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National Instruments Reports Record Operating Income in Q4

Quarterly Revenue Increases 22 Percent on a Sequential Basis

AUSTIN, Texas, Jan. 26, 2010 /PRNewswire via COMTEX News Network/ -- Q4 2009 Highlights

National Instruments (Nasdaq: NATI) reported quarterly revenue of $202 million, which represents a 22 percent sequential increase and is flat year-over-year. Orders returned to year-over-year growth in Q4, up 2 percent, and the average order size reached a new quarterly record of approximately $3,800. Revenue growth in the quarter was lower than year-over-year order growth due to a record $8 million net increase in deferred revenue, primarily resulting from strong sequential growth in software sales in Q4, which is expected to benefit revenue in future quarters.

In Q4, gross margin increased by 2.3 percentage points sequentially and increased 1.7 percentage points year-over-year to 76.9 percent in Q4. Non-GAAP gross margin increased by 2.2 percentage points sequentially and increased by 1.7 percentage points year-over-year to 77.5 percent. Inventory declined by $2 million sequentially in Q4.

Q4 2009 operating income and non-GAAP operating income both set quarterly records. Operating income was $36 million, a 65 percent increase over Q4 2008. The non-GAAP operating income of $42 million was up 50 percent compared to Q4 2008, and represents a non-GAAP operating margin of 21 percent. The company's non-GAAP results exclude the impact of both stock-based compensation and the amortization of acquisition-related intangibles.

"While 2009 presented one of the most difficult economic environments in company history, our investments in R&D and field sales and the strength of our execution throughout the organization allowed National Instruments to recover rapidly, outperform the industry and position ourselves well for long-term success," said James Truchard, NI president, co-founder and CEO. "I would like to congratulate our employees for making National Instruments one of FORTUNE's 100 Best Places to Work for an 11th consecutive yearand to thank everyone in the company for their expense management and commitment to innovation throughout 2009."

In Q4, NI virtual instrumentation and graphical system design product sales, which constitute the majority of the company's product portfolio, were up 23 percent from Q3 2009. NI instrument control product sales, which represent approximately 7 percent of NI revenue, were flat year-over-year and were up sequentially for a second quarter. NI CompactRIO hardware, modular instruments and academic products all set quarterly revenue records in Q4. The strong sequential increase in NI instrument control revenue in Q4 indicates that the overall test and measurement industry likely continued the sequential recovery that began in Q3. Product revenue was $188 million, up 1 percent from Q4 2008, and software maintenance revenue was $13 million, down 11 percent year-over-year.

Geographically, revenue in U.S. dollar terms for Q4 2009 compared to Q4 2008 was down 6 percent in the Americas, down 3 percent in Europe and up 15 percent in Asia. In local currency terms, revenue was up 1 percent in Europe and up 10 percent in Asia.

In Q4 2009, the company incurred a non-cash tax charge related to an opportunity benefit created by a new corporate income tax law in Hungary, which became effective on Jan. 1, 2010. Under the new law, National Instruments will receive a double tax deduction for qualified R&D expenses starting in 2010. As a result, NI has taken a non-cash charge to write off $21.6 million in other tax assets that NI had on its balance sheet related to Hungary but now does not expect to use. The $21.6 million charge reduced both the company's GAAP and non-GAAP earnings per share (EPS) by $0.28. For historical comparison, note that in Q4 2007, NI recognized an $18.3 million non-cash tax credit related to its Hungarian operations.

Including the impact of the $21.6 million, or $0.28 per share non-cash tax charge, net income for Q4 was $2.4 million, with fully diluted EPS of $0.03, and non-GAAP net income was $9.7 million, with non-GAAP fully diluted EPS of $0.12. A reconciliation of the company's GAAP and non-GAAP results is included in this earnings press release.

The NI commitment to innovation and customer success is evident in the continued growth in R&D and field sales, which were up by 63 people in 2009. As of Dec. 31, total headcount was 5,120, a 1 percent year-over-year decline.

Cash flow from operations continued to be strong at $136 million for the year. As of Dec. 31, 2009, NI had $289 million in net cash and short-term investments, up $12 million from Sept. 30, 2009. During Q4 2009, the company paid $9 million in dividends and used $16.4 million to repurchase 574,000 shares of its common stock at an average price of $28.55 per share. During the difficult two years since the start of the recession in December 2007, NI generated $257 million in net cash provided by operating activities, paid out $72 million in dividends and used $138 million for the purchase of 5.6 million shares of NI common stock at an average price of $24.89 per share.

