments Reports Record Q2 Revenue Up 27 Percent

Quarterly Operating Income Up 70 Percent

AUSTIN, Texas -- July 27, 2004 -- National Instruments (Nasdaq: NATI) reported second quarter revenue of $127 million, an increase of 27 percent compared to the second quarter of 2003. Operating income was up 70 percent from Q2 2003 and fully diluted earnings per share (EPS) for Q2 were 14 cents with net income of $11.4 million, up 53 percent from Q2 2003. The company had strong growth in all regions with sales growth of 23 percent in Asia, 27 percent in the Americas and 30 percent in Europe. This represents the company's third consecutive quarter of record revenues.

The company also announced a quarterly dividend of 5 cents per share on its common stock payable on Aug. 30, 2004, to shareholders of record on Aug. 9, 2004. As of June 30, 2004 the company had $192 million of cash and short-term investments.

"I am very pleased with our new product execution in Q2, highlighted by record new product output from R&D," said Dr. James Truchard, NI CEO. "These new products, combined with the success of our strategic platforms including LabVIEW, PXI and Compact FieldPoint, are taking virtual instrumentation deeper into test, design and control."

"Customer response to our products continues to be strong worldwide with revenue growth across all product areas," added Truchard. "We are on track to deliver record revenues for the second half of the year as well as the full fiscal year, and we are focused on improving our operating leverage during Q3 and Q4."

Q2 2004 Highlights

  • Third consecutive quarter of record revenue with 27 percent year-over-year revenue growth
  • Quarterly operating income up 70 percent year-over-year
  • Record number of new products in Q2 including upgrade of flagship software with LabVIEW 7.1 release
  • Strong year-over-year growth for strategic platforms including LabVIEW, Compact FieldPoint and PXI
  • Solid growth for core products including software, PC data acquisition, modular instruments and instrument control
  • Strong customer activity levels, including a record 3.6 million visitors to ni.com
  • ni.com named one of the ten best customer support sites by the Association of Support Professionals

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National Instruments Reports Record Q2 Revenue Up 27 Percent
July 27, 2004
Page 2

"In Q2 we had outstanding revenue growth. While we delivered excellent operating income growth of 70 percent, we did not deliver the full operating leverage expected," said Alex Davern, NI CFO. "The strengthening of the U.S. dollar caused us to incur a $743,000 foreign exchange loss during Q2. For the second half of the year, we will be focused on continuing to grow the top line while moderating the growth in expenses to move our operating margins toward our goal of 18 percent in Q4."

Geographically, the growth of revenue in U.S. dollar terms for Q2 2004 compared to Q2 2003 was as follows: up 27 percent in the Americas, up 30 percent in Europe and up 23 percent in Asia, giving overall growth of 27 percent. In local currency terms, revenue was up 12 percent in Europe, up 19 percent in Asia and up 27 percent in the Americas for an overall local currency growth of 20 percent.

The company is expecting revenue in Q3 2004 to increase sequentially to between $127 million and $131 million. This would represent an increase of between 21 to 25 percent over Q3 2003. In Q3 2004, we expect to report total operating expenses of approximately $81 million and fully diluted EPS of between $0.13 and $0.16, up from $0.10 in Q3 2003. We are currently expecting to report record revenue for Q4 2004 and fully diluted EPS of between $0.23 and $0.26, up from $0.14 in Q4 2003.

National Instruments will hold its 10th annual NIWeek conference August 17-19, 2004 in Austin, Texas. NIWeek is a key event for launching new products and meeting with customers and strategic partners. The event will kickoff with a keynote address by Tim Dehne, senior vice president of research and development, where the company will introduce and demonstrate major new products that expand NI's market opportunity. Early registration is at record levels, with nearly 30 percent growth compared to last year. NI will hold its Analyst Day on August 17 in concert with NIWeek.

Interested parties can listen to a conference call today, July 27, 2004, beginning at 4:00 p.m. CDT, at ni.com/call. Replay information will be available by calling (719) 457-0820, confirmation code #347555, from July 27, 2004, at 7:00 p.m. CDT, through Aug. 3, 2004, at 12:00 a.m. CDT.

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National Instruments Reports Record Q2 Revenue Up 27 Percent
July 27, 2004
Page 3

This release contains "forward-looking statements," including statements regarding major new products expanding market opportunity, being on track to deliver record revenues, improving operating leverage in Q3 and Q4, operating margin goals, revenue, and operating expenses and earnings per share in Q3 2004. These statements are subject to a number of risks and uncertainties, including the risk of adverse changes in the global economy, delays in the release of new products, the ability to control expenses, fluctuations in customer demand for NI products, manufacturing inefficiencies, and foreign exchange fluctuations. Actual results may differ materially from the expected results. The company directs you to documents filed with the SEC for other risks associated with the company's future performance.

