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National Instruments Reports Record Quarterly and Annual Revenue

Company Reports Record Quarterly and Annual Profit, Declares 3-for-2 Stock Split

AUSTIN, Texas, Jan. 25, 2011 /PRNewswire/ --

Q4 2010 Highlights


National Instruments (Nasdaq: NATI) today announced Q4 revenue of $250 million, a new quarterly revenue record and a 24 percent increase compared to Q4 2009. This exceeded the company's guidance of between $230 million and $244 million, which was provided on Oct. 25, 2010. In Q4, the company's large order business, defined as orders greater than $20,000, grew 22 percent sequentially. Backlog increased by $5 million from Sept. 30 to Dec. 31, 2010.

GAAP and non-GAAP operating income were all-time quarterly records, and operating margins improved significantly over Q4 2009. Net income for Q4 2010 was $38 million, with GAAP fully diluted earnings per share (EPS) of $0.48. Non-GAAP net income was $42 million, with non-GAAP fully diluted EPS of $0.53. When comparing these results to 2009, investors should recall that the company incurred a $21.6 million noncash tax charge that reduced both GAAP and non-GAAP EPS by $0.28 in Q4 2009.

In Q4, GAAP gross margin increased 60 basis points year-over-year to 77.5 percent. Non-GAAP gross margin increased by 50 basis points year-over-year to 78.0 percent.

The company's non-GAAP results exclude the impact of both stock-based compensation and the amortization of acquisition-related intangibles. Reconciliations of the company's GAAP and non-GAAP results are included as part of this news release.

"I am extremely pleased with the significant demand we saw for our products through 2010," said Dr. James Truchard, co-founder, president and CEO. "I believe our long-term focus on innovation and our expanding product and services portfolio have created significant new opportunities for NI, and I believe our customers are seeing great value in our integrated platforms such as NI LabVIEW, PXI and CompactRIO."

NI virtual instrumentation and graphical system design product sales were up 24 percent year-over-year. NI instrument control product sales were up 20 percent year-over-year in Q4. Product revenue was $234 million, up 24 percent year-over-year, and software maintenance revenue was $16 million, up 21 percent year-over-year.

Geographically, revenue in US dollar terms for Q4 2010 compared to Q4 2009 was up 16 percent in the Americas, up 24 percent in Europe and up 37 percent in Asia. In local currency terms, revenue was up 28 percent in Europe and up 27 percent in Asia.

As of Dec. 31, NI had a record $351 million in cash and short-term investments, up $12 million from Sept. 30. The National Instruments Board of Directors declared a 3-for-2 stock split and increased the quarterly dividend to $0.15 per share on the company's common stock payable on Feb. 21 to shareholders of record on Feb. 4. All per-share data, including dividends and guidance, in this news release is presented prior to this split.

FY 2010 Highlights


Full-year 2010 revenue was $873 million, up 29 percent year-over-year. Annual GAAP net income was $109.1 million, with fully diluted EPS of $1.38, and annual non-GAAP net income was $124.6 million, with non-GAAP fully diluted EPS of $1.58.

Guidance for Q1 2011

"We are extremely pleased by our impressive finish to 2010, and this increases our confidence in aggressively investing in long-term growth," said Alex Davern, EVP, COO and CFO. "As part of our investment for 2011, we are budgeting to increase our R&D personnel by 19 percent and our field sales force by 24 percent. Overall headcount is budgeted to increase by 17 percent; however, the incremental cost of these additions will be partially offset by an expected reduction in our variable compensation in 2011."

NI expects strong Q1 year-over-year revenue growth, with revenue expected to be between $230 million and $244 million. The company expects fully diluted EPS between $0.33 and $0.41, with non-GAAP fully diluted EPS expected to be between $0.38 and $0.46. For 2011, the company anticipates that its non-GAAP effective tax rate will be approximately 20 percent.

In Q1 2011, the company anticipates that the GAAP to non-GAAP EPS adjustment will be approximately $0.05 per share.

Non-GAAP Presentation

In addition to disclosing results determined in accordance with GAAP, NI discloses certain non-GAAP operating results and non-GAAP information that exclude certain charges. In this news release, the company has presented its gross profit, operating expenses, operating income, income before income taxes, provision for income taxes, net income and basic and fully diluted EPS for the three- and 12-month periods ending Dec. 31, 2010 and 2009, on a GAAP and non-GAAP basis. When presenting non-GAAP information, the company includes a reconciliation of the non-GAAP results to the GAAP results. 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 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 the 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 company's 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 the company's earnings before interest, taxes, depreciation and amortization (EBITDA) and EBITDA diluted EPS for the three- and 12-month periods ended Dec. 31, 2010 and 2009. The company also believes that including the EBITDA results assists investors in assessing the company's operational performance relative to its competitors. A reconciliation of EBITDA and EBITDA diluted EPS to GAAP net income and GAAP diluted EPS is included with this news release.