National Instruments announced that its Board of Directors approved an 8 percent sequential increase in the quarterly dividend to $0.13 per share. This dividend is payable on March 1, 2010, to shareholders of record on Feb. 8, 2010.

FY 2009 Highlights

Full-year 2009 revenue was $677 million, down 18 percent year-over-year in U.S. dollar terms. Including the impact of the $21.6 million or $0.28 per share non-cash tax charge, annual net income was $17 million, with fully diluted EPS of $0.22, and annual non-GAAP net income was $36 million, with non-GAAP fully diluted EPS of $0.47.

Guidance for Q1 2010

"We are very pleased with the rapid recovery in our business despite the continued severe weakness in industrial capacity utilization," said Alex Davern, NI CFO. "Our goals are to maintain the market share gains we have achieved in the recession and to focus on delivering significant operating leverage in the recovery. Our guidance anticipates significant year-over-year revenue and profit growth in Q1, with the midpoint of both revenue and earnings per share guidance, representing new all-time records for a first quarter."

NI expects strong Q1 year-over-year revenue growth, with revenue expected to be between $192 million and $202 million. The company expects fully diluted EPS between $0.24 and $0.32, with non-GAAP fully diluted EPS expected to be between $0.30 and $0.38. This guidance includes the full restoration of employee salaries, generally effective Feb. 1, and the automatic variable pay increase that will result from the significant year-over-year growth assumed by the company's guidance.

For 2010, the company anticipates that its non-GAAP effective tax rate will be between 18 percent and 22 percent, and the company is using 20 percent for internal modeling.

In Q1 2010, the company anticipates that the GAAP to non-GAAP EPS adjustment will be approximately $0.06 per share. For the full year, the company anticipates that the GAAP to non-GAAP EPS adjustment will be approximately $0.22 per share.

Non-GAAP Earnings Presentation and Non-GAAP Earnings Guidance

In addition to disclosing results determined in accordance with GAAP, NI discloses certain non-GAAP operating results that exclude certain charges. In this news release, the company has presented its results for 2009 and for Q4 2009 on a GAAP and non-GAAP basis. When presenting non-GAAP results, the company includes a reconciliation of the non-GAAP data to the data under GAAP.

Management believes that including the non-GAAP results assists investors in assessing the company's operational performance and its performance relative to its competitors. The company presents these non-GAAP results as a complement to results provided in accordance with GAAP, and these results should not be regarded as a substitute for GAAP. Management uses these non-GAAP measures to manage and assess the profitability and performance of its business and does not consider stock-based compensation expense or amortization of acquired intangibles that are all non-cash charges in managing its operations. Specifically, management uses non-GAAP measures to plan and forecast future periods, to establish operational goals, to compare with its business plan and individual operating budgets, to measure management performance for purposes of executive compensation including payments to be made under bonus plans, to assist the public in measuring the company's performance relative to the long-term public performance goals, to allocate resources and, relative to the company's historical financial performance, to enable comparability between periods. Management also considers such non-GAAP results to be an important supplemental measure of its performance. This news release also discloses NI's earnings before interest, taxes, depreciation and amortization (EBITDA) for 2009 and Q4 2009 and comparative EBITDA results for 2008 and Q4 2008. Management also believes that including the EBITDA results assists investors in assessing the company's operational performance relative to its competitors. A reconciliation of EBITDA to GAAP net income is included with this news release.

Conference Call Information

Interested parties can listen to the Q4 2009 conference call today, Jan. 26, beginning at 4:00 p.m. CT, at www.ni.com/call. Replay information is available by calling (888) 203-1112, confirmation code #8926744, from Jan. 26 at 7:00 p.m. CT through Feb. 5 at midnight CT.

