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National Instruments Reports Record Annual Revenue of $1.02 Billion

Company Reports Record Non-GAAP Annual Profit; Raises Quarterly Dividend 40 Percent

Jan 31, 2012 04:01 PM Eastern Standard Time

AUSTIN, Texas, Jan. 31, 2012 /PRNewswire/ --

Q4 2011 Highlights


National Instruments (Nasdaq: NATI) today announced record Q4 GAAP revenue of $278 million, an increase of 11 percent year-over-year. Non-GAAP revenue was $280 million, representing a 12 percent increase year-over-year. In Q4, the company's large order business, defined as orders greater than $20,000, grew 10 percent year-over-year, and the average order size reached a new all-time record of approximately $4,650.

GAAP net income was $24.3 million in Q4, with fully diluted earnings per share (EPS) of $0.20, and non-GAAP net income was $32.5 million, with non-GAAP fully diluted EPS of $0.27.

The company's non-GAAP results exclude the impact of stock-based compensation, amortization of acquisition-related intangibles, acquisition accounting for deferred revenue and acquisition-related transaction costs. Reconciliations of the company's GAAP and non-GAAP results are included as part of this news release.

"Despite recent economic headwinds, we executed well this quarter as we set a new quarterly revenue record and surpassed the $1 billion annual revenue milestone," said Dr. James Truchard, co-founder, president and CEO. "We believe this success has benefitted from the industry shift toward software-based instrumentation, and I believe our long-term investments in software and modular hardware continue to drive improvements in performance, size and productivity for our customers."

NI graphical system design products, which represented about 95 percent of the company's product portfolio, had approximately 14 percent year-over-year revenue growth in Q4 2011. Sales of NI instrument control products, which represented approximately 5 percent of NI revenue in the quarter, were down approximately 16 percent year-over-year in Q4 2011.

Geographically, revenue in U.S. dollar terms for Q4 2011 compared to Q4 2010 was up 9 percent in the Americas, excluding acquisitions, up 3 percent in Europe and up 11 percent in Asia. In local currency terms, revenue was up 5 percent in Europe and up 8 percent in Asia. Including acquisitions, the Americas revenue was up 21 percent.

As of Dec. 31, NI had $366 million in cash and short-term investments. The National Instruments Board of Directors approved a 40 percent increase in the quarterly dividend to $0.14 per share on the company's common stock payable on March 5 to shareholders of record on Feb. 13. This increase in the dividend reflects the progress NI has made since the 2009 recession in strengthening its business model and investing in growth.

FY 2011 Highlights


Full-year 2011 GAAP revenue was $1.02 billion, up 17 percent year-over-year. Annual GAAP net income was $94 million, with fully diluted GAAP EPS of $0.78, and annual non-GAAP net income was $130 million, with non-GAAP fully diluted EPS of $1.07.

"While our strategic investments throughout 2011 have placed some pressure on short-term margins, we feel confident that they have positioned us for long-term growth," said Alex Davern, EVP, COO and CFO. "Our goals for 2012 are to leverage the investments we made in 2011 to drive sustained revenue growth and to continue to drive toward our long-term target of 18 percent non-GAAP operating income."

Guidance for Q1 2012

NI expects Q1 year-over-year revenue growth, with non-GAAP revenue expected to be between $250 million and $270 million. The company expects fully diluted GAAP EPS between $0.09 and $0.17, with non-GAAP fully diluted EPS expected to be between $0.16 and $0.24.

In Q1 2012, the company anticipates that the GAAP to non-GAAP EPS adjustment will be approximately $0.07 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 revenue, gross profit, gross margin, operating expenses, operating income, operating margin, 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, 2011 and 2010, on a GAAP and non-GAAP basis. NI is also providing guidance on its non-GAAP revenue and non-GAAP fully diluted EPS.  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, amortization of acquisition-related intangibles, acquisition accounting for deferred revenue, adjustments related to the company's contract dispute with the GSA and acquisition-related transaction costs 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, 2011 and 2010. 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 2011 conference call today, Jan. 31, beginning at 4:00 p.m. CST, at www.ni.com/call. Additionally, a replay will be available shortly after the call ends through Feb. 6 at 7:00 p.m. CST by calling (888) 203-1112, confirmation code #9641643 or by visiting the company's website at www.ni.com/call.

