AUSTIN, Texas - Jan. 29, 2009 - National Instruments (Nasdaq: NATI) reported quarterly revenue of $202 million. This is consistent with the preliminary results the company announced on Jan. 2. GAAP net income for Q4 2008 was $19.3 million with GAAP diluted earnings per share (EPS) of $0.25. Non-GAAP net income was $24.2 million with diluted EPS of $0.31. When comparing Q4 2008 GAAP and non-GAAP fully diluted EPS to Q4 2007, note that in Q4 2007 NI recognized an $18.3 million tax credit that had the impact of increasing the company's GAAP and non-GAAP EPS by $0.23 in Q4 2007.

"The diversity of our customers, markets, and geographies enabled our field sales engineers to continue to find business in areas where investment is still flowing and allowed us to deliver another record year in 2008, turning in 11 percent revenue growth in a tough environment for the industry," said James Truchard, NI president, co-founder and CEO. "I believe our strong financial position, solid business model, and long-term commitment to innovation and growth will allow us to expand our market position in test and industrial embedded applications."

For 2008, revenue was $821 million, up 11 percent year-over-year in U.S. dollar terms. GAAP fully diluted EPS for 2008 was $1.07 with annual net income of $85 million. Non-GAAP fully diluted EPS for 2008 was $1.30 with annual non-GAAP net income of $103 million. Cash flow from operating activities was $122 million in 2008. 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.

In Q4 2008, NI virtual instrumentation and graphical system design products, which constitute the vast majority of the company's product portfolio, achieved 2 percent year-over-year revenue growth. Sales of NI instrument control products, which now represent approximately 7 percent of NI revenue, were down 29 percent year-over-year in Q4 2008. NI instrument control products are the most economically sensitive portion of company revenue, and the company expects the revenue trend in instrument control to continue to deteriorate in Q1 2009. For the year, NI virtual instrumentation and graphical system design products saw 13 percent year-over-year revenue growth, and NI instrument control products were down 11 percent year-over-year.

Geographically, revenue in U.S. dollar terms for Q4 2008 compared to Q4 2007 was up 4 percent in the Americas, down 2 percent in Europe and down 8 percent in Asia, equaling an overall revenue decline of 1 percent. The company's revenue growth in the Americas was helped by the fact that the U.S. economy weakened first, with the U.S. PMI averaging below 50 in Q4 2007. In local currency terms, revenue was down 5 percent in Europe and down 3 percent in Asia.

As of Dec. 31, 2008, the company had $236 million in net cash and short-term investments. During Q4 2008, the company paid $9 million in dividends and repurchased 1,989,000 shares of its common stock at an average price of $22.86 per share. For the full year, the company paid $35 million in dividends and used $104 million to repurchase 5.2 percent of its common stock at an average price of $25.23 per share. NI announced today that the board of directors approved an increase in the quarterly dividend to $0.12 per share. This dividend is payable on March 2, to shareholders of record on Feb. 9. In addition, the company announced that its Board of Directors has approved a new share repurchase plan that increases the number of shares the company is authorized to repurchase by 2.4 million to 3 million shares.

"We will continue our investments in R&D and our field sales force which have been critical to allowing us to gain market share," said Alex Davern, NI CFO. "Given the current deep industrial recession, we plan to prudently manage expenses in other areas of the business and as a result we have reduced 2009 budgeted expenses by $30 million since our call on Jan. 2 and are budgeting to reduce our total non-GAAP operating expenses by 3 percent in 2009."

Q4 2008 Highlights

• Quarterly revenue of $202 million, down 1 percent year-over-year
• Net income of $19.3 million
• Non-GAAP net income of $24.2 million
• Record quarterly revenue for RF test modular instruments, software and NI CompactRIO products
• Cash and short-term investments of $236 million

FY 2008 Highlights

• Record annual revenue of $821 million, up 11 percent year-over-year
• Annual net income of $85 million
• Non-GAAP annual net income of $103 million
• Record annual revenue for software, CompactRIO, data acquisition, machine vision, and PXI products
• NI named to FORTUNE magazine's 100 Best Companies to Work For list for 10th consecutive year
• Cash flow from operating activities of $122 million

Expanded Revenue Disclosure

In this news release, the company is separately disclosing its software maintenance revenue for the first time. Future earnings releases and annual and quarterly SEC reports will include this expanded revenue disclosure. As part of this expanded disclosure, some technical support costs previously included in sales and marketing expenses are now accounted for as part of cost of goods sold. All prior year amounts have been reclassified to conform with this presentation.

In Q4 2008, product revenue was $187 million, down 4 percent from Q4 2007, and software maintenance revenue was $15 million, up 42 percent year-over-year. For the full year, product revenue was $765 million and software maintenance revenue was $55 million, which represents 9 percent and 42 percent year-over-year revenue growth, respectively.

Guidance for 2009

The volatility in the macroeconomic environment has created a great degree of uncertainty for the 1st half of 2009. Given that macroeconomic conditions will be the most important variable in predicting our results in Q1, we have delayed giving quantitative revenue or earnings per share guidance until our business update call scheduled for March 5 when the company expects to have a clearer picture of the quarter.

Historically, National Instruments' revenue has declined sequentially in Q1, and Q1 has been the lowest revenue and profit quarter of the year. The company expects these patterns to continue this year. Looking out to Q2 and beyond, NI expects to see its normal seasonal pattern start to reemerge and revenue and profit to improve sequentially in Q2.

On the expense side, the company will continue to be very prudent in managing expenses. NI plans to sustain its strategic investments in R&D and field sales, while significantly limiting expense growth elsewhere. Since our update call on Jan. 2, the company has reduced its spending plans for the full year of 2009 by an additional $30 million, to better position the company to deal with the extended economic uncertainty. As a result, for the full year of 2009, the company is now budgeting for a 3 percent year-over-year reduction in non-GAAP operating expenses compared to a 14 percent increase in 2008. For Q1 2009, NI is currently budgeting for a year-over-year increase of approximately 1 percent in total non-GAAP operating expenses.

National Instruments will hold a business update call on March 5 at 4.00 p.m. CT.

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 2008 and for Q4 2008 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 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.

Conference Call Information

Interested parties can listen to the Q4 2008 conference call today, Jan. 29, beginning at 4:00 p.m. CT, at www.ni.com/call. Replay information is available by calling (888) 203-1112, confirmation code #3658764, from Jan. 29 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 expanding our market position, expecting a continued deterioration in instrument control revenue in Q1 2009, planning to manage expenses and budget to reduce non-GAAP operating expenses by 3 percent, expecting historical revenue and profit patterns to continue this year, expected revenue and profit improvement in Q2, being prudent in managing expenses, sustaining strategic investments in R&D and field sales while significantly limiting expense growth elsewhere, budgeting for 3 percent year-over-year reduction in non-GAAP expenses and for a year-over-year increase in total non-GAAP operating expenses. These statements are subject to a number of risks and uncertainties, including the risk of further adverse changes or fluctuations in the global economy as a result of recent challenges in the global credit and equity markets, delays in the release of new products, 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 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 25,000 different companies worldwide, with no one customer representing more than 3 percent of revenue and no one industry representing more than 10 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 ten 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, emailing nati@ni.com or visiting www.ni.com/nati.

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.

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