Forward-Looking Statements

This release contains "forward-looking statements," including statements related to deferred revenue benefitting revenue in future quarters, positioning the company for long-term success, not expecting to use other tax assets in Hungary, maintaining market share gains, significant operating leverage and the company's guidance for Q1 2010 with respect to revenue and GAAP and non-GAAP EPS, guidance assumptions, non-GAAP tax rate for 2010 and expected GAAP and non-GAAP adjustments for Q1 2010 and 2010. These statements are subject to a number of risks and uncertainties, including the risk of unexpected adverse changes or fluctuations in the global economy as a result of conditions in the global credit and equity markets, delays in the release of new products, fluctuations in customer demand for NI products, manufacturing inefficiencies, competitive conditions in NI markets, further tax law changes in Hungary and foreign exchange fluctuations. Actual results may differ materially from the expected results. The company directs readers to its quarterly reports on Form 10-Q and the other documents it files with the SEC for other risks associated with the company's future performance.

About National Instruments

National Instruments (www.ni.com) is transforming the way engineers and scientists design, prototype and deploy systems for measurement, automation and embedded applications. NI empowers customers with off-the-shelf software such as NI LabVIEW and modular cost-effective hardware, and sells to a broad base of more than 30,000 different companies worldwide, with no one customer representing more than 3 percent of revenue and no one industry representing more than 15 percent of revenue. Headquartered in Austin, Texas, NI has more than 5,000 employees and direct operations in more than 40 countries. For the past 11 years, FORTUNE magazine has named NI one of the 100 best companies to work for in America. Readers can obtain investment information from the company's investor relations department by calling (512) 683-5090, e-mailing nati@ni.com or visiting www.ni.com/nati.

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



    Contact:   Veronica Garza
                Investor
                Relations
               (512) 683-6873





                  National Instruments
          Condensed Consolidated Balance Sheets
                     (in thousands)

                                  December       December
                                     31,            31,
                                       2009          2008
                                (unaudited)
                                -----------
    Assets

    Current assets:

    Cash and cash
     equivalents                   $201,465      $229,400

    Short-term investments           87,196         6,220

    Accounts receivable,
     net                            103,957       121,548

    Inventories, net                 86,515       107,358

    Prepaid expenses and
     other current assets            36,523        43,062

    Deferred income taxes,
     net                             16,522        21,435
                                     ------        ------
    Total current assets            532,178       529,023


    Long-term investments                 -        10,500

    Property and
     equipment, net                 153,265       154,477

    Goodwill, net                    64,779        64,561

    Intangible assets, net           43,390        41,915

    Other long-term assets           19,417        32,115
                                     ------        ------
    Total assets                   $813,029      $832,591
                                   ========      ========

    Liabilities and
     Stockholders' Equity

    Current liabilities:

    Accounts payable                $23,502       $30,876

    Accrued compensation             14,934        22,012

    Deferred revenue                 57,242        45,514

    Accrued expenses and
     other liabilities                8,560        18,848

    Other taxes payable              14,181        13,481
                                     ------        ------
    Total current
     liabilities                    118,419       130,731


    Deferred income taxes            25,012        25,157

    Liability for
     uncertain tax
     positions                       11,062         9,364

    Other long-term
     liabilities                      4,116         2,901
                                      -----         -----
    Total liabilities              $158,609      $168,153
                                   ========      ========

    Stockholders' equity:

    Preferred stock                       -             -

    Common stock                        774           772

    Additional paid-in
     capital                        336,446       300,352

    Retained earnings               303,655       352,831

    Accumulated other
     comprehensive income            13,545        10,483
                                     ------        ------
    Total stockholders'
     equity                        $654,420      $664,438
                                   --------      --------
    Total liabilities and
     stockholders' equity          $813,029      $832,591
                                   ========      ========






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

                                    Three Months Ended
                                       December 31,
                                        2009           2008
                                        ----           ----
                                 (unaudited)
    Net sales:
    Product                         $188,388       $187,219
    Software
     maintenance                      13,209         14,888
                                      ------         ------
    Total net sales                  201,597        202,107

    Cost of sales:
    Product                          $45,466        $48,577
    Software
     maintenance                       1,150          1,516
                                       -----          -----
    Total cost of sales               46,616         50,093


    Gross profit                    $154,981       $152,014
                                    --------       --------

    Operating expenses:
    Sales and marketing              $70,178        $76,771
    Research and
     development                      33,722         37,332
    General and
     administrative                   15,100         16,040
                                      ------         ------
    Total operating
     expenses                       $119,000       $130,143
                                    --------       --------