About National Instruments

National Instruments (www.ni.com) is a technology pioneer and leader in virtual instrumentation -- a revolutionary concept that has changed the way engineers and scientists approach measurement and automation. Leveraging the PC and its related technologies, virtual instrumentation increases productivity and lowers costs through easy-to-integrate software, such as the NI LabVIEW graphical development environment, and modular hardware, such as PXI modules for data acquisition, instrument control and machine vision. Headquartered in Austin, Texas, NI has more than 3,200 employees and direct operations in 40 countries. In 2003, the company sold products to more than 25,000 companies in 90 countries. For the past five years, FORTUNE magazine named NI one of the 100 best companies to work for in America.

Readers may obtain investment information from the company's investor relations department by calling (512) 683-5090, by sending e-mail to nati@ni.com or by visiting www.ni.com/nati.

The condensed consolidated balance sheets, statements of income and cash flows to follow.

FieldPoint, LabVIEW, NI and ni.com are trademarks of National Instruments. Other product and company names listed are trademarks or trade names of their respective companies.

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National Instruments Reports Record Q2 Revenue Up 27 Percent
July 27, 2004
Page 4

National Instruments
Condensed Consolidated Balance Sheets
(in thousands)

June 30

December 31

2004

2003

(unaudited)

(unaudited)

ASSETS

Current assets:

Cash and cash equivalents

$46,199

$53,446

Short-term investments

145,708

141,227

Accounts receivable, net

85,091

77,970

Inventories, net

60,431

38,813

Other current assets

26,512

19,669

Total current assets

363,941

331,125

Property and equipment, net

150,462

151,612

Intangibles and other assets, net

42,721

42,414

Total assets

$557,124

$525,151

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$35,102

$29,567

Accrued expenses and other liabilities

46,662

46,228

Total current liabilities

81,764

75,795

Deferred income taxes, net

10,391

9,904

Total liabilities

92,155

85,699

Stockholders' equity:

Preferred stock

--

--

Common stock

788

783

Additional paid-in capital

98,707

95,070

Retained earnings

367,621

349,994

Other

(2,147)

(6,395)

Total stockholders' equity

464,969

439,452

Total liabilities and stockholders' equity

$557,124

$525,151

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National Instruments Reports Record Q2 Revenue Up 27 Percent
July 27, 2004
Page 5

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

Three Months

Six Months

Ended June 30,

Ended June 30,

(unaudited)

(unaudited)

2004

2003

2004

2003

Net sales

$127,127

$100,165

$251,765

$199,338

Cost of sales

33,325

27,150

64,895

53,163

Gross profit

93,802

73,015

186,870

146,175

Sales and marketing

47,048

38,124

93,745

76,669

Research and development

21,345

16,876

41,335

32,127

General and administrative

9,999

8,469

19,859

16,806

Patent litigation

402

732

578

3,434

Total operating expenses

78,794

64,201

155,517

129,036

Operating income

15,008

8,814

31,353

17,139

Interest income, net

717

620

1,430

1,306

Foreign exchange gain/(loss), net

(743)

340

(746)

325

Other income, net

165

98

212

119

Income before income taxes

15,147

9,872

32,249

18,889

Provision for income taxes

3,787

2,468

8,062

4,722

Net income

$11,360

$7,404

$24,187

$14,167

Earnings per share:

Basic

$0.15

$0.10

$0.31

$0.18

Diluted

$0.14

$0.09

$0.30

$0.18

Weighted average shares

Outstanding:

Basic

78,287

77,235

78,126

76,986

Diluted

81,994

80,450

81,955

80,180

Dividend declared per share

$0.05

$--

$0.08

$--

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National Instruments Reports Record Q2 Revenue Up 27 Percent
July 27, 2004
Page 6

National Instruments
Consolidated Statements of Cash Flows
(in thousands)

Six Months Ended

June 30,

(unaudited)

2004

2003

Cash flow from operating activities:

Net income

$24,187

$14,167

Adjustments to reconcile net income to net cash provided by operating activities:

Charges to income not requiring cash outlays:

Depreciation and amortization

12,058

12,390

Benefit from deferred income taxes

(1,137)

(965)

Tax benefit from stock option plans

1,807

1,315

Changes in operating assets and liabilities:

Decrease (increase) in accounts receivable

(7,121)

1,221

Decrease (increase) in inventory

(21,618)

3,351

Decrease (increase) in prepaid expense and other assets

(1,635)

2,511

Increase (decrease) in current liabilities

5,969

(6,978)

Net cash provided by operating activities

12,510

27,012

Cash flow from investing activities:

Capital expenditures

(6,802)

(7,759)

Capitalization of internally developed software

(3,413)

(8,432)

Additions to other intangibles

(336)

(4,323)

Purchases of short-term investments

(91,367)

(77,042)

Sales and maturities of short-term investments

86,886

50,651

Net cash used in investing activities

(15,032)

(46,905)

Cash flow from financing activities:

Proceeds from issuance of common stock

9,240

7,715

Repurchases of common stock

(7,405)

--

Dividends paid

(6,560)

___--

Net cash provided by (used in) financing activities

(4,725)

7,715

Net decrease in cash and cash equivalents

(7,247)

(12,178)

Cash and cash equivalents at beginning of period

53,446

40,240

Cash and cash equivalents at end of period

$46,199

$28,062

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