Conference Call Information

Interested parties can listen to the Q4 2010 conference call today, Jan. 25, beginning at 4:00 p.m. CST, at www.ni.com/call. Replay information is available by calling (888) 203-1112, confirmation code # 6952882, shortly after the call through January 30 at 7:00 p.m. CST.

Forward-Looking Statements

This release contains "forward-looking statements," including statements related to significant new opportunities for NI, our belief that customers are seeing great value in our platforms, our confidence in aggressively investing in long-term growth, our budget for R&D, field sales and overall headcount, that the incremental cost of our headcount additions will be partially offset by a reduction in variable compensation in 2011, our Q1 guidance for revenue and GAAP and non-GAAP EPS, our expected GAAP to non-GAAP adjustment for Q1 and our anticipated non-GAAP effective tax rate for 2011. These statements are subject to a number of risks and uncertainties, including the risk of adverse changes or fluctuations in the global economy, component shortages, delays in the release of new products, fluctuations in customer demand for NI products, the company's ability to continue to control its operating expenses, manufacturing inefficiencies and foreign exchange fluctuations. Actual results may differ materially from the expected results. The company directs readers to its Form 10-K for the fiscal year ended Dec. 31, 2009, its Form 10-Q for the quarter ended Sept. 30, 2010, 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 4 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 12 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. (NATI-F)

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.


National Instruments

Consolidated Balance Sheets

(in thousands)








December 31,



2010


2009



(Unaudited)








Assets





Current assets:





Cash and cash equivalents

$

219,447

$

201,465

Short-term investments


131,215


87,196

Accounts receivable, net


127,214


103,957

Inventories, net


117,765


86,515

Prepaid expenses and other current assets


36,239


36,523

Deferred income taxes, net


18,838


16,522

Total current assets


650,718


532,178






Property and equipment, net


160,410


153,265

Goodwill, net


70,278


64,779

Intangible assets, net


52,816


43,390

Other long-term assets


25,460


19,417

Total assets

$

959,682

$

813,029






Liabilities and Stockholders' Equity





Current liabilities:





Accounts payable

$

33,544

$

23,502

Accrued compensation


27,734


14,934

Deferred revenue


71,650


57,242

Accrued expenses and other liabilities


16,538


8,560

Other taxes payable


16,846


14,181

Total current liabilities


166,312


118,419






Deferred income taxes


29,477


25,012

Liability for uncertain tax positions


14,953


11,062

Other long-term liabilities


4,395


4,116

Total liabilities

$

215,137

$

158,609






Stockholders' equity:





Preferred stock


-


-

Common stock


786


774

Additional paid-in capital


408,106


336,446

Retained earnings


336,363


303,655

Accumulated other comprehensive income


(710)


13,545

Total stockholders' equity

$

744,545

$

654,420

Total liabilities and stockholders' equity

$

959,682

$

813,029





National Instruments

Consolidated Statements of Income

(in thousands, except per share data)












Three Months Ended


Year Ended



December 31,


December 31,



(Unaudited)


(Unaudited)





2010


2009


2010


2009

Net sales:









Product

$

233,973

$

188,388

$

807,386

$

623,736

Software maintenance


15,990


13,209


65,834


52,858

Total net sales


249,963


201,597


873,220


676,594










Cost of sales:









Product

$

55,278

$

45,466

$

195,096

$

164,700

Software maintenance


1,021


1,150


4,987


5,184

Total cost of sales


56,299


46,616


200,083


169,884










Gross profit

$

193,664

$

154,981

$

673,137

$

506,710










Operating expenses:









Sales and marketing

$

86,440

$

70,178

$

319,606

$

269,267

Research and development


43,237


33,722


158,149


132,974

General and administrative


17,368


15,100


67,069


57,938

Total operating expenses

$

147,045

$

119,000

$

544,824

$

460,179










Operating income

$

46,619

$

35,981

$

128,313

$

46,531










Other income (expense):









Interest income

$

340

$

294

$

1,391

$

1,629

Net foreign exchange gain (loss)


(110)