    Operating income                  35,981         21,871

    Other income
     (expense):
    Interest income                     $294           $971
    Net foreign
     exchange gain
     (loss)                             (567)        (1,946)
    Other income
     (expense), net                      372            148
                                         ---            ---

    Income before
     income taxes                    $36,080        $21,044

    Provision for
     (benefit from)
     income taxes                     33,714          1,726

    Net income                        $2,366        $19,318
                                      ------        -------

    Basic earnings per
     share                             $0.03          $0.25
                                       -----          -----
    Diluted earnings
     per share                         $0.03          $0.25
                                       -----          -----

    Weighted average
     shares outstanding
     -
    basic                             77,589         78,110
    diluted                           78,325         78,522

    Dividends declared
     per share                         $0.12          $0.11


                                 Twelve Months
                                     Ended
                                 December 31,
                                        2009           2008
                                        ----           ----
                                 (unaudited)
    Net sales:
    Product                         $623,736       $765,441
    Software
     maintenance                      52,858         55,096
                                      ------         ------
    Total net sales                  676,594        820,537

    Cost of sales:
    Product                         $164,700       $201,064
    Software
     maintenance                       5,184          6,045
                                       -----          -----
    Total cost of sales              169,884        207,109


    Gross profit                    $506,710       $613,428
                                    --------       --------

    Operating expenses:
    Sales and marketing             $269,267       $307,409
    Research and
     development                     132,974        143,140
    General and
     administrative                   57,938         67,162
                                      ------         ------
    Total operating
     expenses                       $460,179       $517,711
                                    --------       --------

    Operating income                  46,531         95,717

    Other income
     (expense):
    Interest income                   $1,629         $5,996
    Net foreign
     exchange gain
     (loss)                              734         (3,737)
    Other income
     (expense), net                    1,351            161
                                       -----            ---

    Income before
     income taxes                    $50,245        $98,137

    Provision for
     (benefit from)
     income taxes                     33,160         13,310

    Net income                       $17,085        $84,827
                                     -------        -------

    Basic earnings per
     share                             $0.22          $1.08
                                       -----          -----
    Diluted earnings
     per share                         $0.22          $1.07
                                       -----          -----

    Weighted average
     shares outstanding
     -
    basic                             77,520         78,567
    diluted                           78,026         79,515

    Dividends declared
     per share                         $0.48          $0.44




               National Instruments
    Condensed Consolidated Statements of Cash
                       Flows
                  (in thousands)

                                          Twelve Months
                                              Ended
                                          December 31,
                                           2009           2008
                                    (unaudited)
                                    -----------
    Cash flow from operating
     activities:

    Net income                          $17,085        $84,827

    Adjustments to reconcile
     net income to net cash
     provided

    by operating activities:

    Depreciation and
     amortization                        38,365         37,103

    Stock-based compensation             20,299         19,854

    Provision for (benefit
     from) deferred income
     taxes                               17,196         (4,475)

    Tax expense (benefit from)
     stock option plans                   1,450         (1,213)

    Changes in operating
     assets and liabilities:

    Accounts receivable                  17,591         12,159

    Inventories                          20,843        (24,578)

    Prepaid expenses and other
     assets                              12,740        (10,340)

    Accounts payable                     (7,374)        (5,648)

    Deferred revenue                     11,728          9,423

    Taxes and other
     liabilities                        (14,272)         4,706
                                        -------          -----
    Net cash provided by
     operating activities              $135,651       $121,818
                                       --------       --------

    Cash flow from investing
     activities:

    Capital expenditures                (20,847)       (25,771)

    Capitalization of
     internally developed
     software                           (12,583)        (9,487)

    Additions to other
     intangibles                         (4,602)        (3,010)

    Acquisition, net of cash
     received                                 -        (17,310)

    Purchases of short-term
     and long-term
     investments                        (93,087)        (9,061)

    Sales and maturities of
     short-term and long-
     term investments                    19,204         86,179

    Purchases of foreign
     currency option contracts                -         (2,784)
                                            ---         ------
    Net cash (used by)
     provided by investing
     activities                       $(111,915)       $18,756
                                      ---------        -------

    Cash flow from financing
     activities:

    Proceeds from issuance of
     common stock                        21,666         31,150