Forward-Looking Statements

This release contains "forward-looking statements," including statements related to validating the industry shift toward a software-based approach to instrumentation, being optimistic that NI's long-term software investment and the performance, size and productivity advantages of its hardware will allow NI to continue to transform the industry and provide quality solutions to its customers, increasing the dividend being a very effective method of returning cash to shareholders, pressure on short-term margins, leveraging the investments the company made in 2011 to drive sustained revenue growth and drive toward 18 percent non-GAAP operating income and NI's Q1 guidance for revenue, GAAP and non-GAAP EPS, non-GAAP effective tax rate and the amount of NI's GAAP to non-GAAP EPS adjustment. 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 effectively manage its operating expenses, manufacturing inefficiencies, adjustments to acquisition earn-out accruals, foreign exchange fluctuations, the outcome of the company's dispute with the U.S. government on its GSA contract and the impact of NI's recent and any future acquisitions. 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, 2011, its Form 10-Q for the quarter ended Sept. 30, 2011, and the other documents it files with the SEC for other risks associated with the company's future performance.

About National Instruments

Since 1976, National Instruments (www.ni.com) has equipped engineers and scientists with tools that accelerate productivity, innovation and discovery. NI's graphical system design approach to engineering provides an integrated software and hardware platform that speeds the development of any system needing measurement and control. The company's long-term vision and focus on improving society through its technology supports the success of its customers, employees, suppliers and shareholders. Readers can obtain investment information from the company's investor relations department by calling (512) 683-5090, emailing 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.

Contact:

Caitlin Cooper Gursslin


Investor Relations


(512) 683-8456



National Instruments

Consolidated Balance Sheets

(in thousands)





December 31,

December 31,


2011

2010


(unaudited)





Assets



Current assets:



Cash and cash equivalents

$ 142,608

$ 219,447

Short-term investments

223,504

131,215

Accounts receivable, net

157,056

127,214

Inventories, net

131,995

117,765

Prepaid expenses and other current assets

38,082

36,239

Deferred income taxes, net

26,304

18,838

Total current assets

719,549

650,718




Property and equipment, net

190,148

160,410

Goodwill

130,747

70,278

Intangible assets, net

83,866

52,816

Other long-term assets

29,984

25,460

Total assets

$ 1,154,294

$ 959,682




Liabilities and Stockholders' Equity



Current liabilities:



Accounts payable

$ 41,111

$ 33,544

Accrued compensation

29,616

27,734

Deferred revenue

90,074

71,650

Accrued expenses and other liabilities

37,612

16,538

Other taxes payable

24,507

16,846

Total current liabilities

222,920

166,312




Deferred income taxes

43,186

29,477

Liability for uncertain tax positions

19,494

14,953

Other long-term liabilities

16,683

4,395

Total liabilities

$ 302,283

$ 215,137




Stockholders' equity:



Preferred stock

-

-

Common stock

1,207

1,179

Additional paid-in capital

471,830

407,713

Retained earnings

382,474

336,363

Accumulated other comprehensive (loss)

(3,500)

(710)

Total stockholders' equity

$ 852,011

$ 744,545

Total liabilities and stockholders' equity

$ 1,154,294

$ 959,682




National Instruments

Consolidated Statements of Income

(in thousands, except per share data)












Three Months Ended


Twelve Months Ended



December 31,

(Unaudited)


December 31,

  (Unaudited)



2011


2010


2011


2010

Net sales:









Product

$

256,606

$

231,715

$

955,613

$

807,386

Software maintenance


21,445


18,248


81,667


65,834

GSA accrual


-


-


(13,107)


-

Total net sales


278,051


249,963


1,024,173


873,220











Cost of sales:









Product

$

66,499

$

55,278

$

235,839

$

195,096

Software maintenance


888


1,021


5,125


4,987

Total cost of sales


67,387


56,299


240,964


200,083










Gross profit

$

210,664

$

193,664

$

783,209

$

673,137










Operating expenses:









Sales and marketing

$

102,221

$

86,440

$

388,768

$

319,606

Research and development


54,502


43,237


199,071


158,149

General and administrative


21,439


17,368


82,658


67,069

Total operating expenses

$

178,162

$

147,045

$

670,497

$

544,824










Operating income

$

32,502

$

46,619

$

112,712

$

128,313










Other income (expense):









Interest income

$

280

$

340

$

1,319

$

1,391

Net foreign exchange gain (loss)


(1,338)


(110)


(2,755)


(2,585)

Other income (expense), net


78


23


(142)


993










Income before income taxes

$

31,522

$

46,872

$

111,134

$

128,112










Provision for  income taxes


7,195


8,844


17,062


18,996










Net income

$

24,327

$

38,028

$

94,072

$

109,116










Basic earnings per share

$

0.20

$

0.32

$

0.79

$

0.93

Diluted earnings per share

$

0.20

$

0.32

$

0.78

$

0.92










Weighted average shares outstanding -









Basic


120,582


117,639


119,836


116,973

Diluted


121,453


119,002


121,220


118,572










Dividends declared per share

$

0.10

$

0.09

$

0.40

$

0.35





National Instruments

Consolidated Statements of Cash Flows

(in thousands)



Twelve Months Ended



December 31,

(Unaudited)



2011


2010

Cash flow from operating activities:





Net income

$

94,072

$

109,116

Adjustments to reconcile net income to net cash provided





by operating activities:





Depreciation and amortization


49,897


37,872

Stock-based compensation


23,219


18,795

Tax (benefit) expense from deferred income taxes


(8,581)


3,668

Tax (benefit) expense from stock option plans


(5,151)


(96)

Changes in operating assets and liabilities:





Accounts receivable


(21,957)


(22,923)

Inventories


(11,817)


(30,930)

Prepaid expenses and other assets


(1,350)


(20,411)

Accounts payable


5,573


9,630

Deferred revenue


16,953


14,408

Taxes and other liabilities


29,041


25,929

Net cash provided by operating activities

$

169,899

$

145,058






Cash flow from investing activities:





Capital expenditures


(54,830)


(28,397)

Capitalization of internally developed software


(12,065)


(15,759)

Additions to other intangibles


(5,035)


(4,151)

Acquisitions, net of cash received


(73,558)


(4,218)

Purchases of short-term investments


(257,449)


(126,691)

Sales and maturities of short-term investments


166,104


82,672

Net cash (used by) investing activities

$

(236,833)

$

(96,544)






Cash flow from financing activities:





Proceeds from issuance of common stock


32,905


51,852

Repurchase of common stock


-


(41,862)

Dividends paid


(47,961)


(40,618)

Tax benefit (expense)  from stock option plans


5,151


96

Net cash (used by) financing activities

$

(9,905)

$

(30,532)






Net change in cash and cash equivalents


(76,839)


17,982

Cash and cash equivalents at beginning of period


219,447


201,465

Cash and cash equivalents at end of period

$

142,608

$

219,447





Detail of GAAP Charges Related to Revenue, Stock-Based Compensation,

Amortization of Acquisition Intangibles and Acquisition-Related Transaction Costs

(in thousands)

(unaudited)












Three Months Ended


Twelve Months Ended



December 31,


December 31,



2011


2010


2011


2010

Revenue









Acquisition related deferred revenue

$

1,912

$

-

$

4,730

$

-

GSA accrual


-


-


13,107


-

Provision for income taxes


(669)


-


(6,242)


-

Total

$

1,243

$

-

$

11,595

$

-












2011


2010


2011


2010

Stock-Based Compensation









Cost of sales

$

411

$

331

$

1,527

$

1,345

Sales and marketing


2,702


1,851


9,711


7,911

Research and development


2,625


1,774


8,870


6,903

General and administrative


831


645


3,111


2,636

Provision for income taxes


(2,041)