(567)


(2,585)


734

Other income, net


23


372


993


1,351










Income before income taxes

$

46,872

$

36,080

$

128,112

$

50,245










Provision for  income taxes


8,844


33,714


18,996


33,160










Net income

$

38,028

$

2,366

$

109,116

$

17,085










Basic earnings per share

$

0.48

$

0.03

$

1.40

$

0.22

Diluted earnings per share

$

0.48

$

0.03

$

1.38

$

0.22










Weighted average shares outstanding -









basic


78,426


77,589


77,982


77,520

diluted


79,335


78,325


79,048


78,026










Dividends declared per share

$

0.13

$

0.12

$

0.52

$

0.48





National Instruments

Consolidated Statements of Cash Flows

(in thousands)



Year Ended



December 31,



(Unaudited)





2010


2009

Cash flow from operating activities:





Net income

$

109,116

$

17,085

Adjustments to reconcile net income to net cash provided





by operating activities:





Depreciation and amortization


37,872


38,365

Stock-based compensation


18,795


20,299

Tax expense  from deferred income taxes


3,668


17,196

Tax expense (benefit) from stock option plans


(96)


1,450

Changes in operating assets and liabilities:





Accounts receivable


(22,923)


17,591

Inventories


(30,930)


20,843

Prepaid expenses and other assets


(20,411)


12,740

Accounts payable


9,630


(7,374)

Deferred revenue


14,408


11,728

Taxes and other liabilities


25,929


(14,272)

Net cash provided by operating activities

$

145,058

$

135,651






Cash flow from investing activities:





Capital expenditures


(28,397)


(20,847)

Capitalization of internally developed software


(15,759)


(12,583)

Additions to other intangibles


(4,151)


(4,602)

Acquisitions, net of cash received


(4,218)


-

Purchases of short-term investments


(126,691)


(93,087)

Sales and maturities of short-term investments


82,672


19,204

Net cash (used by) investing activities

$

(96,544)

$

(111,915)






Cash flow from financing activities:





Proceeds from issuance of common stock


51,852


21,672

Repurchase of common stock


(41,862)


(34,585)

Dividends paid


(40,618)


(37,308)

Tax expense (benefit) from stock option plans


96


(1,450)

Net cash (used by) financing activities

$

(30,532)

$

(51,671)






Net change in cash and cash equivalents


17,982


(27,935)

Cash and cash equivalents at beginning of period


201,465


229,400

Cash and cash equivalents at end of period

$

219,447

$

201,465





Detail of GAAP Charges Related to Stock-Based Compensation and

Amortization of Acquisition Intangibles

(Unaudited)












Three Months Ended


Year Ended



December 31,


December 31,












2010


2009


2010


2009

Stock-based compensation









Cost of sales

$

331

$

309

$

1,345

$

1,284

Sales and marketing


1,851


2,148


7,911


8,774

Research and development


1,774


1,887


6,903


7,236

General and administrative


645


717


2,636


3,005

Provision for income taxes


(1,549)


1,523


(5,971)


(3,765)

Total

$

3,052

$

6,584

$

12,824

$

16,534



















Amortization of acquisition intangibles









Cost of sales

$

921

$

852

$

3,486

$

3,445

Sales and marketing


75


126


386


503

Research and development


-


-


-


-

General and administrative


15


-


15


-

Provision for income taxes


(298)


(277)


(1,202)


(1,111)

Total

$

713

$

701

$

2,685

$

2,837





National Instruments

Reconciliation of GAAP to Non-GAAP Measures

(in thousands, except per share data)

(unaudited)












Three Months Ended


Year Ended



December 31,


December 31,



2010


2009


2010


2009










Reconciliation of Gross Profit to Non-GAAP Gross Profit










Gross profit, as reported

$

193,664

$

154,981

$

673,137

$

506,710

Stock-based compensation


331


309


1,345


1,284

Amortization of acquisition intangibles


921


852


3,486


3,445

Non-GAAP gross profit

$

194,916

$

156,142

$

677,968

$

511,439










Reconciliation of Operating Expenses to Non-GAAP Operating Expenses










Operating expenses, as reported

$

147,045

$

119,000

$

544,824

$

460,179

Stock-based compensation


(4,270)


(4,752)


(17,450)


(19,015)

Amortization of acquisition intangibles


(90)


(126)


(401)


(503)