    Repurchase of common stock          (34,579)      (103,641)

    Dividends paid                      (37,308)       (34,735)

    Tax expense (benefit from)
     stock option plans                  (1,450)         1,213
                                         ------          -----
    Net cash (used by)
     financing activities              $(51,671)     $(106,013)
                                       --------      ---------

    Net change in cash and
     cash equivalents                   (27,935)        34,561

    Cash and cash equivalents
     at beginning of period            $229,400       $194,839
                                       --------       --------
    Cash and cash equivalents
     at end of period                  $201,465       $229,400
                                       ========       ========


    Detail of GAAP charges related to stock-based compensation and
          amortization of acquisition intangibles (unaudited)


                                       Three Months
                                           Ended
                                       December 31,
                                      2009          2008
                                      ----          ----

    Stock-based compensation

    Cost of sales                     $309          $253

    Sales and marketing              2,148         2,275

    Research and development         1,887         1,961

    General and
     administrative                    717           733
                                       ---           ---
    Provision for income
     taxes                           1,523        (1,013)
                                     -----        ------
    Total                           $6,584        $4,209
                                    ------        ------


    Amortization of
     acquisition intangibles
    Cost of sales                     $852          $862

    Sales and marketing                126           131

    Research and development             -             -

    General and
     administrative                      -             -
                                       ---           ---
    Provision for income
     taxes                            (277)         (281)
                                      ----          ----
    Total                             $701          $712
                                       ---           ---


                                      Twelve Months
                                          Ended
                                      December 31,
                                      2009          2008
                                      ----          ----

    Stock-based compensation

    Cost of sales                   $1,284        $1,063

    Sales and marketing              8,774         8,479

    Research and development         7,236         7,121

    General and
     administrative                  3,005         3,084
                                     -----         -----
    Provision for income
     taxes                          (3,765)       (4,601)
                                    ------        ------
    Total                          $16,534       $15,146
                                   -------       -------


    Amortization of
     acquisition intangibles
    Cost of sales                   $3,445        $3,587

    Sales and marketing                503           566

    Research and development             -            14

    General and
     administrative                      -             -
                                       ---           ---
    Provision for income
     taxes                          (1,111)       (1,127)
                                    ------        ------
    Total                           $2,837        $3,040
                                    ------        ------


                      National Instruments
          Reconciliation of GAAP to Non-GAAP Measures
             (in thousands, except per share data)
                          (unaudited)

    Reconciliation of Gross Profit to Non-GAAP Gross Profit


                                         Three Months
                                            Ended
                                        December 31,
                                        2009           2008
                                        ----           ----

    Gross profit, as
     reported                       $154,981       $152,014
    Stock-based
     compensation                        309            253
    Amortization of
     acquisition
     intangibles                         852            862
                                         ---            ---

    Non-GAAP gross profit           $156,142       $153,129
                                    ========       ========


                                        Twelve Months
                                            Ended
                                        December 31,
                                        2009           2008
                                        ----           ----

    Gross profit, as
     reported                       $506,710       $613,428
    Stock-based
     compensation                      1,284          1,063
    Amortization of
     acquisition
     intangibles                       3,445          3,587
                                       -----          -----

    Non-GAAP gross profit           $511,439       $618,078
                                    ========       ========


    Reconciliation of Operating Expense to Non-GAAP Operating Expenses


                                         Three Months
                                            Ended
                                        December 31,
                                        2009           2008
                                        ----           ----

    Operating expense, as
     reported                       $119,000       $130,143
    Stock-based
     compensation                     (4,752)        (4,969)
    Amortization of
     acquisition
     intangibles                        (126)          (131)
                                        ----           ----

    Non-GAAP operating
     expenses                       $114,122       $125,043
                                    ========       ========


                                        Twelve Months
                                            Ended
                                        December 31,
                                        2009           2008
                                        ----           ----

    Operating expense, as
     reported                       $460,179       $517,711
    Stock-based
     compensation                    (19,015)       (18,684)
    Amortization of
     acquisition
     intangibles                        (503)          (580)
                                        ----           ----

    Non-GAAP operating
     expenses                       $440,661       $498,447
                                    ========       ========


    Reconciliation of Operating Income to Non-GAAP Operating Income


                                        Three Months
                                            Ended
                                        December 31,
                                        2009          2008
                                        ----          ----

