Contacts: | Rebecca Geier | Jennifer Howard-Brown |
National Instruments Reports 20 Percent Year-Over-Year Revenue Growth
Company Delivers Record Software Sales and Launches Significant New Products in Q3
AUSTIN, Texas -- Oct. 26, 2004 -- National Instruments (Nasdaq: NATI) reported third quarter revenue of
$125 million, an increase of 20 percent compared to the third quarter of 2003, as well as the company's ninth consecutive quarter of year-over-year revenue growth. Net income under generally accepted accounting principles (GAAP) for Q3 2004 was $7.9 million, representing diluted earnings per share (EPS) of 10 cents. This compares to net income of $8 million and diluted EPS of 10 cents in Q3 2003.
Pro forma adjusted net income for Q3 2004 was $9.9 million, which represented diluted EPS of 12 cents compared to the pro forma adjusted net income of $8.2 million and diluted EPS of 10 cents in Q3 2003. Pro forma net income and diluted EPS for each third quarter period excludes the effects of patent litigation costs. These charges are set forth in the reconciliation of GAAP to non-GAAP financial measures table included below. Patent litigation costs in Q3 2004 include a $2.5 million charge to accrue for the additional expected patent litigation costs of taking the company's current patent litigation with SoftWIRE Technology, LLC to trial in 2006. This incremental charge resulted from a decision by the court on Oct. 6, 2004, to delay the trial and was not included in the company's previous guidance of fully diluted EPS of 11 cents for Q3 2004.
The company also announced a quarterly dividend of 5cents per share on its common stock payable on Nov. 29, 2004, to shareholders of record on Nov. 8, 2004. As of Sept. 30, 2004, the company had $200 million in cash and short-term investments. During the quarter, the company repurchased approximately 251,000 shares of common stock for $6.7 million and paid a dividend of $3.9 million.
"We continued our aggressive investment in R&D in Q3 and introduced significant new products at NIWeek, including our new NI M Series family of data acquisition devices, two new 200 MS/s PXI modular instruments, and the CompactRIO embedded control system platform," said NI president and CEO Dr. James Truchard. "Strong sales of software, PXI and modular instruments during the quarter demonstrate the mainstream acceptance of virtual instrumentation in test, and we are excited about our growing opportunities in industrial control and design."
-- More --
National Instruments Reports 20 Percent Year-Over-Year Revenue Growth
Oct. 26, 2004
Page 2
Q3 2004 Highlights
- Revenue growth of 20 percent year-over-year
- Pro forma net income up 20 percent year-over-year
- Record quarter for software sales
- Successful NIWeek with record attendance and record number of exhibitors
- New M Series products that lead the industry with more performance, I/O capabilities and value to customers
- Strong growth in PXI led by modular instruments and switch products with the launch of two new 200 MS/s modular instruments
- Introduction of CompactRIO, a new rugged, ultrahigh-performance platform for industrial control
- Release of SignalExpress, an interactive software environment for design engineers
- Disciplined expense management by employees
"The strong growth of our newer products shows that our strategy of increased investment in R&D paid off as our order growth outpaced our peers," said NI CFO Alex Davern. "We expect to see sequential revenue growth and a record revenue quarter in Q4."
Geographically, the growth of revenue in U.S. dollar terms for Q3 2004 compared to Q3 2003 was up 23 percent in the Americas, up 15 percent in Europe and up 19 percent in Asia, equaling overall growth of 20 percent.In local currency terms, revenue was up 5percent in Europe, up 16 percent in Asia and up 23 percent in the Americas for an overall local currency growth of 16 percent.
NI anticipates Q4 revenue to increase sequentially to a new quarterly revenue record. In addition, the company estimates fully diluted earnings per share of between 16 cents and 20 cents for Q4 2004.
Interested parties can listen to a conference call today, Oct. 26, 2004, beginning at 4:00 p.m. CDT, at www.ni.com/call.Replay information will be available by calling (719) 457-0820, confirmation code #893468, from Oct. 26, 2004, at 7:00 p.m. CDT, through Nov. 2, 2004, at 12:00 a.m. CST.