(1,549)


(6,827)


(5,971)

Total

$

4,528

$

3,052

$

16,392

$

12,824



















Amortization of Acquisition Intangibles









Cost of sales

$

2,469

$

921

$

7,064

$

3,486

Sales and marketing


447


75


1,071


386

General and administrative


-


15


-


15

Other income, net


190


-


955


-

Provision for income taxes


(993)


(298)


(2,736)


(1,202)

Total

$

2,113

$

713

$

6,354

$

2,685










Acquisition-Related Transaction Costs









Cost of sales

$

32

$

-

$

54

$

-

Sales and marketing


220


-


1,349


-

Research and development


106


-


176


-

General and administrative


47


-


505


-

Provision for income taxes


(142)


-


(288)


-

Total

$

263

$

-

$

1,796

$

-














National Instruments

Reconciliation of GAAP to Non-GAAP Measures

(in thousands, except per share data)

(unaudited)












Three Months Ended


Twelve Months Ended



December 31,


December 31,



2011


2010


2011


2010










Reconciliation of Revenue to Non-GAAP Revenue

Revenue, as reported

$

278,051

$

249,963

$

1,024,173

$

873,220

Acquisition related deferred revenue


1,912


-


4,730


-

GSA accrual


-


-


13,107


-

Non-GAAP revenue

$

279,963

$

249,963

$

1,042,010

$

873,220










Reconciliation of Gross Profit to Non-GAAP Gross Profit

Gross profit, as reported

$

210,664

$

193,664

$

783,209

$

673,137

Acquisition-related deferred revenue and GSA accrual


1,912


-


17,837


-

Stock-based compensation


411


331


1,527


1,345

Amortization of acquisition intangibles


2,469


921


7,064


3,486

Acquisition-related transaction costs


32


-


54


-

Non-GAAP gross profit

$

215,488

$

194,916

$

809,691

$

677,968










Reconciliation of Operating Expenses to Non-GAAP Operating Expenses

Operating expenses, as reported

$

178,162

$

147,045

$

670,497

$

544,824

Stock-based compensation


(6,158)


(4,270)


(21,692)


(17,450)

Amortization of acquisition intangibles


(447)


(90)


(1,071)


(401)

Acquisition-related transaction costs


(373)


-


(2,030)


-

Non-GAAP operating expenses

$

171,184

$

142,685

$

645,704

$

526,973










Reconciliation of Operating Income to Non-GAAP Operating Income

Operating income, as reported

$

32,502

$

46,619

$

112,712

$

128,313

Acquisition-related deferred revenue and GSA accrual


1,912


-


17,837


-

Stock-based compensation


6,569


4,601


23,219


18,795

Amortization of acquisition intangibles


2,916


1,011


8,135


3,887

Acquisition-related transaction costs


405


-


2,084


-

Non-GAAP operating income

$

44,304

$

52,231

$

163,987

$

150,995










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

Income before income taxes, as reported

$

31,522

$

46,872

$

111,134

$

128,112

Acquisition-related deferred revenue and GSA accrual


1,912


-


17,837


-

Stock-based compensation


6,569


4,601


23,219


18,795

Amortization of acquisition intangibles


3,106


1,011


9,090


3,887

Acquisition-related transaction costs


405


-


2,084


-

Non-GAAP income before income taxes

$

43,514

$

52,484

$

163,364

$

150,794










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

Provision for income taxes, as reported

$

7,195

$

8,844

$

17,062

$

18,996

Acquisition-related deferred revenue and GSA accrual


669


-


6,242


-

Stock-based compensation


2,041


1,549


6,827


5,971

Amortization of acquisition intangibles


993


298


2,736


1,202

Acquisition-related transaction costs


142


-


288


-

Non-GAAP provision for income taxes

$

11,040

$

10,691

$

33,155

$

26,169





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

(in thousands, except per share data)

(unaudited)