    Operating income, as
     reported                        $35,981       $21,871
    Stock-based
     compensation                      5,061         5,222
    Amortization of
     acquisition
     intangibles                         978           993
                                         ---           ---

    Non-GAAP operating
     income                          $42,020       $28,086
                                     =======       =======


                                    Twelve Months
                                       Ended
                                   December 31,
                                       2009           2008
                                       ----           ----

    Operating income, as
     reported                       $46,531        $95,717
    Stock-based
     compensation                    20,299         19,747
    Amortization of
     acquisition
     intangibles                      3,948          4,167
                                      -----          -----

    Non-GAAP operating
     income                         $70,778       $119,631
                                    =======       ========


    Reconciliation of Income before income taxes to Non-GAAP Income
    before income taxes


                                        Three Months
                                            Ended
                                        December 31,
                                        2009          2008
                                        ----          ----

    Income before income
     taxes, as reported              $36,080       $21,044
    Stock-based
     compensation                      5,061         5,222
    Amortization of
     acquisition
     intangibles                         978           993
                                         ---           ---

    Non-GAAP income before
     income taxes                    $42,119       $27,259
                                     =======       =======


                                     Twelve Months
                                        Ended
                                    December 31,
                                        2009           2008
                                        ----           ----

    Income before income
     taxes, as reported              $50,245        $98,137
    Stock-based
     compensation                     20,299         19,747
    Amortization of
     acquisition
     intangibles                       3,948          4,167
                                       -----          -----

    Non-GAAP income before
     income taxes                    $74,492       $122,051
                                     =======       ========


    Reconciliation of Provision for Income Taxes to Non-GAAP Provision
    for Income Taxes

                                     Three Months
                                        Ended
                                    December 31,
                                        2009         2008
                                        ----         ----

    Provision for income
     taxes, as reported              $33,714       $1,726
    Stock-based
     compensation                     (1,523)       1,013
    Amortization of
     acquisition
     intangibles                         277          281
                                         ---          ---

    Non-GAAP provision for
     income taxes                    $32,468       $3,020
                                     =======       ======


                                    Twelve Months
                                       Ended
                                   December 31,
                                       2009          2008
                                       ----          ----

    Provision for income
     taxes, as reported             $33,160       $13,310
    Stock-based
     compensation                     3,765         4,601
    Amortization of
     acquisition
     intangibles                      1,111         1,127
                                      -----         -----

    Non-GAAP provision
     for income taxes               $38,036       $19,038
                                    =======       =======


    Reconciliation of Net Income and Diluted EPS to Non-GAAP Net Income
                                and Non-GAAP
                                Diluted EPS


                                            Three
                                           Months
                                            Ended
                                          December
                                              31,
                                            2009         2008
                                            ----         ----
    Net income, as reported               $2,366      $19,318
    Adjustments to reconcile net
     income to non-GAAP net
     income:
      Stock-based compensation,
       net of tax effect                   6,584        4,209
      Amortization of acquisition
       intangibles, net of tax
       effect                                701          712
                                             ---          ---

    Non-GAAP net income                   $9,651      $24,239
                                          ======      =======

    Basic EPS, as reported                 $0.03        $0.25
    Adjustment to reconcile
     basic EPS to non-GAAP
    basic EPS:
      Impact of stock-based
       compensation, net of tax
       effect                              $0.08        $0.05
      Impact of amortization of
       acquisition intangibles,
       net of tax effect                   $0.01        $0.01
                                           -----        -----

    Non-GAAP basic EPS                     $0.12        $0.31
                                           =====        =====


    Diluted EPS, as reported               $0.03        $0.25
    Adjustment to reconcile
     diluted EPS to non-GAAP
    diluted EPS:
      Impact of stock-based
       compensation, net of tax
       effect                              $0.08        $0.05
      Impact of amortization of
       acquisition intangibles,
       net of tax effect                   $0.01        $0.01
                                           -----        -----

    Non-GAAP diluted EPS                   $0.12        $0.31
                                           =====        =====

    Weighted average shares
     outstanding -
    Basic                                 77,589       78,110
                                          ------       ------
    Diluted                               78,325       78,522
                                          ------       ------