Non-GAAP operating expenses

$

142,685

$

114,122

$

526,973

$

440,661










Reconciliation of Operating Income to Non-GAAP Operating Income










Operating income, as reported

$

46,619

$

35,981

$

128,313

$

46,531

Stock-based compensation


4,601


5,061


18,795


20,299

Amortization of acquisition intangibles


1,011


978


3,887


3,948

Non-GAAP operating income

$

52,231

$

42,020

$

150,995

$

70,778










Reconciliation of Income Before Income Taxes to Non-GAAP Income Before Income Taxes










Income before income taxes, as reported

$

46,872

$

36,080

$

128,112

$

50,245

Stock-based compensation


4,601


5,061


18,795


20,299

Amortization of acquisition intangibles


1,011


978


3,887


3,948

Non-GAAP income before income taxes

$

52,484

$

42,119

$

150,794

$

74,492










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










Provision for  income taxes, as reported

$

8,844

$

33,714

$

18,996

$

33,160

Stock-based compensation


1,549


(1,523)


5,971


3,765

Amortization of acquisition intangibles


298


277


1,202


1,111

Non-GAAP provision for income taxes

$

10,691

$

32,468

$

26,169

$

38,036





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

(unaudited)












Three Months Ended


Year Ended



December 31,


December 31,



2010


2009


2010


2009

Net income, as reported

$

38,028

$

2,366

$

109,116

$

17,085

Adjustments to reconcile net income to non-GAAP net income:









 Stock-based compensation, net of tax effect


3,052


6,584


12,824


16,534

 Amortization of acquisition intangibles, net of tax effect


713


701


2,685


2,837

Non-GAAP net income

$

41,793

$

9,651

$

124,625

$

36,456










Basic EPS, as reported

$

0.48

$

0.03

$

1.40

$

0.22

Adjustment to reconcile basic EPS to non-GAAP









basic EPS:









 Impact of stock-based compensation, net of tax effect

$

0.04

$

0.08

$

0.17

$

0.21

 Impact of amortization of acquisition intangibles, net of tax effect

$

0.01

$

0.01

$

0.03

$

0.04

Non-GAAP basic EPS

$

0.53

$

0.12

$

1.60

$

0.47



















Diluted EPS, as reported

$

0.48

$

0.03

$

1.38

$

0.22

Adjustment to reconcile diluted EPS to non-GAAP









diluted EPS:









 Impact of stock-based compensation, net of tax effect

$

0.04

$

0.08

$

0.16

$

0.21

 Impact of amortization of acquisition intangibles, net of tax effect

$

0.01

$

0.01

$

0.04

$

0.04

Non-GAAP diluted EPS

$

0.53

$

0.12

$

1.58

$

0.47










Weighted average shares outstanding -









Basic


78,426


77,589


77,982


77,520

Diluted


79,335


78,325


79,048


78,026





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

(unaudited)












Three Months Ended


Year Ended



December 31,


December 31,



2010


2009


2010


2009

Net income, as reported

$

38,028

$

2,366

$

109,116

$

17,085

Adjustments to reconcile net income to EBITDA:









    Interest income


(340)


(294)


(1,391)


(1,629)

    Taxes


8,844


33,714


18,996


33,160

    Depreciation and amortization


9,652


9,829


37,872


38,365

EBITDA

$

56,184

$

45,615

$

164,593

$

86,981










Diluted EPS, as reported

$

0.48

$

0.03

$

1.38

$

0.22

Adjustment to reconcile diluted EPS to EBITDA









    Interest income

$

(0.00)

$

(0.00)

$

(0.02)

$

(0.02)

    Taxes

$

0.11

$

0.43

$

0.24

$

0.42

    Depreciation and amortization

$

0.12

$

0.12

$

0.48

$

0.49

EBITDA diluted EPS

$

0.71

$

0.58

$

2.08

$

1.11










Weighted average shares outstanding - Diluted


79,335


78,325


79,048


78,026





National Instruments

Reconciliation of GAAP to Non-GAAP EPS Guidance

(unaudited)

















Three months ended




March 31, 2011










Low


High

GAAP Fully Diluted EPS, guidance

$

0.33

$

0.41

Adjustment to reconcile diluted EPS to non-GAAP





diluted EPS:





 Impact of stock-based compensation, net of tax effect

$

0.04

$

0.04

 Impact of amortization of acquisition intangibles, net of tax effect

$

0.01

$

0.01







Non-GAAP diluted EPS, guidance

$

0.38

$

0.46




Contact:

Veronica Garza


Investor Relations


(512) 683-6873



SOURCE National Instruments

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