-- More --
National Instruments Reports 20 Percent Year-Over-Year Revenue Growth
Oct. 26, 2004
Page 3
This release contains "forward-looking statements," including statements regarding strong growth of newer products, mainstream acceptance of virtual instrumentation, excitement about growth opportunities, sequential revenue growth and record revenue for Q4 and earnings per share of 16 cents to 20 cents in Q4 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 readers to documents filed with the SEC for other risks associated with the company's future performance.
Non-GAAP Financial Measurements
In addition to the GAAP results provided by this document, the company has provided non-GAAP financial measurements that present net income and net income per share on a basis excluding certain charges. Details of these excluded items are presented in the table below, which reconciles the GAAP results to non-GAAP financial measurements described in this press release.
-- More --
National Instruments Reports 20 Percent Year-Over-Year Revenue Growth
Oct. 26, 2004
Page 4
National Instruments
Reconciliation of Pro Forma Net Income to Reported Results
(in thousands, except per share data)
(unaudited)
Three Months | Nine Months | ||||||
Ended September 30, | Ended September 30, | ||||||
2004 | 2003 | 2004 | 2003 | ||||
Pro forma net income | $9,880 | $8,226 | $34,512 | $24,968 | |||
Pro forma adjustment: | |||||||
Patent litigation | |||||||
(tax effected) | (1,943) | (272) | (2,388) | (2,847) | |||
GAAP net income | $7,937 | $7,954 | $32,124 | $22,121 | |||
Basic earnings per share: | |||||||
Pro forma net income | $0.13 | $0.11 | $0.44 | $0.32 | |||
Pro forma adjustment | (0.03) | (0.01) | (0.03) | (0.03) | |||
Net income | $0.10 | $0.10 | $0.41 | $0.29 | |||
Diluted earnings per share: | |||||||
Pro forma net income | $0.12 | $0.10 | $0.42 | $0.31 | |||
Pro forma adjustment | (0.02) | - | (0.03) | (0.04) | |||
Net income | $0.10 | $0.10 | $0.39 | $0.27 | |||
Basic shares used in circulation | 78,671 | 77,298 | 78,637 | 77,202 | |||
Diluted shares used in circulation | 81,749 | 80,898 | 82,209 | 80,579 | |||
-- More --
National Instruments Reports 20 Percent Year-Over-Year Revenue Growth
Oct. 26, 2004
Page 5
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 in industry, government and academia 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 3,100 employees and direct operations in 41 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 follow.
CompactRIO, LabVIEW, NI, ni.com, NIWeek and SignalExpress are trademarks of National Instruments. Other product and company names listed are trademarks or trade names of their respective companies.
-- More --
National Instruments Reports 20 Percent Year-Over-Year Revenue Growth
Oct. 26, 2004
Page 6
National Instruments
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
September 30, | December 31, | ||
2004 | 2003 | ||
ASSETS | |||
Current assets: | |||
Cash and cash equivalents | $53,104 | $53,446 | |
Short-term investments | 147,186 | 141,227 | |
Accounts receivable, net | 75,921 | 77,970 | |
Inventories, net | 59,198 | 38,813 | |
Other current assets | 32,308 | 19,669 | |
Total current assets | 367,717 | 331,125 | |
Property and equipment, net | 150,623 | 151,612 | |
Intangibles and other assets, net | 42,360 | 42,414 | |
Total assets | $560,700 | $525,151 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Current liabilities: | |||
Accounts payable | $29,240 | $29,567 | |
Accrued expenses and other liabilities | 55,797 | 46,228 | |
Total current liabilities | 85,037 | 75,795 | |
Deferred income taxes, net | 10,446 | 9,904 | |
Total liabilities | 95,483 | 85,699 | |
Stockholders' equity: | |||
Preferred stock | -- | -- | |
Common stock | 787 | 783 | |