                                                 Twelve
                                                 Months
                                                 Ended
                                                December
                                                    31,
                                             2009          2008
                                             ----          ----
    Net income, as reported               $17,085       $84,827
    Adjustments to reconcile
     net income to non-GAAP
     net income:
      Stock-based compensation,
       net of tax effect                   16,534        15,146
      Amortization of acquisition
       intangibles, net of tax
       effect                               2,837         3,040
                                            -----         -----

    Non-GAAP net income                   $36,456      $103,013
                                          =======      ========

    Basic EPS, as reported                  $0.22         $1.08
    Adjustment to reconcile
     basic EPS to non-GAAP
    basic EPS:
      Impact of stock-based
       compensation, net of tax
       effect                               $0.21         $0.19
      Impact of amortization of
       acquisition intangibles,
       net of tax effect                    $0.04         $0.04
                                            -----         -----

    Non-GAAP basic EPS                      $0.47         $1.31
                                            =====         =====


    Diluted EPS, as reported                $0.22         $1.07
    Adjustment to reconcile
     diluted EPS to non-GAAP
    diluted EPS:
      Impact of stock-based
       compensation, net of tax
       effect                               $0.21         $0.19
      Impact of amortization of
       acquisition intangibles,
       net of tax effect                    $0.04         $0.04
                                            -----         -----

    Non-GAAP diluted EPS                    $0.47         $1.30
                                            =====         =====

    Weighted average shares
     outstanding -
    Basic                                  77,520        78,567
                                           ------        ------
    Diluted                                78,026        79,515
                                           ------        ------


    Reconciliation of Net Income and Diluted EPS to EBITDA and EBITDA
                               Diluted EPS


                                      Three Months
                                        Ended
                                     December 31,
                                         2009         2008
                                         ----         ----
    Net income, as reported            $2,366      $19,318
    Adjustments to reconcile
     net income to EBITDA:
         Interest income                 (294)        (971)
         Taxes                         33,714        1,726
         Depreciation and
          amortization                  9,829        9,202
                                        -----        -----
    EBITDA                            $45,615      $29,275
                                      =======      =======

    Diluted EPS, as reported            $0.03        $0.25
    Adjustment to reconcile
     diluted EPS to EBITDA
         Interest income                $0.00       $(0.01)
         Taxes                          $0.43        $0.02
         Depreciation and
          amortization                  $0.12        $0.11
                                        -----        -----
    EBITDA diluted EPS                  $0.58        $0.37
                                        =====        =====


    Diluted                            78,325       78,522
                                       ------       ------


                                      Twelve Months
                                        Ended
                                     December 31,
                                         2009          2008
                                         ----          ----
    Net income, as reported           $17,085       $84,827
    Adjustments to reconcile
     net income to EBITDA:
         Interest income               (1,629)       (5,996)
         Taxes                         33,160        13,310
         Depreciation and
          amortization                 38,365        37,103
                                       ------        ------
    EBITDA                            $86,981      $129,244
                                      =======      ========

    Diluted EPS, as reported            $0.22         $1.07
    Adjustment to reconcile
     diluted EPS to EBITDA
         Interest income               $(0.02)       $(0.08)
         Taxes                          $0.42         $0.17
         Depreciation and
          amortization                  $0.49         $0.47
                                        -----         -----
    EBITDA diluted EPS                  $1.11         $1.63
                                        =====         =====


    Diluted                            78,026        79,515
                                       ------        ------


                    National Instruments
             Reconciliation of GAAP to Non-GAAP
                     Estimated Measures
           (in thousands, except per share data)
                        (unaudited)

    Reconciliation of Estimated GAAP Fully
     Diluted EPS to Non-GAAP Fully Diluted
     EPS

                                           Three
                                          months
                                           ended
                                        March 31,
                                             2010
                                          ----------

                                        Low      High
    GAAP Fully Diluted EPS,
     estimated                        $0.24     $0.32

    Adjustment to reconcile
     diluted EPS to non-GAAP

    diluted EPS:

      Impact of stock-based
       compensation, net of tax
       effect                         $0.05     $0.05

      Impact of amortization of
       acquisition intangibles,
       net of tax effect              $0.01     $0.01



    Non-GAAP diluted EPS,
     estimated                        $0.30     $0.38
                                      =====     =====


SOURCE National Instruments

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