Three Months Ended


Twelve Months Ended



December 31,


December 31,



2011


2010


2011


2010

Net income, as reported

$

24,327

$

38,028

$

94,072

$

109,116

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









Acquisition-related deferred revenue and GSA accrual, net of tax effect


1,243


-


11,595


-

 Stock-based compensation, net of tax effect


4,528


3,052


16,392


12,824

 Amortization of acquisition intangibles, net of tax effect


2,113


713


6,354


2,685

 Acquisition-related transaction costs, net of tax effect


263


-


1,796


-

Non-GAAP net income

$

32,474

$

41,793

$

130,209

$

124,625










Basic EPS, as reported

$

0.20

$

0.32

$

0.79

$

0.93

Adjustment to reconcile basic EPS to non-GAAP









basic EPS:









 Impact of acquisition-related deferred revenue and GSA accrual, net of tax effect


0.01


-


0.10


-

 Impact of stock-based compensation, net of tax effect


0.04


0.03


0.14


0.11

 Impact of amortization of acquisition intangibles, net of tax effect


0.02


0.01


0.05


0.03

 Impact of acquisition-related transaction costs, net of tax effect

0.00


-


0.01


-

Non-GAAP basic EPS

$

0.27

$

0.36

$

1.09

$

1.07



















Diluted EPS, as reported

$

0.20

$

0.32

$

0.78

$

0.92

Adjustment to reconcile diluted EPS to non-GAAP









diluted EPS:









 Impact of acquisition-related deferred revenue and GSA accrual, net of tax effect


0.01


-


0.10


-

 Impact of stock-based compensation, net of tax effect


0.04


0.02


0.13


0.11

 Impact of amortization of acquisition intangibles, net of tax effect


0.02


0.01


0.05


0.02

 Impact of acquisition-related transaction costs, net of tax effect

0.00


-


0.01


-

Non-GAAP diluted EPS

$

0.27

$

0.35

$

1.07

$

1.05










Weighted average shares outstanding -









Basic


120,582


117,639


119,836


116,973

Diluted


121,453


119,002


121,220


118,572





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

(in thousands, except per share data)

(unaudited)












Three Months Ended


Twelve Months Ended



December 31,


December 31,



2011


2010


2011


2010

Net income, as reported

$

24,327

$

38,028

$

94,072

$

109,116

Adjustments to reconcile net income to EBITDA:









    Interest income


(280)


(340)


(1,319)


(1,391)

    Taxes


7,195


8,844


17,062


18,996

    Depreciation and amortization


14,152


9,652


49,897


37,872

EBITDA

$

45,394

$

56,184

$

159,712

$

164,593










Diluted EPS, as reported

$

0.20

$

0.32

$

0.78

$

0.92

Adjustment to reconcile diluted EPS to EBITDA









    Interest income


(0.01)


(0.00)


(0.01)


(0.01)

    Taxes


0.06


0.07


0.14


0.16

    Depreciation and amortization


0.12


0.08


0.41


0.32

EBITDA diluted EPS

$

0.37

$

0.47

$

1.32

$

1.39










Weighted average shares outstanding - Diluted


121,453


119,002


121,220


118,572





National Instruments

Reconciliation of GAAP to Non-GAAP Guidance

(unaudited)










Three months ended




March 31, 2012




(Millions)










Low


High

GAAP revenue, guidance

$

249

$

269

Adjustment to reconcile revenue to non-GAAP revenue:





 Impact of acquisition-related deferred revenue write-off








1


1

Non-GAAP revenue, guidance

$

250

$

270



















National Instruments

Reconciliation of GAAP to Non-GAAP EPS Guidance

(unaudited)










Three months ended




March 31, 2012










Low


High

GAAP fully diluted EPS, guidance

$

0.09

$

0.17

Adjustment to reconcile diluted EPS to non-GAAP diluted EPS:





 Impact of acquisition-related deferred revenue write-off


0.01


0.01

 Impact of stock-based compensation, net of tax effect


0.04


0.04

 Impact of amortization of acquisition intangibles, net of tax effect


0.02


0.02







Non-GAAP diluted EPS, guidance

$

0.16

$

0.24




SOURCE National Instruments

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