Additional paid-in capital | 94,072 | 95,070 | |
Retained earnings | 371,615 | 349,994 | |
Other | (1,257) | (6,395) | |
Total stockholders' equity | 465,217 | 439,452 | |
Total liabilities and stockholders' equity | $560,700 | $525,151 |
-- More --
National Instruments Reports 20 Percent Year-Over-Year Revenue Growth
Oct. 26, 2004
Page 7
National Instruments
Condensed Consolidated Statements of Income
(in thousands, except per share data)
(unaudited)
Three Months | Nine Months | ||||||
Ended September 30, | Ended September 30, | ||||||
2004 | 2003 | 2004 | 2003 | ||||
Net sales | $125,348 | $104,644 | $377,113 | $303,983 | |||
Cost of sales | 34,247 | 27,434 | 99,142 | 80,598 | |||
Gross profit | 91,101 | 77,210 | 277,971 | 223,385 | |||
Sales and marketing | 46,378 | 40,282 | 140,123 | 116,951 | |||
Research and development | 21,737 | 18,370 | 63,072 | 50,497 | |||
General and administrative | 10,358 | 8,438 | 30,202 | 25,244 | |||
Patent litigation | 2,591 | 362 | 3,184 | 3,796 | |||
Total operating expenses | 81,064 | 67,452 | 236,581 | 196,488 | |||
Operating income | 10,037 | 9,758 | 41,390 | 26,897 | |||
Interest income, net | 582 | 570 | 2,012 | 1,876 | |||
Foreign exchange, net | (85) | (209) | (831) | 116 | |||
Other income, net | 48 | 486 | 261 | 606 | |||
Income before income taxes | 10,582 | 10,605 | 42,832 | 29,495 | |||
Provision for income taxes | 2,645 | 2,651 | 10,708 | 7,374 | |||
Net income | $7,937 | $7,954 | $32,124 | $22,121 | |||
Earnings per share: | |||||||
Basic | $0.10 | $0.10 | $0.41 | $0.29 | |||
Diluted | $0.10 | $0.10 | $0.39 | $0.27 | |||
Weighted average shares outstanding: | |||||||
Basic | 78,671 | 77,298 | 78,637 | 77,202 | |||
Diluted | 81,749 | 80,898 | 82,209 | 80,579 | |||
Dividends declared per share | $0.05 | $0.03 | $0.13 | $0.03 |
-- More --
National Instruments Reports 20 Percent Year-Over-Year Revenue Growth
Oct. 26, 2004
Page 8
National Instruments
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Nine Months Ended | |||
September 30, | |||
2004 | 2003 | ||
Cash flow from operating activities: | |||
Net income | $32,124 | $22,121 | |
Adjustments to reconcile net income to cash from operating activities: | |||
Charges (benefits) to income not requiring cash: | |||
Depreciation and amortization | 18,505 | 18,787 | |
Benefit from deferred income taxes | (937) | (514) | |
Tax benefit from stock option plans | 1,983 | 2,565 | |
Changes in operating assets and liabilities: | |||
Decrease (increase) in accounts receivable | 2,049 | (5,332) | |
Decrease (increase) in inventory | (20,385) | 799 | |
Decrease (increase) in prepaid expense and other assets | (7,262) | 4,071 | |
Increase (decrease) in current liabilities | 9,242 | (4,384) | |
Net cash provided by operating activities | 35,319 | 38,113 | |
Cash flow from investing activities: | |||
Payment for acquisitions, net of cash received | - | (5,316) | |
Capital expenditures | (11,338) | (12,870) | |
Capitalization of internally developed software | (4,199) | (9,449) | |
Additions to other intangibles | (685) | (1,022) | |
Purchases of short-term investments | (167,403) | (105,626) | |
Sales and maturities of short-term investments | 161,444 | 81,054 | |
Net cash used in investing activities | (22,181) | (53,229) | |
Cash flow from financing activities: | |||
Proceeds from issuance of common stock | 11,168 | 11,476 | |
Repurchase of common stock | (14,145) | - | |
Dividends paid | (10,503) | (2,585) | |
Net cash provided by (used in) financing activities | (13,480) | 8,891 | |
Net decrease in cash and cash equivalents | (342) | (6,225) | |
Cash and cash equivalents at beginning of period | 53,446 | 40,240 | |
Cash and cash equivalents at end of period | $53,104 | $34,015 | |
###